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2000 - PARS - Public Agency Retirement System
`rBUC cony PASS R m S ERVICES ERW. Making retirement "'A for you. July 12, 2010 Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 E. Valley Road Rosemead. CA 91770 Dear Mr. Hawkesworth Enclosed please find the amendment to the City of Rosemead PARS Retirement Enhancement Plan. The amendment closes the Plan to employees hired on or after July 1, 2010. Additionally, as we discussed, I added the following language to the end of Section 4.1, Normal Form of Benefit. "The Retirement Benefit shall cease for any Member, who returns to active CalPERS status and shall recommence as of the first day of the month after the Member returns to retired status under CalPERS at the same benefit amount and option immediately prior to the suspension of benefits." Please review the amendment. If no further modifications to the Plan are needed at this time please return one signed original to my attention and keep the second original for your records. As always, don't hesitate to contact me at 800 540 6369 x 132 or by email at svolcan @pars.org with any questions or concerns. Sincerer yr, Shauna Volcan Senior Manager, Plan Implementation /enclosure cc: Dennis Yu, Senior Vice President, PARS ols 4350 Von Kerman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8057 www.pars.org 0."S AGENry PARS PEVRE EM SEPVIC6 Making 2timrncut ."'k for you. July 6, 2010 Mr. Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 East Valley Boulevard Rosemead, CA 91770 RE: PARS REP /ARS Investment Related Materials Dear Mr. Hawkesworth Following your recent meeting, enclosed please find a set of trustee forms for the City's PARS Retirement Enhancement Plan (REP) and the PARS Alternate Retirement System (ARS) -457 FICA Alternative Retirement Plan. Should the City choose to change investment strategies for one or both plans, please have Mr. Allred complete and return the necessary forms to my attention. (You do not need to complete and return the Union Bank Stable Value Fund Disclosure Statement and Participation Agreement unless you are selecting this fund for the PAR ARS plan.) Additionally, I am working on the plan amendment to your PARS Retirement Enhancement Plan which will modify the Plan to exclude employees hired on or after July 1, 2010. 1 will forward the plan amendment to your attention. As always, if you have any questions on the enclosed documents, please don't hesitate to contact me at 800.540.6369 x 132 or by email at svolcan@pars.or¢. Thank you. Sincerely, Shama Volcan Sr. Manager, Plan Implementation Enclosure 4350 Von Karman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8057 www.pars.org 1,0 UnionBank✓ Investment Strategy Selection and Disclosure Form DB Plans Date'. Agency or District: City of Rosemead Plan Name: City of Rosemead PARS Retirement Enhancement Plan To: HighMark Capital Management, Inc. and Union Bank, N.A. Union Bank, N.A, has been or is hereby appointed Investment Manager of the above - referenced Plan. Please invest the assets of the above referenced Plan and Trust forwhich you have been appointed Investment Manager in the (select one of the strategies listed below). STRATEGY INVESTMENT OBJECTIVE ALLOCATION Investment Strategy Seleglon and Circbsure Fomn BB Plans Page 1 of 1 Ve,107rCp Co111l1l D 401m Unign Bang, NA 11 nghlz ri,—.. ❑ Liquidity Management q y g Provide current Income with liquidity and stability of principal Money Markel Fund through investments in short -term U S. Treasury obligations Provide current Income with liquidity antl stability of principal L2 Liquidity Management through investments in short -term obligations Issued or Money Market Fund guaranteed by the U S. government and its agencies. ❑ Liquidity Management Generate current income with liquidity and stability of principal. Money Market Fund ❑ Short-to- Intermediate Term Fixed Income Strategy Maximize Income consistently with a low level of price volatility. Fixed Income Fund I/ ❑ ❑ Conservative HighMark PLUS Conservative Index PLUS Provide a consistent level of inflation- protected income over the long -term Equity: 5 -20 Fixed Income . 60 -95% Cash: 0 -20% o ❑ Moderately Conservative - — _ — HighMark PLUS Provide current income with capital appreciation as a secondary Equity: 2040% c ❑ Moderately Conservative objective. Fixed Income: 50 -80% Cash'. 0 -20% a Index PLUS ❑ Moderate HighMaB PLUS Equity. 40 -60% m Provide current Income and moderate capital appreciation. Fixed Income: 40 -60% ❑ Moderate Index PLUS Cash: 0 -20 % ❑ Balancedl Moderately Aggressive HighMark PLUS Equity: 50 -70% Provide growth of principal and Income. Fixed Income 30 -50% - ❑ Balancedl Moderately Aggressive Cash. 0 -20% Index PLUS Note: HighMark PLUS portfolios are diversified portfolios of actively managed mutual funds. Index PLUS portfolios are diversified portfolios of index based mutual funds or exchange -marled Ponds. ( _ _ City Manager A 4 grazed lagi Title Jeff All red PnnWame Date A therazed Signer Aullrobeed gear, Investment Strategy Seleglon and Circbsure Fomn BB Plans Page 1 of 1 Ve,107rCp Co111l1l D 401m Unign Bang, NA 11 nghlz ri,—.. to UnionBank PARS Fee Schedule ANNUALFEES Trust/Custody Fees All Plan assets _.. _. ..... ...... _. _.... 0.12% on all incoming contributions Investment Management Fees Investment Management Fees are based on the Investment Strategy you select Following is a list of the Investment management fees applicable to each Investment Strategy: Liquidity -- HighMark U.S. Treasury Money Market— Fund level fees only (see prospectus) Liquidity — HighMark U.S. Government Money Market Fund — Fund level fees only (see prospectus) Liquidity — HighMark Diversified Money Market— Fund level fees only (see prospectus) Short to Intermediate Term Fixed income Strategy. Union Bank, N A. provides investment management services for the assets actively managed In the PARS Short to Intermediate -Term Fixed Income Account The annual fee on the account's asset value is prorated and charged monthly': 12% on the first 10% on the next 05% on all over $75,000,000 $25,000.000 sloo,0ogoao 'Holdings in the Hartford Guaranteed Annuity Contract for which HighMark Capital Management has also been appointed Investment Fiduciary are held in a separate account and are not assessed the investment management fees listed above. Holdings in Highmark Money Market Funds are also not charged at the above rates, but instead are assessed management fees at the fund level as disclosed in the HighMark Money Market Mutual Fund Prospectus. As of O6/30/2009 the account held $ $442.193. 71 in the HighMark 100% US Government Money Market Fund and $15],138,981.33 in other assets. • Union Bank Stable Value Fund - Fund level fees only (see disclosure) Diversified Portfolios (Conservative, Moderately Conservative, Moderate, Balancedl Moderately Aggressive): Per Annum Charges All plan assets __... _.... ..._._.0.60 %' 'waived for plan assets invested in HighMark Funds or the Union Bank Stable Value Fund Other Fees HighMark Mutual Funds _._... _.... _._... ..__. See Prospectus and Mutual Fund Disclosure Exchange Traded Funds _. ._ _._... See PARS Investment Services Exhibit Union Bank Stable Value Funtl. _... _. ._..._ _..__. _... _. _. _. See Disclosure Class action services _... _.. _. _._. _.. _.. 6% of recovered funds Please Note: The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEAd prohibits the transfer of funds from a financial institution to an internet gambling site The UIGEA defines restricted transactions as those prohibited under applicable federal, state, or tribal gambling laws. Restricted transactions are prohibited from being processed through your account or relationship ACKNOWLEDGED AND APPROVED PARS Trust Name at Trust City of Rosemead PARS Ralinement Enhancement Plan Name of Plan Jeff Allred _ City Manager Name of 4 homedFF er /or PI n Sponsor Title Sig turn of AUl Te Signe sll Sponsor Date ;292010 bUnionBank- Union Bank, N.A. Mutual Fund Disclosure Statement Bank- Managed Institutional Accounts Form MFDS -1 Union Bank, N.A. ( "Bank ") makes a variety of mutual funds available to its clients. Among the funds available are the HighMark® Funds ( "Funds "), a family of mutual funds sponsored and distributed by HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc. HighMark Capital Management, Inc, ( "HCM"), a registered investment adviser and wholly owned investment management subsidiary of the Bank, serves as the investment adviser and administrator for the Funds, his the Bank serves as custodian and provides certain additional services to the Funtls. Fees for the services described below are paid by the Funds to HCM, the Bank, or its affiliates Additionally, the Bank charges your account fees for the services provided to you "Account" means the client plan, trust or other account managed by the Bank. To avoid management fee duplication, HCM and the Bank retain the fees paid to them by the Funds or its distributor that are attributable to your Account, but no investment advisory fee is charged to your Account for any Bank managed account assets invested in the Funtls. You can contact your Account oHicerfor an additional copy of your Account fee schedule. HCM and the Bank may also receive certain Indirect benefits from having your Accounts) invested in the Funds. For example, a larger fund size creates certain economies of scale and lowers that Fund a expense ratio. The extent to which these factors help each Fund grow benefits HCM and the Bank, whose fees are partially based on the size of each Funtl. Accompanying this Disclosure are prospectuses that contain information on the Investment objectives, operation and fees for all Fund portfolios available to Accounts of the type you have Additional copies of the prospectuses for all of the Fund portfolios, that contain information on the investment objectives, operation and fees for all of the Funds are available from your trust officer, or from the distributor as follows: HighMark Funds Distributors, Inc. 760 Moore Road, King of Prussia, PA 19406, 1- 800 - 433 -6884 or by electronic access through wow. High MarkFunds. Com. Read the prospectuses carefully. HighMark Funds offers its shares solely through its distributor, which is not affiliated with HCM or the Bank. The Bank does not endorse or sponsor the Funds. The Funds are not obligations of the Bank, and are not insured by the FDIC or any other government agency. Investments in the Funds, like any mutual fund investments, involve risk, including the possible loss of principal. FEES FOR SERVICES The services performed for the Funds by HCM, the Bank or its affiliates, and the maximum fees which may be paid for such services, are fully set forth below. The fees may, from time to time be voluntarily reduced pursuant to agreement with the Funds. Voluntary reduction in the fees of a Fund lower that Funds expenses and, thus, temporarily increase that Fund's yield while the voluntary reduction is in effect. Investment Advisor Services: For the expenses incurred and services provided by HCM as the Funds' investment adviser, HCM receives the following fees, computed daily and paid monthly: Money Market Funds: At the annual rate of thirty one - hundredths of one percent (.30 %) of each fund's average daily net assets. Bond Funds: For each fund, except the Short Term Bond Fund, at the annual rate of up to fifty one-hundredths of one percent (.50 %) of each fund's average daily net assets. For the Shod -Term Bond Fund, at the annual rate of forty one - hundredths of one percent (.40%) of the fund a average daily net assets. Asset Allocation Funds: At the annual rate of eighteen one hundredths of one percent (.18 0) of each fund a average dally net assets. Eguity Index Funds: At the annual rate of up to fifty one - huntlretlths of one percent (.50 %) of the funds average daily net assets. International Equity Fund At the annual rate of ninety -five one hundredths of one percent ( 95 %) of the fund's average daily net assets. Domestic Equity And Balanced Funds : At the annual rate of sixty one hundredths of one percent (.60 %) of each fund's average daily net assets. except for the funds listed In the table below: :. HighMark Fun Equity Income Cognitive Value, Enhanced Growth, Geneva Growth Small Cap Advantage Small Cap Value, Geneva Small Cap Growth At the annual rate of up to fifty -five one - hundredths of one percent At the annual rate of up to seventy -five one hundredths of one At the annual rate of ninety -five one - hundredths of one percent At the annual rate of up to one percent (1.DO %) cribs fund's average daily net assets. Mutual Fund Dooll Statement Banktvlanaged Institutional Accounts Page 1 or 3 13177 1.1 Conynghl 22010 anion Bank, N A All Tighe rezoned Mutual Fund Disclosure State me t Bank Managed Institutional Accounts Custodian and Bank Services: For its services as the Funds domestic custodian, the Bank receives a custodian fee at an annual rate of six and one - quarter one thousandths of one percent ( 0 00625 %) of each fund's average daily net assets and reimbursement for reasonable out of pocket expenses incurred in connection with these services. The Bank also receives six one hundredth of one percent (0.06 %) per annum, calculated on the value of total daily outstanding loan balances for each HighMark Fund portfolio that participates in the Union Bank securities lending program. Global custody fees are ad valorem and transaction fees vary with the country in which settlement takes place . For more detailed information, contact the Fund through the distributor at the number set forth above. Shareholder Servicing Fees: The Bank provides certain shareholder support services to the Funtls, and fees for shareholder servicing vary from time to time, but may be up to twenty -five one - hundredths of one percent ( 25 %) of the average daily net assets of a Fund. Administrator Services: HCM acts as administrator to the Funds. HCM is entitled to receive fees from the Fund for services actually performed at an annual rate of up to fifteen one hundredths of one percent (.15 %) of the Fund's average daily net assets computed daily and paid monthly in arrears. From the administration fee, HCM pays sub - administration fees as more fully described in the Funds Statement of Additional Information (SAI), available upon request. Other Services: HCM and the Bank reserve the right to direct that certain brokerage transactions be performed through their affiliates. Such transactions would be subject to "best execution" requirements, entered into solely pursuant to the provisions of applicable law and regulation . and only after approval by the Board of Trustees of the Funtls. In the event of such transactions, the affiliates would be paid brokerage fees by the Funds. Bank or its affiliates may receive soft dollar compensation from brokers consistent with section 28(e) of the Securities Exchange Ad of 1934. Mutual funds may also direct trades through Bank's affiliated broker. Please review the prospectuses for mutual funds carefully to identify risks, investment objectives, any investment limitations and restrictions, and costs and expenses of investing In any mutual fund you purchase, including fees paid to service providers such as Bank. Mutual fund prospectuses are available through electronic access from the mutual fund's distributor, your broker or your Union Bank Relationship Manger. In the event that we decide to purchase for your Account an interest in a Morgan Stanley sponsored or advised asset, you are advised that Bank's ultimate parent company, Mitsubishi UFJ Financial Group, Inc. ( "MUFG'), has acquired preferred stock of Morgan Stanley, the parent company of Morgan Stanley & Co. Incorporated, a registered broker dealer ( "MS &CO.'). This investment gives MUSS a greater than 20 percent ownership interest in Morgan Stanley on a fully diluted basis. A portion of such preferred stock is convertible (subject to certain regulatory approvals) Into voting common stock of Morgan Stanley. MUFG is entitled to nominate one member of Morgan Stanley s board of directors and to have an additional "observer present at meetings of Morgan Stanley's board. If applicable any Investment In Morgan Stanley mutual funds or Morgan Stanley collective funds for ERISA Accounts will be made consistent with applicable prohibited transaction exemptions. Mutual Fund Disclosure Statement Bank Managed Inin trhonal Accounts Page 2 of 3 oaWGto /o9 LopYngM4J 2plp prim 6anh. NA NI ngnl—sarvetl Mutual Fund Disclosure Statement Bank Managed Institutional Accounts CONSENT AND ACKNOWLEDGMENT TO USE PROPRIETARY MUTUAL FUNDS Investment in the HighMark Funds family of mutual funds maybe beneficial because it gives portability to Account holders whose Accounts provide for in -kind distributions or rollovers; results in diversification of Account assets, thereby potentially lowering overall investment risk; allows Account holders to benefit from professional management of the mutual funds' investments: and allows selection among a family of related funds for quick and inexpensive movement between funds in response to market shifts or changes in investment objectives. Applicable fiduciary law and regulation, including, if applicable, the Employee Retirement Income Security Act of 1974 ( "ERISA'I, as amended require full disclosure of relevant fee information so that the client or an independent fiduciary acting on the client's behalf may monitor the reasonableness of the total fees being received by the Bank for its services to the Account Please sign below indicating you have read this Disclosure and consent to the use of the above referenced Funds and to the Bank's receipt offing, above fees. IMe hereby acknowledge receipt of the prospectuses of the HighMark Funds. If the Account is related to ERISA, INJe acknowledge that INJe have been offered a copy of Prohibited Transaction Exemption 94 -86, the exemption upon which the Bank relies when investing assets of the Account in proprietary mutual funtls. IWe hereby authorize the Investment of Account assets in any portfolio of the HighMark Funds in the Bank's discretion in accordance with the investment policies of the Account laNe also approve the receipt of fees by the Bank in accordance with the information set forth above in the Fund prospectuses, and in my Account fee schedule. ACCOUNT NAME: Cit of Rosemead PARS Retirement Enhancement Plan CLIENTICOMPANYIENTITY NAME: City of Rosemead Authorized Signer: Jeff Allred Title: City M er Signature of Authorized Signer: Date: Authorized Signer: Title: Signature of Authorized Signer: Date: Authorized Signer: Title: Signature of Authorized Signer: Date: Mutual Fund Disolocuro Statement Bank Managed Institutional Accounts Page 3 of 3 111161N09 en Vrghrr LmnUlmaank, NA ArngMS 11111 H i U Investment Services Exhibit: Defined Benefit Plans Complete and flexible investment options specifically designed for PARS plans Aw s s'N F- — L I TY ,PARS - hloking MbMMe ( work /wyW. Union Bank PARS Investment Services Exhibit for DB Plans HighMark 100% U.S. Treasury Money Market Fund ................ ............................... page 2 HighMark U.S. Government Money Market Fund ..................... ............................... page 3 HighMark Diversified Money Market Fund ................................ ............................... page 4 Short-to- Intermediate Fixed Income Strategy ........................... ............................... page 5 Diversified Portfolios page 6 Appendix Exchange- Traded Funds .................. ............................... ........................... page 10 Mutual Fund Selection Process ................................... ............................... page 14 Disclosures................................................... ............................... ........................... page 17 Investment Services Exhibit Page 1 HighMark 100% U.S. Treasury Money Market Fund Open -end, publicly traded mutual fund Inception Date: August 10, 1987 Ticker: HMTXX Advisor: HighMark Capital Management The HighMark 100% U.S. Treasury Money Markel Fund seeks current income with liquidity and stability of principal. The Fund invests exclusively in U.S. Treasury securities and separately traded components of those securities called "STRIPS." To limit the Fund's interest -rate risk, the Fund's managers will maintain an average weighted portfolio maturity of 90 days or less. In addition, each individual security in the portfolio will have a maturity of no more than 397 days. In choosing investments for the Fund, the portfolio managers consider such factors as: • The outlook for interest rates; • Buying and selling activity in the Treasury market as a whole and /or demand for individual Treasury securities; • Imbalances in the supply of Treasuries relative to demand; • The appropriateness of particular securities to the Fund's objectives. As of March 31, 2010 Yields (net) 7 Day Simple 0.01% 1 -Mo. Simple 0.01% 3 -Mo. Simple 0.01% Average weighted maturity: 28 days Annualized Total Rate of Returns (net) 1 -Year 0.02% 3 -Years 1.34% 5-Years 2.28% 10 -Years 2.24% Past performance is no indication of future results. Please refer to page 17 for appropriate disclosures. Investment Services Exhibit page 2 N HighMark U.S. Government Money Market Fund Open -end, publicly traded mutual fund Inception Oate: August 10, 1987 Ticker: HMGXX Advisor: HighMark Capital Management The HighMark U.S. Government Money Market Fund seeks current income with liquidity and stability of principal. To pursue this goal, the Fund invests exclusively in short-term debt obligations issued or NOTE. This Fund complies with the requirements of the California Government Code for the Investment of Public Funds and is rated AAA for credit quality by both Moody's Investor Service and Standard and Poor's Corporation. This is the highest rating assigned. guaranteed by the U.S. governments, its agencies or instrumentalities, such as the Government National Mortgage Association ( "Ginnie Mae ") and the U.S. Export-Import Bank. Some of these debt obligations may be subject to repurchase agreements. To limit the Fund's interest -rate risk, the Fund's managers will maintain an average weighted portfolio maturity of 90 days or less. In addition, each individual security in the portfolio will have a maturity of no more than 397 days. In choosing investments for the Fund, the portfolio managers consider such factors as: • The outlook for interest rates; • Buying and selling activity in the U.S. government securities market as a whole and /or demand for individual securities; • Imbalances in the supply of U.S. government securities relative to demand; • The appropriateness of particular securities to the Fund's objectives. As of March 31, 2010 Yields (net) Annualized Total Rate of Returns (net) 7 Day Simple 0.05% 1 -Year 0.14% 1 -Mo. Simple 0.05% 3 -Years 1.95% 3 -Mo. Simple 0.05% 5 -Years 2.77% Average weighted maturity: 10 -Years 2.54% 12 days Past performance is no indication of future results. Please rater to page 17 for appropriate disdosures. Investment Services Exhibit page 3 HighMark Diversified Money Market Fund Open-end, publicly traded mutual fund Inception Date: February 1, 1991 Ticker: HMDXX Advisor: HighMark Capital Management HighMark Diversified Money Market Fund seeks to generate current income with liquidity and stability of principal. To pursue this goal, the Fund invests primarily in high - quality, short-term debt securities. "High - quality" securities are those that at least one nationally recognized rating agency such as Standard & Poore has judged financially strong enough to be included in its highest credit - quality category for short-term securities. The Fund may also invest in nonrated securities if the portfolio managers believe they are of comparably high quality. To limit the Fund's interest -rate risk, the Fund's managers will maintain an average weighted portfolio maturity of 90 days or less. In addition, each individual security in the portfolio will have a maturity of no more than 397 days. In choosing investments for the Fund, the portfolio managers consider such factors as: • The outlook for interest rates; • Buying and selling activity in the high - quality, short-term securities market as a whole and /or for individual securities; • Imbalances in the supply of high - quality, short-term securities relative to demand; • The appropriateness of particular securities to the Fund's objectives. As of March 31, 2010 Yields (net) 7 Day Simple 0.16% 1 -Mo. Simple 0.19% 3 -Mo. Simple 0.20% Average weighted maturity: 66 days Annualized Total Rate of Returns (net) 1 -Year 0.46% 3 -Years 2.39% 5 -Years 3.07% 10 -Years 2.75% Past performance is no indication of luture results. Please refer to page 17 for appropriate disclosures. Investment services Exhibit page 4 Short to Intermediate -Term Fixed Income Strategy Separate Account Management Advisor: HighMark Capital Management The Short to Intermediate -Tem1 Fixed Income strategy is actively managed to maximize income consistently with a low level of price volatility. The strategy represents a diversified portfolio of U.S. Treasury bills, notes and bonds, U.S. Government Agency securities, and corporate debentures (minimum quality rating of A3 by Moody's or A- by Standard and Poors) with maturities of up to five years, except that up to 20% of portfolio assets may have a maximum maturity of eight years. Uninvested cash in the portfolio is swept daily into the HighMark 100% U.S. Treasury Money Market Fund or the U.S. Government Money Market Fund. As of March 31, 2010 Yields (gross) Annualized Total Rate of Returns (gross) Current Yield 3.48% 1 -Year 4.99% Yield to Effective Maturity 0.84% 3 -Years 3.93% Yrs. to Effective Maturity Duration to Effective Maturity (Years) 5 -Years 4.14% 1.05 10 -Years 4.98% 1.03 Investment Services Exhibit page 5 Diversified Portfolios • Reduced risk and enhanced return potential through diversification. By diversifying the assets among investment styles and investment managers we will attempt to reduce your portfolio's potential liability for loss as investment styles move out of favor. Likewise, you will have the opportunity to increase return when styles move into favor. • Reduced risk and enhanced return potential through disciplined mutual fund selection and monitoring process. We employ a rigorous due diligence process that screens investment managers and mutual funds to select quality managers with proven skill and resources to deliver competitive returns within reasonable risk parameters. Strategy Investment Objective Equity Allocation' Index PLUS Provide a consistent level of Conservative inflation - protected income Maximum 20.0% ETFs' over the long-term. Actively managed mutual funds Actively managed mutual funds Provide current income and HighMark 100% U.S. Treasury or U.S. Moderately Conservative moderate capital Maximum 40.0% Market Fund appreciation. Ad- valorem fee on all assets not in Moderate Provide growth of principal Maximum 60.0% in HighMark/ nion Bank funds and income. Balanced /Moderately Provide growth of principal Maximum 70.0% A ressive and income. 'Maximum allocation of total portfolio to equines in any given rime period. Implementation Options HighMark PLUS Index PLUS Exchange-Traded Funds Actively managed mutual funds ETFs' Flnowome Actively managed mutual funds Actively managed mutual funds HighMark 100% U.S. Treasury or U.S. HighMark 100% U.S. Treasury or U.S. Government Money Government Money Market Fund Market Fund Ad- valorem fee on all assets not in Ad- valorem fee on all assets not Fee Hi hMarklUnion Bank funds in HighMark/ nion Bank funds 'More information on Exchange- I radea Tunas it its) is manned on page ry vs this document. Investment Services Exhibit page 6 HighMark PLUS versus Index PL HI hMark PLUS — an active app roach Index PLUS — • Active asset allocation • Active I • Exclusive use of actively managed • Index -t mutual funds employ • Ability to take advantage of • Minimi: anomalies in the market to market outperform passive benchmarks • Lower 7.70% • Greats • Limited 17.44% on rem Balanced/Moderately Aggressive Moderate Moderately Conservative Conservative Rolling 1 -Year Returns June 1987– March 2010 NLowast Relu m ffAverage Return WHighe r -30.0% 40.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Based on 274 morMly obse —dws: 1) Conservalive: 5% Mbottson Associates 30-Day Treasury Bills TR Index; 40% ML US GorpBGod 1 -3 Year TR Index; 40% BarCAP US Agg Bond TR Index; 12% SW 500 TR Index; 1% Russell 2000 TR Index; 2% MSCI EAFE NR Index USD, 2) Mode afely Conservative: 5% Ibbodson Associates 30-Day Treasury Oils TR Index: 25% ML US CmpBGovt 1 -3 Year M Index; 40% BarCep US Agg Bond TR Index; 25% S&P 500 TR Index; 1.5% Ruese112000 TR Index; 3.5% MSCI EAFE NR Index USD. 3) Moderate: 5% Ibbottson Associates 3(�Day Treasury axis M Index; 15% ML US CorpBGovt 1 -3 Year TR IMex; 30% BarCap US Agg Bud TR Index: 43% SW 500 TR Index; 2% Russel 2000 TR Index; 5% MSCI EAFE NR Index USD. 4) Balanced - Moderately Aggressive: 5% Mixvuon Associates 30-Day Treasury Bills TR Index; 5% ML US CnpBGM 1 -3 Year TR Index; 30% B ,Cap US Agg Bond TR Index; 51% S&P 500 TR Index; 3% Russell 2000 TR Index; 6% MSCI EAFE NR Index USD. Prior to April 1, 2007. the blended benchmarks for Ore investment objectives vrere foe /lowing: 1) Conservative: 5% Ibbodwn Associates 30-Day Treasury Bids TR Index; 4(Y% ML US CmpBGovt 1 -3 Year TR Index; 40% BarCap US Agg Bond TR Index; 15% SW 500 TR Index. 2) Moderately Consarvedve: 5% MWiffi On Associates 30-Day Treasury Bills TR Index; 25% ML US Com&Gow 13 Year TR Index; 40% BarCap US Agg Bond TR Index; 30% S&P 500 TR Index. 3) Modeate: 5% Mbodson Assocates 30- Day Treasury Bids TR Index; 15% ML US ComgGOVt 1 -3 Year TR Index; 30% BarCap US Agg Bond! TR Index; 50% S&P 500 TR Index, 4) Balanced - Moderately Aggressive: 5% Mi oll" Associates 30 -Day Treasury Bills TR Index; 5% ML US CoM&Govt 13 Year M Index; 30 %BarCap US Agg Bond TR Index; 60% S&P 500 TR Index. Investment Services Exhibit page 7 34.04% - 28.13% 8.85% 2921% 8.42% - 23.67% 2130% 7.70% -14.14% 17.44% 7.08% -637% -30.0% 40.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Based on 274 morMly obse —dws: 1) Conservalive: 5% Mbottson Associates 30-Day Treasury Bills TR Index; 40% ML US GorpBGod 1 -3 Year TR Index; 40% BarCAP US Agg Bond TR Index; 12% SW 500 TR Index; 1% Russell 2000 TR Index; 2% MSCI EAFE NR Index USD, 2) Mode afely Conservative: 5% Ibbodson Associates 30-Day Treasury Oils TR Index: 25% ML US CmpBGovt 1 -3 Year M Index; 40% BarCep US Agg Bond TR Index; 25% S&P 500 TR Index; 1.5% Ruese112000 TR Index; 3.5% MSCI EAFE NR Index USD. 3) Moderate: 5% Ibbottson Associates 3(�Day Treasury axis M Index; 15% ML US CorpBGovt 1 -3 Year TR IMex; 30% BarCap US Agg Bud TR Index: 43% SW 500 TR Index; 2% Russel 2000 TR Index; 5% MSCI EAFE NR Index USD. 4) Balanced - Moderately Aggressive: 5% Mixvuon Associates 30-Day Treasury Bills TR Index; 5% ML US CnpBGM 1 -3 Year TR Index; 30% B ,Cap US Agg Bond TR Index; 51% S&P 500 TR Index; 3% Russell 2000 TR Index; 6% MSCI EAFE NR Index USD. Prior to April 1, 2007. the blended benchmarks for Ore investment objectives vrere foe /lowing: 1) Conservative: 5% Ibbodwn Associates 30-Day Treasury Bids TR Index; 4(Y% ML US CmpBGovt 1 -3 Year TR Index; 40% BarCap US Agg Bond TR Index; 15% SW 500 TR Index. 2) Moderately Consarvedve: 5% MWiffi On Associates 30-Day Treasury Bills TR Index; 25% ML US Com&Gow 13 Year TR Index; 40% BarCap US Agg Bond TR Index; 30% S&P 500 TR Index. 3) Modeate: 5% Mbodson Assocates 30- Day Treasury Bids TR Index; 15% ML US ComgGOVt 1 -3 Year TR Index; 30% BarCap US Agg Bond! TR Index; 50% S&P 500 TR Index, 4) Balanced - Moderately Aggressive: 5% Mi oll" Associates 30 -Day Treasury Bills TR Index; 5% ML US CoM&Govt 13 Year M Index; 30 %BarCap US Agg Bond TR Index; 60% S&P 500 TR Index. Investment Services Exhibit page 7 Conservative Strategy The primary goal of the Conservative Strategy is to provide a consistent level of inflation- protected income over the long -term. The major portion of the assets will be fixed income related. Equity securities are utilized to provide inflation protection: Strategic Range Policy Equity 5 -20% 15% Fixed Income 60 -95% 80% Cash 0 -20% 5% Moderately Conservative Strategy The dual goals of the Moderately Conservative Strategy are current income and moderate capital appreciation. The major portion of the assets is committed to income - producing securities. Market fluctuations should be expected: Moderate Strategy The dual goals of the Moderate Strategy are growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important. The portfolio will be allocated between equity and Fixed income investments as follows: Strategic Range Policy Equity 40-60% 50% Fixed Income 40 -60% 45% Cash 0 -20% 5% Investment Services Exhibit page 8 Strategic Range Policy Equity 20 -40% 30% Fixed Income 50 -80% 65% Cash 0 -20% 5% Moderate Strategy The dual goals of the Moderate Strategy are growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important. The portfolio will be allocated between equity and Fixed income investments as follows: Strategic Range Policy Equity 40-60% 50% Fixed Income 40 -60% 45% Cash 0 -20% 5% Investment Services Exhibit page 8 w � BalancedlModerately Aggressive Strategy The dual goals of the Balanced /Moderately Aggressive Strategy are growth of principal and income. While dividend and interest income are an important component of the objective's total return, it is expected that capital appreciation will comprise a larger portion of the total return. The portfolio will be allocated between equity and fixed income investments as follows: Strategic Range Policy Equity 50 -70% 60% Fixed Income 30 -50% 35% Cash 0 -20% 5% Investment Services Exhibit page 9 C•7 Exchange- Traded Funds An Exchange - Traded Fund (ETF) is a basket of stocks that closely track the composition and performance of most leading market indexes — by market capitalization, investment style, sector, or country. Unlike traditional mutual funds, ETFs work like stocks: they can be bought and sold throughout the trading day. ETFs offer several advantages of index mutual funds, including lower expense. Index Mutual Non -Index Cost- eBective • • Varies • Offer instant access to a por 11 of • • • securities Can be priced, bought, and sold • • Dividends reinvest immediately • Varies Varies • Limit consequences of other • N/A shareholders'redemptions Holdings are transparent • Varies • Advantages of Exchange- Traded Funds (ETFs) • ETFs offer the instant diversification of indexing — and more. Index investing has become a very popular and very simple way to add market exposure in a highly diversified, cost- effective way. ETFs offer the same benefits as other index investments, but provide substantially more flexibility and a host of other advantages. • ETFs help shield investors from the cost and performance impact of portfolio turnover. Moving in and out of traditional mutual funds - active or index - can take its toll on portfolio performance. The costs of this activity, which include brokerage commissions, bid /ask spreads, market impact, and, in the rase of some foreign stock markets, transaction taxes, are ultimately passed along to every investor in the fund. In addition, trading activity by fund managers within many portfolios may create tax consequences - such as short- and long -term capital gains distributions at year -end - that are passed through to shareholders. Investment Services Exhibit page 10 o ETF investors avoid many of these issues. The exchange provides the liquidity,' not the fund manager, which means the trading activity of other investors cannot affect your investment. (Please note that there may be capital gains distributions by the ETFs not related to individual investor buying and selling.) • Although ETFs may be bought and sold on the exchange through any brokerage account, ETFs are not individually redeemable from the Fund. Investors may acquire ETFs, and tender ETFs for redemption, through the Fund in Creation Unit aggregations only. ETFs are cost-effective. ETFs can be a very cost -effective way to build a portfolio or obtain targeted exposure to a specific sector. The cost of investing in ETFs is generally less than the cost of investing in most actively managed equity funds and equity index funds. Of course, ETF transactions will generate brokerage commissions, but the savings from lower fund costs can help offset these fees. Category Average Active Fund Average Index Fund ETF Choices Large Blend 1.34% 61% 0.09% IShares S &P 500 Large Value 1.40% 6.66% 0.20% 0.18% IShares R1000 Value IShares S &P 500 Value Small Cap 1.60% 0.64% 0.20% 0.18% IShares R2000 IShares S &P 600 Mid Cap 1.52% 0.33% 0.20% IShares S &P 400 International 1.87% 0.86% 0.84% IShares MSCI Developed Market Series Emerging Market 2.31% 0.58% 0.99% IShares MSCI Emerging Market Series Tech Sector 1.77% 0.60% 0.60% IShares Dow Jones Tech • ETFs reinvest dividends immediately. Traditional mutual funds reinvest dividends quarterly, but dividends from the underlying stocks in ETFs are reinvested immediately. Investment Services Exhibit page 11 o Q ETF investments are transparent. When you invest in ETFs, you know exactly what you're investing in: a substantial number of ETFs fully replicate their underlying indexes, the components of which are disclosed every trading day. Traditional mutual funds, however, generally reveal their entire holdings just twice a year. Only when you can actually see what's in the fund portfolio can you evaluate how closely the fund manager is sticking to the objectives and the style of the fund. Some ETFs, it should be noted, invest in a representative sampling of securities in the underlying index when the fund manager feels it's difficult or impractical to hold every security in the index. These kinds of fund holdings aren't as transparent as those of funds managed by full replication. ETFs cover a broad array of market indexes. ETFs cover the investing front from many angles, which makes them extremely flexible investment instruments. You can invest in ETFs by market capitalization, country, style, or sector. With so many different choices, ETFs enable you to make targeted investments easily - and still attain a level of diversification that would be time - consuming and expensive to replicate by buying individual securities. Investment Services Exhibit page 12 ETFs Traditional Retail Mutual Funds Offer intraday pricing and trading Mutual funds typically priced and traded only at end-of-day NAV 'In -kind' creationlredemption process can Net redemptions can generate taxable reduce likelihood of tax- consequent distributions to non-exiting shareholders transactions for shareholders Investors purchaselsell shares through an Individual investor transactions — exchange; this does not result in activity in redemptions — with the fund may result in the underlying portfolio and reduces the capital gains tax distribution for non-exiting likelihood of tax consequences for other shareholders shareholders Can be traded with limit orders, stops, or Limit order pricing not available; stop limits (buys and sells) per exchange transactions typically completed at end-of- miss day NAV Standard margin rules apply to purchases Funds cannot be directly purchased on margin; can be considered 'good collateral' only after being held fully paid for 30 days Offer low to moderate expense ratios; Offer low to moderate expense ratios domestic funds' ratios are lower than depending on fund; domestic fund ratios international funds' ratios tend to be lower than international fund ratios Can be traded through any brokerage Mutual fund availability through brokers is account predicated upon negotiated selling agreements; all funds not available through brokerage firms; funds can be purchased directly from fund company Normal brokerage account commissions Some funds charge sales load; some no- apply load funds purchased through fund supermarkets and brokers may be subject to transaction fees Early sales/redempfion fees don't apply Fund company may impose fees for 'active' trading Investment services Exhibit page 13 E Mutual Fund Selection Process Since there are more than 14,000 mutual funds available to investors today, finding those that are among the best is a challenge. Knowing when it is time to replace a fund is equally challenging. HighMark Capital Management has a dedicated group that is responsible for researching and selecting quality investment managers in the form of sub - advisors and mutual funds. Our Sub - Advisory Due Diligence Group utilizes a rigorous screening process that searches for investment managers and styles that have not only produced above - average returns within acceptable risk parameters, but have the resources and commitment to continue to deliver these results. We've set high standards for our investment managers and funds — and we'll replace managers if they slip below these standards. This is a highly specialized, time consuming approach dedicated to one goal: competitive and consistent performance. Screening Process Screen 1: Reduce universe of available managers by using basic criteria • Fund track record • Fund assets • Manager tenure in fund • Expense ratio • Median market -rap • Style consistency • Purchase constraints Screen 2: Trim down the screened universe by using absolute requirements, and • Sizelstyle constraints • Strategy assets • Manager tenure in strategy • Style consistency Investment Services Exhibit page 14 Screen 3: Rank top - performing funds by analyzing consistency of performance relative to benchmark returns • 12 -month rolling performance versus benchmark over 3-, 5-, 7-, 10 year periods (must outperform benchmark at least 50% of all time periods) Screen 4: Continue the reduction of the universe by analyzing performance relative to peers • Calendar year performance versus peer group (must outperform peer group category average return 60% of the time) Screen 5, Further reduce the universe by evaluating specific criteria • Number of holdings • Assets in top 10 holdings • Composition • Portfolio turnover • Sector weights • Standard deviation • Sharpe ratio Screen 6: Examine remaining funds to confirm and finalize short-list • Initial purchase constraints, median market capitalization, portfolio statistics, performance Screen 7: Evaluate top - ranked funds via 8- factor due - diligence RFP process to choose finalist(s) • Organization (rank ownership, financial condition) • Asset composition (rank firm assets, product assetstlimits) • People (rank experience, turnover, incentives) • Portfolio characteristics (rank market rap ranges, portfolio statistics) • Investment process (rank discipline, risk controls) • Fee structure (rank reasonableness of fees for style) • Compliance/intemal controls (rank regulatory actions, litigation) • Performance (rank manager skill) Investment Services Exhibit page 15 O 4 Monitoring Process Our mutual fund selection process is very dynamic. Once we've selected mutual funds for investment, we continue to monitor the activities, rash flows, characteristics, attribution, and management of the funds. easy: Monitor ammeter Demamenue and trading adrviture, washing br Problems such as: Monitoring 4 Returns lncowbteat win irks manager's style or our expectations J Permlmance contradictory b the manager's benchmark axi pears J seamy selecton not In agreement with the managers investment phibsophy and process Pa.... that lead to abnamal atoll. mmentratimu O Sari , sales that do not meet Me manager's afraid sell dixlpllne Monthly: Ris, Monthly: Pordolio usk axpwures and benchmars am ulton anal,os is mrlducmd. We look for; d Stow and industry extenuate that am incmestent well Me anomalies investment guidefllm Perfoommunce Unusual traGtilg error to Me benchmarks Attribution s Portfolio chanu entice hat xx itl win the stmis benchmarl,, weightings, such as Weighted market rapdaanumn yield Beta Pace to Earnings Pisa to Book EPS growth Quarterly: Firs, contact 1111 pWrMny: Managers are contacted to dluuss paMdlo Writhes, Our review process Imb m' J lnaaequate transparency between Me managers comments and poMolho holdings J Reduced oammuniwton anchor inadequate explanations ham Me manager Analysis A 8 Inwnsismnces related m the managers remarks on style, secto, and malketcap wagmirgs J Instability at Me manager's Investment management firm J Portlolio performance Mat console with peers and style un'weram Annually: =(a Mnu Abandons visit am formal due diligmws rstr questionnaire anarn ent bob Iw: a Anarenons m Me nays allure that aehxi hcm its MdIMy anWmnmmt Due s O Investment management dissectors resulting hen gocucl adOnmu, syslem arvendorchanges, business graNh oration liquidations 4 Modimathas to Me investment process arndror nsk oclumis that interfere with Me strategy's discipline J Staring adjustments Mal may result in par performance Investment Services Exhibit page 16 G 0 HighMark Capital Management, Inc., a registered advisor, is a wholly owned subsidiary of Union Bank, N.A., and serves as investment advisor for HighMark Funds. Union Bank, N.A., a subsidiary of UnionBanCal Corporation, provides certain services to the Funds and is compensated for these services. HighMark Funds are distributed by HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc. Shares in the HighMark Funds and investments in HighMark Capital Management strategies are not deposits, obligations of, or guaranteed by the advisor, its parent or any affiliates. The performance data quoted represents past performance and is not a guarantee of future results. Investment return and principal value will fluctuate so that an investors shares, when redeemed, may be worth more or less than their original cost. An investment in the money market funds, stable value fund or any of the investment portfolios are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. In addition to the normal risks associated with equity investing, international investing may involve disk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Investment Services Exhibit page 17 o d.;kii q r norl - -, 11 f 0A October 27, 2008 Mr. Oliver Chi City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91770 Subject: IRS Required Restatement of PARS REP Plans Dear Mr. Chi: 1 1 71-1171 =17M w (i �i 20 ,06 By...- .. .-- ------ In our Fall 2007 Administrator's Update we discussed the changes made to the Letter of Determination program and the new remedial amendment cycles implemented by the Internal Revenue Service in 2006. The changes require employers to amend and restate their individually designed retirement plan document(s) every five years to incorporate the most recent federal and state law statutory and regulatory changes applicable to qualified governmental plans. Many of the changes reflect the EGTRRA provisions made permanent by the passage of the Pension Protection Act of 2006. This new program also placed Employers on a specific cycle. As a governmental agency with an individually designed plan, your agency falls under Cycle C and you are required to amend and restate your Plants) by January 31, 2009. In response to this requirement we have worked together with our legal counsel, O'Melveny & Myers, LLP, to prepare an amended and restated plan document updated for all legislation and regulations to date. The enclosed Plan document(s) also incorporates any elective plan amendments you may have made to your Plants)- Enclosed, please find the following document(s): City of Rosemead PARS Retirement Enhancement Plan We have enclosed 2 copies of the Plan document(s) for your review. One copy is for you to sign and retain for your records and the second copy should be signed and returned to our office no later than November 30, 21 During this restatement process you have the option of applying for an individual Letter of Determination on your restated Plan document(s). A favorable determination letter indicates that, in the opinion of the IRS, the terms of the Plan documentts) conform to the qualification requirements of IRC § 401(a). A plan that satisfies the qualification requirements is entitled to favorable tax treatment. At your discretion and request, PARS and O'Melveny and Myers will prepare and file an application for a separate Letter of Determination for you. We strongly recommend that your agency request an IRS Letter of Determination in order to obtain the maximum assurance of your Plants) qualified status. The cost to process an individual request for an IRS Letter of Determination, which includes the IRS filing fees and Power of Attorney services, is $2,000. If you would like to apply, please let us know by initialing the last page of the enclosed Plan document(s). PARS will prepare the application and forward it to you along with the corresponding invoice. 5141 California Ave., Ste 150, Irvine, CA 92617 -3069 800.731.7884 fax 949.823.9990 enrollments©pars.org Mr. Oliver Chi City Manager October 27, 2008 Page Two We understand that every minute of your time is valuable; therefore, we have taken many steps to facilitate this IRS - required task for you and your staff. If you have any questions about this restatement process please feel free to contact me at (800) 540 -6369 x132 or by email at svolcan @pars.org. Sincerely, Shauna Volcan Senior Manager, Plan Implementation Enclosure(s) cc: Dennis Yu, Vice President, PARS Public Agency Retirement Services Is not licensed to provide tax, accounting or legal advice. We submit these documents with the understanding that they will receive proper review by the appropriate counsel THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN AMENDED AND RESTATED EFFECTIVE JULY 1, 2008 DEFINED BENEFIT TABLE OF CONTENTS Page INTRODUCTION.......................................................... ............................... _...... _.....................4 ARTICLE I - PARTICIPATION 1.1 Eligibility for Benefits .............. .... .......... ...... ... .._...... ..._.... .._.... ............ ........ ....................5 1.2 Commencement of Benefits.._ .......... ....... .................. .......................................... ........... 7 13 Participat ion ........... ........ ....._.... ............_. ... .............. ...... .............._..... .............. ................ 7 ARTICLE II - BENEFITS 2.1 Retirement Benefits ........ .... .............. ... ................................. ._. ... .......... ............... _...........K 2.2 Survivor Continuance Benefit ........................................................ I......... 11 2.3 Pre - Retirement Disability Benefit. ... I ............................................................................... 11 2.4 Pre - Retirement Death BeneSts.._ ... ....... ......................................... .........................._.... 11 2.5 Deferred Retirement Benefit ........................................................ 11 2.6 Designation of Beneficiary....._ ......... ..... ..................... .... .... ......... ... ..._....... _..... ........... 11 ARTICLE 111 -VESTING 4 14 3.2 Full or Partial Termination...._ ............................. 3.3 Attainment of Normal Retirement Age ............................................. ............................... 14 3.4 Effect of Vesting .................. ......................... 14 ARTICLE IV - DISTRIBUTIONS 4.1 Normal Form of Benefit ... ..._..... ..._ ...................................... ........................ 15 4.2 Optional Fornrs of Benefit._ ............................_............................ ............................... _.IS 43 Limitations..._ ..... ........ ... .._... .......... ..._......................................_..... ............................... 16 24 4.4 Cash Out of Small Benefits ....................... .................. 4.5 Actuarial Equicalcnce ............. ...._ ........... ....................................... ......_......._................ 24 4.6 Direct Rollovers . .............. .......... ........ ... ...._.................... .... ............ ...................._... ... .... 24 ARTICLE V - ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights Not Subject to Execution ................... ............ _........_.....____........._.. 27 5.2 Rules and Regulations ..... .............. ......................................._......... ..................._.. ... ...... 27 5.3 Amendment and Terminat ion . ................. ............. .................... .... ... ....... ........................ 29 5.4 Military Service..._ .... ............._... ... .................... ........._.................. ............................ ... 29 5.5 Administrative Expenses ........ ........ .. .................. .... ......_..... ..._. ... ...._.......... ........ 29 CONT. TABLE OF CONTENTS ARTICLE VI — ANNUAL BENEFIT LIMITATIONS 6.1 Definitions and Applicat ion ................... ....... ..... ...... ................ ... ..... ..... .............. ... ..... ... . 30 6.2 Annual Limitation on Benefits ......... ........................ 32 ARTICLE VII - DEFINITIONS 7.1 Definitions ......... .................... .... .._...................... ... ....... ........... .........._........._..... ... 36 INTRODUCTION The City of Rosemead ( "Employer') has adopted this tax - qualified governmental defined benefit plan for the benefit of its eligible employees to provide supplemental retirement benefits to eligible employees of the Employer in addition to the benefits employees will receive from the California Public Employees' Retirement System ("CaIPERS'). This document is a full and complete amendment and restatement of the City of Rosemead PARS Retirement Enhancement Plan adopted effective July I, 2000. It is intended that this Plan and the Trust established to hold the assets of the Plan shall be qualified under Section 401(a) and tax - exempt under Section 50Ila) of the Internal Revenue Code of 1986, together with any amendments thereto ( "Code'). It is further intended that this Plan and the Trust established hereunder shall meet the requirements of a pension trust under California Government Code ( "Act') Sections 53215 - 53224, or their successor sections (the "Act"). At any time prior to the satisfaction of all liabilities with respect to Members and their Beneficiaries under the Trust created pursuant to this Plan, the trust assets shall not be used for, or diverted to, purposes other than the exclusive benefit of Members or their Beneficiaries, as prescribed in Section 401(a)(2) of the Code. It is intended that the Plan satisfy the requirements of the applicable provisions of the Economic Growth and Tax Relief Reconciliation Act (commonly known as "EGTRRA ) and the Pension Protection Act of 2006 (commonly known as the "PPA'), and that the provisions of this Plan reflecting the EGTRRA and PPA amendments are hereby made effective as of the dates required by the legislation referred to in this sentence. ARTICLE PARTICIPATION 1.1 Eligibility for Benefits An Employee shall be eligible to receive Retirement Benefits described under this Plan if he or she meets all of the requirements under one of the following tiers: Tier I (a) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (b) is at least fifty -five (55) years of age; (c) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (d) has terminated employment with the Employer and currently retired under CilPERS prior to September 25, 2007; and (e) has applied for benefits under this Plan. Tier 11 (a) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (b) is at least sixty (60) years of age, (c) has completed at least ten (10) but not more than twenty (20) years of full -lime continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least ten 5 (10) but not more than twenty (20) years immediately prior to termination of duties; (d) has terminated employment with the Employer and concurrently retired under CalPERS prior to September 25, 2007; and (e) has applied for benefits under this Plan. Tier III (a) is a City Council member of the Employer on or after July 1, 2000; (b) is at least fifty -five (55) years of age; (e) has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer, (d) has terminated employment with the Employer and concurrently retired under CaIPERS prior to September 25, 2007; and (e) has applied for benefits under this Plan. Tier IV (a) is the Assistant City Manager of the Employer as of January 1, 2006; (b) has terminated employment with the Employer and concurrently retired under CalPERS prior to September 25, 2007; and (c) has applied for benefits under this Plan. Tier V (a) is a full -time Miscellaneous Employee of the Employer, a contract City Attorney, or City Council member of the Employer, on or after September 25, 2007; (b) is at least fifty -five (55) years of agc; (c) has completed Twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer for full- 6 time Miscellaneous Employees; or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; or has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (d) has terminated employment with the Employer and currently retires under CalPERS; and (e) has applied for benefits under this Plan. 1.2 Commencement of Benefits Benefits shall commence as of the first day of the month after an Employee meets the eligibility requirements of Section I.I. 1.3 Participation An Employee will be credited with a Year of Participation for each year in which the Employee has met the requirements of Section 1.I(a). 7 ARTICLE II BENEFITS 2.1 Retirement Benefits Retirement Benefits under this Plan shall be based on the Employee's tier of eligibility pursuant to Section 1.1 as follows. Tier I The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twclfth of the difference between (1) and (2) described below: (I) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one-twelfth of a year), times the Member's Final Pay. times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of it year), times the Mcmber's Final Pay, times the CaIPERS Benefit Factor. Tier IF Ilse benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one- twelfth of the difference between ( I ) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer and the number of lull and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was 9 at any time employed on a full -time basis as one- twelfth of a year), times the Member's Final Pay, times two- and -one half percent (2.50 %). (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on it full -time basis as one - twelfth of a year), times the Member's Final Pay, times the CalPERS Benefit Factor. Tier III The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of employment as a City Council member with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one- twelfth of a year), times the Members Final Pay, times three percent (3 0U). (2) The number of full and partial years of full -time continuous employment with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the CaIPERS Benefit Factor. Tier IV The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the Member s Final Pay times three percent (3.00 %6) times 1.404. 9 Tier V The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer for full -time Miscellaneous Employees; or the number of full and partial years retained as City Attorney; or the number of full and partial years of employment as a City Council member; completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %), the product of which shall not exceed ninety percent (90 %) of Final Pay. (2) The number of full and partial years of full -time continuous employment with the Employer for full -time Miscellaneous Employees; or the number of full and partial years retained as City Attorney; or the number of full and partial years of employment as a City Council member; completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the CalPERS Enhanced Benefit Factor. The total combined CalPERS and PARS benefit shall not exceed ninety percent (90 %) of Final Pay. 10 2.2 Survivor Continuance Benefit No Survivor Continuance Benefit shall be provided unless the Member elects to have the benefit paid in an Optional Form of Benefit. 2.3 Pre - Retirement Disability Benefit No Pre- Retirement Disability Benefits shall be provided. 2.4 Pre - Retirement Death Benefit Pre - retirement death benefits shall be provided for those actively employed Employees of the Employer who die after attaining the minimum age requirement and completing the required years of service with the Employer in accordance with Section l.l. The benefit shall be equal to the Member's Retirement Benefit corresponding to the tier of eligibility, actuarially reduced as if the Member had retired and elected a 100% joint-and-survivor option. The benefit will be paid over the lifetime of the surviving spouse. There is no pre - retirement death benefit payable if there is no surviving spouse. 2.5 Deferred Retirement Benefit No Deferred Retirement Benefit 2.6 Designation of Beneficiary (a) Each Member shall have the right to designate a Beneficiary to receive the death benefits, if any, that are payable to a Beneficiary from this Plan. Such designation does not permit the Member to change a person identified under another provision of the Plan as being eligible to receive a benefit. Such designation must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. (b) The Beneficiary for a married Member shall be the Member's spouse at the date of death, unless the written consent of such spouse is provided upon a form acceptable to the Employer. Each such designation for death benefits must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and sighted by the Member. if no such designation is on file with the Employer at the time of the death of the Member, or if for any reason at the sole discretion of the Employer, such designation is defective, then the spouse of such Member shall be conclusively deemed to be the Beneficiary designated to receive such benefit. (c) The signature of the Member's spouse shall be required on a designation of beneficiary form or an application for a benefit under the Plan if the spouse is not the beneficiary, unless the Member declares in writing that one of the following conditions exists: (1) The Member is not married; (2) The Member does not know, and has taken all reasonable steps to determine the whereabouts of the spouse; (3) The spouse is incapable of executing the acknowledbnnent because of an incapacitating mental or physical condition; (4) The Member and spouse have executed a marriage settlement agreement that makes the community property laws inapplicable to the marriage; or (5) The current spouse has no identifiable community property interest in the benefits. Effective as of January I, 2005, for purposes of this Section 2.6 only, all references in this Section 2.6 to the term "marriage" shall also include the term "registered domestic partnership." All references to the tern "married" shall also include "registered 12 domestic partnership" and all references in this Section 2.6 to the term "spouse" shall also include the term "registered domestic partner." The inclusion of "registered domestic partner" in the definition of "spouse" shall not apply for the purposes of Sections 4.3, 4.6 and 6.2 of this Plan. 13 ARTICLE III VESTING 3.1 Vestio A Member will be fully vested in his /her Retirement Benefit upon meeting the requirements of Section 1.1. 3.2 Full or Partial Termination Notwithstanding the vesting schedule, upon the complete discontinuance of Employer contributions to the Plan or upon any full or partial termination of the Plan, the Member's Retirement Benefit shall become one hundred percent (100 %) Vested. 3.3 Attainment of Normal Retirement Age A Member shall be fully vested in his /her Retirement Benefit upon attainment of Normal Retirement Age and fulfilling all requirements established in Section 1.1. 3.4 Effect of Vesting Vesting shall entitle a Member to payment during his /her lifetime of the Retirement Benefit at the times and upon the conditions specified herein, and shall entitle the Member's survivor or Beneficiary to any death benefits provided herein. Any unpaid Retirement Benefits are forfeited upon the Members death under the Normal Form of Benefit. 14 ARTICLE IV DISTRIBUTIONS 4.1 Normal Form of Benefit Unless the Member elects an Optional Form of Benefit under Section 4.2, payments to a Member of a Retirement Benefit shall be made in the form of monthly payments commencing pursuant to Section 1.2 and ending on the fast day of the month in which the Member's death occurs, in the amount specified in Section 2.1. The Retirement Benefit shall be subject to an annual compounding cost -of- living adjustment effective on the anniversary date of commencement of the Retirement Benefit. The amount of such cost of living adjustment shall be two percent (2 %) per year, provided that the payment for any year shall not exceed the payment that would have resulted from the cumulative application since the date of benefit commencement (on an annually- compounded basis) of the lesser of (i) a two percent (2 %) annual increase, or (it) an annual increase equal to the increase in the Consumer Price Index for All Urban Consumers issued by the Bureau of Labor Statistics. For avoidance of doubt, if the application of the foregoing proviso causes the increase to the payment in any year to be Tess than two percent (2 %), then the increase to the payment in any subsequent year may be greater than two percent (2 %). Furthermore, in no circumstances shall the amount of the payment be decreased. This form of payment shall be the "Nonni] Form of Benefit." 4.2 Optional Forms of Belief In lieu of the Normal Form of Benefit, a Member may elect a form of benefit payment of Actuarial Equivalence as follows: 15 (a) Joint and 100% Survivor Continuance. Under this form of payment: (1) The Member receives a reduced monthly benefit, and if the Member predeceases the Beneficiary, the Beneficiary will receive a monthly payment for the life of the Beneficiary equal to Ioo00/ of such reduced monthly benefit; provided, however, that if the Beneficiary is not the spouse of the Member, this form of payment shall be available only to the extent permitted pursuant to Section 4.3(b)(4)(A). (2) If the Beneficiary predeceases the Member, the Member's reduced monthly payment will not increase. (3) The Member's designation of a Beneficiary shall become irrevocable upon the Member's- retirement if electing this form of payment. 4.3 Limitations (a) In the case of a Member who attains age 70 -I /2, distribution of such Member's entire interest must commence not later than the first day of April following the later of the calendar year in which such Member attains age 70 -1/2 or the calendar year in which the Member retires (the "Required Beginning Date "). In all cases, distributions shall be made in at least the amounts determined in accordance with Code Section 401(a)(9) and the regulations thereunder, as described in Section 4.3(b) below. (b) With respect to required minimum distributions under this Section 4.3 for calendar years beginning after December 31, 2002, the following rules shall apply: (1) All distributions required under this Section 4.3 shall be determined and made in accordance with the Treasury Regulations under Section 401(a)(9) of the Code. The requirements of this Section 4.3 will lake precedence over any inconsistent provisions of the Plan, provided that this Section 4.3 shall not be considered to allow a Member or 16 Beneficiary to delay a distribution or elect an optional form of benefit not otherwise provided in the Plan. (2) Time and Manner of Distribution (A) The Member's entire interest will begin to be distributed to the Member no later than the Member's- Required Beginning Date as defined in Section 4.3(a). (B) If the Member dies before distributions begin, then the Member's entire interest will begin to be distributed no later than as follows: (1) If the Member's surviving spouse is the Members sole designated Beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Member died, or by December 31 of the calendar year in which the Member would have attained age 70 -1/2, if later. (II) If the Member's surviving spouse is not the Member's sole designated Beneficiary, then distributions to the designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Member died. (Ill) If there is no designated Beneficiary as of September 30 of the year following the year of the Members death, the Member's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Member s death. (IV) If the Member's surviving spouse is the Member's sole designated Beneficiary and the surviving spouse dies after the Member but 17 before distributions to the surviving spouse begin, this Section 4.3(b)(2)(B), other than Section 4.3(b)(2)(B)(I), will apply as if the surviving spouse were the Member. For purposes of this Section 4.3(b)(2)(13) and Section 4.3(6)(5), distributions are considered to begin on the Member's Required Beginning Date (or, if Section 4.3(b)(2)(B)(IV) applies, the date distributions are required to begin to the surviving spouse under Section 4.3(b)(2)(B)(I)). If annuity payments irrevocably commence to the Member before the Member's Required Beginning Date (or to the Member's surviving spouse before the date distributions are required to begin to the surviving spouse under Section 43(b)(2)(13)(1)), the date distributions are considered to begin is the date distributions actually commence. (C) Unless the Member's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions will be made in accordance with Sections 4.3(b)(3), (4) and (5). If the Members interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury Regulations. (3) Determination of Amount to be Distributed Each Year (A) If the Member's interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements: (I) the annuity distributions will be paid in periodic payments made at intervals not longer than one year; Is (11) the distribution period will be over a life (or lives) or over a period certain not longer than the period described in Sections 4.3(b)(4) or (5); (111) once payments have begun under a fixed -term payout under Section 4.2 (if such a benefit is available), the fixed -term payout period will not be changed even if the period certain is shorter than the maximum permitted; (IV) payments will either be non - increasing or increase only as follows: (i) by an annual percentage increase that does not exceed the annual percentage increase in a cost -of- living index that is based on prices of all items and issued by the Bureau of Labor Statistics; (it) to the extent of the reduction in the amount of the Member's payments to provide for a survivor benefit upon death, but only if the Beneficiary whose life was being used to determine the distribution period described in Section 4.3(b)(4) dies or is no longer the Member's Beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code; or (iii) to pay increased benefits that result from a Plan amendment. (B) The amount that must be distributed on or before the Members Required Beginning Date (or, if the Member dies before distributions begin, the 19 date distributions are required to begin under Sections 4.3(b)(2)(B)(1) or (II)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi- monthly, monthly, semi- annually, or annually. All of the Member's benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Member's Required Beginning Data (C) Any additional benefits accruing to the Member in a calendar year after the first distribution calendar year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. (4) Requirements For Annuity Distributions That Commence During Member's Lifetime (A) If the Member's interest is being distributed in the form of a benefit described in Section 4.2 for the joint lives of the Member and a nonspouse Beneficiary, annuity payments to be made on or after the Member's Required Beginning Date to the designated Beneficiary after the Member's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Member using the table set forth in Q &A -2 of Section 1.401(a)(9) -6 of the Treasury Regulations. If the form of distribution combines a benefit described in Section 4.2 for the joint lives of the Member and a nonspouse Beneficiary and a fixed -term payout annuity, the 20 requirement in the preceding sentence will apply to annuity payments to be made to the designated Beneficiary after the expiration of the fixed -tern payout period. (B) Unless the Member's spouse is the sole designated Beneficiary and the fern of distribution is a fixed -term payout annuity, the fixed -term payout period for an annuity distribution commencing during the Members lifetime may not exceed the applicable distribution period for the Member under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury Regulations for the calendar year that contains the annuity starting date. If the benefit commencement date precedes the year in which the Member reaches age 70, the applicable distribution period for the Member is the distribution period for age 70 under the Uniform Lifetime Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations plus the excess of 70 over the age of the Member as of the Member's birthday in the year that contains the benefit commencement date. If the Member's spouse is the Member's sole designated Beneficiary and the form of distribution is a fixed -tern payout annuity, the fixed -tern payout period may not exceed the longer of the Member's applicable distribution period, as detcrmined under this Section 4.3(b)(4), or the joint life and last survivor expectancy of the Member and the Members spouse as determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations, using the Member's and spouse's attained ages as of the Member's and spouse's birthdays in the calendar year that contains the benefit commencement date. (5) Requirements For Minimum Distributions Where Member Dies Before Date Distributions Begin 21 (A) If the Member dies before the date distribution of his or her interest begins and there is a designated Beneficiary, the Member's entire interest will be distributed, beginning no later than the time described in Sections 43(6)(2)(6)(1) or (II), over the life of the designated Beneficiary or over a fixed -term payout period not exceeding: (1) unless the benefit commencement date is before the first distribution calendar year, the life expectancy of the designated Beneficiary is determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year immediately following the calendar year of the Member's death; or (II) if the benefit commencement date is before the first distribution calendar year, the life expectancy of the designated Beneficiary is determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year that contains the benefit commencement date. (B) if the Member dies before the date distributions begin and there is no designated Beneficiary as of September 30 of the year following the year of the Member's death, distribution of the Members entire interest will he completed by December 31 of the calendar year containing the fifih anniversary of the Member's death. (C) If the Member dies before the date distribution of his or her interest begins, the Members surviving spouse is the Member's sole designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this Section 4.3(6)(5) will apply as if the surviving spouse were the 22 Member, except that the time by which distributions must begin will be determined without regard to Section 4.3(b)(2)(B)(1). (6) Definitions (A) Designated Beneficiary. The individual who is designated as the Beneficiary under Section 2.6 of the Flan and is the designated Beneficiary under Section 401(a)(9) of the Code and Section 1.401(a)(9) -I, Q &A -4, of the Treasury Regulations. (B) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Members death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the Member's Required Beginning Date. For distributions beginning after the Member's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 4.3(b)(2)(B). (C) Life Expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9) -9 of the Treasury Regulations. (D) Required Beginning Date. The date set forth in Section 4.3(a). 4.4 Cash Out of Small Benefits It the Actuarial Equivalence of a Member's Normal Retirement Benefit is less than $5.000 at the time of termination of employment, such benefit shall be paid as a single cash lump sum in lieu of any other benefits hereunder. 23 4.5 Actuarial Equivalence Actuarial Equivalence shall be determined using the mortality assumption based on the 1983 Group Annuity Mortality (GAM) table and the interest assumption shall be 6% per annum. 4.6 Direct Rollovers (a) This section applies to all distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this plan, a distributes may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. A distributes includes an Employee or former Employee. In addition, the Employee's or former Employees surviving spouse and the Employees 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 distributces with regard to the interest of the spouse or former spouse. (b) A Beneficiary who is not the spouse of the Member may elect a direct trustee to trustee transfer that qualities as an eligible rollover distribution under this Section 4.6. Such transfer shall be made to an individual retirement plan described in Section 408(x) of the Code or an individual retirement account that is established for the purpose of receiving the distribution on behalf of-such Beneficiary. Such individual retirement account shall be deemed an inherited IRA pursuant to the provisions of Section 402(c)(I 1) of the Code. (t) Definitions (A) Eligible Rollover Distribution An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributes, except that an eligible rollover distribution does not include: fit any 24 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; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code, (iii) any hardship distribution, and (iv) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), unless such portion is transferred in a direct trustee- to- nustee transfer to a qualified trust which is part of a plan which is a defined contribution plan and which agrees to separately account for amounts so transferred, including separate accounting for the portion which is includible in gross income and the portion which is not so includible. (B) 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, a qualified trust described in Section 401(a) of the Code that accepts the distribulcc's eligible rollover distribution, an annuity contract described in Section 403(b) of the Code, a Roth IRA described in Code Section 408A (but only if the distributee satisfies the requirements of Code Section 408A(c)(3)(B)), or an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. 'Pile 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. 25 (C) Direct Rollover A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. ?6 ARTICLE V ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights Not Subject To Execution The right of a Member to a benefit under this Plan is not assignable and is not subject to execution or any other process whatsoever, except to the extent permitted by the Code of Civil Procedure and the Family Code of the State of California. Any payment hereunder required under the California Family Code to a person other than the Member must not alter the form or amount of benefits hereunder, except that to the extent provided in a valid court order, an Actuarial Equivalent payment may be made to the spouse or child of a Beneficiary pursuant to a qualified domestic relations order (as defined in Code Section 414(p)) prior to the Member's retirement. 5.2 Rules and Regulations The Employer has full discretionary authority to supervise and control the operation of this Plan in accordance with its terms and may snake rules and regulations for the administration of this Plan that arc not inconsistent with the terms and provisions hereof. 'The Employer shall determine any questions arising in connection with the interpretation, application or administration of the Plan (including any question of fact relating to age, employment, compensation or eligibility of Employees) and its decisions or actions in respect thereof shall be conclusive and binding upon any and all persons and parties. The Employer shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following: (a) To determine all questions relating to the eligibility of Employees to participate; 27 (b) To construe and interpret the terms and provisions of the Plan; (c) To compute, certify to, and direct the Trustee with regard to the amount and kind of benefits payable to the Members and their Beneficiaries; (d) To authorize all disbursements by the Trustee from the Trust; (e) To maintain all records that may be necessary for the administration of the Plan other than those maintained by the Trustee; and (t) To appoint a Plan Administrator or, any other agent, and to delegate to them or to the Trustee such powers and duties in connection with the administration of the Plan as it may from time to time prescribe, and to designate each such administrator or agent as a fiduciary with regard to matters delegated to him. With respect to management and control of investments, the Employer shall have the power to direct the Trustee in writing with respect to the investment of the Trust assets or any part thereof. Where investment authority, management and control of Trust assets have been delegated to the Trustee by the Employer, the Trustee shall be a fiduciary with respect to the investment, management and control of the Trust assets contributed by the Employer and Members with full discretion in the exercise of such investment, management and control. Where investment authority, management and control of Trust assets is not specifically delegated to the Trustee, the Trustee shall be subject to the direction of the Employer. Expenses and fees in connection with the administration of the Plan and the Trust shall be paid from the Trust assets to the fullest extent permitted by law, unless the Employer determines otherwise. To the extent determined by the Employer or its delegate, elections and consents made by means of electronic media shall be permissible if made according to the relevant provisions of Treasury Regulation Section 1.401(x) -21. 28 5.3 Amendment and Termination The Employer shall have the right to amend, modify or terminate this Plan at any time. In the event of the complete discontinuance of this Plan, the entire interest of each Member affected thereby shall immediately become 100% vested. All benefits hereunder shall be payable solely from the assets of the Trust. After all liabilities of this Plan to Members and their Beneficiaries have been satisfied, any residual assets of this Plan shall be used for such purposes as determined by the Employer, including a distribution of the assets to the general funds of the Employer. 5.4 Military Service Effective December 12, 1994 and 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 with Section 414(u) of the Code. 5.5 Administrative Expenses in accordance with Section 53217 of the Act, the Employer may make contributions to the Trust sufficient to defray all or part of the expenses of administering the Plan or may pay such expenses directly. 29 ARTICLE VI ANNUAL BENEFIT LIMITATIONS 6.1 Definitions and Application As used in this Article VI, the following terms shall have the meanings specified below. Unless otherwise stated below, the provisions of this Article VI shall apply to Limitation Years beginning on or after July 1, 2007. "Affiliated Company" means a company required to be aggregated with the Employer for Purposes of Code Sections 414(b) and (c), provided, however, the determination under Section 414(b) and (c) of the Code shall be made as if the phrase "more than 50 percent" were substituted for the phrase "at least 80 percent" each place it is incorporated into Section 414(b) and (c) of the Code. "Annual Benefit" means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which Employees do not contribute and under which no rollover contributions are made, or to which assets have been transferred from a qualified plan that was not maintained by the Employer_ If the benefit is payable in a form other than a straight life annuity, such form must be adjusted actuarially to be the equivalent of a straight life annuity before applying the limitations of Section 6.2(a). The actuarial adjustment to the equivalent of a straight life annuity will apply to all Plan benefits except as set forth herein. The actuarial adjustment for benefits paid in a form to which Code Section 417(c)(3) does not apply shall be equal to the greater of (x) or (y), where (x) is an adjustment based on 5% and the mortality table specified in Section 'I reasury Regulation Section 1.417(e)- I(d)(2) for that annuity starting date, and (y) is the annual amount of the straight life annuity commencing on the same annuity starting date as the form of benefit payable to the Member, based on the factors specified in the Plan to adjust the applicable form of benefits. The actuarial adjustment for benefits paid in a form to 30 which Code Section 417(e)(3) applies shall be equal to the greatest of (xx), Ivy) or (zz), where (xx) is an adjustment based on 5.5% and the mortality table specified in Section Treasury Regulation Section 1 A17(e)- I(d)(2) for that annuity starting date, (yy) is the annual amount of the straight life annuity commencing on the same annuity starting date as the form of benefit payable to the Member, based on the factors specified in the Plan to adjust the applicable form of benefits, and (zz) is an adjustment based on the applicable interest rate for the distribution under Regulation Section 1.417(e)- I(d)(3) and the mortality table specified in Section 'treasury Regulation Section 1.417(e) -1 (d)(2) for that annuity starting date, divided by 1.05. No actuarial adjustment is required for the following: qualified joint and survivor annuity benefits, pre - retirement disability benefits, pre- retirement death benefits, post - retirement medical benefits, and the value of an automatic benefit increase feature made in accordance with applicable Treasury Regulations. "Employer" means the Employer and any Affiliated Company that adopts this Plan. "Limitation Year" means a twelve- consecutive month period ending on the Anniversary Date. if the Limitation Year is amended to a different twelve- consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. 'Belated Plan' means any other defined benefit plan (as defined in Section 415(k) of the Code) maintained by the Employer. "Year of Participation" means the Employee shall be credited with a Year of Participation for each year in which the Employee has met the requirements of Section 1.1(a). An Employee who is permanently and totally disabled within the meaning of Section 415(c)(3)(C)(i) of the Code for an accrual computation period shall receive a Year of Participation with respect to that period. In addition, for an Employee to receive a Year of 31 Participation for an accrual computation period, the Plan must be established no later than the last day of such accrual computation period. In no event will more than one Year of Participation be credited for any 12 -month period. 6.2 Annual Limitation on Benefits Notwithstanding any other provision of the Plan: (a) The Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed an amount equal to $160,000, or such other dollar limitation determined for the Limitation Year by automatically adjusting the $160,000 limitation by the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code in such manner as the Secretary shall prescribe. The new dollar limitation shall apply to Limitation Years ending within the calendar year of the date of the adjustment. Cost of living adjustments to the dollar limitation occurring after severance from employment are taken into account. (b) If the Member has less than ten Years of Participation with the Employer, the limitation in Section 6.2(a) shall be reduced by multiplying it by a fraction, the numerator of which is the Members full and partial Years of Participation, and the denominator of which is ten. To the extent provided in Treasury Regulations or in other guidance issued by the Internal Revenue Service, the preceding sentence shall be applied separately with respect to each change in the benefit structure of the Plan. The reduction provided in this paragraph does not apply to payments made to the Member if his payments commence after he has become disabled (within the meaning of Code Section 415(6)(2)(1)), and does not apply to payments made on account of the Members death. (c) If the Annual Benefit of a Member begins prior to age 62 the limitation under Section 6.2(a) applicable to the Member at such earlier age is an Annual Benefit payable in the 32 form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the limitation applicable to the Member at age 62 (adjusted under subsection 6.2(b) above, if required). The limitation applicable at an age prior to age 62 is determined as the lesser of (x) the actuarial equivalent (at such age) of the limitation computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for early retirement calculations and (y) the actuarial equivalent (at such age) of the limitation computed using a five percent interest rate and the applicable mortality table specified in Section 415(b)(2)(E) of the Code. Any decrease in the limitation determined in accordance with this subsection 62(e) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Member. if any benefits arc forfeited upon death, the full mortality decrement is taken into account. The reduction in this Section 6.2(c) shall not apply for a Member who is a "qualified participant," as defined in Code Section 415(b)(2)(H). (d) If the Annual Benefit of a Member begins after age 65, the limitation under Section 6.2(a) applicable to the Member at such later age is an Annual Benefit payable in the form of a straight life annuity beginning at the later age that is the actuarial equivalent of the limitation applicable to the Member at age 65 (adjusted under subsection (b) above, if require]). The limitation applicable at an age after age 65 is determined as the lesser of (x) the actuarial equivalent (at such age) of the limitation computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for early retirement calculations and (y) the actuarial equivalent (at such age) of the limitation computed using a five percent interest rate and the applicable mortality table specified in Section 415(b)(2)(E) of the Code. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored. 33 (e) Pursuant to Treasury Regulation Section 1.415(b)- I(a)(7)(iii), the rate of a Member's accrual shall not be limited by this Article VI (but at all times the annual benefit payable to the Member is subject to the limits set forth in this Article VI). (1) The limitation in Section 6.2(a) is deemed satisfied if the Annual Benefit payable to a Member is not more than S 1,000 multiplied by the Me'mber's number of years of service or parts thereof (not to exceed ten) with the Employer, and the Employer (or a predecessor employer) has not at any time maintained a defined contribution plan in which such Member participated. If the Employer maintains one or more defined benefit plans, in addition to this Plan, covering an Employee who is also a Member in this Plan, the sum of the Annual Benefits of all the plans will be treated as a single benefit for the purposes of applying the limitations of Section 6.2(a). For purposes of the preceding sentence, Annual Benefits under a 'qualified governmental excess benefit arrangement;' as described in Section 415(m)(3) of the Code, shall be disregarded. If the Annual Benefits exceed, in the aggregate, the limitations of Section 62(a), the Normal Retirement Benefits under this Plan will be reduced (but not below zero) until the sum of the benefits of the Related Plan(s) satisfy the limitations. In the case of an individual who was a Member in one or more defined benefit plans of the Employer as of the first day of the first Limitation Year beginning after December 31, 1986, the application of the limitations of this Section 6.2 shall not cause the limitation under Section 6.2(a) for such individual under all such defined benefit plans to be less than the individual's Current Accrued Benefit. The preceding sentence applies only if such defined benefit plans met the requirements of Section 415 of the Code, for all Limitation Years beginning before May 6, 1986. For purposes of this Section 6.2(t), an individual's Current Accrued Benefit means a Members Accrued Benefit under the Plan, determined as if the Member had separated from service as of the close 34 of the last Limitation Year beginning before January I, 1987, when expressed as an annual benefit within the meaning of Section 415(b)(2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (i) any change in the terms and conditions of the Plan after May 5, 1986; and (it) any cost of living adjustments occurring after May 5, 1986. (g) If a Member makes one or more contributions to the Plan to purchase "permissive service credit,- as defined in Code Section 415(n)(3), then the limitations of this Article VI shall be treated as met only if either (i) the limitations provided in Code Section 415(b) are met, determined by treating the accrued benefit derived from such contributions as an annual benefit for purposes of Code Section 415(b), or (ii) the requirements of Code Section 415(c) are met, determined by treating all such contributions as annual additions for purposes of Code Section 415(c). 35 ARTICLE VII DEFINITIONS 7.1 Definitions Whenever the following tens are used in the Plan, with the first letter capitalized, they shall have the meanings specified below. "Act" means California Government Code. "Amended Effective Date" means July 1, 2008, unless otherwise indicated herein. "Anniversary Date" means July I. "Beneficiary" means the person, persons, trust or trusts designated by a Member, or, in the absence of a designation, entitled by will or the Taws of descent and distribution, to receive the benefit specified under this Plan if the Member dies and means the Member's executor or administrator if no other beneficiary is designated and able to act under the circumstances. "CalPERS" means the California Public Employees' Retirement System. "CalPERS Benefit Factor" means the age factor used by the PERS Loud Miscellaneous 2% at 55 plan, which is determined at the Members age at retirement. "CaIPERS Enhanced Benefit Factor" means the age factor used by the CaIPERS Local Miscellaneous 2.7% at 55 plan, which is determined at the Member's age at retirement. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Compensation" means, for Plan Years beginning after December 31, 2001 or 90 days after the opening of the final legislature session or after January I, 2001 all compensation subject to CalPERS withholding for that portion of the flan Year during which the Employee was a Member, paid in cash by the Employer to the Member for personal services. Compensation in excess of $220,000 (as adjusted through 2000) shall be disregarded. Such amount shall thereafter be adjusted for increases in the cost of living in accordance with Code 36 Section 401(a)(17), except that the dollar increase in effect on January I of any calendar year shall be effective for the Plan Year beginning with or within such calendar year. For any short Plan Year the Compensation limit shall be an amount equal to the Compensation limit for the calendar year in which the Plan Year begins multiplied by a ratio obtained by dividing the number of full months in the short Plan Year by twelve (12). For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001, the annual compensation limit described in this Section 7.1 for determination periods beginning before January 1, 2002 shall be $150,000 for any determination period beginning in 1996 or earlier; $160,000 for any determination period beginning in 1997, 1998. or 1999; and $170,000 for any determination period beginning in 2000 or 2001. "Effective Date" means, unless otherwise indicated herein, July I, 2000. "Eligible Class of Employees" means the eligible class of employees as provided herein and in the applicable governing hoard policies and regulations promulgated thereunder by the Employer. "Eligible Employee" means an Employee who meets the requirements as described in Section 1.1. "Employee" means an employee of the Employer. "Employer" means the City of Rosemead that has adopted this Plan. "Final Pay" means the highest annual compensation paid to an Employee, including Employer Paid Member Contributions, if applicable, during any twelve consecutive months of employment with the Employer, subject to the limitations of Section 401(a)(I7) of the Code. "Ineligible Employee" means an ineligible employee as provided herein and in the applicable governing board policies and regulations promulgated thereunder by the Employer. "Member" means an Employee eligible to receive benefits under this Plan. 37 "Normal Form of Benefit" is the form of benefit described in Section 4.1. "Normal Retirement Age" means age sixty -two (62) and meeting the requirements of Section 1.1. "Plan" means the City of Rosemead PARS Retirement Enhancement Plan. `Plan Administrator' means the individual or position designated by the Employer to act on behalf of the Employer in matters relating to this Plan. If no designation is made, the Employer shall be the Plan Administrator. If a Plan Administrator has been appointed the word "Employer" as used in this Plan shall mean Plan Administrator unless the context indicates a different meaning is intended. `Plan Year'- means the consecutive twelve -month period beginning on July I and ending on June 30. "Public Agency" means an employer authorized under California Government Code Article 1.5, Sections 53215 through 53224 to establish a pension trust. "Regulations" means the regulations adopted or proposed by the Department of Treasury from time to time pursuant to the Code. "Retirement Benefits" means the benefits- payable to the Member following retirement, as described in Article 11. "frusf' means the trust established as part of the Public Agency Retirement Trust to hold the assets of the Plan. '"Prustee" means the trustee of the Trust. "Vested" means the nonforfeitable portion of any account maintained on behalf of a Member. "Year of Participation" means any year in which an Employee has met the requirements of Section 1.1(a). 38 ADOPTION OF THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The Amended and Restated City of Rosemead PARS Retirement Enhancement Plan is hereby adopted effective July I, 2008. a-- By: � Title: City Manager Date: Il• 3 1 08 Plan Submission to the IRS for a Letter of Determination The decision to submit the foregoing Plan to the IRS shall be determined by the Plan Administrator pursuant to his/her initials below: Yes, please submit the Plan to the IRS for a Letter of Determination. OL No, do not submit This Plan to the IRS for a Letter of Determination. If you answered Yes, please provide the following infotmation: Employer Tax lD# y5 - ,107M(jq Tax Ycar- EndSur+e 3Dt 41000 List all qualified retirement plans offered h y City of Rosemead (e.g. CaIPERS) Name of Qualified Plan _ Defined Rene�for Defined Contribution —_ CalPERS Defined Benefit AMENDMENT TO THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer') has previously adopted the City of Rosemead Public Agency Retirement System (PARS) Retirement Enhancement Plan effective July 1, 2000 (the "Plan ") for the benefit of eligible employees, and WHEREAS, the Employer has reserved the right to amend the Plan in accordance with Section 5.3 of the Plan. and WHEREAS, the Employer deems it to be in the best interest of the Employer and the Plan to amend the Plan to provide an early retirement incentive for eligible Miscellaneous Employees. NOW THEREFORE, BE IT RESOLVED, that effective September 11, 2012, the Plan is hereby amended to add an additional tier of eligibility and benefits as follows: 1. Article I, Section 1.1, Eligibility for Benefits, is hereby amended to add the following Tier VIII: 1.1 Eligibility for Benefits. Tier VIII (a) is an actively employed Miscellaneous Employee of the Employer as of July 24, 2012; (b) is at least fifty -five (55) years of age and eligible to retire under CalPERS under a regular service retirement as of September 30, 2012, (c) has terminated employment with the Employer effective on or before September 28, 2012, concurrently retires under CalPERS effective on or before September 30, 2012, and remains in retired status under CalPERS, and (d) has applied for benefits under this Plan. 2. Article II, Section 2.1, Retirement Benefits, is hereby amended by adding the following Tier VIII: 2.1 Retirement Benefits. TIER VIII The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to two (2) additional years of CalPERS service credit. 3. Article IV, Section 4.2, Optional Forms of Benefit, is hereby amended to add Tier VIII to the additional payout options available under 4.2(b) and 4.2(c) below: (a) Joint and 100% Survivor Continuance. Under this form of payment: (1) The Member receives a reduced monthly benefit, and if the Member predeceases the Beneficiary, the Beneficiary will receive a monthly payment for the life of the Beneficiary equal to 100% of such reduced monthly benefit; provided, however, that if the Beneficiary is not the spouse of the Member, this form of payment shall be available only to the extent permitted pursuant to Section 4.3(b)(4)(A). (2) If the Beneficiary predeceases the Member, the Member's reduced monthly payment will not increase. (3) The Member's designation of a Beneficiary shall become irrevocable upon the Member's retirement if electing this form of payment. (b) Lump Sum Payout. Under this form of payment the Member receives a one -time lump sum payment. This form of payment is available for Members eligible under Tier VI, Tier VII, or Tier VIII of Section 1.1. (c) Fixed -Term Payout. Under this form of payment: (1) The Member receives a benefit paid over a designated period of time (ranging from five (5) years to fifteen (15) years, not to exceed the Member's life expectancy) that is actuarially equivalent to the Normal Form of Benefit. (2) Any remaining payments in the fixed -term payout schedule shall continue to the Beneficiary or subsequent Beneficiaries in the event of the Member's death. (3) This form of payment is available for Members eligible under Tier VI, Tier VII or Tier VIII of Section 1.1. 11, 2012 IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of September . Executed this /_� day o , 2012. By: 9�0,&�2 Title: City Manager AMENDMENT TO THE AGREEMENT FOR ADMINISTRATIVE SERVICES FOR THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The Agreement for Administrative Services made the 10th day of August 2000, ( "Agreement ") between Phase II Systems, a California corporation, doing business as Public Agency Retirement Services and the City of Rosemead ( "Agency ") is hereby amended as follows: Exhibit 1B, Fees for Services, paragraph D is hereby amended to include the 2011 -2012 supplementary retirement incentive as follows: (D) A fee equal to five and one -half percent (5.50 %) of all contributions made by the Agency on behalf of Participants qualifying for benefits under the PARS supplementary retirement incentive, Section 1. 1, Tier VI and Tier VII, of the subject Plan. Fees will be billed to the Trustee as contributions are made to the Plan and it will be the responsibility of the Trustee to pay those fees from assets of the Plan. These fees are exclusive of Trustee and investment management fees, which are based on the standard fees charged by the Trustee. Contributions made pursuant to this paragraph (D) shall not be included in the calculation of the asset fee described in paragraph 1(B) 2. City of Rosemead By: 9 &_," — Name: Jeff llred Title: City Manager Dated: Phase II Systems, dba Public Agency Retirement Services (PARS) By: ' / tie Name: Tod Hammeras Title: Chief Financial Officer Dated: 40��/2 p� Z REE�, S PARS AGENCY SERVICES Making retirement work toryou. July 12, 2012 Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 E. Valley Road Rosemead, CA 91770 Dear Matt: Enclosed please find for your files a fully executed original of the amendment to the Agreement for Administrative Services for the 2012/12 early retirement incentive. Sincerely, CX21--e— Shauna Volcan Vice President, Plan Implementation /enclosure cc: Dennis Yu, Senior Vice President, PARS 4350 Von Karman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8057 www.pars.org AMENDMENT TO THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead PARS Retirement Enhancement Plan (the "Plan "); and WHEREAS, the Employer has the right to amend said Plan in accordance with Section 3 of the Plan; and WHEREAS, the Employer desires to amend the Plan to comply with recent legislation and regulations applicable to the Plan. NOW, THEREFORE, the Plan is hereby amended as follows: Effective January 1, 2008, Section 4.6(b)(1)(B), "Eligible Retirement Plan," is hereby amended by adding the following to the end of the Section: "With respect to eligible rollover distributions made on or after January I, 2008, an eligible retirement plan shall also include a Roth IRA as described in Section 408A of the Code, provided that the distributee is not restricted from making such a rollover from this Plan to a Roth IRA pursuant to Section 408A(c) of the Code." This Amendment is hereby adopted this / day of 2017-effective as of the dates set forth above. City of Rosemead By: Its: City Janager Page 1 of 1 Making retirement work for you. J, r 11 t• To: Valued PARS Client From: PARS /Plan Compliance Date: April 11, 2011 Re: Interim Amendments to the PARS Plan Document Enclosed please find an IRS required interim amendment to your PARS Retirement Enhancement Plan (REP). These interim amendments are required from time to time based on the IRS staggered remedial amendment cycles. The amendment reflects recent legislation with respect to 1) the definition of Eligible Rollover Distribution; 2) the HEART Act; and 3) the final 415 Regulations. These amendments are in compliance with recent IRS guidelines and do not require any changes to your current administration procedures in place. We have enclosed 2 originals of the plan amendment. Please keep one signed original with your PARS REP Plan Document and return the second signed original to our office in the enclosed envelope. Please return the amendment to our office no later than May 31, 2011. If you have any questions about the enclosed plan amendment, please feel free to contact Shauna Volcan at (800) 540 -6369 x 132 or svolcanPpars.ora. Thank you. AMENDMENT TO THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead PARS Retirement Enhancement Plan (the "Plan"); and WHEREAS, the Employer has the right to amend said Plan in accordance with Section 5.3 of the Plan; and WHEREAS, the Employer desires to amend the Plan to comply with recent legislation and regulations applicable to the Plan. NOW, THEREFORE, the Plan is hereby amended as follows: 1. Effective January 1, 2007, Section 4.6(b)(1)(A), "Eligible Rollover Distribution," is hereby amended in its entirety to read as follows: "(1) Eligible Rollover Distribution. An eligible rollover 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 the following: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or the 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 (10) years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Internal Revenue Code; (iii) and any hardship distribution; and (iv) the portion of any distribution that is not includible in gross income, provided that effective January 1, 2002, a portion of a distribution will not fail to be an eligible rollover distribution merely because the portion consists of after -tax employee contributions that are not includible in gross income. However, such portion may be transferred only: (A) to an individual retirement account or annuity described in Section 408(a) or (b) of the Internal Revenue Code (or, on or after January 1, 2008, to a Roth IRA described in Section 409A of the Code) or to a qualified defined contribution plan described in Section 401(a) of the Internal Revenue Code; (B) on or after January 1, 2007, to a qualified defined benefit plan described in Section 401(a) of the Internal Revenue Code or to an annuity contract described in Section 403(b) of the Internal Revenue Code, that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible." Page 1 of 4 2. Effective July 1, 2010, Section 5.4, "Military Service ", is hereby amended by adding the following to the end of the section: "In the case of a Member who dies while performing qualified military service, the survivors of the Member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan had the Member resumed and then terminated employment on account of death." 3. The definition of "Annual Benefit" in Article VI, Section 6.1, is hereby amended in its entirety as follows, effective for limitation years beginning on or after July 1, 2009: "Annual Benefit" means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which Employees do not contribute and under which no rollover contributions are made, or to which assets have been transferred from a qualified plan that was not maintained by the Employer. If the benefit is payable in a form other than a straight life annuity, such form must be adjusted actuarially to be the equivalent of a straight life annuity before applying the limitations of Section 6.2(a). Such actuarial adjustment shall be made pursuant to the applicable provisions of Treasury Regulation Section 1.415(b) -1(c), which are incorporated herein by reference. The actuarial adjustment to the equivalent of a straight life annuity will apply to all Plan benefits. No actuarial adjustment is required for the following: qualified joint and survivor annuity benefits, pre - retirement disability benefits, pre- retirement death benefits, post- retirement medical benefits, and the value of an automatic benefit increase feature made in accordance with applicable Treasury Regulations." 4. Article VI, Section 6.2 is hereby amended in its entirety as follows, effective for the limitation years beginning on or after July 1, 2009: "6.2 1 Annual Limitation on Benefits. Notwithstanding any other provision of the Plan: (a) The Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed an amount equal to $160,000, or such other dollar limitation determined for the Limitation Year by automatically adjusting the $160,000 limitation by the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code in such manner as the Secretary shall prescribe. The new dollar limitation shall apply to Limitation Years ending within the calendar year of the date of the adjustment. (b) If the Member has less than ten Years of Participation with the Employer, the limitation in Section 6.2(a) shall be reduced by multiplying it by a fraction, the numerator of which is the Member's full and partial Years of Participation, and the Page 2 of 4 denominator of which is ten. To the extent provided in Treasury Regulations or in other guidance issued by the Internal Revenue Service, the preceding sentence shall be applied separately with respect to each change in the benefit structure of the Plan. The reduction provided in this paragraph does not apply to payments made to the Member if his payments commence after he has become disabled (within the meaning of Code Section 415(b)(2)(1)), and does not apply to payments made on account of the Member's death. (c) If the Annual Benefit of a Member begins prior to age 62, the limitation under Section 6.2(c) applicable to the Member at such earlier age is an Annual Benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the limitation applicable to the Member at age 62 (adjusted under subsection 6.2(b) above, if required). The limitation applicable at an age prior to age 62 shall be determined in accordance with the provisions of Treasury Regulation Section 1.415(b) -1(d), which are incorporated herein by reference. The reduction in this Section 6.2(c) shall not apply for a Member who is a "qualified participant," as defined in Code Section 415(b)(2)(H). (d) If the Annual Benefit of a Member begins after age 65, the limitation under Section 6.2(a) applicable to the Member at such a later age is an Annual Benefit payable in the form of a straight life annuity beginning at the later age that is the actuarial equivalent of the limitation applicable to the Member at age 65 (adjusted under subsection 6.2(b) above, if required). The limitation applicable at an age after age 65 shall be determined in accordance with the provisions of Treasury Regulation Section 1.415(b) -1(e), which are incorporated herein by reference. (e) Pursuant to Treasury Regulation Section 1.415(b)- 1(a)(7)(iii), the rate of a Member's accrual shall not be limited by this Article VI (but at all times the annual benefit payable to the Member is not subject to the limits set forth in this Article VI). (f) The limitation in Section 6.2(a) is deemed satisfied if the Annual Benefit payable to a Member is not more than $1,000.00 multiplied by the Member's number of years of service or parts thereof (not to exceed ten) with the Employer, and the Employer (or a predecessor employer) has not at any time maintained a defined contribution plan in which such Member participated. If the Employer maintains one or more defined benefit plans, in addition to this Plan, covering an Employee who is also a Member in this Plan, the sum of the Annual Benefits of all the plans will be treated as a single benefit for the purposes of applying the limitations of Section 6.2(a). For purposes of the preceding sentence, Annual Benefits under a "qualified governmental excess benefit arrangement," as described in Section 415(m)(3) of the Code, shall be disregarded. If the Annual Benefits exceed, in the aggregate, the limitations of Section 6.2(a), the Normal Retirement Benefits under this Plan will be reduced (but not below zero) until the sum of the benefits of the Related Plan(s) satisfy the limitations. In the case of an individual who was a Member in one or more defined benefit plans of the Employer as of the Page 3 of 4 first day of the first Limitation Year beginning after December 31, 1986, the application of the limitations of this Section 6.2 shall not cause the limitation under Section 6.2(a) for such individual under all such defined benefit plans to be less than the individual's Current Accrued Benefit. The preceding sentence applies only if such defined benefit plans met the requirements of Section 415 of the Code, for all Limitation Years beginning before May 6, 1986. For purposes of this Section 6.2(f), an individual's Current Accrued Benefit means a Member's Accrued Benefit under the Plan, determined as if the Member had separated from service as of the close of the last Limitation Year beginning before January 1, 1987, when expressed as an annual benefit within the meaning of Section 415(b)(2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (i) any change in the terms and conditions of the Plan after May 5, 1986; and (ii) any cost of living adjustments occurring after May 5, 1986. (g) If a Member makes one or more contributions to the Plan to purchase "permissive service credit," as defined in Code Section 415(n)(3), then the limitations of this Article VI shall be treated as met only if either (i) the limitations provided in Code Section 415(b) are met, determined by treating the accrued benefit derived from such contributions as an annual benefit for purposes of Code Section 415(b), or (ii) the requirements of Code Section 415(c) are met, determined by treating all such contributions as annual additions for purposes of Code Section 415(c)." This Amendment is hereby adopted this 13", day of qpr_� � , 2011 effective as of the dates set forth above. City of Rosemead By: 5; Its: City Manager Page 4 of 4 RINLIC AGFNCY PARS 0. 11e. M SERVICE Making mtimmen( worktoryouu July 12, 2010 Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 E. Valley Road Rosemead. CA 91770 Dear Mr. Hawkesworth Enclosed please find the amendment to the City of Rosemead PARS Retirement Enhancement Plan. The amendment closes the Plan to employees hired on or after July 1, 2010. Additionally, as we discussed, I added the following language to the end of Section 4.1, Normal Form of Benefit. "The Retirement Benefit shall cease for any Memberr who returns to active CalPERS status and shall recommence as of the first day of the month after the Member returns to retired status under CaIPERS at the same benefit amount and option immediately prior to the suspension of benefits." Please review the amendment. If no further modifications to the Plan are needed at this time, please return one signed original to my attention and keep the second original for your records. As always, don't hesitate to contact me at 800.540.6369 x 132 or by email at svolcan@pars.org with any questions or concerns. Sincerer Xn Shauna Volcan Senior Manager, Plan Implementation /enclosure cc: Dennis Vu, Senior Vice President, PARS 4350 Von Kaman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800 660.8057 www.pars.org July 6, 2010 Mr. Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 East Valley Boulevard Rosemead, CA 91770 RE: PARS REP /ARS Investment Related Materials Dear Mr. Hawkesworth Following your recent meeting, enclosed please find a set of trustee forms for the City's PARS Retirement Enhancement Plan (REP) and the PARS Alternate Retirement System (ARS) -457 FICA Alternative Retirement Plan. Should the City choose to change investment strategies for one or both plans, please have Mr. Allred complete and return the necessary forms to my attention. (you do not need to complete and return the Union Bank Stable Value Fund Disclosure Statement and Participation Agreement unless you are selecting this fund for the PAR ARS plan.) Additionally, I am working on the plan amendment to your PARS Retirement Enhancement Plan which will modify the Plan to exclude employees hired on or after July 1, 2010. 1 will forward the plan amendment to your attention. As always, if you have any questions on the enclosed documents, please don't hesitate to contact me at 800.540.6369 x 132 or by email at svolcan@pars.org. Thank you. Sincerely, Shauna Vulcan Sr. Manager, Plan Implementation Enclosure 4350 Von Karman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8057 www,pars.org nm�y PARS RE�f ,R.,CNi ,FAVI CF$ w�/ Making mtlienium work for you. July 6, 2010 Mr. Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 East Valley Boulevard Rosemead, CA 91770 RE: PARS REP /ARS Investment Related Materials Dear Mr. Hawkesworth Following your recent meeting, enclosed please find a set of trustee forms for the City's PARS Retirement Enhancement Plan (REP) and the PARS Alternate Retirement System (ARS) -457 FICA Alternative Retirement Plan. Should the City choose to change investment strategies for one or both plans, please have Mr. Allred complete and return the necessary forms to my attention. (you do not need to complete and return the Union Bank Stable Value Fund Disclosure Statement and Participation Agreement unless you are selecting this fund for the PAR ARS plan.) Additionally, I am working on the plan amendment to your PARS Retirement Enhancement Plan which will modify the Plan to exclude employees hired on or after July 1, 2010. 1 will forward the plan amendment to your attention. As always, if you have any questions on the enclosed documents, please don't hesitate to contact me at 800.540.6369 x 132 or by email at svolcan@pars.org. Thank you. Sincerely, Shauna Vulcan Sr. Manager, Plan Implementation Enclosure 4350 Von Karman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8057 www,pars.org bUnionBank- Investment Strategy Selection and Disclosure Form DB Plans Date Agency or District: City of Rosemead Plan Name: City of Rosemead PARS Retirement Enhancement Plan To HighMark Capital Management, Inc. and Union Bank, N.A. Union Bank, N.A. has been or is hereby appointed Investment Manager of the above - referenced Plan. Please invest the assets of the above - referenced Plan and Trust for which you have been appointed Investment Manager in the (select one of the strategies listed below): STRATEGY INVESTMENT OBJECTIVE ALLOCATION Provide current income with liquidity and stability of principal ❑ Liquidity Management through investments in short -term U.S. Treasury obligations Money Market Fund Provide current Income with liquidity and stability of principal ❑ Liquidity Management through investments in short-term obligations Issued or Money Market Fund guaranteed by the U.S. government and its agencies. ❑ Liquidity Management Generate current income with liquidity and stability of principal. Money Market Fund Invesimeot Svategy Stilecuon and Disclosure Porn DS Plans Page 1 of 1 vei 10710.9 Cop,,ghl o cla noon Bane. N Ai rignts reserved. El Shod-to- Intermediate Term Fixed Maximize Income consistently with a low level of price volatility. Fixed Income Fund Trtle JeH Income Strategy print Name Dale Authadaed Signer Authorized Signer ❑ Conservative HlghMark PLUS Provide a consistent level of inflation protected income over the Equity Fixed Income: &20 60 -95% I/ ❑ Conservative Index PLUS long -term. Cash. 0 -20% o El Conservative = HighMark HlghMark PLUS Provide current Income with capital appreciation as a secondary Equity. 20 -40% n objective. Fixed Income. 50 -80% a L1 Moderately Conservative Cash: 0 -20% Index PLUS ❑ Moderate HighMark PLUS Equity 40 -60% Provide current Income and moderate capital appreciation. Fixed Income: 40 -60% ❑ Moderate Index PLUS Cash. 0 -20% I ❑ Aggressive II\ HighMed/MOderately HighMark PLUS Equity 5040% Provide growth of principal and income Fixed I ncome: 3050% ❑ Balanced /Moderately Aggressive Cash'. 0 -20% Index PLUS Note. HighMark PLUS portfolios are diversfiedporffichm, of achou, managed mutual funds_ Index PLUS port folios are dwerslfiedpoddolios of index -based mutual funds or exchange- traded funds. Invesimeot Svategy Stilecuon and Disclosure Porn DS Plans Page 1 of 1 vei 10710.9 Cop,,ghl o cla noon Bane. N Ai rignts reserved. ( City Manager A ized Sig Trtle JeH print Name Dale Authadaed Signer Authorized Signer Invesimeot Svategy Stilecuon and Disclosure Porn DS Plans Page 1 of 1 vei 10710.9 Cop,,ghl o cla noon Bane. N Ai rignts reserved. 11 UnionBank PARS Fee Schedule ANNUALFEES Trust/Custody Fees All Plan assets ....................... .0.12 % on all incoming contributions Investment Management Fees Investment Managament Fees are based on the Investment Strategy you select. Following is a list of the investment management fees applicable to each Investment Strategy: • Liquidity -- HighMark U.S. Treasury Money Market— Fund level fees only (see prospectus) • Liquidity -- HighMark U.S. Government Money Market Fund — Fund level fees only (see prospectus) • Liquidity -- HighMark Diversified Money Market— Fund level fees only (see prospectus) • Short to Intermediate Term Fixed income Strategy. Union Bank, N . provides investment management services for the assets actively managed in the PARS Short to Intermediate - Term Fixed Income Account. The annual fee on the account's asset value is prorated and charged monthly'. 12% on the first $75,000000 10% on the next $25,000,000 ,05% on all over $100,000,000 'Holdings in the Harrow Guaranteed Annuity Contract for which HighMark Capital Management has also been appointed Investment Fiduciary are held in a separate account and are not assessed the investment management fees listed above. Holdings in Highmark Money Market Funds are also not charged at the above rates, but instead are assessed management fees at the fund level as disclosed m the HighMark Money Market Mutual Fund Prospectus. As of 06 042009 the account held $ $442,193. ]t in the HighMark 100% US Government Money Market Fund and $15],138,981.33 in other assets. Union Bank Stable Value Fund - Fund level fees only (see disclosure) Diversified Portfolios (Conservative, Moderately Conservative, Moderate, Balanced/ Moderately Aggressive): Per Annum Charges All plan assets .....__. _.. _... _....... ._._...060% - 'waived for plan assets invested in HighMark Funds or the Union Bank Stable Value Fund Other Fees HighMark Mutual Funds _.. _.. _. _.. ___ _.. _. _.._ See Prospectus and Mutual Fund Disclosure Exchange Traded Funds ._ _.._ __._ _..__._ See PARS Investment Services Exhibit Union Bank Stable Value Funtl. _.__ _.._ _.. _... _. _ See Disclosure Class action services _...._ _..... _.._ __.. _. ......... _.. _.6% of recovered funds Please Note: The Unlawful Internet Gambling Enforcement Act of 2006 ( UIGEA) prohibits the transfer of funds from a financial Institution to an Internal gambling site The UIGEA defines restricted transactions as those prohibited under applicable federal, state . or tribal gambling laws. Restricted transactions are prohibited from being processed through your account or relationship. ACKNOWLEDGED AND APPROVED PARS Trust Name of Trust Jeff Allred Name atAalhorizedfj ter for P' n Sponsor G ak Sig turn of AlaWl'i Signer for Pp Sponsor City of Rosemead PARS Retirement Enhancement Plan Name of Plan City Manager Title 7-/3 Dale vei 01129am0 Union Dank n A to UnionBank- Union Bank, N.A. Mutual Fund Disclosure Statement Bank- Managed Institutional Accounts Form MFDS -1 Union Bank, NA, ( "Bank ") makes a variety of mutual funds available to its clients. Among the funds available are the HighMark® Funds ( "Funds "), a family of mutual funds sponsored and distributed by HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc. HighMark Capital Management, Inc ("HCM "), a registered investment adviser and wholly owned investment management subsidiary of the Bank, serves as the investment adviser and administrator for the Funtls, while the Bank serves as custodian and provides certain additional services to the Funds. Fees for the services described below are paid by the Funds to HCM, the Bank, or its affiliates. Additionally, the Bank charges your account fees for the services provided to you 'Account" means the client plan, trust or other account managed by the Bank. To avoid management fee duplication, HCM and the Bank retain the fees paid to them by the Funds or its distributor that are attributable to your Account, but no Investment advisory fee is charged to your Account for any Bank managed account assets invested in the Funtls. You can contact your Account officer for an additional copy of your Account fee schedule. HCM and the Bank may also receive certain indirect benefits from having your Accounts) invested in the Funds. For example, a larger fund size creates certain economies of scale and lowers that Fund's expense ratio. The extent to which these factors help each Fund grow benefits HCM and the Bank, whose fees are partially based on the size of each Fund. Accompanying this Disclosure are prospectuses that contain information an the Investment objectives, operation and fees for all Fund portfolios available to Accounts of the type you have Additional copies of the prospectuses for all of the Fund portfolios, that contain information on the Investment objectives, operation and fees for all of the Funds are available from your trust officer, or from the distributor as follows: HighMark Funds Distributors, Inc. 760 Moore Road, King of Prussia, PA 19406, 1- 800 - 433 -6884 or by electronic access through www. High Mark Funds. Com. Read the prospectuses carefully. HighMark Funds offers its shares solely through its distributor, which is not affiliated with HCM or the Bank. The Bank does not endorse or sponsor the Funds. The Funds are not obligations of the Bank, and are not insured by the FDIC or any other government agency. Investments in the Funds, like any mutual fund investments, involve risk, including the possible loss of principal. FEES FOR SERVICES The services performed for the Funds by HCM, the Bank or its affiliates, and the maximum fees which maybe paid for such services are fully set forth below. The fees may from time to time, be voluntarily reduced pursuant to agreement with the Funds. Voluntary reduction in the fees of a Fund lower that Funds expenses and thus, temporarily Increase that Fund's yield while the voluntary reduction is In effect. Investment Advisor Services: For the expenses Incurred and services provided by HCM as the Funds investment adviser, HCM receives the following fees, computed daily and paid monthly: Money Market Funds: At the annual rate of thirty one hundredths of one percent (30 %) of each fund's average daily net assets. Bond Funds : For each fund, except the Short Term Bond Fund at the annual rate of up to fifty one hundredths of one percent (.50 %) of each fund's average dally net assets. For the Shod -Term Bond Fund, at the annual rate of forty one-hundredths of one percent ( 40 %) of the fund's average daily net assets. Asset Allocation Funds: At the annual rate of eighteen one - hundredths of one percent (.18 %) of each fund's average daily net assets. Equity Index Funds: At the annual rate of up to fifty one - hundredths of one percent (.50 %) of the funds average daily net assets. International Equity Funds: At the annual rate of ninety -five one - hundredths of one percent (.95 %) of the fund's average daily net assets. Domestic Equity And Balanced Funds: At the annual rate of sixty one hundredths of one percent (.60%) of each fund's average dally net assets, except for the funds listed In the table below: Equity Income At the annual rate of up to fifty -five one - hundredths of one percent 11" Cognitive Value. Enhanced Growth, Geneva Growth At the annual rate of up to seventy -five one hundredths of one Small Cap Advantage Small Cap Value, Geneva Small Cap Growth At the annual rate of ninety -five one - hundredths of one percent _(95 %) of the fund's average daily net assets. At the annual rate of up to one percent (1 00 %) of the fund a average net assets Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Page t of 3 pig /, ,1009 copyright®20ID Union Bank NA All maMZ n,,ry ul Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Custodian and Bank Services: For its services as the Funds domestic custodian, the Bank receives a custodian fee at an annual rate of six and one - quarter one thousandths of one percent (.0.00625 %) of each fund's average daily net assets and reimbursement for reasonable out of pocket expenses incurred in connection with these services. The Bank also receives six one - hundredth of one percent (0.06 %) per annum, calculated on the value of total daily outstanding loan balances for each HlghMark Fund portfolio that participates in the Union Bank securities lending program. Global custody fees are ad valorem and transaction fees vary with the country in which settlement lakes place . For more detailed information, contact the Fund through the distributor at the number set forth above. Shareholder Servicing Fees: The Bank provides certain shareholder support services to the Funds, and fees for shareholder servicing vary from time to time but may be up to twenty -five one - hundredths of one percent (.25 %) of the average daily net assets of a Fund. Administrator Services: HCM ads as administrator to the Funds. HCM is entitled to receive fees from the Fund for services actually performed at an annual rate of up to fifteen one - hundredths of one percent (.15 %) of the Funds average daily net assets computed daily and paid monthly in arrears. From the administration fee, HCM pays sub administration fees as more fully described in the Fund s Statement of Additional Information (SAI), available upon request. Other Services: HCM and the Bank reserve the right to direct that certain brokerage transactions be performed through their affiliates. Such transactions would be subject to "best execution' requirements, entered into solely pursuant to the provisions of applicable law and regulation, and only after approval by the Board of Trustees of the Funds. In the event of such transactions, the affiliates would be paid brokerage fees by the Funds. Bank or Its affiliates may receive soft dollar compensation from brokers consistent with section 28(e) of the Securities Exchange Ad of 1934. Mutual funds may also direct trades through Bank's affiliated broker. Please review the prospectuses for mutual funds carefully to identify risks, investment objectives, any investment limitations and restrictions, and costs and expenses of investing In any mutual fund you purchase, including fees paid to service providers such as Bank. Mutual fund prospectuses are available through eledron'IC access from the mutual fund's distributor, your broker or your Union Bank Relationship Manger. In the event that we decide to purchase for your Account an interest in a Morgan Stanley sponsored or advised asset, you are advised that Bank's ultimate parent company, Mitsubishi UFJ Financial Group, Inc, (`Nil has acquired preferred stock of Morgan Stanley, the parent company of Morgan Stanley & Co. Incorporated, a registered broker - dealer ( "MS &Co "). This investment gives MUFG a greater than 20 percent ownership Interest in Morgan Stanley on a fully diluted basis. A portion of such preferred stock is convertible (subject to certain regulatory approvals) Into voting common stock of Morgan Stanley. MUFG is entitled to nominate one member of Morgan Stanley's board of directors and to have an additional "observer present at meetings of Morgan Stanley s board. If applicable any investment in Morgan Stanley mutual funds or Morgan Stanley collective funds for ERISA Accounts will be made consistent with applicable prohibited transaction exemptions. Mutual Fund Disclosure Statement Bank Managed Institutional ACCOunrs Page 2 or 3 11397610109 CopV^9nt ®2m➢ Uniw Bank, NA NII ngMSeaerren Mutual F d Disclosure Statement Back Managed Institutional A o nts CONSENT AND ACKNOWLEDGMENT TO USE PROPRIETARY MUTUAL FUNDS Investment in the HighMark Funds family of mutual funds may be beneficial because it gives portability to Account holders whose Accounts provide for in kind distributions or rollovers: results in diversfioation of Account assets, thereby potentially lowering overall investment risk, allows Account holders to benefit from professional management of the mutual funds' investments, and allows selection among a family of related funds for quick and Inexpensive movement between funds in response to market shifts or changes in Investment objectives. Applicable fiduciary law and regulation, including, if applicable, the Employee Retirement Income Security Act of 1974 (" ERISA "), as amended, require full disclosure of relevant fee information so that the client or an independent fiduciary acting on the client's behalf may monitorthe reasonableness of the total fees being received by the Bank for its services to the Account Please sign below indicating you have read this Disclosure and consent to the use of the above - referenced Funds and to the Bank's receipt of the above fees. We hereby acknowledge receipt ofthe prospectuses of the HighMark Funds, If the Account is related to ERISA, We acknowledge that IANe have been offered a copy of Prohibited Transaction Exemption 94 -86, the exemption upon which the Bank relies when investing assets of the Account in proprietary mutual funds. IANe hereby authorize the investment of Account assets in any portfolio of the HighMark Funds in the Bank's discretion in accordance with the investment policies of the Account. We also approve the receipt of fees by the Bank In accordance with the information set forth above, in the Fund prospectuses, and in my Account fee schedule. ACCOUNT NAME: Cit of Rosemead PARS Retirement Enhancement Plan CLIENT/COMPANY /ENTITY NAME: City of Rosemead Authorized Signer: Jeff Allred - Title: city Man er Signature of Authorized Signer: y' Data: Authorized Signer: Title: Signature of Authorized Signer: Date: Authorized Signer: Title: Signature of Authorized Signer: Date: Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Page 3 of 3 all's IdN9 Ccnyn9Nl V 2010 Jsiw rke k, NA All ngnts rescrvne Investment Services Exhibit: Defined Benefit Plans Complete and flexible investment options specifically designed for PARS plans �} is e V/1.r �11 i ITY `I ILf:V bUnionBank PARS Investment Services Exhibit for DB Plans HighMark 100% U.S. Treasury Money Market Fund ........................ HighMark U.S. Government Money Market Fund ............................. HighMark Diversified Money Market Fund ......... ............................... Short-to- Intermediate Fixed Income Strategy .... ............................... Diversified Portfolios .......................................... ............................... Appendix Exchange- Traded Funds .................. Mutual Fund Selection Process........ Disclosures ............................ ........ page 2 ........ page 3 ........ page 4 ........ page 5 ........ page 6 page 10 page 14 page 17 Investment services Exhibit page 1 HighMark 1O0% U.S. Treasury Money Market Fund Open -end, publicly traded mutual fund Inception Date: August 10, 1987 Ticker: HMTXX Advisor: HighMark Capital Management The HighMark 100% U.S. Treasury Money Market Fund seeks current income with liquidity and stability of principal. The Fund invests exclusively in U.S. Treasury securities and separately traded components of those securities called "STRIPS." To limit the Fund's interest -rate risk, the Fund's managers will maintain an average weighted portfolio maturity of 90 days or less. In addition, each individual security in the portfolio will have a maturity of no more than 397 days. In choosing investments for the Fund, the portfolio managers consider such factors as: • The outlook for interest rates; • Buying and selling activity in the Treasury market as a whole and /or demand for individual Treasury securities; • Imbalances in the supply of Treasuries relative to demand; • The appropriateness of particular securities to the Fund's objectives. As of March 31, 2010 Yields (net) Annualized Total Rate of Returns (net) 7 Day Simple 0.01% 1 -Year 0.02% 1 -Mo. Simple 0.01% 3 -Years 1.34% 3 -Mo. Simple 0.01% 5 -Years 2.28% Average weighted maturity: 10 -Years 2.24% 28 days Past performance is no indication of future results. Please refer to page 17 for appropriate disclosures. Investment Services Exhibit page 2 HighMark U.S. Government Money Market Fund Open -end, publicly traded mutual fund Inception Date: August 10, 1987 Ticker: HMGXX Advisor: HighMark Capital Management The HighMark U.S. Government Money Market Fund seeks current income with liquidity and stability of principal. To pursue this goal, the Fund invests exclusively in short-term debt obligations issued or NOTE., This Fund complies with the requirements of the California Government Code for the Investment of Public Funds and is rated AAA for credit quality by both Moody's Investor Service and Standard and Poor's Corporation. This is the highest rating assigned. guaranteed by the U.S. governments, its agencies or instrumentalities, such as the Government National Mortgage Association ( "Ginnie Mae ") and the U.S. Export-Import Bank. Some of these debt obligations may be subject to repurchase agreements. To limit the Fund's interest -rate risk, the Fund's managers will maintain an average weighted portfolio maturity of 90 days or less. In addition, each individual security in the portfolio will have a maturity of no more than 397 days. In choosing investments for the Fund, the portfolio managers consider such factors as: • The outlook for interest rates; • Buying and selling activity in the U.S. government securities market as a whole and /or demand for individual securities; • Imbalances in the supply of U.S. government securities relative to demand; • The appropriateness of particular securities to the Fund's objectives. As of March 31, 2010 Yields (net) Annualized Total Rate of Returns (net) 7 Day Simple 0.05% 1 -Year 0.14% 1 -Mo. Simple 0.05% 3 -Years 1.95% 3 -Mo. Simple 0.05% 5 -Years 2.77% Average weighted maturity: 10 -Years 2.54% 12 days Past performance is no Indication of future results. Please refer to page 17 for appropriate disclosures. Investment Services Exhibit page 3 HighMark Diversified Money Market Fund Open -end, publicly traded mutual fund Inception Date: February 1, 1991 Ticker: HMDXX Advisor: HighMark Capital Management HighMark Diversified Money Market Fund seeks to generate current income with liquidity and stability of principal. To pursue this goal, the Fund invests primarily in high - quality, short-term debt securities. "High- quality" securities are those that at least one nationally recognized rating agency such as Standard & Poor's has judged financially strong enough to be included in its highest credit - quality category for short-term securities. The Fund may also invest in nonrated securities if the portfolio managers believe they are of comparably high quality. To limit the Fund's interest -rate risk, the Fund's managers will maintain an average weighted portfolio maturity of 90 days or less. In addition, each individual security in the portfolio will have a maturity of no more than 397 days. In choosing investments for the Fund, the portfolio managers consider such factors as: • The outlook for interest rates; • Buying and selling activity in the high - quality, shod -term securities market as a whole and /or for individual securities; • Imbalances in the supply of high - quality, short-term securities relative to demand; • The appropriateness of particular securities to the Fund's objectives. As of March 31, 2010 Yields (net) Annualized Total Rate of Returns (net) 7 Day Simple 0.16% 1 -Year 0.46% 1 -Mo. Simple 0.19°/ 3 -Years 2.39% 3 -MO. Simple 0.20% 5 -Years 3.07% Average weighted maturity: 10 -Years 2.75% 66 days Past performance is no indication of future results. Please refer to page 17 for appropriate disclosures. Investment services Exhibit page 4 Short to Intermediate -Term Fixed Income Strategy Separate Account Management Advisor: HighMark Capital Management The Short to Intermediate -Term Fixed Income strategy is actively managed to maximize income consistently with a low level of price volatility. The strategy represents a diversified portfolio of U.S. Treasury bills, notes and bonds, U.S. Government Agency securities, and corporate debentures (minimum quality rating of A3 by Moody's or A- by Standard and Poors) with maturities of up to five years, except that up to 20% of portfolio assets may have a maximum maturity of eight years. Uninvested cash in the portfolio is swept daily into the HighMark 100% U.S. Treasury Money Market Fund or the U.S. Government Money Market Fund. As of March 31, 2010 Yields (gross) Annualized Total Rate of Returns (gross) Current Yield 3.48% 1 -Year 4.99 Yield to Effective Maturity 0.84% 3 -Years 3.93% 5 -Years 4.14% Yrs. to Effective Maturity 1.05 10 -Years 4.98% Duration to Effective Maturity (Years) 1.03 Investment Services Exhibit page 5 Diversified Portfolios Reduced risk and enhanced return potential through diversification. By diversifying the assets among investment styles and investment managers we will attempt to reduce your portfolio's potential liability for loss as investment styles move out of favor. Likewise, you will have the opportunity to increase return when styles move into favor. Reduced risk and enhanced return potential through disciplined mutual fund selection and monitoring process. We employ a rigorous due diligence process that screens investment managers and mutual funds to select quality managers with proven skill and resources to deliver competitive returns within reasonable risk parameters. Strategy Investment Objective Equity Allocation' Index PLUS Provide a consistent level of Actively managed mutual funds Conservative inflation - protected income Maximum 20.0% Actively managed mutual funds over the long-term. HighMark 100% U.S. Treasury or U.S. HighMark 100% U.S. Treasury Provide current income and Government Money Market Fund Moderately Conservative moderate capital Maximum 40.0% Market Fund appreciation. Ad- valorem fee on all assets not in Moderate Provide growth of principal Maximum 60.0% in HighMark/Union Bank funds and income. Balanced /Moderately Provide growth of principal Maximum 70.0% Aggressive I and income. 'Maximum allocation of total portfolio to equities in any given time period. Implementation Options High Mark PLUS Index PLUS Equity Actively managed mutual funds Exchange- Traded Funds ETFs' Fixed Income Actively managed mutual funds Actively managed mutual funds HighMark 100% U.S. Treasury or U.S. HighMark 100% U.S. Treasury Cash Government Money Market Fund or U.S. Government Money Market Fund Ad- valorem fee on all assets not in Ad- valorem fee on all assets not Fee HighMark/Union Bank funds in HighMark/Union Bank funds `More information on Exchange - Traded Funds (ETFs) is included on page 10 of this document. Investment Services Exhibit page 6 HighMark PLUS versus Index PLUS Hi hMark PLUS — an active approach Index PLUS —a passive approach • Active asset allocation • Active asset allocation • Exclusive use of actively managed • Index -based securities (ETFs) mutual funds employed in equity strategy • Ability to take advantage of • Minimizes "surprises" by tracking anomalies in the market to market indexes outperform passive benchmarks • Lower embedded fund costs 70% • Greater transparency of holdings • Limited impact of large redemptions 17.44% on remaining shareholders Balanced /Moderately Aggressive Moderate Moderately Conservative Conservative Rolling 1 -Year Returns June 1987— March 2010 ■Lowest Return XAve rage Return ❑Highest Return - 30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Based on 274 monthly observations; 1) Conservaliv, 5% Ibbottson Associates 30-DAy Treasury Bills TR Index; 40% ML US Corp &Govt 1 -3 Year TR Index; 40% Badi US Agg Bond TR Index, 12% S &P 500 TR Index,- 1% Russell 2000 TR Index r 2% MSCI EAFE NR Index USD, 2) Moderately Conservative: 5% Ibbottson Associates 30 Day Treasury Bills TR Index, 25% ML US Cwp&GOVt 1 -3 Year TR Index, 40% Bei US AN Bond TR Index; 25% S &P 500 TR Intlex; 1.5% Russell 2000 TR Index; 3,5% MSCI SAFE NR Intlex USD 3) Moderate: 5% Ibbottson Associates 30 -Day Treasury Bills TR Index, 15% ML US Corp&Gdo 1 -3 Year TR Index, 30% BarCap US AN Bond TR Index, 43% S&P 500 TR Index, 2% Russell 2000 TR Index; 5% MSCI EAFE NR Index USD. 4) Balanced - Moderately Aggressive; 5% Ibbottson Associates 30-Day Treasury Bills TR Index; 5% ML US Corp&Gov1 1 -3 Year TR Index, 30% BarCap US AN Bond TR Index; 51% S&P 500 TR Index; 3% Russell 2000 TR Index, 6% MSCI SAFE NR Index USO. Prior to April 1, 2007, the blended benchmarks for the investment objectives were the following: 1) Conservative: 5% Ibbottson Associates 30 -Day Treasury Bills TR Index: 40% ML US Corp &Govt 1 -3 Year TR Index, 40% Bad-Cap US AN Bond TR Ini 15% S &P 500 TR Index. 2) Moderately Conservative: 5% Ibbottson Associates 30 -Day Treasury Bills TR Index, 25% ML US Corp &GON 1 -3 Year TR Index; 40% BarCap US AN Bond TR Index; 30% S &P 500 TR Intlex. 3) Moderate: 5% Ibbottson Associates 30- Day Treasury BIIIS TR Index; 15% ML US Com&Govt 1 -3 Year TR Index, 30% Redcap US AN Bond TR Index; 50% S &P 500 TR Index, 4) Balanced Moderately Aggressive: 5% Ibbottson Associates 30 Day Treasury Bills TR Index; 5% ML US Corp &GON 1 -3 Year TR Index; 30 %BarCap US AN Bond TR Index; 60% S&P 500 TR Intlex. Investment Services Exhibit page 7 34.04 - 28.13% 8.85% 2921% 3,42% n,67% 2130% 70% -tap4% 17.44% 7.W% 63r% - 30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Based on 274 monthly observations; 1) Conservaliv, 5% Ibbottson Associates 30-DAy Treasury Bills TR Index; 40% ML US Corp &Govt 1 -3 Year TR Index; 40% Badi US Agg Bond TR Index, 12% S &P 500 TR Index,- 1% Russell 2000 TR Index r 2% MSCI EAFE NR Index USD, 2) Moderately Conservative: 5% Ibbottson Associates 30 Day Treasury Bills TR Index, 25% ML US Cwp&GOVt 1 -3 Year TR Index, 40% Bei US AN Bond TR Index; 25% S &P 500 TR Intlex; 1.5% Russell 2000 TR Index; 3,5% MSCI SAFE NR Intlex USD 3) Moderate: 5% Ibbottson Associates 30 -Day Treasury Bills TR Index, 15% ML US Corp&Gdo 1 -3 Year TR Index, 30% BarCap US AN Bond TR Index, 43% S&P 500 TR Index, 2% Russell 2000 TR Index; 5% MSCI EAFE NR Index USD. 4) Balanced - Moderately Aggressive; 5% Ibbottson Associates 30-Day Treasury Bills TR Index; 5% ML US Corp&Gov1 1 -3 Year TR Index, 30% BarCap US AN Bond TR Index; 51% S&P 500 TR Index; 3% Russell 2000 TR Index, 6% MSCI SAFE NR Index USO. Prior to April 1, 2007, the blended benchmarks for the investment objectives were the following: 1) Conservative: 5% Ibbottson Associates 30 -Day Treasury Bills TR Index: 40% ML US Corp &Govt 1 -3 Year TR Index, 40% Bad-Cap US AN Bond TR Ini 15% S &P 500 TR Index. 2) Moderately Conservative: 5% Ibbottson Associates 30 -Day Treasury Bills TR Index, 25% ML US Corp &GON 1 -3 Year TR Index; 40% BarCap US AN Bond TR Index; 30% S &P 500 TR Intlex. 3) Moderate: 5% Ibbottson Associates 30- Day Treasury BIIIS TR Index; 15% ML US Com&Govt 1 -3 Year TR Index, 30% Redcap US AN Bond TR Index; 50% S &P 500 TR Index, 4) Balanced Moderately Aggressive: 5% Ibbottson Associates 30 Day Treasury Bills TR Index; 5% ML US Corp &GON 1 -3 Year TR Index; 30 %BarCap US AN Bond TR Index; 60% S&P 500 TR Intlex. Investment Services Exhibit page 7 Conservative Strategy The primary goal of the Conservative Strategy is to provide a consistent level of inflation - protected income over the long -term. The major portion of the assets will be fixed income related. Equity securities are utilized to provide inflation protection: Moderately Conservative Strategy The dual goals of the Moderately Conservative Strategy are current income and moderate capital appreciation. The major portion of the assets is committed to income - producing securities. Market fluctuations should be expected: Strategic Range Policy Equity 20 -40% 30% Fixed Income 50 -80% 65°% Cash 0 -20% 5% Moderate Strategy The dual goals of the Moderate Strategy are growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important. The portfolio will be allocated between equity and fixed income investments as follows: Strategic Range Policy Equity 5 -20% 15% Fixed Income 60 -95% 80% Cash 0 -20% 5% Moderately Conservative Strategy The dual goals of the Moderately Conservative Strategy are current income and moderate capital appreciation. The major portion of the assets is committed to income - producing securities. Market fluctuations should be expected: Strategic Range Policy Equity 20 -40% 30% Fixed Income 50 -80% 65°% Cash 0 -20% 5% Moderate Strategy The dual goals of the Moderate Strategy are growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important. The portfolio will be allocated between equity and fixed income investments as follows: Investment Services Exhibit page 8 Strategic Range Policy Equity 40 -60% 50% Fixed Income 40 -60% 45% Cash 0-20% 5% Investment Services Exhibit page 8 Balanced /Moderately Aggressive Strategy The dual goals of the Balanced /Moderately Aggressive Strategy are growth of principal and income. While dividend and interest income are an important component of the objective's total return, it is expected that capital appreciation will comprise a larger portion of the total return. The portfolio will be allocated between equity and fixed income investments as follows: Strategic Range Policy Equity 50 -70% 60% Fixed Income 30 -50% 35% Cash 0 -20% 5% Investment Services Exhibit page 9 Exchange- Traded Funds An Exchange- Traded Fund (ETF) is a basket of stocks that closely track the composition and performance of most leading market indexes – by market capitalization, investment style, sector, or country. Unlike traditional mutual funds, ETFs work like stocks: they ran be bought and sold throughout the trading day. ETFs offer several advantages of index mutual funds, including lower expense. Offer instant access to a portfolio of securities Can be priced, bought, and sold whenever the market is open Dividends reinvest immediately Limit consequences of other shareholders'redemptions Holdings are transparent • a • Vanes Varies a •_... _. _.._.. __.. N/A • Varies • 1- Advantages of Exchange- Traded Funds (ETFs) • ETFs offer the instant diversification of indexing — and more. Index investing has become a very popular and very simple way to add market exposure in a highly diversified, cost - effective way. ETFs offer the same benefits as other index investments, but provide substantially more Flexibility and a host of other advantages. • ETFs help shield investors from the cost and performance impact of portfolio turnover. Moving in and out of traditional mutual funds - active or index - can take its toll on portfolio performance. The costs of this activity, which include brokerage commissions, bid /ask spreads, market impact, and, in the case of some foreign stock markets, transaction taxes, are ultimately passed along to every investor in the fund. In addition, trading activity by fund managers within many portfolios may create tax consequences - such as short- and long -term capital gains distributions at year -end - that are passed through to shareholders. Investment Services Exhibit page 10 Index Mutual Non -Index FTFS Funds Mutual Funds Stocks Cost- effective • • Varies 9 Offer instant access to a portfolio of securities Can be priced, bought, and sold whenever the market is open Dividends reinvest immediately Limit consequences of other shareholders'redemptions Holdings are transparent • a • Vanes Varies a •_... _. _.._.. __.. N/A • Varies • 1- Advantages of Exchange- Traded Funds (ETFs) • ETFs offer the instant diversification of indexing — and more. Index investing has become a very popular and very simple way to add market exposure in a highly diversified, cost - effective way. ETFs offer the same benefits as other index investments, but provide substantially more Flexibility and a host of other advantages. • ETFs help shield investors from the cost and performance impact of portfolio turnover. Moving in and out of traditional mutual funds - active or index - can take its toll on portfolio performance. The costs of this activity, which include brokerage commissions, bid /ask spreads, market impact, and, in the case of some foreign stock markets, transaction taxes, are ultimately passed along to every investor in the fund. In addition, trading activity by fund managers within many portfolios may create tax consequences - such as short- and long -term capital gains distributions at year -end - that are passed through to shareholders. Investment Services Exhibit page 10 ETF investors avoid many of these issues. The exchange provides the liquidity,` not the fund manager, which means the trading activity of other investors cannot affect your investment. (Please note that there may be capital gains distributions by the ETFs not related to individual investor buying and selling.) ' Although ETFs may be bought and sold on the exchange through any brokerage account, ETFs are not individually redeemable from the Fund. Investors may acquire ETFs, and tender ETFs for redemption, through the Fund in Creation Unit aggregations only. • ETFs are cost - effective. ETFs can be a very cost - effective way to build a portfolio or obtain targeted exposure to a specific sector. The cost of investing in ETFs; is generally less than the cost of investing in most actively managed equity funds and equity index funds. Of course, ETF transactions will generate brokerage commissions, but the savings from lower fund costs can help offset these fees. • ETFs reinvest dividends immediately. Traditional mutual funds reinvest dividends quarterly, but dividends from the underlying stocks in ETFs are reinvested immediately. Investment Services Exhibit page 11 Average Average Active Index Fund Fund ETF I Choices -Category Large Blend 1.34 % 0.61% 0.09% IShares S &P 500 Large Value 1.409/6 0.66% 0.20% IShares R1000 Value' 3 0.18% IShares S &P 500 Value _ Small Cap 160% 0.64% f 0.20% IShares R2000 0.18% IShares S &P 600 Mid Cap 1.52% 0.339/6 0.20 / IShares S &P 400 'International 187% 086% 0.84/ 0.99% {IShares MSCl Developed Market Series IShares MSCI Emerging Markel Series Emerging Market 2.31% 0.58% Tech Sector 1.77% 0.60% 0.60% IShares Dow Jones Tech • ETFs reinvest dividends immediately. Traditional mutual funds reinvest dividends quarterly, but dividends from the underlying stocks in ETFs are reinvested immediately. Investment Services Exhibit page 11 • ETF investments are transparent. When you invest in ETFs, you know exactly what you're investing in: a substantial number of ETFs fully replicate their underlying indexes, the components of which are disclosed every trading day. Traditional mutual funds, however, generally reveal their entire holdings just twice a year. Only when you can actually see what's in the fund portfolio can you evaluate how closely the fund manager is sticking to the objectives and the style of the fund. Some ETFs, it should be noted, invest in a representative sampling of securities in the underlying index when the fund manager feels it's difficult or impractical to hold every security in the index. These kinds of fund holdings aren't as transparent as those of funds managed by full replication. ETFs cover a broad array of market indexes. ETFs cover the investing front from many angles, which makes them extremely Flexible investment instruments. You can invest in ETFs by market capitalization, country, style, or sector. With so many different choices, ETFs enable you to make targeted investments easily - and still attain a level of diversification that would be time - consuming and expensive to replicate by buying individual securities. Investment Services Exhibit page 12 ETFs Traditional Retail Mutual Funds Offer intraday pricing and trading Mutual funds typically priced and traded only at end-of-day NAV 'In -kind' creation/redemption process can Net redemptions can generate taxable reduce likelihood of tax - consequent distributions to non - exiting shareholders transactions for shareholders Investors purchase /sell shares through an Individual investor transactions — exchange; this does not result in activity in redemptions — with the fund may result in the underlying portfolio and reduces the capital gains tax distribution for non - exiting likelihood of tax consequences for other shareholders shareholders Can be traded with limit orders, stops, or Limit order pricing not available; stop limits (buys and sells) per exchange transactions typically completed at end -of- rules day NAV Standard margin rules apply to purchases Funds cannot be directly purchased on margin; can be considered 'good collateral' only after being held fully paid for 30 days Offer low to moderate expense ratios; Offer low to moderate expense ratios domestic funds' ratios are lower than depending on fund; domestic fund ratios international funds' ratios tend to be lower than international fund ratios Can be traded through any brokerage Mutual fund availability through brokers is account predicated upon negotiated selling agreements; all funds not available through brokerage firms; funds can be purchased directly from fund company Normal brokerage account commissions Some funds charge sales load; some no- apply load funds purchased through fund supermarkets and brokers may be subject to transaction fees Early sales/redemption fees don't apply Fund company may impose fees far 'active' trading Investment Services Exhibit page 13 Mutual Fund Selection Process Since there are more than 14,000 mutual funds available to investors today, finding those that are among the best is a challenge. Knowing when it is time to replace a fund is equally challenging. HighMark Capital Management has a dedicated group that is responsible for researching and selecting quality investment managers in the form of sub - advisors and mutual funds. Our Sub - Advisory Due Diligence Group utilizes a rigorous screening process that searches for investment managers and styles that have not only produced above - average returns within acceptable risk parameters, but have the resources and commitment to continue to deliver these results. We've set high standards for our investment managers and funds — and we'll replace managers if they slip below these standards. This is a highly specialized, time consuming approach dedicated to one goal: competitive and consistent performance. Screening Process Screen 1: Reduce universe of available managers by using basic criteria • Fund track record • Fund assets • Manager tenure in fund • Expense ratio • Median market -cap • Style consistency • Purchase constraints Screen 2: Trim down the screened universe by using absolute requirements, and • Size /style constraints • Strategy assets • Manager tenure in strategy • Style consistency Investment services Exhibit page 14 Screen 3: Rank top - performing funds by analyzing consistency of performance relative to benchmark returns • 12 -month rolling performance versus benchmark over 3-, 5-, 7-, 10 year periods (must outperform benchmark at least 50% of all time periods) Screen 4: Continue the reduction of the universe by analyzing performance relative to peers • Calendar year performance versus peer group (must outperform peer group category average return 60% of the time) Screen 5: Further reduce the universe by evaluating specific criteria • Number of holdings • Assets in top 10 holdings • Composition • Portfolio turnover • Sector weights • Standard deviation • Sharpe ratio Screen 6: Examine remaining funds to confirm and finalize short-list • Initial purchase constraints, median market capitalization, portfolio statistics, performance Screen 7: Evaluate top- ranked funds via 8- factor due - diligence RFP process to choose finalist(s) • Organization (rank ownership, financial condition) • Asset composition (rank firm assets, product assets /limits) • People (rank experience, turnover, incentives) • Portfolio characteristics (rank market cap ranges, portfolio statistics) • Investment process (rank discipline, risk controls) • Fee structure (rank reasonableness of fees for style) • Compliance /internal controls (rank regulatory actions, litigation) • Performance (rank manager skill) Investment Services Exhibit page 15 Monitoring Process Our mutual fund selection process is very dynamic. Once we've selected mutual funds for investment, we continue to monitor the activities, cash Flows, characteristics, attribution, and management of the funds. Daily: Performance Dally: Monitor manager performance and trading aefinfies, assuming for problems such as Monitoring s Returns Inconsistent with the manager s style or our expectations vr Performance cortredictory to the managers benchmark woos peers Bil Security selection not in agreement with the managers Investment philosophy and process Purchases that lead to abnormal porlfoli0 concentrations Secunly sales that do not meet the manager's stated sell discipline Monthly; Risk Monthly: Portfolio risk exposums and benchmark attribution analysis is conducted. We look for Sector and industry exposures, that are inconsistent with the managers Investment guidelines Perfounfichanic J Unusual franking error b the benchmarks O Portfolio chrom eristics that conflict with the strategy s benchmark weightings, such as Weighted market capilah'stim yield Data Price to Earrings Price an Book EPS growth Quarterly: Firm Quarterly: Managers are contacted to discuss podlolio activities. Our review process Inks far Contact : haddepuate transparency research the managers comments and psMolm holdings o Reduced communication across inadequate explanations from the manager Parini " Inconsistencies relater to the manager s remarks on style, sector, and mallet -an weightings Analysis Instability at the manager s investment management final Poribllo performance that conflicts with peers and style universes Annually: 0 Annually: The on tire visit and formal due diligence questionnaire review process looks for: NN Alterations to the funs s culture that detract from its healthy environment r ♦ Investment management distractions resulting from product addamr, , system or vendor changes, Review Businessg.h or asset ligwrati as . Modifications to the investment process ounce, risk controls that Interfere with the sttatagys iisnplme o Staffing adjustr cents that may result in poor performance Investment Services Exhibit page 16 HighMark Capital Management, Inc., a registered adviser, is a wholly owned subsidiary of Union Bank, NA,, and serves as investment advisor for HighMark Funds. Union Bank, N.A., a subsidiary of UnionBanCal Corporation, provides certain services to the Funds and is compensated for these services. HighMark Funds are distributed by HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc. Shares in the HighMark Funds and investments in HighMark Capital Management strategies are not deposits, obligations of, or guaranteed by the advisor, its parent or any affiliates. The performance data quoted represents past performance and is not a guarantee of future results. Investment return and principal value will fluctuate so that an investors shares, when redeemed, may be worth more or less than their original cost. An investment in the money market funds, stable value fund or any of the investment portfolios are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the money market funds seek to preserve the value of your investment at $1.00 per share, it is passible to lose money by investing in the funds. In addition to the normal risks associated with equity investing, international investing may involve risk of capital loss from unfavorable Fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Investment Services Exhibit page 17 1'1,1111, 4CFICl' N111PLNI NI SI IC:Ifp u12 , e.. n i.- 0 2008 1 BY October 27. 2008 Mr. Oliver Chi City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91770 Subject: IRS Required Restatement of PARS REP Plans Dear Mr. Chi: In our Fall 2007 Administrator's Update we discussed the changes made to the Letter of Determination program and the new remedial amendment cycles implemented by the Internal Revenue Service in 2006. The changes require employers to amend and restate their individually designed retirement plan document(s) every five years to incorporate the most recent federal and state law statutory and regulatory changes applicable to qualified governmental plans. Many of the changes reflect the EGTRRA provisions made permanent by the passage of the Pension Protection Act of 2006. This new program also placed Employers on a specific cycle. As a governmental agency with an individually designed plan, your agency falls under Cycle C and you are required to amend and restate your Plan(s) by January 31, 2009. In response to this requirement we have worked together with our legal counsel, O'Melveny & Myers, LLP, to prepare an amended and restated plan document updated for all legislation and regulations to date. The enclosed Plan document(s) also incorporates any elective plan amendments you may have made to your Plants). Enclosed, please find the following document(s): City of Rosemead PARS Retirement Enhancement Plan We have enclosed 2 copies of the Plan document(s) for your review. One copy is for you to sign and retain for your records and the second copy should be signed and returned to our office no later than November 30, 2008. During this restatement process you have the option of applying for an individual Letter of Determination on your restated Plan document(s). A favorable determination letter indicates that, in the opinion of the IRS, the terms of the Plan document(s) conform to the qualification requirements of IRC § 401(a). A plan that satisfies the qualification requirements is entitled to favorable tax treatment. At your discretion and request, PARS and O'Melveny and Myers will prepare and file an application for a separate Letter of Determination for you. We strongly recommend that your agency request an IRS Letter of Determination in order to obtain the maximum assurance of your Plan(s) qualified status. The cost to process an individual request for an IRS Letter of Determination, which includes the IRS filing fees and Power of Attorney services, is $2,000. If you would like to apply, please let us know by initialing the last page of the enclosed Plan document(s). PARS will prepare the application and forward it to you along with the corresponding invoice. 5141 California Ave., Ste. 150, Irvine, CA 92617 -3069 8007317884 fax 949.823 9900 enrollmentsiaJpars.are Mr. Oliver Chi City Manager October 27, 2008 Page Two We understand that every minute of your time is valuable; therefore, we have taken many steps to facilitate this IRS - required task for you and your staff. If you have any questions about this restatement process please feel free to contact me at (800) 540 -6369 x132 or by email at svolcan @pars org. Sincerely, Shauna Volcan Senior Manager, Plan Implementation Enclosures) cc: Dennis Yu, Vice President, PARS Public Agency Retirement Services is not licensed to provide tax, accounting or legal advice. We submit these documents with the understanding that they will receive proper review by the appropriate course. THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN AMENDED AND RESTATED EFFECTIVE JULY 1, 2008 DEFINED BENEFIT TABLE OF CONTENTS Page INTRODUCTION......................................................................................... ............................... 4 ARTICLE 1 -PARTICIPATION 1.1 Eligibility for Benefits ......... ................................................................ ..............................5 1.2 Commencement of Benefits ............... ............. ................................................................. 7 1.3 Participation ......................................................................................... ..............................7 ARTICLE 11 - BENEFITS 2.1 Retirement Benefits ............... ................. ..... .... ........... .... ......._..... ... . ... ........_.......... .... .... 8 2.2 Survivor Continuance Benefit ................................ ..............._......... ............................... 11 2.3 Pre - Retirement Disability Benefit ......... ............... .... .... ......._.... .... ..... ......_. ..... ........ ..... 11 2.4 Pre - Retirement Death Benefits ............ .................................... 11 2.5 Deferred Retirement Benefit ............................................................. ............................... 11 2.6 Designation of Beneficiary ...... ............................................................ 1 I ARTICLE III - VESTING 3.1 Vesting 14 3.2 Full or Partial Termination ........................................................... ............. ..................... 14 3.3 Attainment of Normal Retirement Age ............... ._ ................ ...................................... . 14 3.4 Effect of Vest ing ............... .... ......... ...... ............................. ........................... ........ ......... 14 ARTICLE IV - DISTRIBUTIONS 4.1 Normal Form of Benefit..... ............ ....... ......... .................. .................................... ....... 15 4.2 Optional Forms of Benefit ............................................. .._...................................... ...... . 15 4.3 Limitations._ ................................. ..............._.................... .... .... .... ...._..............._....... ... 16 4.4 Cash Out of Small Benefits. ...... ...... ........................................................ . .......... .. .... 24 4.5 Actuarial Equiaal ence ............................. ......................... . ... ......_....... ... ........... _............ 24 4.6 Direct Rollovers ............... ....... .......................... ........... ........ ........ ............................... 24 ARTICLE V - ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Members Rights Not Subject to Execution ......... ._................ ....... .................._............ 27 5.2 Rules and Regulations .......... ......... ................. .... ............ ..................... .............. 27 5.3 Amendment and Termination _.....__ ................_.................._....... ..........................__... 29 5.4 Military Service .............................................. .... ......... ..... ................. ....................... .... 29 5.5 Administrative Expenses ... .... ......... ......... ............................ ............ ............. ._............. 9 9 CONT. TABLE OF CONTENTS ARTICLE V1— ANNUAL BENEFIT LIMITATIONS 6.1 Definitions and Application ......................................................._..... ............................... 30 6.2 Annual Limitation on Benefits ..................... ........................... ........................................ 32 ARTICLE VII - DEFINITIONS 7.1 Definitions ............. ................. - ......................................................... ................... ..... 36 INTRODUCTION The City of Rosemead ( "Employer") has adopted this tax- qualified governmental defined benefit plan for the benefit of its eligible employees to provide supplemental retirement benefits to eligible employees of the Employer in addition to the benefits employees will receive from the California Public Employees' Retirement System ( "CalPERS "). Phis document is a full and complete amendment and restatement of the City of Rosemead PARS Retirement Enhancement Plan adopted effective July 1, 2000. It is intended that this Plan and the Trust established to hold the assets of the Plan shall be qualified under Section 401(a) and tax - exempt under Section 501(a) of the Internal Revenue Code of 1956, together with any amendments thereto ("Code "). 11 is further intended that this Plan and the Trust established hereunder shall meet the requirements of a pension trust under California Government Code ( "Act') Sections 53215 - 53224, or their successor sections (the "Act"). At any time prior to the satisfaction of all liabilities with respect to Members and their Beneficiaries under the Trust created pursuant to this Plan, the trust assets- shall not be used for, or diverted to, purposes other than the exclusive benefit of Members or their Beneficiaries, as prescribed in Section 401(a)(2) of the Code. It is intended that the Plan satisfy the requirements of the applicable provisions of the Economic Growth and'fas Relief Reconciliation Act (commonly known as " EGTRRA") and the Pension Protection Act of 2006 (commonly known as the "PPA "), and that the provisions of this Plan reflecting the EGTRRA and PPA amendments are hereby made effective as of the dates required by the legislation referred to in this sentence. ARTICLE PARTICIPATION 1.1 Eligibilitv for Benefits An Employee shall be eligible to receive Retirement Benefits described under this Plan if he or she meets all of the requirements under one of the following tiers: Tier I (a) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July I, 2000; (b) is at (cast fifty -five (55) years of age; (e) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (d) has terminated employment with the Employer and currently retired under CaIPFRS prior to September 25, 2007; and (e) has applied for benefits under this Plan. "Pier 11 (a) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (b) is at least sixty (60) years of age; (c) has completed at least ten (10) but not more than twenty (20) years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least ten 5 (10) but not more than twenty (20) years immediately prior to termination of duties; (d) has terminated employment with the Employer and concurrently retired under CalPERS prior to September 25, 2007; and (e) has applied for benefits under this Plan. Tier III (a) is a City Council member of the Employer on or after July I, 2000; (b) is at least fifty -five (55) years of age; (c) has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (d) has terminated employment with the Employer and concurrently retired under CalPERS prior to September 25, 2007; and (e) has applied for benefits under this Plan. Tier IV (a) is the Assistant City Manager of the Employer as of January 1, 2006; (b) has terminated employment with the Employer and concurrently retired under CalPERS prior to September 25, 2007; and (c) has applied for benefits under this Plan. Pier V (a) is a full -time Miscellaneous Employee of the Employer, a contract City Attorney, or City Council member of the Employer, on or after September 25, 2007; (b) is at least fifty -live (5 5) years of age; (c) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer for full- 6 time Miscellaneous Employees; or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; or has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (d) has terminated employment with the Employer and currently retires under CaIPFRS; and (c) has applied for benefits under this Plan. 1.2 Commencement of Beneflts Benefits shall commence as of the first day of the month after an Employee meets the eligibility requirements- of Section I.1. 1.3 Participation An Employee will be credited with a Year of Participation for each year in which the Employee has met the requirements of Section 1.I la). 7 ARTICLE II BENEFITS 2.1 Retirement Benefits Retirement Benefits under this Plan shall be based on the Employee's tier of eligibility pursuant to Section 1.1 as follows. Tier I The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the CalPERS Benefit Factor. 'Fier If The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to onc-twelfth of the difference between (1) and (2) described below: (1) 1 he number of full and partial years of full-time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Members retirement (treating each month in which the Member was 8 at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times two -and -one half percent (2.50 %). (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one- twelfth of a year), times the Member's Final Pay, times the CalPERS Benefit Factor. Tier III The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of employment as a City Council member with the Employer completed as of the Member's retirement (treating each month in which the Member was at airy time employed on a full -time basis as one-twelfth of a year), times the Member's Final Pay, times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a hill -time basis as one- twelfth of a year), times the Members Final Pay, times the CaIPERS Benefit Factor. Tier IV The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the Member's Final Pay times three percent (3.00 %) times 1.404. 9 Tier V The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer for full -time Miscellaneous Employees; or the number of full and partial years retained as City Attorney; or the number of full and partial years of employment as a City Council member; completed as of the Member s retirement (treating each month in which the Member was at any tune employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %), the product of which shall not exceed ninety percent (90 %) of Final Pay. (2) The number of fill and partial years of full -time continuous employment with the Employer for full -time Miscellaneous Employees; or the number of full and partial years retained as City Attomey; or the number of full and partial years of employment as it City Council member; completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - (welfth of a year), times the Members Final Pay, times the CalPERS Enhanced Benefit Factor. The total combined CaIPERS and PARS benefit shall not exceed ninety percent (90 %) of Final Pay. 10 2.2 Survivor Continuance Benefit No Survivor Continuance Benefit shall be provided unless the Member elects to have the benefit paid in an Optional Form of Benefit. 2.3 Pre - Retirement Disability Benefi t No Pre-Retirement Disability Benefits shall be provided. 2.4 Pre- Retirement Death Benefit Pre-retirement death benefits shall be provided for those actively employed Employees of the Employer who die after attaining the minimum age requirement and completing the required years of service with the Employer in accordance with Section I.1. The benefit shall be equal to the Member's Retirement Benefit corresponding to the tier of eligibility, actuarially reduced as if the Member had retired and elected a 1000/ joint - and - survivor option. The benefit will be paid over the lifetime of the surviving spouse. There is no pre - retirement death benefit payable if there is no surviving spouse. 2.5 Deferred Retirement Benefit No Deferred Retirement Benefit 2.6 Designation of Beneficiary (a) Each Member shall have the right to designate a Beneficiary to receive the death benefits, if any, that are payable to a Beneficiary from this Plan. Such designation does not permit the Member to change a person identified under another provision of the Plan as being eligible to receive a benefit. Such designation must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. (b) The Beneficiary for a married Member shall be the Member's spouse at the date of death, unless the written consent of such spouse is provided upon a form acceptable to the Employer. Each such designation for death benefits must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. If no such designation is on file with the Employer at the time of the death of the Member, or if for any reason at the sole discretion of the Employer, such designation is defective, then the spouse of such Member shall be conclusively deemed to be the Beneficiary designated to receive such benefit. (c) The signature of the Member's spouse shall be required on a designation of beneficiary form or an application for a benefit under the Plan if the spouse is not the beneficiary, unless the Member declares in writing that one of the following conditions exists: (1) The Member is not married; (2) The Member does not know, and has taken all reasonable steps to determine the whereabouts of the spouse; (3) The spouse is incapable of executing the acknowledgment because of an incapacitating mental or physical condition; (4) The Member and spouse have executed a marriage settlement agreement that makes the community property laws inapplicable to the marriage; or (5) The current spouse has no identifiable community property interest in the benefits. Effective as of January I, 2005, for purposes of this Section 2.6 only, all references in this Section 2.6 to the term "marriage" shall also include the term 'registered domestic partnership." All references to the term "married" shall also include 'registered 12 domestic partnership" and all references in this Section 2.6 to the term "spouse" shall also include the term "registered domestic partner." The inclusion of "registered domestic partner" in the definition of "spouse" shall not apply for the purposes of Sections 4.3, 4.6 and 6.2 of this Plan. 13 ARTICLE III VESTING 3.1 Vesting A Member will be fully vested in his /her Retirement Benefit upon meeting the requirements of Section 1.1. 3.2 Full or Partial Termination Notwithstanding the vesting schedule, upon the complete discontinuance of Employer contributions to the Plan or upon any full or partial termination of the Plan, the Member's Retirement Benefit shall become one hundred percent (100 %) Vested. 3.3 Attainment of Normal Retirement Age A Member shall be fully vested in his/her Retirement Benefit upon attainment of Normal Retirement Age and fldfilling all requirements established in Section 1.1. 3.4 Effect of Vesting Vesting shall entitle a Member to payment during his/her lifetime of the Retirement Benefit at the times and upon the conditions specified herein. and shall entitle the Members survivor or Beneficiary to any death benefits provided herein. Any unpaid Retirement Benefits are forfeited upon the Member's death under the Normal Form of Benefit. 14 a1:a1fN111m►y DISTRIBUTIONS 4.1 Normal Form of Benefit Unless the Member elects an Optional Form of Benefit under Section 4.2, payments to a Member of a Retirement Benefit shall be made in the form of monthly payments commencing pursuant to Section 1.2 and ending on the first day of the month in which the Member's death occurs, in the amount specified in Section 2.1. The Retirement Benefit shall be subject to an annual compounding cost -of- living adjustment effective on the anniversary date of commencement of the Retirement Benefit. The amount of such cost of living adjustment shall be two percent (2 %) per year, provided that the payment for any year shall not exceed the payment that would have resulted from the cumulative application since the date of benefit commencement (oft an annually - compounded basis) of the lesser of (i) a two percent (2 %) annual increase, or (ii) an annual increase equal to the increase in the Consumer Price Index for All Urban Consumers issued by the Bureau of Labor Statistics. For avoidance of doubt, if the application of the foregoing proviso causes the increase to the payment in any year to be less than two percent (2 %), then the increase to the payment in any subsequent year may be greater than two percent (2 %). Furthermore, in no circumstances shall the amount of the payment be decreased. This form of payment shall be the "Normal Form of Benefit." 4.2 Optional Forms of Benefit In lieu of the Normal Form of Benefit, a Member may elect a form of benefit payment of Actuarial Equivalence as follows: 15 (a) Joint and 100% Survivor Continuance. Under this forth of payment (1) The Member receives a reduced monthly benefit, and if the Member predeceases the Beneficiary, the Beneficiary will receive a monthly payment for the life of the Beneficiary equal to 100% of such reduced monthly benefit; provided, however, that if the Beneficiary is not the spouse of the Member, this form of payment shall be available only to the extent permitted pursuant to Section 4.3(b)(4)(A). (2) If the Beneficiary predeceases the Member, the Member's reduced monthly payment will not increase. (3) The Member's designation of a Beneficiary shall become irrevocable upon the Member's retirement if electing this form of payment. 4.3 Limitations (a) In the case of a Member who attains age 70-1/2, distribution of such Member's entire interest must commence not later than the first day of April following the later of the calendar year in which such Member attains age 70 -1/2 or the calendar year in which the Member retires (the "Required Beginning Date"). In all cases, distributions shall be made in at least the amounts determined in accordance with Code Section 401(a)(9) and the regulations thereunder, as described in Section 4.3(b) below. (b) With respect to required minimum distributions under this Section 4.3 for calendar years beginning after December 31, 2002, the following rules shall apply: (I) All distributions required under this Section 4.3 shall be determined and made in accordance with the 'I reasury Regulations under Section 401(a)(9) of the Code. The requirements of this Section 4.3 will take precedence over any inconsistent provisions of the Plan, provided that this Section 4.3 shall not be considered to allow a Member or 16 Beneficiary to delay a distribution or elect an optional form of benefit not otherwise provided in the Plan. (2) Time and Manner of Distribution (A) The Member's entire interest will begin to be distributed to the Member no later than the Member's Required Beginning Date as defined in Section 4.3(a). (B) If the Member dies before distributions begin, then the Member s entire interest will begin to be distributed no later than as follows: (1) If the Member's surviving spouse is the Member's sole designated Beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Member died, or by December 31 of the calendar year in which the Member would have attained age 70 -1/2, if later. (11) If the Member's surviving spouse is not the Member's sole designated Beneficiary, then distributions to the designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Member died. (III) If there is no designated Beneficiary as of September 30 of the year following the year of the Member's death, the Member's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Member's death. (IV) If the Members surviving spouse is the Mcmbcr's sole designated Beneficiary and the surviving spouse dies alter the Member but I before distributions to the surviving spouse begin, this Section 4.3(b)(2)(B), other than Section 4.3(b)(2)(B)(1), will apply as if the surviving spouse were the Member. For purposes of this Section 4.3(b)(2)(B) and Section 4.3(b)(5), distributions are considered to begin on the Member's Required Beginning Date (or, if Section 4.3(b)(2)(B)(IV) applies, the date distributions are required to begin to the surviving spouse under Section 4.3(b)(2)(B)(1)). If annuity payments irrevocably commence to the Member before the Member's Required Beginning Date (or to the Members surviving spouse before the date distributions are required to begin to the surviving spouse under Section 43(b)(2)(B)(1)), the date distributions are considered to begin is the date distributions actually commence. (C) Unless the Member's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions will be made in accordance with Sections 43(6)(3), (4) and (5). If the Members interest is distributed in the form of an annuity purchased from an insurance company, distribution., thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury Regulations. (3) Determination of Amount to be Distributed Each Year (A) If the Member's interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements: (1) the annuity distributions will be paid in penodic payments made at intervals not longer than one year: Is (11) the distribution period will be over a life (or lives) or over a period certain not longer than the period described in Sections 4.3(b)(4) or (5); (III) once payments have begun under a fixed -term payout under Section 4.2 (if such a benefit is available), the fixed -term payout period will not be changed even if the period certain is shorter than the maximum permitted; (IV) payments will either be non - increasing or increase only as follows: (i) by an annual percentage increase that does not exceed the annual percentage increase in a cost -of- living index that is based on prices of all items and issued by the Bureau of Labor Statistics; (ii) to the extent of the reduction in the amount of the Members payments to provide for a survivor benefit upon death, but only if the Beneficiary whose life was being used to determine the distribution period described in Section 4.3(b)(4) dies or is no longer the Members Beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code; or (iii) to pay increased benefits that result from a Plan amendment. (B) "I he amount that must be distributed on or before the Members Required Beginning Date (or, if the Member dies before distributions begin, the 19 date distributions are required to begin under Sections 43(b)(2)(13)(I) or (II)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi- monthly, monthly, semi - annually, or annually. All of the Member's benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Member's Required Beginning Date. (C) Any additional benefits accruing to the Member in a calendar year after the first distribution calendar year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. (4) Requirements For Annuity Distributions That Commence During Member's Lifetime (A) If the Member's interest is being distributed in the town of a benefit described in Section 42 for the joint lives of the Member and a nonspouse Beneficiary, annuity payments to be made on or after the Member's Required Beginning Date to the designated Beneficiary after the Member's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Member using the table set forth in Q &A -2 of Section 1.401(x)(9) -6 of the Treasury Regulations. If the form of distribution combines a benefit described in Section 4.2 for the joint lives of the Member and a nonspouse Beneficiary and a fixed -term payout annuity, the 20 requirement in the preceding sentence will apply to annuity payments to be made to the designated Beneficiary after the expiration of the fixed -term payout period. (B) Unless the Member's spouse is the sole designated Beneficiary and the form of distribution is a fixed -term payout annuity, the Fixed -term payout period for an annuity distribution commencing during the Member's lifetime may not exceed the applicable distribution period for the Member under the Uniform Lifetime Table set forth in Section 1.401(a)(9 )-9 of the Treasury Regulations for the calendar year that contains the annuity starting date. If the benefit commencement dale precedes the year in which the Member reaches age 70, the applicable distribution period for the Member is the distribution period for age 70 under the Uniform Lifetime Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations plus the excess of 70 over the age of the Member as of the Member's birthday in the year that contains the benefit commencement date. If the Member's spouse is the Member's sole designated Beneficiary and the form of distribution is a fixed -term payout annuity, the fixed -term payout period may not exceed the longer of the Member's applicable distribution period, as determined under this Section 4.3(b)(4), or the joint life and last survivor expectancy of the Member and the Member's spouse as determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations, using the Member's and spous'e's attained ages as of the Member's and spouses birthdays in the calendar year that contains the benefit commencement date. (5) Requirements For Minimum Distributions Where Member Dies Before Date Distributions Begin 21 (A) if the Member dies before the date distribution of his or her interest begins and there is a designated Beneficiary, the Member's entire interest will be distributed, beginning no later than the time described in Sections 4.3(b)(2)(B)(1) or (If), over the life of the designated Beneficiary or over a fixed -term payout period not exceeding: (1) unless the benefit commencement date is before the first distribution calendar year, the life expectancy of the designated Beneficiary is determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year immediately following the calendar year of the Members death; or (11) if the benefit commencement date is before the first distribution calendar year, the life expectancy of the designated Beneficiary is determined using the Beneficiary's age as of the Bcneiciary's birthday in the calendar year that contains the benefit commencement date. (B) If the Member dies before the date distributions begin and there is no designated Beneficiary as of September 30 of the year following the year of the Member's death, distribution of the Member's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Member's death. (C) If the Member dies before the date distribution of his or her interest begins, the Member's surviving spouse is the Member's sole designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this Section 4.3(b)(5) will apply as if the surviving spouse were the 22 Member, except that the time by which distributions must begin will be determined without regard to Section 4.3(b)(2)(B)(1). (6) Definitions (A) Designated Beneficiary. The individual who is designated as the Beneficiary under Section 2.6 of the Plan and is the designated Beneficiary under Section 401(a)(9) of the Code and Section 1.401(a)(9) -I, Q &A -4, of the Treasury Regulations. (B) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Member's death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the Member's Required Beginning Date. For distributions beginning after the Member's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 4.3(b)(2)(B). (C) Life Expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9) -9 of the Treasury Regulations. (D) Required Beginning Date. The date set forth in Section 4.3(a), 4.4 Cash Out of Small Benefits If the Actuarial Equivalence of a Members Normal Retirement Benefit is Tess than $5,000 at the time of termination of employment, such benefit shall be paid as a single cash lump sum in lieu of an), other benefits hereunder. 23 4.5 Actuarial Equivalence Actuarial Equivalence shall be determined using the mortality assumption based on the 1983 Group Annuity Mortality (GAM) table and the interest assumption shall be 6% per annum. 4.6 Direct Rollovers (a) This section applies to all distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this plan, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. 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 dislributees with regard to the interest of the spouse or former spouse. (b) A Beneficiary who is not the spouse of the Member may elect a direct trustee to trustee transfer that qualifies as an eligible rollover distribution under this Section 4.6. Such transfer shall be made to an individual retirement plan described in Section 408(x) of the Code or an individual retirement account that is established for the purpose of receiving the distribution on behalf of such Beneficiary. Such individual retirement account shall be deemed an inherited IRA pursuant to the provisions of Section 402(c)(I I ) of the Code. (I) Definitions (A) Eligible Rollover Distribution An eligible rollover 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: fit any 24 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; (it) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code, (iii) any hardship distribution, and (iv) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), unless such portion is transferred in a direct trustee -to- trustee transfer to a qualified trust which is part of a plan which is a defined contribution plan and which agrees to separately account for amounts so transferred, including separate accounting for the portion which is includible in gross income and the portion which is not so includible. (t3) 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, a qualified trust described in Section 401(x) of the Code that accepts the distrlbutee's eligible rollover distribution, an annuity contract described in Section 403(6) of the Code, a Roth IRA describe(] in Code Suction 408A (but only if the distributee satisfies the requirements of Code Section 408A(c)(3)(6)), or an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a stale and which agrees to separately account for amounts transferred into such plan from this Plan. 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. 25 (C) Direct Rollover A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 26 ARTICLE V ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights Not Subject To Execution The right of a Member to a benefit under this Plan is not assignable and is not subject to execution or any other process whatsoever, except to the extent permitted by the Code of Civil Procedure and the Family Code of the State of California. Any payment hereunder required under the California Family Code to a person other than the Member must not alter the form or amount of benefits hereunder, except that to the extent provided in a valid court order, an Actuarial Equivalent payment may be made to the spouse or child of a Beneficiary pursuant to a qualified domestic relations order (as defined in Code Section 414(p)) prior to the Member's retirement_ 5.2 Rules and Regulations The Employer has full discretionary authority to supervise and control the operation of this Plan in accordance with its terns and may make rules and regulations for the administration of this Plan that are not inconsistent with the terms and provisions hereof. The Employer shall determine any questions arising in connection with the interpretation, application or administration of the Plan (including any question of fact relating to age, employment, compensation or eligibility of Employees) and its decisions or actions in respect thereof shall be conclusive and binding upon any and all persons and parties. 'I he Employer shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following: (a) To determine all questions relating to the eligibility of Employees to participate; 27 (b) To construe and interpret the terms and provisions of the Plan; (c) To compute, certify to, and direct the Trustee with regard to the amount and kind of benefits payable to the Members and their Beneficiaries; (d) 't to authorize all disbursements by fire Trustee from the Trust; (e) 'to maintain all records that may be necessary for the administration of the Plan other than those maintained by the Trustee; and (t) To appoint a Plan Administrator or, any other agent, and to delegate to them or to the Trustee such powers and duties in connection with the administration of the Plan as it may from time to time prescribe, and to designate each such administrator or agent as a fiduciary with regard to matters delegated to him. With respect to management and control of investments, the Employer shall have the power to direct the Trustee in writing with respect to the investment of the Trust assets or any part thereof Where investment authority, management and control of Trust assets have been delegated to the Trustee by the Employer, the Trustee shall be a fiduciary with respect to the investment, management and control of the Trust assets contributed by the Employer and Members with full discretion in the exercise of such investment, management and control. Where investment authority, management and control of Trust assets is not specifically delegated to the Trustee, the Trustee shall be subject to the direction of the Employer. Expenses and fees in connection with the administration of the Plan and the Trust shall be paid from the 'I rust assets to the fullest extent permitted by law, unless the Employer determines otherwise. To the extent determined by the Employer or its delegate, elections and consents made by means of electronic media shall be permissible if made according to the relevant provisions of Treasury Regulation Section 1.401(a) -21. 28 5.3 Amendment and Termination The Employer shall have the right to amend, modify or terminate this Plan at any time. In the event of the complete discontinuance of this Plan, the entire interest of each Member affected thereby shall immediately become 100% vested. All benefits hereunder shall be payable solely from the assets of the Trust. After all liabilities of this Plan to Members and their Beneficiaries have been satisfied, any residual assets of this Plan shall be used for such purposes as determined by the Employer, including a distribution of the assets to the general funds of the Employer. 5.4 Military Service Effective December 12, 1994 and 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 with Section 414(u) of the Code. 5.5 Administrative Expenses hi accordance with Section 53217 of the Act, the Employer may make contributions to the Trust sufficient to defray all or part of the expenses of administering the Plan or may pay such expenses directly. 29 ARTICLE VI ANNUAL BENEFIT LIMITATIONS 6.1 Definitions and Application As used in this Article VI, the following terms shall have the meanings specified below. Unless otherwise stated below, the provisions of this Article VI shall apply to Limitation Years beginning on or after July 1, 2007. "Affiliated Company" means a company required to be aggregated with the Employer for Purposes of Code Sections 414(b) and (c), provided, however, the determination under Section 414(b) and (c) of the Code shall be made as if the phrase "more than 50 percent' were substituted for the phrase "al (cast 80 percent' each place it is incorporated into Section 414(b) and (c) of the Code. "Annual Benefit" means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which Employees do not contribute and under which no rollover contributions are made, or to which assets have been transferred from a qualified plan that was not maintained by the Employer. If the benefit is payable in a form other than a straight life annuity, such form must be adjusted actuarially to be the equivalent of a straight life annuity before applying the limitations of Section 6.2(a). The actuarial adjustment to the equivalent of a straight life annuity will apply to all Plan benefits except as set forth herein. The actuarial adjustment for benefits paid in a form to which Code Section 417(c)(3) does not apply shall be equal to the greater of (x) or (y), where (x) is an adjustment based on 5 % and the mortality table specified in Section Treasury Regulation Section 1.417(c) -1 (d)(2) for that annuity starting date, and (y) is the annual amount of the straight life annuity commencing on the same annuity starting date as the form of benefit payable to the Member, based on the factors specified in the Plan to adjust the applicable form of benefits. The actuarial adjustment for benefits paid in a form to 30 which Code Section 417(e)(3) applies shall be equal to the greatest of (xx), (yy) or (zz), where (xx) is an adjustment based on 5.5% and the mortality table specified in Section Treasury Regulation Section 1.417(e)- 1(d)(2) for that annuity starting date, Ivy) is the annual amount of the straight life annuity commencing on the same annuity starting date as the form of benefit payable to the Member, based on the factors specified in the Plan to adjust the applicable form of benefits, and (zz) is an adjustment based on the applicable interest rate for the distribution under Regulation Section 1.417(c)-1(d)(3) and the mortality table specified in Section Treasury Regulation Section 1.417(e)-I(d)(2) for that annuity starting date, divided by 1.05. No actuarial adjustment is required for the following: qualified joint and survivor annuity benefits, pre - retirement disability benefits, pre - retirement death benefits, post - retirement medical benefits, and the value of an automatic benefit increase feature made in accordance with applicable Treasury Regulations. "Employer" means the Employer and any Affiliated Company that adopts this Plan. "Limitation Year" means a twelve-consecutive month period ending on the Anniversary Date. If the Limitation Year is amended to a different twelve - consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. "Related Plan" means any other defined benefit plan (as defined in Section 415(k) of the Code) maintained by the Employer. "Year of Participation" means the Employee shall be credited with a Year of Participation for each year in which the Employee has met the requirements of Section I.I (a). An Employee who is permanently and totally disabled within the meaning of Section 415(c)(3)(C)(i) of the Code for an accrual computation period shall receive a Year of Participation with respect to that period. In addition, for an Employee to receive a Year of 31 Participation for an accrual computation period, the Plan must be established no later than the last day of such accrual computation period. In no event will more than one Year of Participation be credited for any 12 -month period. 6.2 Annual Limitation on Benefits Notwithstanding any other provision of the Plan: (a) The Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed an amount equal to $160,000, or such other dollar limitation determined for the Limitation Year by automatically adjusting the $160,000 limitation by the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code in such manner as the Secretary shall prescribe. The new dollar limitation shall apply to Limitation Years ending within the calendar year of the date of the adjustment. Cost of living adjustments to the dollar limitation occurring after severance from employment are taken into account. (b) If the Member has less than ten Years of Participation with the Employer, the limitation in Section 6.2(a) shall be reduced by multiplying it by a fraction, the numerator of which is the Member's full and partial Years of Participation, and the denominator of which is ten. 'Io the extent provided in Treasury Regulations or in other guidance issued by the Internal Revenue Service, the preceding sentence shall be applied separately with respect to each change in the benefit structure of the Plan. The reduction provided in this paragraph does not apply to payments- made to the Member if his payments commence after he has become disabled (within the meaning of Code Section 415(6)(2)(1)), and does not apply to payments made on account of the Member's death. (c) if the Annual Benefit of a Member begins prior to age 62, the limitation under Section 6.2(a) applicable to the Member at such earlier age is an Annual Benefit payable in the 32 form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the limitation applicable to the Member at age 62 (adjusted under subsection 6.2(b) above, if required). The limitation applicable at an age prior to age 62 is determined as the lesser of (x) the actuarial equivalent (at such age) of the limitation computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for early retirement calculations and (y) the actuarial equivalent (at such age) of the limitation computed using a five percent interest rate and the applicable mortality table specified in Section 415(b)(2)(E) of the Code. Any decrease in the limitation determined in accordance with this subsection 6.2(c) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Member. If any benefits are forfeited upon death, the full mortality decrement is taken into account. The reduction in this Section 6.2(c) shall not apply for a Member who is a `qualified participant,' as defined in Code Section 415(b)(2)(H). (d) If the Annual Benefit of a Member begins after age 65, the limitation under Section 6.2(a) applicable to the Member at such later age is an Annual Benefit payable in the forth of a straight life annuity beginning at the later age that is the actuarial equivalent of the limitation applicable to the Member at age 65 (adjusted under subsection (b) above, if required). The limitation applicable at an age after age 65 is determined as the lesser of (x) the actuarial equivalent (at such age) of the limitation computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for early retirement calculations and (y) the actuarial equivalent (at such age) of the limitation computed using a five percent interest rate and the applicable mortality table specified in Section 415(b)(2)(E) of the Code. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored. 33 (c) Pursuant to Treasury Regulation Section 1.415(b)- t(a)(7)(iii), the rate of a Member's accrual shall not be limited by this Article VI (but at all times the annual benefit payable to the Member is subject to the limits set forth in this Article VI). (f) The limitation in Section 6.2(a) is deemed satisfied if the Annual Benefit payable to a Member is not more than $1,000 multiplied by the Member's number of years of service or parts thereof (not to exceed ten) with the Employer, and the Employer (or a predecessor employer) has not at any time maintained a defined contribution plan in which such Member participated. If the Employer maintains one or more defined benefit plans, in addition to this Plan, covering an Employee who is also a Member in this Plan, the sum of the Animal Benefits of all the plans will be treated as a single benefit for the purposes of applying the limitations of Section 6.2(a). For purposes of the preceding sentence, Annual Benefits under it "qualified governmental excess benefit arrangement," as described in Section 415(m)(3) of the Code, shall be disregarded. If the Annual Benefits exceed, in the aggregate, the limitations of Section 6.2(a), the Normal Retirement Benefits under this Plan will be reduced (but not below zero) until the sum of the benefits of the Related Plan(s) satisfy the limitations. In the case of an individual who was a Member in one or more defined benefit plans of the Employer as of the first day of the first Limitation Year beginning after December 31, 1986, the application of the limitations of this Section 6.2 shall not cause the limitation under Section 6.2(a) for such individual under all such defined benefit plans to be less than the individual's Current Accrual Benefit. The preceding sentence applies- only if such defined benefit plans met the requirements of Section 415 of the Code, lot all Limitation Years beginning before May 6, 1986. For purposes of this Section 6.2(t), an individuals Current Accrued Benefit means a Members Accrued Benefit under the Plan, determined as if the Member had separated from service as of the close 34 of the last Limitation Year beginning before January 1, 1987, when expressed as an annual benefit within the meaning of Section 415(b)(2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (i) any change in the terms and conditions of the Plan after May 5, 1986; and (it) any cost of living adjustments occurring after May 5, 1986. (g) If a Member makes one or more contributions to the Plan to purchase "permissive service credit," as defined in Code Section 415(n)(3), then the limitations of this Article VI shall be treated as met only if either (i) the limitations provided in Code Section 415(b) are met, determined by treating the accrued benefit derived from such contributions as an annual benefit for purposes of Code Section 415(b), or (ii) the requirements of Code Section 415(c) are met, determined by treating all such contributions as annual additions for purposes of Code Section 415(c). 35 ARTICLE VII DEFINITIONS 7.1 Definitions Whenever the following terms are used in the Plan, with the first letter capitalized, they shall have the meanings specified below. "Act" means California Government Code. "Amended Effective Date" means July 1, 2008, unless otherwise indicated herein. "Anniversary Date" means July I. "Beneficiary" means the person, persons, trust or trusts designated by a Member, or, in the absence of a designation, entitled by will or the laws of descent and distribution, to receive the benefit specified under this Plan if the Member dies and means the Member's executor or administrator if no other beneficiary is designated and able to act under the circumstances. "CAPERS" means the California Public Employees' Retirement System. "CalPERS Benefit Factor" means the age factor used by the PERS Local Miscellaneous 2 % at 55 plan, which is determined at the Members age at retirement. "CAPERS Enhanced Benefit Factor" means the age factor used by the CaWERS Local Miscellaneous 2.7% at 55 plan, which is determined at the Member's age at retirement. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Compensation. means, for Plan Years beginning after December 31, 2001 or 90 days after the opening of the final legislature session or after January I, 2002. all compensation subject to CalPERS withholding for that portion of the flan Year during which the Employee was a Member, paid in cash by the Employer to the Member for personal services. Compensation in excess of $220,000 (as adjusted through 2006) shall be disregarded. Such amount shall thereafter be adjusted for increases in the cost of living in accordance with Code 36 Section 401(a)(17), except that the dollar increase in effect on January t of any calendar year shall be effective for the Plan Year beginning with or within such calendar year. For any short Plan Year the Compensation limit shall be an amount equal to the Compensation limit for the calendar year in which the Plan Year begins multiplied by a ratio obtained by dividing the number of full months in the short Plan Year by twelve (12). For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001, the annual compensation limit described in this Section 7.1 for determination periods beginning before January 1, 2002 shall be 5150,000 for any determination period beginning in 1996 or earlier; S160,000 for any determination period beginning in 1997, 1998, or 1999; and S l 70,000 for any detcmimation period beginning in 2000 or 2001. "Effective Date" means, unless otherwise indicated herein, July 1, 2000. 'Eligible Class of Employees' means the eligible class of employees- as provided herein and in the applicable governing board policies and regulations promulgated thereunder by the Employer. "Eligible Employee" an Employee who meets the requirements as described in Section I.I. "Employee means an employee of the Employer. "Employer" means the City of Rosemead that has adopted this Plan. "Final Pay" means the highest annual compensation paid to an Employee, including Employer Paid Member Contributions, if applicable, during any twelve consecutive months of employment with the Employer, subject to the limitations of Section 401(a)(I7) of the Code. "Ineligible Employee' means an ineligible employee as provided herein and in the applicable governing board policies and regulations promulgated thereunder by the Employer. "Member" means an Employee eligible to receive benefits under this Plan. 37 "Normal Form of Benefit" is the form of benefit described in Section 4.1. "Normal Retirement Age" means age sixty -two (62) and meeting the requirements of Section 1.1. "Plan" means the City of Rosemead PARS Retirement Enhancement Plan. "Plan Administrator" means the individual or position designated by the Employer to act on behalf of the Employer in matters relating to this Plan. If no designation is made, the Employer shall be the Plan Administrator. If a Plan Administrator has been appointed the word "Employer" as used in this Plan shall mean Plan Administrator unless the context indicates a different meaning is intended. "Plan Year" means the consecutive twelve -month period beginning on July 1 and ending on June 30. "Public Agency" means an employer authorized under California Government Code Article 1.5, Sections 53215 through 53224 to establish a pension trust. "Regulations" means the regulations adopted or proposed by the Department of'I reasury from time to time pursuant to the Code. "Retirement Benefits" means the benefits payable to the Member following retirement, as described in Article It. "Trust" means the trust established as part of the Public Agency Retirement 'trust to hold the assets ofthe Plan. 'Trustee means the trustee of the trust. "Vested" means the nonforfeitable portion of any account maintained on behalf of a Member. "Year of Participation" means any year in which an Employee has met the requirements of Section 1.1(a). 38 ADOPTION OF THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The Amended and Restated City of Rosemead PARS Retirement Enhancement Plan is hereby adopted effective July I, 2008. 'rifle: City Manager Date: 11. 3 ' O$ Plan Submission to the IRS for a Letter of Determination The decision to submit the foregoing Plan to the IRS shall be determined by the Plan Administrator pursuant to his/her initials below: V/Yes, please submit the Plan to the IRS for a Letter of Determination. 0 No, do not submit this Plan to the IRS for a Letter of Dctmmination. If you answered Yes, please provide the following information: Employer Tax IDt! IS - 101-17 ffiq Tax Year- Fnd- %)ne, 3t% t MlXn, List all qualified retirement plans offered by City of Rosemead (e.g. CalPERS) _ Name of ualified Plan _ _Defined Bearfit ar DeJned Cont_rihutinn CaIPERS Defined Benefit By: 'rifle: City Manager Date: 11. 3 ' O$ Plan Submission to the IRS for a Letter of Determination The decision to submit the foregoing Plan to the IRS shall be determined by the Plan Administrator pursuant to his/her initials below: V/Yes, please submit the Plan to the IRS for a Letter of Determination. 0 No, do not submit this Plan to the IRS for a Letter of Dctmmination. If you answered Yes, please provide the following information: Employer Tax IDt! IS - 101-17 ffiq Tax Year- Fnd- %)ne, 3t% t MlXn, List all qualified retirement plans offered by City of Rosemead (e.g. CalPERS) _ Name of ualified Plan _ _Defined Bearfit ar DeJned Cont_rihutinn CaIPERS Defined Benefit bUnionBank- Investment Strategy Selection and Disclosure Form DB Plans Note: HighMark PLUS portfolios are diversified portfolios of actively managed mutual funds. Index PLUS portfolios are diversified portfolios of index -based mutual funds or exchange - traded funds. Jeff Allred Print Name Authorized Signer City Manager Tille Date Authorized Signer Investment Strategy Selection and Disclosure Form DB Plans Page 1 of 1 Ver 107009 eopyrignl 0 2010 Union Bank, N.A All rights reservetl. Date: Agency or District: City of Rosemead Plan Name: City of Rosemead PARS Retirement Enhancement Plan To: HighMark Capital Management, Inc. and Union Bank, N.A. Union Bank, N.A. has been or is hereby appointed Investment Manager of the above - referenced Plan. Please invest the assets of the above - referenced Plan and Trust for which you have been appointed Investment Manager in the (select one of the strategies listed below): STRATEGY INVESTMENT OBJECTIVE ALLOCATION ❑ Liquidity Management Provide current income with liquidity and stability of principal Money Market Fund through investments in short-teml U.S. Treasury obligations Provide current income with liquidity and stability of principal ❑ Liquidity Management through investments in short-term obligations issued or Money Market Fund guaranteed by the U.S. government and its agencies. ❑ Liquidity Management Generate current income with liquidity and stability of principal. Money Market Fund El Short- to- Intemlediate Term Fixed Income Strategy Maximize income consistently with a low level of price volatility. Fixed Income Fund / ❑ Conservative HighMark PLUS Provide a consistent level of inflation- protected income over the long-term. Equity: 5 -20% Fixed Income: 60 -95% I( ❑ Conservative Index PLUS g' Cash: 0 -20% o ❑ Moderately Conservative o HighMark PLUS Provide current income with capital appreciation as a secondary Equity: 20 -40% >_ ❑ Moderately Conservative objective. Fixed Income: 50 -80% Cash: 0 -20% li Index PLUS v w w Moderate HighMark PLUS Equity: 40.60% Provide current income and moderate capital appreciation. Fixed Income: 40 -60% 0 ❑ Moderate Index PLUS Cash: 0 -20% ❑ Balanced / Moderately Aggressive HighMark PLUS Equity: 50-70% Provide growth of principal and income. Fixed Income: 30-50% El Balanced /Moderately Aggressive Cash: 0 -20% Index PLUS Note: HighMark PLUS portfolios are diversified portfolios of actively managed mutual funds. Index PLUS portfolios are diversified portfolios of index -based mutual funds or exchange - traded funds. Jeff Allred Print Name Authorized Signer City Manager Tille Date Authorized Signer Investment Strategy Selection and Disclosure Form DB Plans Page 1 of 1 Ver 107009 eopyrignl 0 2010 Union Bank, N.A All rights reservetl. bUnionBank- PARS Fee Schedule ANNUAL FEES Trust/Custody Fees All Plan assets ...................................................................................... ............................... .........................0.12% on all incoming contributions Investment Management Fees Investment Management Fees are based on the Investment Strategy you select. Following is a list of the investment management fees applicable to each Investment Strategy: • Liquidity -- HighMark U.S. Treasury Money Market — Fund level fees only (see prospectus) • Liquidity -- HighMark U.S. Government Money Market Fund — Fund level fees only (see prospectus) Liquidity -- HighMark Diversified Money Market— Fund level fees only (see prospectus) • Short to Intermediate Term Fixed Income Strategy: Union Bank, N.A. provides investment management services for the assets actively managed in the PARS Short to Intermediate - Term Fixed Income Account. The annual fee on the account's asset value is prorated and charged monthly': .12% on the first $75,000,000 .10% on the next $25,000,000 .05% on all over $100,000,000 'Holdings in the Hartford Guaranteed Annuity Contract for which HighMark Capital Management has also been appointed Investment Fiduciary are held in a separate account and are not assessed the investment management fees listed above. Holdings in Highmark Money Market Funds are also not charged at the above rates, but instead are assessed management fees at the fund level as disclosed in the HighMark Money Market Mutual Fund Prospectus. As of OW02009 the account held $ $442,193.71 in the HighMark 100% US Government Money Market Fund and $157,138,981.33 in otherassets. Union Bank Stable Value Fund - Fund level fees only (see disclosure) Diversified Portfolios (Conservative, Moderately Conservative, Moderate, Balancedl Moderately Aggressive): Per Annum Charges Allplan assets .................................................................................................................................. ............................... .........................0.60 %' 'waived for plan assets invested in HighMark Funds or the Union Bank Stable Value Fund Other Fees HighMark Mutual Funds .................................................................................. ............................... See Prospectus and Mutual Fund Disclosure Exchange Traded Funds ......................................................................................... ............................... See PARS Investment Services Exhibit UnionBank Stable Value Fund .......................................................................................... ............................... ............................See Disclosure Classaction services ................... :. ................... ................... ................................... ........ ................... ........ ... ................ .... 6% of recovered funds Please Note: The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) prohibits the transfer of funds from a financial institution to an internet gambling site. The UIGEA defines restricted transactions as those prohibited under applicable federal, state, or tribal gambling laws. Restricted transactions are prohibited from being processed through your account or relationship. ACKNOWLEDGED AND APPROVED PARS Trust Name of Trust Jeff Allred Name ofAuthori Signer r Plan Sponsor Signature of A�tflorized WgrTer for Plan Sp nsor Union Bank, N.A City of Rosemead PARS Retirement Enhancement Plan Name of Plan City Manaoer Title if laho Date bUnionBank- Union Bank, N.A. Mutual Fund Disclosure Statement Bank - Managed Institutional Accounts Form MFDS -1 Union Bank, N.A. ( "Bank ") makes a variety of mutual funds available to its clients. Among the funds available are the HighMark® Funds ( "Funds "), a family of mutual funds sponsored and distributed by HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc. HighMark Capital Management, Inc. ( "HCM "), a registered investment adviser and wholly owned investment management subsidiary of the Bank, serves as the investment adviser and administrator for the Funds, while the Bank serves as custodian and provides certain additional services to the Funds. Fees for the services described below are paid by the Funds to HCM, the Bank, or its affiliates. Additionally, the Bank charges your account fees for the services provided to you. "Account" means the client plan, trust or other account managed by the Bank. To avoid management fee duplication, HCM and the Bank retain the fees paid to them by the Funds or its distributor that are attributable to your Account, but no investment advisory fee is charged to your Account for any Bank managed account assets invested in the Funds. You can contact your Account officer for an additional copy of your Account fee schedule. HCM and the Bank may also receive certain indirect benefits from having your Account(s) invested in the Funds. For example, a larger fund size creates certain economies of scale and lowers that Fund's expense ratio. The extent to which these factors help each Fund grow benefits HCM and the Bank, whose fees are partially based on the size of each Fund. Accompanying this Disclosure are prospectuses that contain information on the investment objectives, operation and fees for all Fund portfolios available to Accounts of the type you have. Additional copies of the prospectuses for all of the Fund portfolios, that contain information on the investment objectives, operation and fees for all of the Funds are available from your trust officer, or from the distributor as follows: HighMark Funds Distributors, Inc. 760 Moore Road, King of Prussia, PA 19406, 1- 800 - 433 -6884 or by electronic access through www.HighMarkFunds.Com. Read the prospectuses carefully. HighMark Funds offers its shares solely through its distributor, which is not affiliated with HCM or the Bank. The Bank does not endorse or sponsor the Funds. The Funds are not obligations of the Bank, and are not insured by the FDIC or any other government agency. Investments in the Funds, like any mutual fund investments, involve risk, including the possible loss of principal. FEES FOR SERVICES The services performed for the Funds by HCM, the Bank or its affiliates, and the maximum fees which may be paid for such services, are fully set forth below. The fees may, from time to time, be voluntarily reduced pursuant to agreement with the Funds. Voluntary reduction in the fees of a Fund lower that Fund's expenses and, thus, temporarily increase that Fund's yield while the voluntary reduction is in effect. Investment Advisor Services: For the expenses incurred and services provided by HCM as the Funds' investment adviser, HCM receives the following fees, computed daily and paid monthly: • Money Market Funds: At the annual rate of thirty one - hundredths of one percent (.30 %) of each fund's average daily net assets. • Bond Funds: For each fund, except the Short-Term Bond Fund, at the annual rate of up to fifty one - hundredths of one percent (.50 %) of each fund's average daily net assets. For the Short-Term Bond Fund, at the annual rate of forty one - hundredths of one percent (.40 %) of the fund's average daily net assets. • Asset Allocation Funds: At the annual rate of eighteen one - hundredths of one percent (.18 %) of each fund's average daily net assets. • Equity Index Funds: At the annual rate of up to fifty one - hundredths of one percent (.50 %) of the fund's average daily net assets. • International Equity Funds: At the annual rate of ninety -five one - hundredths of one percent (.95 %) of the fund's average daily net assets. • Domestic Equity And Balanced Funds: Al the annual rate of sixty one - hundredths of one percent (.60 %) of each fund's average daily net assets, except for the funds listed in the table below: HighMark Funds Rate Equity Income At the annual rate of up to fifty -five one - hundredths of one percent .55% of the fund's average daily net assets. Cognitive Value, Enhanced Growth, Geneva Growth At the annual rate of up to seventy -five one - hundredths of one ercenl .75% of the fund's average daily net assets. Small Cap Advantage At the annual rate of ninety -five one - hundredths of one percent .95% of the fund's rage daily net assets. Small Cap Value, Geneva Small Cap Growth At the annual rate of up to one percent (1.00 %) of the fund's average daily net assets. Mutual Fund Disclosure Statement Bank - Managed Institutional Accounts - Page 1 of 3 0397610109 Copyrign102o10 union Bank, N A All rights reserved. Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Custodian and Bank Services: For its services as the Funds' domestic custodian, the Bank receives a custodian fee at an annual rate of six and one - quarter one thousandths of one percent (.0.00625 %) of each fund's average daily net assets and reimbursement for reasonable out of pocket expenses incurred in connection with these services. The Bank also receives six one - hundredth of one percent (0.06 %) per annum, calculated on the value of total daily outstanding loan balances for each HighMark Fund portfolio that participates in the Union Bank securities lending program. Global custody fees are ad valorem and transaction fees vary with the country in which settlement takes place. For more detailed information, contact the Fund through the distributor at the number set forth above. Shareholder Servicing Fees: The Bank provides certain shareholder support services to the Funds, and fees for shareholder servicing vary from time to lime, but may be up to twenty -five one - hundredths of one percent (.25 %) of the average daily net assets of a Fund. Administrator Services: HCM acts as administrator to the Funds. HCM is entitled to receive fees from the Fund for services actually performed at an annual rate of up to fifteen one - hundredths of one percent (.15 %) of the Fund's average daily net assets computed daily and paid monthly in arrears. From the administration fee, HCM pays sub - administration fees as more fully described in the Fund's Statement of Additional Information (SAI), available upon request. Other Services: HCM and the Bank reserve the right to direct that certain brokerage transactions be performed through their affiliates. Such transactions would be subject to "best execution" requirements, entered into solely pursuant to the provisions of applicable law and regulation, and only after approval by the Board of Trustees of the Funds. In the event of such transactions, the affiliates would be paid brokerage fees by ,the Funds. Bank or its affiliates may receive soft dollar compensation from brokers consistent with section 28(e) of the Securities Exchange Act of 1934. Mutual funds may also direct trades through Bank's affiliated broker. Please review the prospectuses for mutual funds carefully to identify risks, investment objectives, any investment limitations and restrictions, and costs and expenses of investing in any mutual fund you purchase, including fees paid to service providers such as Bank, Mutual fund prospectuses are available through electronic access from the mutual fund's distributor, your broker or your Union Bank Relationship Manger. In the event that we decide to purchase for your Account an interest in a Morgan Stanley sponsored or advised asset, you are advised that Bank's ultimate parent Company, Mitsubishi UFJ Financial Group, Inc. ("MUFG "), has acquired preferred stock of Morgan Stanley, the parent company of Morgan Stanley & Co. Incorporated, a registered broker - dealer ( "MS &Co. "). This investment gives MUFG a greater than 20 percent ownership interest in Morgan Stanley on a fully diluted basis. A portion of such preferred stock is convertible (subject to certain regulatory approvals) into voting common stock of Morgan Stanley. MUFG is entitled to nominate one member of Morgan Stanley's board of directors and to have an additional "observer" present at meetings of Morgan Stanley's board. If applicable any investment in Morgan Stanley mutual funds or Morgan Stanley collective funds for ERISA Accounts will be made consistent with applicable prohibited transaction exemptions. Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Page 2 of 3 03976 -10/09 eopyllBftr 0 2010 Union 9aNC, N A. All ngNS re5arre0. Mutual Fund Disclosure Statement Bank Managed Institutional Accounts CONSENT AND ACKNOWLEDGMENT TO USE PROPRIETARY MUTUAL FUNDS Investment in the HighMark Funds family of mutual funds may be beneficial because it gives portability to Account holders whose Accounts provide for in -kind distributions of rollovers; results in diversification of Account assets, thereby potentially lowering overall investment risk; allows Account holders to benefit from professional management of the mutual funds' investments; and allows selection among a family of related funds for quick and inexpensive movement between funds in response to market shifts or changes in investment objectives. Applicable fiduciary law and regulation, including, if applicable, the Employee Retirement Income Security Act of 1974 ( "ERISA "), as amended, require full disclosure of relevant fee information so that the client or an independent fiduciary acting on the client's behalf may monitor the reasonableness of the total fees being received by the Bank for its services to the Account. Please sign below indicating you have read this Disclosure and consent to the use of the above - referenced Funds and to the Bank's receipt of the above fees. IANe hereby acknowledge receipt of the prospectuses of the HighMark Funds. If the Account is related to ERISA, IM/e acknowledge that IANe have been offered a copy of Prohibited Transaction Exemption 94 -86, the exemption upon which the Bank relies when investing assets of the Account in proprietary mutual funds. IANe hereby authorize the investment of Account assets in any portfolio of the HighMark Funds in the Bank's discretion in accordance with the investment policies of the Account. IANe also approve the receipt of fees by the Bank in accordance with the information set forth above, in the Fund prospectuses, and in my Account fee schedule. ACCOUNT NAME: Cit of Rosemead PARS Retirement Enhancement Plan CLIENDCOMPANY /ENTITY NAME: City of Rosemead Authorized Signer: Jeff Title: Signature of Authorized Signer: Date: Authorized Signer: Title: Signature of Authorized Signer: Date: Authorized Signer: Title: Signature of Authorized Signer: Date: Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Page 3 of 3 03976 -10109 Copyright 02010 Union Bank, N. A. All rights reserve0. AMENDMENT TO THE CITY OF ROSEMEAD PARS SECTION 457 FICA ALTERNATIVE RETIREMENT PLAN WHEREAS, City of Rosemead ( "Agency ") has previously adopted the City of Rosemead Public Agency Retirement System Section 457 FICA Alternative Retirement Plan ( "Plan "); and . WHEREAS,, the Agency has the right to amend that Plan in accordance with Section 5.2 of the Plan; and WHEREAS, the Agency desires to amend the Plan to comply with recent legislation and regulations applicable to the Plan. NOW, THEREFORE, the Plan is hereby amended as follows: 1. Article II, Section 2.5, "Coordination With Other Plans" has been amended by adding the following to the end of Section 2.5 to read as follows: ""The Employer shall distribute the amount of a Participant's deferral in excess of the distribution limitations stated in Section 2.3, together with allocable net income, as soon as administratively practicable after the Plan determines that the amount is an excess deferral. For purposes of determining whether there is an excess deferral under Section 2.3, all plans under which a Participant participates as a result of his employment with the Employer shall be treated as a single plan." 2. Article IV, Section 4.2, "In Service Distributions" has been amended in its entirety as follows: "9n accordance with Section 457(e)(9)(A), a Participant who is no longer eligible to participate because he is no longer in the class of Eligible Employees, but who has pot terminated employment with the Employer, shall be eligible for a limited in- service distribution if (i) the Participant's benefit is not more than five thousand dollars ($5,000.00), (ii) no amount has been deferred under this Plan for the Participant during the two (2) year period ending on the date of the distribution, and (iii) there has been no previous distribution to the Participant from this Plan under this Section 4.2." 3. Article 1V, Section 4.3 "Qualified Domestic Relations Order ", subsection (b)(iv), has been amended in its entirety as follows: "All amounts credited to an Alternate Payee's Account will be payable to the Alternate Payee or the Alternate Payee's beneficiary in accordance with the terns of this Plan and the Qualified Domestic Relations Order. Such an order may provide for payment to the Alternate Payee prior to the Participant's Break in Employment." 4. Article IV, Section 4.3 "Qualified Domestic Relations Order," subsection (b)(v), has been deleted in its entirety. Pale I of 2 5. Article IV, Section 4.4 "Direct Rollovers," subsection (b)(ii), has been amended in its entirety as follows: "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, a qualified trust described in Section 401(a) of the Code, an annuity plan described in Section 403(a) 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)(1)(A) of the Code, or an annuity contract described in Section 403(b) that accepts the distributee's Eligible Rollover Distribution. With respect to Eligible Rollover Distributions made on or after January 1, 2008, "Eligible Retirement Plan" shall also include a Roth IRA as described in Section 408A(b) of the Code, provided that the distributee is not restricted from making such a rollover from the Plan to a Roth IRA pursuant to Section 408A(c) of the Code. 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. In addition, a Beneficiary other than an individual described in the preceding sentence is a distributee with regard to the interest of the Participant, subject to the limitation that an Eligible Retirement Plan with respect to such distributee is an individual retirement account or individual retirement annuity that will be treated as an inherited individual retirement account or annuity under Section 402(c)(I 1) of the Code." IN WITNESS THEREOF, this Amendment is hereby adopted effective as of January 1, 2008. Executed this day of , 2010. CITY OF ROSEMEAD By: Its: City Manager Page 2 of 2 B 1-0 UnionBank° Investment Strategy Selection and Disclosure Form DB Plans Date: Note: HighMark PLUS portfolios are diversified portfolios of actively managed mutual funds. Index PLUS porffofios are diversified portfolios of index -based mutual funds or exchange -traded funds. Jeff Allred Print Name Authorized Signer Ve, 107109 City Manager Title /�� 6d' Daf�r Awhorized Signer Investment Strategy Selection and Disclosure Form DB Plans Page 1 of 1 Copyright ® 3010 Unim amk H . All right remneo. Agency or District: City of Rosemead Plan Name: _ City of Rosemead PARS Retirement Enhancement Plan To: HighMark Capital Management, Inc. and Union Bank, N.A. Union Bank, N.A. has been or is hereby appointed Investment Manager of the above - referenced Plan. Please invest the assets of the above - referenced Plan and Trust for which you have been appointed Investment Manager in the (select one of the strategies listed below): STRATEGY INVESTMENT OBJECTIVE ALLOCATION ❑ Liquidity Managernent Provide current income with liquidity and stability of principal Money Market Fund through investments in shod -lens U.S. Treasury obligations Provide current income with liquidity and stability of principal ❑ Liquidity Management through investments in shod -term obligations issued or Money Market Fund guaranteed by the U.S. government and its agencies. ❑ Liquidity Management Generale current incomo with liquidity and stability of principal. Money Market Fund ❑ Short-lo- Intermediate Term Fixed Income Strategy Maximize income consistently with a low level of price volatility. Fixed Income Fund / I/ ❑ ❑ Conservative HighMark PLUS Conservative Index PLUS Provide a consistent level,of inflation - protected income over Ilse long -term. Equity: 5.20% Fixed Income: 60.95°/ Cash: 0.20% o ❑ Moderately Conservative , HighMark PLUS Provide current income with capital a pp reciation as a seconds ry Equity: 20 -40% 0 ❑ Moderately Conservative objective. Fixed Income: 50 -80% Cash: 0 -20% Index PLUS v d '= X Moderate HighMark PLUS Equity: 40.60% Z Provide current income and moderate capital appreciation. Fixed Income: 40.60% O ❑ Moderate Index PLUS Cash: 0 -20% ❑ Balanced f Moderately Aggressive HighMark PLUS Equity: 50-70% Provide growth of principal and income. Fixed Income: 30 -50% ❑ etl l Moderately Aggressive Cash: 0 -20% Index Index PLUS Note: HighMark PLUS portfolios are diversified portfolios of actively managed mutual funds. Index PLUS porffofios are diversified portfolios of index -based mutual funds or exchange -traded funds. Jeff Allred Print Name Authorized Signer Ve, 107109 City Manager Title /�� 6d' Daf�r Awhorized Signer Investment Strategy Selection and Disclosure Form DB Plans Page 1 of 1 Copyright ® 3010 Unim amk H . All right remneo. bUnionBank- PARS Fee Schedule ANNUAL FEES TrusUCustody Fees AllPlan assets ..................................................................................... ............................... ..........................0.12% on all incoming contributions Investment Management Fees Investment Management Fees am based on the Investment Strategy you select. Following is a list of the investment management fees applicable to each Investment Strategy: • Liquidity -- HighMark U.S. Treasury Money Market —Fund level fees only (see prospectus) • Liquidity -- HighMark U.S. Government Money Market Fund — Fund level fees only (see prospectus) • Liquidity -- HighMark Diversified Money Market— Fund level fees only (see prospectus) • Short to Intermediate Term Fixed Income Strategy: Union Bank, N.A. provides investment management services for the assets actively managed in the PARS Short to Intermediate - Term Fixed Income Account. The annual fee on the account's asset value is prorated and charged monthly: .12% on the first $75,000,000 .10% on the next $25,000,000 .05% on all over $100,000,000 'Holdings in the Hartford Guaranteed Annuity Contract for which HighMark Capital Management has also boon appointed Investment Fiduciary am held in a separate account and am not assessed the investment management fees listed above. Holdings in Highmark Money Market Funds am also not charged at the above rates, but instead are assessed management fees'al the fund level as disclosed in the HighMark Money Market Mutual Fund Prospectus. As of O613WO09 the account held $ 5442,193.71 in the HighMark 100% US Government Money Market Fund and $157.138,981.33 in other assets. • Union Bank Stable Value Fund - Fund level fees only (see disclosure) • Diversified Portfolios (Conservative, Moderately Conservative, Moderate, Balanced/ Moderately Aggressive): Per Annum Charges Allplan assets .........................................................................:........................................................ ............................... .........................0.60 %' 'waived for plan assets invested in HighMark Funds or the Union Bank Stable Value Fund Other Fees HighMark Mutual Funds .................................................... .. .....:......................... ............................ See Prospectus and Mutual Fund Disclosure Exchange Traded Funds .............................................. . .......... :......... ..... ................. ............................... See PARS Investment Services Exhibit UnionBank Stable Value Fund ......................................................................................... ............................... ............................See Disclosure Classaction services ................... :............................ ............................................. ............................... 6% of recovered funds Please Note: The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) prohibits the transfer of funds from a financial institution to an internal gambling site. The UIGEA defines restricted transactions as those prohibited under applicable federal, state, or tribal gambling laws. Restricted transactions are prohibited from being processed through your account or relationship. ACKNOWLEDGED AND APPROVED PARS Trust Name of Trust - Jeff Allred Name of Authodje Siynor r Plan S onsor . Signature of A orfzed goer for Plan Sp nsor Union Bank, N A City. of Rosemead PARS Retirement Enhancement Plan Name of Plan City Manager Title Dale lJ 11 UnionBank- Union Bank, N.A. Mutual Fund Disclosure Statement Bank - Managed Institutional Accounts Form MFDS -1 Union Bank, N.A. ( "Bank') makes a variety of mutual funds available to its clients. Among the funds available are the HighMarke Funds ( "Funds "), A family of mutual funds sponsored and distributed by, HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc. I- IighMark Capital Management, Inc. ( "HCM "), a registered investment adviser and wholly owned investment management subsidiary of the Bank, serves as the investment adviser and administrator for the Funds, while the Bank serves as custodian and provides certain additional services to the Funds. Fees for the services described below are paid by the Funds to I1CM, the Bank, or its affiliates. Additionally, the Bank charges your account fees for the services provided to you. 'Account" means the client plan, trust or other account managed by the Bank. To avoid management fee duplication, HCM and the Bank retain the fees paid to them by the Funds or its distributor that are attributable to your Account, but no investment advisory fee Is charged to your Account for any dank managed account assets invested in the Funds. You can contact your Account officer for an additional copy of your Account fee schedule. HCM and the Bank may also receive certain indirect benefits from having your Account(s) invested in the Funds. For example, a larger fund size creates certain economies of scale and lowers that Fund's expense ratio. The extent to which these factors help each Fund grow benefits HCM and the Bank, whose fees are partially based on the size of each Fund. Accompanying this Disclosure are prospectuses that contain information on the investment objectives, operation and fees for all Fund portfolios available to Accounts of the type you have. Additional copies of the prospectuses for all of the Fund portfolios, that contain information on the investment objectives, operation and fees for all of the Funds are available from your trust officer, or from the distributor as follows: HighMark Funds Distributors, Inc. 760 Moore Road, King of Prussia, PA 19406, 1 -BDO- 433 -6864 or by electronic access through www.HighMa*Funds.Com. Read the prospectuses carefully. ' HighMark Funds offers Its shares solely through its distributor, which is not affiliated with HCM or the Bank. The Bank does not endorse or sponsor the Funds. The Funds are not obligations of the Bank, and are not insured by the FDIC or any other government agency. Investments in the Funds, like any mutual fund Investments, involve risk, including the possible loss of principal. . FEES FOR SERVICES The services performed for the Funds by HCM, the Bank of its affiliates, and the maximum fees which may be paid for such services, are fully set forth below. The fees may, from time to lime, be voluntarily reduced pursuant to agreement with the Funds. Voluntary reduction in the fees of a Fund Inver that Fund's expenses and, thus, temporarily increase that Fund's yield while the voluntary reduction is in effect. Investment Advisor Services: For the expenses incurred and services provided by HCM as the Funds' investment adviser, HCM receives the following fees, computed daily and paid monthly: • Money Market Funds: At the annual rate of thirty one - hundredths of one percent (.30 %) of each fund's average daily net assets. • Bond Funds: For each fund, except the Shod -Term Bond Fund, at the annual rate of up to filly ono- hundredths of one percent (.50 %) of each fund's average daily net assets. For the Short-Term Bond Fund, at the annual rate of forty one - hundredths of one percent (.40 %) of the fund's average daily net assets. • Asset Allocation Funds: At the annual rate of eighteen one - hundredths of one percent (.18 %) of each fund's average daily net assets. • Equity Index Funds: At the annual rate of up to fifty one - hundredths of one percent (.50 %) of the fund's average daily net assets. • International Equity Funds: Al the annual rate of ninety -five one - hundredths of one percent (.95 %) of the fund's average daily net assets. • Domestic Equity And Balanced Funds: At the annual rate of sixty one- hundredths of one percent (.60 %) of each fund's average daily net assets, except for the funds fisted in the table below: HighMark Funds Rate Equity Income At the annual rate of up to fifty -five one - hundredths of one percent .55°Y° of the fund's stage daily net assets. Cognitive Value, Enhanced Growth, Geneva Growth At the annual rate of up to seventy -five one - hundredths of one ercent .75% of the fund's average daily net assets. Small Cap Advantage At the annual rate of ninety -five one - hundredths of one percent _(95 %) of the fund's average daily net assets. Small Cap Value, Geneva Small Cap Growth At the annual rate of up to one percent (1.00%) of the fund's average daily net assets. Mutual Fund Disclosure Slatemenl Bank- Managed Institutional Accounts Page 1 of 3 ffigns -lci Cwye9hl02110 Urvw 0°M, N.A. All rights ma°rved. Mutual Fund Disclosure Statement Bank Managed Institutional Accounts Custodian and Bank Services: For its services as the Funds' domestic custodian, the Bank receives a custodian fee at an annual rate of six and one - quarter one thousandths of one percent (.0.00625 %) of each fund's average daily net assets and reimbursement for reasonable out of pocket expenses incurred in connection with these services. The Bank also receives six one- hundredth of one percent (0.06 %) per annum, calculated on the value of total daily outstanding loan balances for each HighMark Fund portfolio that participates in the Union Bank securities lending program. Global custody fees are ad valorem and transaction fees vary with the country in which settlement lakes place. For mom detailed information, contact the Fund through the distributor at the number set forth above, Shareholder Servicing Fees: The Bank provides certain shareholder support services to the Funds, and fees for shareholder servicing vary from time to time, but may be up to twenty -rive one - hundredths of one percent (.25 %) of the average daily net assets of a Fund. Administrator Services: HCM acts as administrator to the Funds. HCM is entitled to receive fees from the Fund for services actually performed at an annual rate of up to fifteen one - hundredths of one percent (A 5 %) of the Fund's average daily net assets computed daily and paid monthly in arrears. From the administration fee, HCM pays sub- adminislralion fees as more fully described in the Fund's Statement of Additional Information (SAI), available upon request. Other Services: HCM and the Bank reserve the right to direct that certain brokerage transactions be performed through their affiliates. Such transactions would be subject to "best execution" requirements, entered into solely pursuant to the provisions of applicable law and regulation, and only after approval by the Board of Trustees of the Funds. In the event of such transactions, the affiliates would be paid brokerage fees by the Funds. Bank or its affiliates may receive soil dollar compensation from brokers consistent with section 28(e) of the Securities Exchange Act of 1934. Mutual funds may also direct trades through Bank's affiliated broker. Please review the prospectuses for mutual funds carefully to identify risks, investment objectives, any investment limitations and restrictions, and costs and expenses of investing in any mutual fund you purchase, including fees paid to service providers such as Bank. Mutual fund prospectuses are available through electronic access from the mutual fund's distributor, your broker or your Union Bank Relationship Manger. In the event that we decide to purchase for your Account an interest in a Morgan Stanley sponsored or advised asset, you are advlsed that Bank's ultimate parent company, Mitsubishi UFJ Financial Group, Inc. CMUFG'), has acquired preferred stock of Morgan Stanley, the parent company of Morgan Stanley & Co. Incorporated, a registered broker - dealer ('MS &CO'). This investment gives MUFG a greater than 20 percent ownership interest in Morgan Stanley on a fully diluted basis. A portion of such preferred stock is convertible (subject to certain regulatory approvals) Into voting common stock of Morgan Stanley.* MUFG is entitled to nominate one member of Morgan Stanley's board of directors and to have an additional "observer present at meetings of Morgan Stanley's board. If applicable any investment in Morgan Stanley mutual funds or Morgan Stanley collective funds for ERISA Accounts will he made consistent with applicable prohibited transaction exemptions. Mulual Fund Disclosure Statement Bank Managed Institutional Accounts Page 2 of 3 RW]a4arla � copyright 0 2010 union Bank. N . All riahls roservxl Mutual Fund Disclosure Statement Bank Managed Institutional Accounts CONSENT AND ACKNOWLEDGMENT TO USE PROPRIETARY MUTUAL FUNDS Investment in the HighMark Funds family of mutual funds may be beneficial because it gives portability to Account holders whose Accounts provide for in -kind distributions or rollovers; results in diversification of Account assets, thereby potentially lowering overall investment risk; allows Account holders to benefit from professional management of the mutual funds' investments; and allows selection among a family of related funds for quick and inexpensive movement between funds in response to market shifts or changes in investment objectives. Applicable fiduciary law and regulation, including, if applicable, the Employee Retirement Income Security Act of 1874 ('ERISA'), as amended, require full disclosure of relevant fee Information so that the client or an independent fiduciary acting on the client's behalf may monitor the reasonableness of the total fees being received by the Bank for its services to the Account. Please sign below indicating you have read this Disclosure and consent to the use of the above - referenced Funds and to the Bank's receipt of the above fees. INVe hereby acknowledge receipt of the prospectuses of the HighMark Funds. If the Account is related to ERISA, INVe acknowledge that INVe have been offered a copy of Prohibited Transaction Exemption 94 -66, the exemption upon which the Bank relies when investing assets of the Account in proprietary mutual funds. IMIo hereby authorize the investment of Account assets in any portfolio of the HighMark Funds in the Bank's discretion in accordance with the investment policies of the Account. INVe also approve the receipt of fees by the Bank in accordance with the Information set forth above, in the Fund prospectuses, and in my Account fee schedule. ACCOUNT NAME: Cit of Rosemead PARS Retirement Enhancement Plan CLIENTICOMPANY /ENTITY NAME Authorized Signer: Title: Signature of Authorized Signer: Data: Authorized Signer: Tide: Signature of Authorized Signer: Date: Authorized Signer: Title: Signature of Authorized Signer: Dale: Mutual Fund Disclosure Statement Bank Managod Institutional Accounts 03976.10000 Page 3 of 3 C<pyrynl ®7010 Union BaM, N A AID nghls rasenetl. PARS Mok/ng retirement work for you. July 16, 2010 Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 E. Valley Road Rosemead, CA 91770 Dear Matt Enclosed please find an original copy of the amendment to the City of Rosemead PARS Retirement Enhancement Plan. The amendment closes the Plan to employees hired on or after July 1, 2010. We have kept an original for our files. At your convenience, please contact me with any questions on the investment selection forms for the REP plan. (l have processed the investment change forms for the ARS plan with the trustee.) As always, don't hesitate to contact me at 800.540.6369 x 132 or by email at svolcan @pars.org with any questions on the existing plans. Sincerely, Shauna VOlcan Senior Manager, Plan Implementation /enclosure cc: Dennis Yu, Senior Vice President, PARS 4350 Von Karman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8051 www.pars.org AMENDMENT TO THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead Public Agency Retirement System (PARS) Retirement Enhancement Plan effective July 1, 2000 (the "Plan ") for the benefit of eligible employees, and WHEREAS, the Employer has reserved the right to amend the Plan in accordance with Section 5.3 of the Plan, and WHEREAS, the Employer has determined that it is in the best interest of the Employer and the Plan to close the Plan to all Employees hired by the Employer on or after July 1, 2010. NOW THEREFORE, BE IT RESOLVED, that effective July 1, 2010, the Plan is hereby amended as follows: 1'. Article I, Section 1.1, Tier V, Eligibility for Benefits, is hereby amended and restated as follows: 1.1 Eligibility for Benefits. Tier V (a) is a full -time Miscellaneous Employee of the Employer, a contract City Attorney, or City Council member of the Employer, on or after September 25, 2007; (b) was hired by the Employer on or before June 30, 2010, (b) is at least fifty -five (55) years of age; (c) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer for full -time Miscellaneous Employees, or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties, or has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer, (d) has terminated employment with the Employer and currently retires under. CalPERS, and remains in retired status under CalPERS; and (e) has applied for benefits under this Plan. 2. Article IV, Section 4.1, Normal Form of Benefit is hereby amended to add the following paragraph to the end of Section 4.1: "The Retirement Benefit shall cease for any. Member who returns to active CalPERS status and shall recommence as of the first day of the month after the Member returns to retired status under CaIPERS at the same benefit amount and option immediately prior to the suspension of benefits." IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of July 1, 2010. t!: Executed 3 y of S6 LL y , 2010. By: Jeff Ired Title: City Manager a�„rs 'u Matv'ng retirement work for you. February 3, 2010 Mr. Matthew Hawkesworth Assistant City Manager City of Rosemead 8838 East Valley Boulevard Rosemead, CA 91770 RE: City of Rosemead PARS Supplemental Retirement Plan Dear Mr. Hawkesworth: Enclosed please find the following fully- executed documents for your files: • Amendment to the City of Rosemead PARS Retirement Enhancement Plan • Amendment to the Agreement for Administrative Services As always, if you have any questions on the enclosed documents, please don't hesitate to contact me at 800.540.6369 x 148 or by email at ihinscheCaoars.org. Thank you. ly,, k I. Hinsc e iator, Plan Implementation 4350 Von Karman Ave., Ste. 100 Newport Beach, CA 92660 -2043 800.540.6369 fax 800.660.8057 www.pars.org J AMENDMENT TO THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead Public Agency Retirement System (PARS) Retirement Enhancement Plan effective July 1, 2000 (the "Plan ") for the benefit of eligible employees, and WHEREAS, the Employer has reserved the right to amend the Plan in accordance with Section 5.3 of the Plan. NOW THEREFORE, BE IT RESOLVED, that effective October 27, 2009, the Plan is hereby amended to add an additional tier of eligibility and benefits as follows: 1. Article I, Section 1.1, Eligibility for Benefits, is hereby amended to add the following Tier VI: 1.1 Eligibility for Benefits. Tier VI (a) is an actively employed Miscellaneous Employee of the Employer as of October 27, 2009; (b) is at least fifty -five (55) years of age and eligible to retire under CaIPERS under a regular service retirement as of March 31, 2010; (c) has terminated employment with the Employer effective no later than March 30, 2010 and concurrently retires under CalPERS; and (d) has applied for benefits under this Plan. 2. Article II, Section 2.1, Retirement Benefits, is hereby amended by adding the following Tier VI: 2.1 Retirement Benefits. TIER VI The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to two (2) additional years of CaIPERS service credit. 3. Article IV, Section 4.2, Optional Forms of Benefit, is hereby amended to add additional payout options for Employees eligible under Section 1.1, Tier VI as follows: (b) Lump Sum Payout. Under this form of payment the Member receives a one -time lump sum payment. (c) Fixed -Term Payout. Under this form of payment: (1) The Member receives a benefit paid over a designated period of time (ranging from five (5) years to fifteen (15) years, not to exceed the Member's life expectancy) that is actuarially equivalent to the Normal Form of Benefit. (2) Any remaining payments in the fixed -term payout schedule shall continue to the Beneficiary or subsequent Beneficiaries in the event of the Member's death. IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of October 27, 2009. Executed this day of 2010. By: Title: City Manager AMENDMENT TO THE AGREEMENT FOR ADMINISTRATIVE SERVICES FOR THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The Agreement for Administrative Services executed the 10`h day of August, 2000, ('Agreement ") between Phase lI Systems, a California corporation, doing business as Public Agency Retirement Services and the City of Rosemead ('Agency ") is hereby amended as follows: 1. Exhibit 113, Fees for Services, is hereby amended to add the following paragraphs (D) and (E) as follows: (D) A fee equal to five and one -half percent (5.50 %) of all contributions made by the Agency on behalf of Participants qualifying for benefits under the PARS supplementary retirement incentive, Section 1.1, Tier VI, of the subject Plan. Fees will be billed to the Trustee as contributions are made by the Agency, and it will be the responsibility of the Trustee to pay those fees from assets of the Plan. These fees are exclusive of Trustee and investment management fees, which are based on the standard fees charged by the Trustee. Contributions made pursuant to this paragraph (D) shall not be included in the calculation of the asset fee described in paragraph 1(B) 2. (E) A fee equal to the stated IRS application fees and legal fees related to any ongoing federal and /or state required Plan compliance changes. Such fees will not be charged to the Agency without prior authorization by the Plan Administrator. City of Rosemead Phase II Systems, dba Public Agency Retirement Services (PARS) By: 40" — Name: Jet Ilre Title: City Manager Dated: By: Name: lCevirrJ. Murphy Title: Chief Operating Officer Dated: Myl o ROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: JEFF ALLRED, CITY MANAGER DATE: OCTOBER 27, 2009 SUBJECT: VOLUNTARY "GOLDEN HANDSHAKE" PROGRAM SUMMARY The City Council will consider initiation of a voluntary "golden handshake" program as part of an overall strategy to reduce ongoing costs. Under this program, which would be available only through March 31, 2010, current employees who are fifty -five years of age or older would be offered an additional two -years of service credit in exchange for retirement on or before March 31, 2010. This program is available through the City's membership in Public Agency Retirement Services (PARS). RECOMMENDATION It is recommended that the City Council approve a PARS Supplementary Retirement Plan contract amendment to initiate the voluntary "golden handshake" program and authorize the proposed implementation timeline. BACKGROUND/ANALYSIS In June of 2009, the City Council approved a balanced Budget for the current 2009 -10 fiscal year. This was a significant accomplishment in the face of declining revenues caused primarily by a recessionary economy and state actions to "take away' or "borrow" local government revenues. However, the Budget was ultimately balanced with limited use of one -time, temporary revenue sources and expenditure reductions, including the temporary suspension of employee salary increases and annual payments to the City's internal revolving equipment replacement fund. While the current Budget is in fact balanced, it is recognized that a structural shortfall exists between ongoing expenditures and anticipated recurring revenues.to cover those costs. In an effort to address the structural shortfall between recurring expenditures and revenues, various actions are being pursued to reduce the City's ongoing operating costs. One such measure is the temporary offering of a voluntary "golden handshake" program through PARS. The "golden handshake" benefit is designed to mirror CalPERS retirement benefits and will be distributed and calculated as such. PARS will provide a general meeting for all eligible employees, and will then schedule individual follow -up meetings if employees wish to discuss the personal financial benefits of the plan. Under the proposed program, participating employees will have to make their final decisions of acceptance on or before January 14, 2010. (The March date has been selected to ensure that the City can account for such changes and savings in the development of the upcoming 2010 -11 fiscal year budget.) Once a decision has been made by an employee to participate in the program, a retirement date on or before March 31, 2010 will be identified. An outline of the timeline has been attached for your reference. ITEM NO. City Council Meeting October 27, 2009 Paoe 2 of 2 FINANCIAL IMPACT A total of six employees would be eligible to participate in the "golden handshake' by virtue of age and length of service. Depending on the number of employees who choose to take advantage of this offering, the extent of the ongoing cost savings will be realized. Prepared by: Matthew E. Hawkesworth Assistant City Manager Attachments: A — PARS Supplementary Retirement Plan contract amendment B — Timeline PARS Supplementary Retirement Plan Attachment A City of Rosemead October 5, 2009 With regard to the PARS Supplementary Retirement Plan for eligible Miscellaneous Employees, the City proposes the following: 1.0 Eligibility 1.1 Those Miscellaneous Employees who: a) Are actively employed by the City as of October 27, 2009; and b) Are at least fifty -five (55) years of age and eligible to retire under PERS under a regular service retirement as of March 31, 2010; and c) have resigned from City employment effective no later than March 30, 2010 and concurrently retire under CalPERS. 2.0 Participation Requirements 2.1 Participation in the retirement incentive requires: a. Submission of required PARS enrollment materials and City Letter of Resignation to PARS by January 14, 2010; and b. Resignation from City employment effective on or before March 30, 2010; and c. Retirement under CalPERS effective on or before March 31, 2010. 3.0 Incentive Payments 3.1 Regarding the incentive under this plan, eligible employees shall receive the following: a) Part 1: monthly cash income for the lifetime of the participant equal to two (2) additional years of PERS service credit; And Part 2: Two (2) additional years of service credit shall be added to the PARS Retirement Enhancement Plan (REP) for benefit service and vesting purposes. b) For purposes of this plan, Final Pay shall be defined as the highest twelve (12) consecutive months of earnings with the City (including Employer Paid Member Contributions to CalPERS) Prepared by Public Agency Retirement Services Page 1 _PARS Supplementary Retirement Plan City of Rosemead October 5, 2009 3.2 Alternative monthly forms of payment of equivalent present value to Part 1 shall be offered. They shall include: a) 100% Joint - and - survivor payments; and b) Lump Sum Option; and c) Fixed Term Monthly Payments ranging from five (15) to fifteen (15) years in duration. These payments are guaranteed to the participant for the full term selected. 3.3 The amount of monthly cash payment under Part 1 shall provide a 2% annual cost of living adjustment and shall be increased on the anniversary date of retirement if a lifetime or 100% joint -and survivor_payment is selected. 3.4 The choice of form of payment (and the choice of payment beneficiary if choosing a joint and survivor form of payment) shall become final upon December 18, 2009 and shall not be subject to change thereafter. 3.5 City PARS benefits are scheduled to commence April 1, 2010. 4.0 Contract Administrator 4.1 The Contract Administrator for the Retirement Incentive shall be Public Agency Retirement Services (PARS). 4.2 Administration fees for this program shall be equal to 5.5% of plan contributions required to fund the benefits provided under Part 1 (two additional years of PERS service) of this incentive. Aut rized ignature fo he City Cch4 ftigkr Title Date Prepared by Public Agency Retirement Services Page 2 PARS Supplementary Retirement Plan City of Rosemead October 5, 2009 Preliminary Timeline (Dates are Tentative) 1. October 27, 2009 2. November 2, 2009 3. November 5, 2009 4. Early December 2009 5. January 14, 2010 7. March 30, 2010 7. March 31, 2010 8. April 1, 2010 Attachment B City Council approves early retirement offer PARS provides individualized packets to Employees PARS holds Orientation Meetings Individualized Employee Workshop Employees submit PARS forms and Letter of Resignation Employees resign on or before this date Employees retire under PERS on or before this date PARS Benefits commence Prepared by Public Agency Retirement Services Page 3 Making retirement work foryou. June 10, 2009 Mr. Matthew Hawkesworth Interim City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91770 40 RE: City of Rosemead PARS Post- Retirement Health Care Plan Dear Mr. Hawkesworth: JUN 15 1009 BY Please find enclosed a fully executed original of the Adoption Agreement to the PARS Trust Agreement for your files. I have also enclosed a fully executed Agreement for Administrative Services for your files. If you have any questions, feel free to contact me at (800) 540 -6369 x 148. Sincerely, Jac i N. Hinsch- Plan dministrator, Implementation /enclosure 5141 California Ave., Ste. 150 Irvine, CA 92617 -3069 800.540.6369 fax 949.823.9900 www.pars.org R& R3 aEnrs�� Making retirement work foryou. June 10, 2009 Mr. Matthew Hawkesworth Interim City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91770 40 RE: City of Rosemead PARS Post- Retirement Health Care Plan Dear Mr. Hawkesworth: JUN 15 1009 BY Please find enclosed a fully executed original of the Adoption Agreement to the PARS Trust Agreement for your files. I have also enclosed a fully executed Agreement for Administrative Services for your files. If you have any questions, feel free to contact me at (800) 540 -6369 x 148. Sincerely, Jac i N. Hinsch- Plan dministrator, Implementation /enclosure 5141 California Ave., Ste. 150 Irvine, CA 92617 -3069 800.540.6369 fax 949.823.9900 www.pars.org 0 0 ADOPTION AGREEMENT TO THE PUBLIC AGENCIES POST - RETIREMENT HEALTH CARE PLAN N131:679999.4 EXHIBI'P "A'* TO PUBLIC AGENCIES POST- R] 31'IRGMEN "1' HEALTH I CARE PLAN TRUST AGREEMHN'1' 0 0 No guaranty that payments or reimbursements to employees, former employees or retirees will be tax -free. The Trust has obtained a ruling from the Internal Revenue Service concerning only the federal tax treatment of the Trust's income. That ruling may not be cited or relied upon by the Employer whatsoever as precedent concerning any matter relating to the Employer's health plan(s) (including post- retirement health plans). In particular, that ruling has no effect on whether contributions to the Employer's health plan(s) or payments from the Employer's health plan(s) (including reimbursements of medical expenses) are excludable from the gross income of employees, former employees or retirees, under the Internal Revenue Code. The federal income tax consequences to employees, former employees and retirees depend on the terms and operation of the Employer's health plan(s). Introduction By executing this Adoption Agreement, the Employer specified in Section 11 of this Adoption Agreement adopts: (1) the Public Agencies Post - Retirement Health Care Plan Document (the "Master Plan Document ") integrated with the variable provisions contained within this Adoption Agreement, and (2) the Public Agencies Post - Retirement Health Care Plan Trust Agreement (the "Trust Agreement "). Defined terms shall have the meanings attributed to such terms in the Master Plan Document or the Trust Agreement. The Employer hereby selects the following Plan specifications: Section 1 Plan and Trust Information A.1.1 FULL NAME OF TRUST: Public Agencies Post - Retirement Health Care Plan Trust A.1.2 FULL NAME OF PLAN: Public Agencies Post - Retirement Health Care Plan, as adopted by (name of Employer): City of Rosemead A.1.3 EFFECTIVE DATE OF PLAN: If this is a restatement of an existing plan, the restatement became effective: June 1, 2009 Nn 1:679999.4 EXH 1 I3I1 "A" TO PUBLIC AGENCIES NOS'r- Rli'I'IRISMhN'I' 13EAI: I'li CARE PLAN I RUST AGREEMENT 0 Section 11 Employer Information 0 A.2.1 EMPLOYER INFORMATION: (See Section 2.1 of Master Plan Document): NAME OF AGENCY: City of Rosemead ADDRESS: (Street): 8838 E. Valley Boulevard (City, State Zipcode): Rosemead, CA 91770 (Phone Number): (626) 569 -2100 A.2.2 EMPLOYER'S PLAN ADMINISTRATOR: City Manager A.2.3 EMPLOYER'S TAX IDENTIFICATION NUMBER: 95- 2079994 A.2.4 EMPLOYER'S FISCAL YEAR means the 12 consecutive month period: Commencing on (month, day) .lulu 1 and Ending on (month, day) June 30 Section 111 Eligible Employees and Eligible Dependents A.3.1 ELIGIBLE EMPLOYEE: The determination of Eligible Employees and Eligible Dependents is finally and conclusively made by the Employer according to its applicable policies and collective bargaining agreements, and without reference to this Plan. Section IV Investment A.4.1 INVESTMENT APPROACH: (See Section 6.1 of the Master Plan Document): The Employer shall select either a discretionary or a directed approach to investment. a. Discretionary Investment Approach If the Discretionary Investment Approach is selected, the Employer hereby directs the Trustee to invest the Assets of the Employer's Agency Account pursuant to one of the investment strategies listed on the accompanying Investment Strategy Selection and Disclosure Form or another investment strategy as mutually agreed upon by the Employer and the Trustee. NHI:679999 4 EXHINI'r "A" TO PUBLIC AGENCIE S POST- RE'I'IREMGN'r I- IISAI; rll CARE PLAN TRUST- AGRGEMGNT • r b. Directed Investment Approach If the Directed Investment Approach is selected, the Employer must attach its investment policy and retain . its own Registered Investment Advisor. The Employer shall be permitted to direct investments of its Agency Account pursuant to the terms of the Trust Agreement. Execution and Adoption of Plan and Related Documents By executing this Adoption Agreement, the Employer hereby adopts and agrees to be bound by the Master Plan Document and the Trust Agreement, and hereby ratifies, confirms and approves the appointment of Union Bank of California, N.A. as the Trustee and the appointment of Public Agency Retirement Services as the Trust Administrator as of the Effective Date. The Employer understands and agrees that the Trust Agreement may be amended from time to time by a vote of the Employers as set forth in the Trust Agreement. This Adoption Agreement is hereby executed and effective as of this 2nd day of ,Tune , 2009. CITY OF ROSEMEAD By: Pogo Mattkew AaJke-sworth Interim City Manager ACCEPTED: Tru: Administrator: P e [I Systems, dba Public Agency Retirement Services By: Title: Date: u Trustee and Investment Fiduciary: Union Bank of California, N.A. By: Title: y/ Date: % By: Title: Ve Date: 0 r9 NB1:679999 A EXHIBIT "A "TO PUBLIC AGENCIES POST- RETIREMEN'r HEALTH CARE PLAN TRUST AGREEMENT • APPENDIX A • ELIGIBLE EMPLOYEES AND ELIGIBLE DEPENDENTS OF EMPLOYER (non - binding list set forth to facilitate administration) NR1:679999.4 EXHIBI "`A "TO PUBLIC AGLNCIES POST -RE 'I'IREMEN "PI -I EALI'11 CARL PLAN (RUST AGREEMENT 0 0 AGREEMENT FOR ADMINISTRATIVE SERVICES This agreement ( "Agreement ") is made thisA u day of Sun/E ' 2009, between Phase II Systems, a corporation organized and existing under the laws of the State of California, doing business as Public Agency Retirement Services (hereinafter "PARS ") and the City of Rosemead ( "Agency "). WHEREAS, Agency has adopted the PARS Public Agencies Post - Retirement Health Care Plan (the "Plan "), and is desirous of retaining PARS, as Trust Administrator to the PARS Public Agencies Post - Retirement Health Care Plan Trust, to provide administrative services; NOW THEREFORE, the parties agree: 1. Services. PARS will provide the services pertaining to the Plan as described in the exhibit attached hereto as "Exhibit IA" ( "Services ") in a timely manner, subject to the further provisions of this Agreement. 2. Fees for Services. PARS will be compensated for performance of the Services as described in the exhibit attached hereto as "Exhibit 1 B ". 3. Payment Terms. Payment for the Services will be remitted directly from Plan assets unless the Agency chooses to make payment directly to PARS. In the event that the Agency chooses to make payment directly to PARS, it shall be the responsibility of the Agency to remit payment directly to PARS based upon an invoice prepared by PARS and delivered to the Agency. If payment is not received by PARS within thirty (30) days of the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per month. If payment is not received from the Agency within sixty (60) days of the invoice delivery date, payment plus accrued interest will be remitted directly from Plan assets, unless PARS has previously received written communication disputing the subject invoice that is signed by a duly authorized representative of the Agency. 4. Fees for Services Beyond Scope. Fees for services beyond those specified in this Agreement will be billed to the Agency at the rates indicated in the PARS' standard fee schedule in effect at the time the services are provided and shall be payable as described in Section 3 of this Agreement. Before any such services are performed, PARS will provide the Agency with written notice of the subject services, terms, and an estimate of the fees therefore. 5. Information Furnished to PARS. PARS will provide the Services contingent upon the Agency's providing PARS the information specified in the exhibit attached hereto as "Exhibit 1C" ( "Data "). It shall be the responsibility of the Agency to certify the accuracy, content and completeness of the Data so that PARS may rely on such information without further audit. It shall further be the responsibility of the Agency to deliver the Data to PARS in such a manner that allows for a reasonable amount of time for the Services to be performed. Unless specified in Exhibit I A, PARS shall be under no duty to question Data received from the Agency, to compute contributions made to the Plan, to determine 'or inquire whether contributions are adequate to meet and discharge liabilities under the Plan, or to determine or inquire whether contributions made to the Page 1 0 0 Plan are in compliance with the Plan or applicable law. In addition, PARS shall not be liable for non performance of Services if such non performance is caused by or results from erroneous and /or late delivery of Data from the Agency. In the event that the Agency fails to provide Data in a complete, accurate and timely manner and pursuant to the specifications in Exhibit 1C, PARS reserves the right, notwithstanding the further provisions of this Agreement, to terminate this Agreement upon no less than ninety (90) days written notice to the Agency. 6. Records. Throughout the duration of this Agreement, and for a period of five (5) years after termination of this Agreement, PARS shall provide duly authorized representatives of Agency access to all records and material relating to calculation of PARS' fees under this Agreement. Such access shall include the right to inspect, audit and reproduce such records and material and to verify reports furnished in compliance with the provisions of this Agreement. All information so obtained shall be accorded confidential treatment as provided under applicable law. 7. Confidentiality. Without the Agency's consent, PARS shall not disclose any information relating to the Plan except to duly authorized officials of the Agency, subject to applicable law, and to parties retained by PARS to perform specific services within this Agreement. The Agency shall not disclose any information relating to the Plan to individuals not employed by the Agency without the prior written consent of PARS, except as such disclosures may be required by applicable law. 8. Independent Contractor. PARS is and at all times hereunder shall be an independent contractor. As such, neither the Agency nor any of its officers, employees or agents shall have the power to control the conduct of PARS, its officers, employees or agents, except as specifically set forth and provided for herein. PARS shall pay all wages, salaries and other amounts due its employees in connection with this Agreement and shall be responsible for all reports and obligations respecting them, such as social security, income tax withholding, unemployment compensation, workers' compensation and similar matters. 9. Indemnification. PARS and Agency hereby indemnify each other and hold the other harmless, including their respective officers, directors, employees, agents and attorneys, from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees and costs, incurred by the other as a consequence of PARS' or Agency's, as the case may be, acts, errors or omissions with respect to the performance of their respective duties hereunder. 10. Compliance with Applicable Law. The Agency shall observe and comply with federal, state and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding the administration of the Plan. PARS shall observe and comply with federal, state and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding Plan administrative services provided under this Agreement. Page 2 0 i 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. In the event any party institutes legal proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any state court of competent jurisdiction. 12. Force Majeure. When a party's nonperformance hereunder was beyond the control and not due to the fault of the party not performing, a party shall be excused from performing' its obligations under this Agreement during the time and to the extent that it is prevented from performing by such cause, including but not limited to: any incidence of fire, flood, acts of God, acts of terrorism or war, commandeering of material, products, plants or facilities by the federal, state or local government, or a material act or omission by the other party. 13. Ownership of Reports and Documents. The originals of all letters, documents, reports, and data produced for the purposes of this Agreement shall be delivered to, and become the property of the Agency. Copies may be made for PARS but shall not be furnished to others without written authorization from Agency. 14. Designees. The Plan Administrator of the Agency, or their designee, shall have the authority to act for and exercise any of the rights of the Agency as set forth in this Agreement, subsequent to and in accordance with the written authority granted by the Governing Body of the Agency, a copy of which writing shall be delivered to PARS. Any officer of PARS, or his or her designees, shall have the authority to act for and exercise any of the rights of PARS as set forth in this Agreement. 15. Notices. All notices hereunder and communications regarding the interpretation of the terms of this Agreement, or changes thereto, shall be effected by delivery of the notices in person or by depositing the notices in the U.S. mail, registered or certified mail, return receipt requested, postage prepaid and addressed as follows: (A) To PARS: PARS; 5141 California Avenue, Ste. 150; Irvine, CA 92617; Attention: President (B) To Agency: City of Rosemead; 8838 E. Valley Boulevard, Rosemead, CA 91770; Attention: City Manager Notices shall be deemed given on the date received by the addressee. 16. Term of Agreement. This Agreement shall remain in effect for the period beginning June 1, 2009 and ending June 30, 2012 ( "Term "). This Agreement may be terminated at any time by giving ninety (90) days written notice to the other party of the intent to terminate. Absent a ninety (90) day written notice to the other party of the intent to terminate, this Agreement will continue unchanged for successive twelve month periods following the Term. 17. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the parties hereto. Page 3 18. Entire Agreement. This Agreement, including exhibits, contains the entire understanding of the parties with respect to the subject matter set forth in this Agreement. In the event a conflict arises between the parties with respect to any term, condition or provision of this Agreement, the remaining terms, conditions and provisions shall remain in full force and legal effect. No waiver of any term or condition of this Agreement by any party shall be construed by the other as a continuing waiver of such term or condition. 19. Attorneys Fees. In the event any action is taken by a party hereto to enforce the terms of this Agreement the prevailing party herein shall be entitled to receive its reasonable attorney's fees. 20. Counterparts. This Agreement may be executed in any number of counterparts, and in that event, each counterpart shall be deemed a complete original and be enforceable without reference to any other counterpart. 21. Headings. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 22. Effective Date. This Agreement shall be effective on the date first above written, and also shall be the date the Agreement is executed. AGENCY: BY: t TITLE: Interim City eer DATE: L .2'09 PARS: BY: TITLE: DATE: Page 4 0 0 EXHIBIT IA SERVICES PARS will provide the following services for the City of Rosemead PARS Public Agencies Post - Retirement Health Care Plan: 1. Plan Installation Services: (A) Meeting with appropriate Agency personnel to discuss plan provisions, implementation timelines, actuarial valuation process, funding strategies, benefit communication strategies, data reporting and contribution submission requirements; (B) Providing the necessary analysis and advisory services to finalize these elements of the Plan; (C) Providing the documentation needed to establish the Plan for review by Agency legal counsel; 2. Plan Administration Services: (A) Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust Program ( "Trustee "), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, reimbursements and investment activity, based upon information received from the Agency and /or Trustee; (C) Coordinating the processing of reimbursement payments pursuant to authorized direction by the Agency, and the provisions of the Plan, and, to the extent possible, based upon Agency- provided Data; (D) Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; (E) Preparing and submitting a- monthly report of Plan activity to the Agency, unless directed by the Agency otherwise; (F) Preparing and submitting an annual report of Plan activity to the Agency; (G) Facilitating actuarial valuation updates and funding modifications for compliance with GASB 45; (FI) Coordinating periodic audits of the Trust; (1) Monitoring Plan and Trust Compliance with federal and state laws. 3. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. In providing the services specified above, PARS will retain qualified professional service providers at its cost as it deems necessary if the service lies outside its area of expertise. Page 5 • 1. • EXHIBIT 1 B FEES FOR SERVICES PARS will be compensated for performance of Services, as described in Exhibit IA based upon the following schedule: (A) An annual asset fee paid from Plan assets based on the following schedule: For Plan Assets from: Annual Rate: $0 to $10,000,000 0.25% $10,000,001 to $15,000,000 0.20% $15,000,001 to $50,000,000 0.15% $50,000,001 and above 0.10% Annual rates are subject to a monthly minimum equal to $400.00. Annual rates are prorated and paid monthly. The annual asset fee shall be calculated by the following formula [Annual Rate divided by 12 (months of the year) multiplied by the Plan asset balance at the end of the month]. Trustee and Investment Management Fees are not included. (B) A fee equal to the out of pocket costs charged to PARS by an outside contractor for formatting contribution data on to a suitable magnetic media, charged only if the contribution data received by PARS from the Agency is not on readable magnetic media ( "Data Processing Fee "). Page 6 EXHIBIT 1C DATA REQUIREMENTS PARS will provide the Services under this Agreement contingent upon receiving the following information: Contribution Data — Completed Contribution Transmittal Form signed by Plan Administrator (or authorized Designee) which contains the following information: (A) Agency name (B) Contribution amount (C) Signed certification of reimbursement from the Plan Administrator, or authorized Designee 2. Reimbursement Data — Completed Payment Reimbursement Form signed by the Plan Administrator (or authorized Designee) which contains the following information: (A) Agency name (B) Payment reimbursement amount (C) Applicable statement date (D) Copy of applicable premium statement (E) Signed certification of reimbursement from the Plan Administrator (or authorized Designee) 3. Executed Legal Documents: (A) Certified Resolution (B) Adoption Agreement to the PARS Public Agencies Post- Retirement Health Care Plan (C) Trustee Investment Forms 4. Other information requested by PARS and Actuarial Provider Page 7 0 0 E M F 5 OR- ORATED 1 0.�0 0 ROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: MATTHEW E. HAWKESWORTH, ACTING CITY MANAGER DATE: MAY 26, 2009 SUBJECT: POST RETIREMENT HEALTHCARE FUNDING SUMMARY The Government Accounting Standards Board (GASB) issued GASB Statement 45 in June 2004 which requires all government agencies to evaluate and adopt a funding plan for Other Post Employment Benefits (OPEB). GASB 45 mandates that public agencies with annual budgets between $10 million and $100 million adopt an implementation plan in the fiscal year beginning after December 31, 2007. For the City of Rosemead, the requirement is for implementation in the 2008 -09 fiscal year. City staff requested that a valuation (Attachment A) be performed in accordance with GASB 45 by Public Agency Retirement Services (PARS) as they currently perform similar services for the City's supplemental retirement plan. Based upon the valuation, which utilizes payroll and demographic information as of January 1, 2008, it was determined that the City has an actuarial unfunded liability of $2.66 million. City staff in conjunction with PARS staff have developed four possible funding scenarios to account for and fund this benefit and actuarial liability. Staff Recommendation Staff recommends that the City Council approve funding option 4 to fully fund the liability over five (5) years and budget accordingly for annual contributions. Furthermore, staff recommends that the City Council adopt Resolution 2009 -24 (Attachment B), the Adoption Agreement (Attachment C), Trust Agreement (Attachment D), and Administrative Services Agreement (Attachment E), and authorize the Acting City Manager to execute the necessary documents to establish an Irrevocable Medical Benefit Trust with PARS. ANALYSIS This City currently has three benefits that require actuarial valuations for OPEB: CaIPERS, Public Agency Retirement Services (PARS), and retiree medical. CaIPERS for retirement benefits and PARS for supplemental retirement benefits are existing plans already. included in the City's annual financial statements and no new work is required under GASB 45. The third ITEM NO.____>a APPROVED FOR CITY COUNCIL AGENDA Present Value of Future Benefits Actuarial Accrued Unfunded Liability Total Annual Contribution 30 Years) 1 — Pay as you Go Not Applicable $2,660,557 $7,016,253 2 — Irrevocable Trust - 1 Year $2,879,427 $2,660,557 $4,319,581 3 —Irrevocable Trust — 3 Year $2,879,427 $2,660,557 $4,686,570 4 — Irrevocable Trust — 5 Year $2,879,427 $2,660,557 $4,881,764 Staff Recommendation Staff recommends that the City Council approve funding option 4 to fully fund the liability over five (5) years and budget accordingly for annual contributions. Furthermore, staff recommends that the City Council adopt Resolution 2009 -24 (Attachment B), the Adoption Agreement (Attachment C), Trust Agreement (Attachment D), and Administrative Services Agreement (Attachment E), and authorize the Acting City Manager to execute the necessary documents to establish an Irrevocable Medical Benefit Trust with PARS. ANALYSIS This City currently has three benefits that require actuarial valuations for OPEB: CaIPERS, Public Agency Retirement Services (PARS), and retiree medical. CaIPERS for retirement benefits and PARS for supplemental retirement benefits are existing plans already. included in the City's annual financial statements and no new work is required under GASB 45. The third ITEM NO.____>a APPROVED FOR CITY COUNCIL AGENDA 0 City Council Meeting May 26, 2009 Pace 2 of 4 0 program offered by the City which does require new reporting is the City's retiree medical benefit. Prior to GASB 45, public agencies were not required to perform actuarial valuations or report the liability of such plans as part of the financial statements. Prior to July 1, 2007, the City of Rosemead provided retiree medical benefits to all full -time team members who retired from the City. Staff presented a GASB 45 actuarial valuation to the City Council on June 12, 2007 which reported that the Present Value of Future Benefits for this plan was $9,850,614 with an Actuarial Accrued Liability of $5,547,615. In order to reduce this liability the City Council authorized staff to negotiate with the Rosemead Employee Association which resulted in the reduction of future retiree medical benefits. The City Council and Rosemead Employee Association subsequently approved a Memorandum of Understanding which eliminated retiree medical benefits to team members hired after July 1, 2007 and implemented minimum, years of service requirements for those hired prior to July 1, 2007. The anticipated result was a significant reduction in future costs and liability for the benefit. City staff contacted PARS and requested a valuation for the current benefits since they had completed the previous valuation and had been working on a valuation for the City's Supplemental Retirement Plan. PARS offered to combine the valuations in order to save the City money as most of the data involved is the same. The valuation was completed and several funding options have been developed. Option 1 Under GASB 45, a public agency may choose to report the actuarial liability as part of the annual financial statements, but make no plans to pre -fund the obligation and continue on a pay -as- you -go basis. Under this scenario the City would continue with past practice of budgeting the annual retiree medical payments. Most agencies and public finance officials have discouraged the pay -as- you -go method as it passes on the previous liability to current and future budgets indefinitely. The annual benefit payments are currently budgeted at $140,820 and are projected to increase each year. Annual payments for subsequent years are estimated as follows: Fiscal Year Estimated Benefit Payments Fiscal Year Estimated Benefit Payments 2009 $140,820 2018 $254,029 2010 $155,416 2019 $266,127 2011 $176,447 2020 $277,073 2012 $190,458 2021 $268,821 2013 $201,898 2022 $274,501 2014 $214,209 2023 $278,318 2015 $220,369 2024 $270,769 2016 $232,356 2025 $266,219 2017 $239,027 2026 $262,024 Options 2 through 4 These options establish an irrevocable medical benefit trust for the funding of OPEB. An irrevocable trust is similar to what the City currently utilizes for its CalPERS and PARS plans. Funds are deposited based upon the actuarial valuation each year with the long term goal of funding the plan at 100 %. The contributions include funds for the annual cost which is referred 0 0 City Council Meeting May 26, 2009 Page 3 of 4 to as the "Normal Cost" and amortization payments to pay down the actuarial accrued liability. Irrevocable plans are maintained by a third -party administrator who collects the funds, manages the investments and distributes payments to retirees. Irrevocable trusts traditionally require lower annual Normal Cost payments and amortization payments as the investments are pooled with other similar plans generating a higher interest rate return. PARS recommends using an interest rate assumption of 7.5% for this type of plan which is similar to what is used by CalPERS and PARS for retirement programs. The annual cost differences in options 2 through 4 display various funding options between one year and five years. As with any unfunded liability or debt, the earlier the liability is paid down, the more money is saved in interest payments. A thirty year cost projection has been attached (Attachment F) for your reference. Irrevocable Medical Benefit Trusts Under GASB 45, an irrevocable trust may be established for the funding and payment of post employment retiree healthcare. In California two large trusts have been created that are being utilized by most government agencies, PARS and CalPERS. City staff is recommending the PARS plan due to the pre- existing relationship and the fact that there is no specific requirement regarding health plan provider. Under the CalPERS trust, the City would be required to keep CaIPERS as the health plan provider indefinitely and since the City has previously considered using outside insurance brokers, the PARS plan would allow the City to keep this option. Under the proposed plan the City will contract with PARS to act as trustee and administrative manager of the irrevocable medical benefits trust. The purpose of the trust is to accumulate, hold, and distribute, medical benefit plan assets for the exclusive benefit of retirees and beneficiaries within the meaning of the IRS Code Section 115 and in conformance with the accounting standard. A second agreement will be executed with Union Bank, who will actively manage plan assets consistent with long -term investments to achieve the assumed actuarial rate of return. The City currently invests using the Balanced /Moderately Aggressive Strategy for the Retirement Enhancement Plan, however, staff is recommending the Moderate Strategy Plan for this Medical Benefit Trust. The Moderate Plan is slightly less aggressive while still maintaining the reasonable ability of earning the assumed 7.5% rate of return over the long term. The individual trust account of the City, known as an agency account, will be part of a larger master trust administered by PARS however; the trustee will provide the City with monthly or quarterly statements of the City's agency account. The following separate agreements are necessary to create the medical benefits trust. • Adoption Agreement - Required for the official adoption of the Master Plan Document (Attachment C). • Trust Agreement - Sets forth the employer's plan administrator (Attachment D). Consistent with other benefits plans, the City Manager and /or designee shall administer the plan. The plan administrator has overall responsibility for the plan including selection of the plan's asset investment approach. 0 City Council Meeting May 26, 2009 Pace 4 of 4 • Administrative Services Agreement - Outlines the services provided and the billing practices of PARS as the trust administrator (Attachment E). PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Submitted by: Mew E. Hawkesworth Acting City Manager Attachments: A— Actuarial Valuation B — Resolution 2009 -24 C - Adoption Agreement D — Trust Agreement E — Administrative Services Agreement F — Thirty Year Cost Projections RESOLUTION: 2009 -24 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ESTABLISHING A SECTION 115 POST - RETIREMENT HEALTH CARE PLAN TRUST. WHEREAS, it is determined to be in the best interest of the City of Rosemead (the "City ") to participate in the PARS Public Agencies Post - Retirement Health Care Plan Trust (the "Program ") to fund post - employment benefits for its employees as specified in the City's policies and /or applicable collective bargaining agreements; and WHEREAS, the City is eligible to participate in the Program, a tax - exempt trust and plan performing an essential governmental function within the meaning of Section 115 of the Internal Revenue Code, as amended, and the Regulations issued thereunder, and is a tax - exempt trust under the provisions of the relevant statutory provisions of the State of California. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ROSEMEAD HEREBY RESOLVES AS FOLLOWS: The City Council hereby adopts the PARS Public Agencies Post - Retirement Health Care Plan Trust, including the PARS Public Agencies Post - Retirement Health Care Plan, as part of the City Retirement Program, effective June 1, 2009; and 2. The City Council hereby appoints the City Manager, or his successor of his designee as the City's Plan Administrator for the Program; and 3. The City's Plan Administrator is hereby authorized to execute the PARS legal documents on behalf of the City and to take whatever additional actions are necessary to maintain the City's participation in the Program and to maintain compliance of any relevant regulation issued or as may be issued; therefore, authorizing him to take whatever additional actions are required to administer the City's PARS plan(s). (See next page for signatures) 0 PASSED, APPROVED AND ADOPTED this 26th day of May 2009. MARGAZET CLARK MAYOR ATTEST: Gloria Molleda City Clerk APPROVE AS TO FORM: e _ ihr� 0 0 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS. CITY OF ROSEMEAD ) I, Gloria Molleda, City Clerk of the City of Rosemead, do hereby certify that the foregoing Resolution No. 2009 -24 being: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ESTABLISHING A SECTION 115 POST - RETIREMENT HEALTH CARE PLAN TRUST was duly and regularly approved and adopted by the Rosemead City Council on the 26`h of May of 2009, by the following vote to wit: Yes: Armenta, Clark, Low, Ly No: None Abstain: Taylor Absent: None Any J" Gloria Molleda City Clerk �71MiIIiman April 14, 2008 Mr. Dennis Yu, CEBS Vice President, Consulting Public Agency Retirement Services 5141 California Avenue, Suite 150 Irvine, CA 92617 -3069 I� L Attachment A 1921 Gallows Road Suite 900 Vienna, VA 22182 USA Tel +1 703 917 0143 Fax +1 703 827 9266 miAiman.con Re: January 1, 2008 Actuarial Valuation for the City of Rosemead Post - Retirement Health Care Plan Dear Dennis: As requested, we have completed our valuation of the post - retirement healthcare plan as of January 1, 2008 for the City of Rosemead. The purpose of the valuation is to estimate the potential liabilities and expense under the GASB 45 accounting rules for post employment benefits other than pensions. This letter - report summarizes our results in aggregate for all employee and retiree groups. Our report is separated into the following seven sections: 1. Summary of Results 2. Ten Year Projection of Pay- as- you-go Cost 3. Participant Data as of January 1, 2008 4. Participant Reconciliation as of January 1, 2008 5. Schedule of Funding Progress 6. Plan Provisions 7. Actuarial Assumptions 8. Actuarial Methods As requested, we show the results under 4.50% and 7.50% interest rate assumptions. In general, the interest rate assumption would be a best estimate of the expected long- term rate of return on assets, which is largely driven by your current and future investment mix. If the plan has no assets, the assumption would be based on the rate of return of the Citys assets. The demographic assumptions used in the calculations are consistent with those that were used in the January 1, 2008 supplemental pension valuation. We used employee and retiree data as of January 1, 2008, and the health plan premiums effective January 1, 2008. As requested, we determined the results at an interest rate of 7.50% for the scenario in which assets would be set aside in an irrevocable trust to fund retiree health benefits. This work product was prepared solely for Public Agency Retirement Servvices and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. Milliman does not Intend to benefit and assumes no duty or liability to otherpartles who receive this work. Offices in Principal Cifies Worldwide r Milli an 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 2 If the assets are not in an irrevocable trust, GASB 45 does not consider them plan assets and the results would be based on the rate of return of the employer's assets. For the latter scenario in which health assets are part of the City's general assets, we have used an interest rate of 4.50%. We show the results under both asset classification approaches. The City has been funding the benefits since its inception on a pay -as- you -go basis. We have not adjusted the costs for any liability the City may have on their financial statement for these benefits. If the City is carrying a liability for these benefits, it may be appropriate to reduce the costs to take into account the liability the City has already accrued. In preparing this report, we relied, without audit, on information (some oral and some in writing) supplied by PARS and the. City's staff. This information includes, but is not limited to, statutory provisions, employee data, and financial information. In our examination of these data, we have found them to be reasonably consistent and comparable with data used for other purposes. Since the valuation results are dependent on the integrity of the data supplied, the results can be expected to differ if the underlying data is incomplete or missing. It should be noted that if any data or other information is inaccurate or incomplete, our calculations may need to be revised. On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, this report is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the actuarial standards of Practice promulgated by the Actuarial Standards Board and applicable Guides to Professional Conduct, amplifying Opinions, and supporting Recommendations of the American Academy of Actuaries. We further certify that all costs, liabilities, rates of interest, and other factors for the Plan have been determined on the basis of actuarial assumptions and methods which are individually reasonable, taking into account the experience of CaIPERS and reasonable expectations. Nevertheless, the emerging costs will vary from those presented in this report to the extent actual experience differs from that projected by the actuarial assumptions. Actuarial computations under GASB Statement No. 45 are for purposes of fulfilling financial accounting requirements. The calculations in the enclosed report have been made on a basis consistent with our understanding of GASB 45. Determinations for purposes, other than meeting those requirements may be significantly different from the results contained in this report. Accordingly, additional determinations may be needed for other purposes. This work product was pmpared solety for Public Agency Retirement Services and the city of Rosemead for the pwpo described herein and may not be appropriated to use for oUw purposes. Willman does nor intend to benefil and assumes no duty or liability to otherparties who receive this work. E t` Milliman 0 Mr. Dennis Yu. CEBS April 14, 2008 Page 3 Milliman's work product was prepared exclusively for the management of the City of Rosemead and PARS for a specific and limited purpose. It is a complex, technical analysis that assumes a high level of knowledge concerning the City of Rosemead operations, and uses City of Rosemead data, which Milliman has not audited. It is not for the use or benefit of any third party for any purpose. Any third party recipient of Milliman's work product who desires professional guidance should not rely upon Milliman's work product, but should engage qualified professionals for advice appropriate to its own specific needs. We respectfully submit the following report, and we look forward to discussing it with you at your convenience. I, John C. Muehl, am a consulting actuary for Milliman, Inc. I am a member of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Please call me at your convenience with any questions about this letter or to discuss study results. Sincerely, Milliman, Inc. i Jenny Fung . Actuarial Analyst John C. Muehl, FSA, EA, MAAA I; Con$ulting Actuary Cc. . Kevin Murphy Robert Dezube JCUVIJFIPHH192 P: IPHHVioeemaad12008\2008GASB.doc This work product was prepared solely for Public Agency Refiremem Services and the City of Rosemead for the purposes described herein and may not be approprated to use for otherpwposes. h5liman does not Intend to benerd and assumes no duly or liabk7ly to ottwpargas who mcww this work. 0 1. Summary of Results 1. Present Value of Future Benefits: a. Actives b. Terminated Vesteds c. Retirees d. Total 2. Present Value of Future Normal Costs: a. Actives b. Terminated Vesteds c. Retirees d. Total 3. Actuarial Liability [(1.) - (2.)]: a. Actives b. Terminated Vesteds c. Retirees d. Total 4. Actuarial Value of Assets: 5. Unfunded Actuarial Liability [(3d.) - (4.)]: 6. Annual Required Contribution a. Normal Cost b. Amortization of Unfunded Actuarial Liability' c. Total 7. Estimated Benefit Payments 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 4 1/1/2008 Valuation Health Plan Assets in Health Plan Assets in Irrevocable Trust General Rosemead Fund 7.50% 4.50% $1,028,467 $1,776,701 0 0 1.850.960 2.441.618 $2,879,427 $4,218,319 $218,870 $527,343 0 0 0 0 $218,870 $527,343 $809,597 $1,249,358 0 0 1.850,960 2.441.618 $2,660,557 $3,690,976 $0 $0 $2,660,557 $3,690,976 Based on a 30 -year amortization period, with level payments. $33,482 $67,941 209.556 216.837 $243,038 $284,778 $140,820 $140,820 7his work product was prepared solely for Public Agency Rebrernent Services and the Gly or Rosemead for the purposes described herein and may not be appropriated to use for other purposes. Millman does not intend to benerd and assumes no duty or liability to other parties who receive this work. Milliman 2. Ten Year Projection of Pay- as- you-go Cost 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 5 Year Beginning January 1 Estimated Benefit Payments 2008 $140,820 2009 ' $155,416 2010 $176,447 2011 $190,458 2012 $201,898 2013 $214,209 2014 $220,369 2015 $232,356 2016 $239,027 2017 1 $254,029 3. Participant Data as of January 1. 2008 a. Active Participant Counts: Males 15 Females 15 Total 30 b. Overall Active Average Age: 46.0 c. Average Service (years): 9.8 d. Retired Participant Counts: Retirees Associated Spouses Males 12 0 Females 2 8 Total 14 8 e. Average Annual Retiree Benefit: $6,211 (Includes Spouses): This work product was prepared solely for Public Agency Retirement services and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. Wiliman does not intend to benefit and assumes no duty or Lability to otherpanies who receive this work Milliman • Active Participants Years of Service C� Mr. Dennis Yu, CEBS April 14, 2008 Page 6 Age Under 5 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 3o to 34 35 to 39 40 $ up Totals Under 25 0 0 0 0 0 0 0 0 0 0 25 To 29 4 0 0 0 0 0 0 0 0 4 30 To 34 3 0 0 0 0 0 0 0 0 3 35 To 39 1 2 0 0 0 0 0 0 0 3 40 To 44 0 0 1 0 0 0 0 0 0 1 45 To 49 2 0 1 0 2 0 0 0 0 5 50 To 54 1 3 1 0 1 1 0 0 0 7 55 To 59 0 1 2 0 0 0 0 0 0 3 60 To 64 0 0 2 0 0 0 0 0 0 2 65 To 69 0 0 0 0 1 0 1 0 0 2 708 Up 0 0 0 0 0 0 0 0 0 0 Totals 11 6 7 0 4 1 1 0 0 30 4. Participant Reconciliation as of January 1. 2008 Participant Count as of 01/01/2007 New Hires Terminated without a benefit Retired Participant Count as of 01/01/2008 5. Schedule of Fundina Proaress') Actives Retirees Total Llabifiy Ratio 39 9 48 2 2 (6) (6) (5) 5 0 30 14 44 In accordance with Statement No. 45 of the Government Accounting Standards Board. Valuation Accrued Value 'Unfunded Funded- Date Liabllify of Llabifiy Ratio Assets; (UAL) 01101/2007 $5,547,615 $0 $5,547,615 0% 01/0112008 $3,548,605 $0 $3,548,605 0% ')Based on investment return assumption of 4.5% $2,119,080 262% $1,682,985 211% This work product was prepared safety rorPublic Agency Retirement SeMoss and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. MiNmen does not intend to benefit and assumes no duty or liability to other pales who receive this work. Milliman 0 6. Current Plan Provisions a. Health Plan Eligibility 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 7 Miscellaneous employees, City Council Members and City Attorney must separate from City employment and concurrently retire under CalPERS. Retirees are eligible to choose one of the following health plans through CalPERS. Shown below are 2008 sample rates for employees only. Employee Only Employee Only Plan Pre-65 Post -65 Blue Shield (HMO) $392.01 $341.44 Kaiser Pennanente (HMO) $359.30 $273.36 PERS Choice (PPO) $449.04 $349.11 PERSCare (PPO) $697.87 $404.60 PORAC (Association Plan) $452.00 $308.00 b. Health Plan Benefit Retired participants For employees who retired prior to July 1, 2007, the City will pay the retired employee's entire monthly medical premium which may include his/her spouse and /or dependents, up to the maximum rate for PERSCare family coverage ($1,814.46 for 2008). The benefit in future years will be adjusted based on the cost of coverage for the PERSCare. option. The spouse of a retiree can continue coverage after the death of the retiree. Active participants For active employees who were hired prior to July 1, 2007 and retire with 20 or more years of service, the City will pay up to $1,000 per month for healthcare benefits for the retiree and family. The retiree pays the rest of the premium. For active employees who were hired prior to July 1, 2007 and retire with 12 to 19 years of service, the City will pay up to $500 per month for healthcare benefits for the retiree and family. The retiree pays the rest of the premium. For active employees who were hired prior to July 1, 2007 and retire with less than 12 years of service, no benefit is provided. For active employees who were hired July 1, 2007 and later, no benefit is provided. This work product was prepared solely for PublicAgermy Retirement Services and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. Arilliman does not intend to benefit and assumes no duty or liability to other parties who receive this work Milliman 0 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 8 c. Benefit Service Benefit service is credited from the date of hire in full -time employment with the City. d. Vesting Service Vesting service is credited from the date of hire in full -time employment with the City. e.. Employee Contributions None. f. Disability Retirement Benefit The Plan does not include a special disability benefit. g. Death Benefit The Plan does not include a special pre- retirement death benefit. h. Withdrawal Benefit The Plan does not include a special withdrawal benefit. Benefit Chanaes Since the Prior Valuation The City of Rosemead reduced benefits for employees who retire July 1, 2007 or later as described in item b. above. The City eliminated benefits for employees hired July 1, 2007 or later. This work product was prepared solely for Public Agency Retirement Services and the City of Rosemead for Me purposes described herein and may not be appropriated to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other paries who receive this work - Milliman 7 0 Actuarial Assumptions a. Valuation Date: b. Investment Return: c. Medical Trend: d. Coverage Elections: 0 January 1, 2008 4.50% and 7.50% Mr. Dennis Yu, CEBS April 14, 2008 Page 9 Increases based on the following table: . January 1, Annual Year Increase 2008 10.00% 2009 9.50% 2010 9.00% 2011 8.50% 2012 8.00% 2013 7.50% 2014 7.00% 2015 6.50% 2016 6.00% 2017 5.50% 2018 0.044% and later 5.00% e. Pre - Retirement Mortality: 100% of new retirees elect coverage based on current elections. 40% of new retirees elect single coverage and 60% of new retirees elect dependent coverage. RP -2000 Combined Healthy mortality tables for males and females, with a 5 -year setback. Sample rates are as follows: Acme Male Female Acme Male Female 20 0.027% 0.017% 50 0.151% 0.112% 25 0.035% 0.019% 55 0.214% 0.168% 30 0.038% 0.021% 60 0.362% 0.272% 35 0.044% 0.026% 65 0.675% 0.506% 40 0.077% 0.048% 70 1.274% 0.971% 45 0.108% 0.071% This work product was prepared solely for Public Agency Retirement Services and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. mikman does not intend to benefit and assumes no duty or liability to other parties who receive this work Milliman • f. Post - Retirement Mortality: 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 10 RP -2000 Combined Healthy mortality tables for males and females. Sample rates are as follows: Years of Service - Males Hire Age Under 1 1 to 2 2 to 3 3 to 4 4 to 5 30 6.600/6 12.55% 8:61% 7.140% 5.81% 40 6.18% 10.48% 7.21% 5.54% 4.54% 50 5.79% 8.77% 6.11% 4.40% 3.69% Years of Service - Females Hire Age Healthy Age Male Female 50 0.21% 0.17% 60 0.67% 0.51% 70 2.22% 1.67% 80 6.44% 4.59% 90 18.34% 13.17% 100 34.46% 23.75% 110 100.00% 100.00% g. Withdrawal: Sample select and ultimate rates for participants are as follows: Years of Service - Males Hire Age Under 1 1 to 2 2 to 3 3 to 4 4 to 5 30 6.600/6 12.55% 8:61% 7.140% 5.81% 40 6.18% 10.48% 7.21% 5.54% 4.54% 50 5.79% 8.77% 6.11% 4.40% 3.69% Years of Service - Females Hire Age Under 1to2 2to3 3to4 4to5 30 8.070/6 15.320/o 11.23% 6-0-20% 7.20% 40 7.66% 12.88% 8.56% 6.63% 4.54% 50 7.25% 10.85% 6.59% 4.98% 2.98% For participants with more than ten years of service: Attained Age Male Female 30 2.58% 3.86% 35 2.42% 3.55% 40 2.27% 3.29% 45 . 2.13% 3.05% This work product was prepared solely for Public Agency Retirement Services and the City of Rosemeed for the purposes described herein and may not be appropriated to use for other purposes. Milliman does not intend to benefit and assumes no duty or Oability to other parties who receive this work. Milliman 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 11 h. Retirement: For miscellaneous employees and the contract City Attorney: Retirement rate of 20% at ages 60 and older with between 10 and 20 years of service, and retirement rate of 30% at ages 55 and older with more than 20 years of service. For City Council members: Retirement rates of 30% per year after attaining age 55. L -Disability: Sample rates are as follows: Age Male Female 30 0.100% 0.0701. 40 0.22% 0.15% 50 0.46% 0.32% j. Maximum Benefits: The maximum benefit for retirees as of July 1, 2007 is equal to the cost of the PERSCare family coverage increased each year by the medical trend. k. Expenses: None are assumed. I. Entry Age: Age at hire in full -time employment with City. This work product was prepared solely for Public Agency Retirement Services and the City of Rosemead fir the purposes described herein and may not be appropriated to use for other purposes. ATr/6man does not intend to benefit and assumes no duty or liability to otherparties who receive this work Milliman 0 0 Mr. Dennis Yu, CEBS April 14, 2008 Page 12 & Actuarial Methods Funding Method The cost method for valuation of liabilities used for this valuation is the entry age normal method. This is one of a family of valuation methods known as projected benefits methods. The chief characteristic of projected benefits methods is that the actuarial present value of all plan benefits is determined as of the valuation date and then allocated between the period before and after the valuation date. The present value of plan benefits earned prior to the valuation date is called the actuarial liability. The present value of plan benefits to be earned after the valuation date is called the present value of future normal costs. Under the entry age normal actuarial cost method, an individual entry age normal cost ratio is determined for each participant by taking the value, as of his entry age in the plan, of the participant's projected future benefits (assuming the current plan benefit provisions had always been in existence), and dividing it by the value, as of the participant's entry age, of his expected future years of service. This ratio for each participant is then multiplied by the present value, as of the valuation date, of the participant's future years of service. The sum of these values for all active participants is the plan's present value (as of the valuation date) of future normal costs. The excess of the present value of all plan benefits over the present value of future normal costs is the actuarial liability. The difference between the actuarial liability and the value of the plan assets as of the valuation date is the unfunded actuarial liability. The unfunded actuarial liability is amortized over a period of 30 years from January 1, 2007, with payments increasing by a payroll growth assumption of 3.25% per annum. Payments are assumed to be made throughout the year. Subsequent gains and losses and benefit improvements will be amortized over the same remaining period. Asset Valuation Method The plan is currently funded on a pay -as- you -go basis, and has no assets. This work product was prepared solely for Public Agency Retirement Services and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to otherparties who receive this work. Mil liman • • Attachment C ADOPTION AGREEMENT TO THE PUBLIC AGENCIES POST - RETIREMENT HEALTH CARE PLAN •.a NB 1:679999 4 EXHIBIT "A" TO PUBLIC AGENCIES POST - RETIREMENT HEALTHCARE PLAN TRUST AGREEMENT s 0 No guaranty that payments or reimbursements to employees, former emplovees or retirees .will be tax -free. The Trust has obtained a ruling from the Internal Revenue Service concerning only the federal tax treatment of the Trust's income. That ruling may not be cited or relied upon by the Employer whatsoever as precedent concerning any matter relating to the Employer's health plan(s) (including post- retirement health plans). In particular, that ruling has no effect on whether contributions to the Employer's health plan(s) or payments from the Employer's health plan(s) (including reimbursements of medical expenses) are excludable from the gross income of employees, former employees or retirees, under the Internal Revenue Code. The federal income tax consequences to employees, former employees and retirees depend on the terms and operation of the Employer's health plan(s). Introduction By executing this Adoption Agreement, the Employer specified in Section II of this Adoption Agreement adopts: (1) the Public Agencies Post - Retirement Health Care Plan Document (the "Master Plan Document ") integrated with the variable provisions contained within this Adoption Agreement, and (2) the Public Agencies Post - Retirement Health Care Plan Trust Agreement (the "Trust Agreement "). Defined terms shall have the meanings attributed to such terms in the Master Plan Document or the Trust Agreement. The Employer hereby selects the following Plan specifications: Section I Plan and Trust Information A.1.1 FULL NAME OF TRUST: Public Agencies Post - Retirement Health Care Plan Trust A.1.2 FULL NAME OF PLAN: Public Agencies Post - Retirement Health Care Plan, as adopted by (name of Employer): A.1.3 EFFECTIVE DATE OF PLAN restatement became effective: If this is a restatement of an existing plan, the NB 1:679999 4 EXHIBIT "A" TO PUBLIC AGENCIES POST - RETIREMENT HEALTHCARE PLAN TRUST AGREEMENT 0 Section II Employer Information i A.2.1 EMPLOYER INFORMATION: (See Section 2.1 of Master Plan Document): NAME OF AGENCY: ADDRESS: (Street): (City, State Zipcode): (Phone Number): A.2.2 EMPLOYER'S PLAN ADMINISTRATOR: A.2.3 EMPLOYER'S TAX IDENTIFICATION NUMBER: A.2.4 EMPLOYER'S FISCAL YEAR means the 12 consecutive month period: Commencing on (month, day) Ending on (month, day) and Section III Eligible Employees and Eligible Dependents A.3.1 ELIGIBLE EMPLOYEE: The determination of Eligible Employees and. Eligible Dependents is finally and conclusively made by the Employer according to its applicable policies and collective bargaining agreements, and without reference to this Plan. Section IV Investment A.4.1 INVESTMENT APPROACH: (See Section 6.1 of the Master Plan Document): The Employer shall select either a discretionary or a directed approach to investment. a. Discretionary Investment Approach If the Discretionary Investment Approach is selected, the Employer hereby directs the Trustee to invest the Assets of the Employer's Agency Account pursuant to one of the investment strategies listed on the accompanying Investment Strategy Selection and Disclosure Form or another investment strategy as mutually agreed upon by the Employer and the Trustee. NB /6799994 EXHIBIT "A" TO PUBLIC AGENCIES POST- RETIREMENT HEALTHCARE PLAN TRUST AGREEMENT b. Directed Investment Approach If the Directed Investment Approach is selected, the Employer must attach its investment policy and retain its own Registered Investment Advisor. The Employer shall be permitted to direct investments of its Agency Account pursuant to the terms of the Trust Agreement. Execution and Adoption of Plan and Related Documents By executing this Adoption Agreement, the Employer hereby adopts and agrees to be bound by the Master Plan Document and the Trust Agreement, and hereby ratifies, confirms and approves the appointment of Union Bank of California, N.A. as the Trustee and the appointment of Public Agency Retirement Services as the Trust Administrator as of the Effective Date. The Employer understands and agrees that the Trust Agreement may be amended from time to time by a vote of the Employers as set forth in the Trust Agreement. This Adoption Agreement is hereby executed and effective as of this day of 20 EMPLOYER (specify): 0 ACCEPTED: Plan Administrator Trust Administrator: Phase II Systems, dba Public Agency Retirement Services Bv: Title: Date: Trustee and Investment Fiduciary: Union Bank of California, N.A. By: Title: Date: By: Title Date NEI:679999.4 EXHIBIT "A" TO PUBLIC AGENCIES POST - RETIREMENT HEALTH CARE PLAN TRUST AGREEMENT 0 APPENDIX A 0 ELIGIBLE EMPLOYEES AND ELIGIBLE DEPENDENTS OF EMPLOYER (non- binding list set forth to facilitate administration) NBI:679999.4 EXHIBIT "A" TO PUBLIC AGENCIES POST- RETIREMENT HEALTH CARE PLAN TRUST AGREEMENT • • Attachment D PUBLIC AGENCIES POST - RETIREMENT HEALTH CARE PLAN TRUST AGREEMENT (amended and restated as of May 16, 2007) NB i :657192.8 ARTICLE I DEFINITIONS 1.1 "Adoption Agreement" shall have the meaning given to such term in Section 2.3. 1.2 "Agency Account" shall have the meaning given to such term in Section 2.4. 1.3 "Agreement for Administrative Services" shall mean the agreement executed between the Employer and the Trust Administrator which authorizes the Trust Administrator to perform specific duties of administering the Agency Account of the Employer. 1.4 "Assets" shall have the meaning given to such term in Section 2.5. 1.5 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to time. 1.6 "Delegatee" shall mean an individual or entity, appointed by the Plan Administrator or Employer to act in such matters as are specified in the appointment. 1.7 "Effective Date" shall mean November 1, 2005, the date the Trust was established, and with respect to each Employer, the Effective Date shall be the date on which the Employer executes the Adoption Agreement. 1.8 "Eligible Dependent" shall mean any dependent of an Eligible Employee who is entitled to health care and welfare benefits after the termination of such Eligible Employee's employment with the Employer pursuant to the Employer's policies and /or applicable collective bargaining agreements. 1.9 "Eligible Employee" shall mean any employee of the Employer who is entitled to post - employment health care and welfare benefits pursuant to such Employer's policies and/or applicable collective bargaining agreements. Unless the context otherwise requires, the term "Eligible Employee" as used herein shall include any Eligible Dependents. 1.10 "Employer" shall mean a public agency that executes the Adoption Agreement, thereby adopting the provisions of this Trust Agreement, provided that such agency is a state, a political subdivision of a state, or an entity the income of which is excludible from gross income under Section 115 of the Code. 1.11 "GASB" shall mean the Governmental Accounting Standards Board. 1.12 "Omnibus Account" shall mean an account, established for record keeping purposes only, to aggregate the balances of the Assets credited to the Agency Accounts. The Trust Administrator shall maintain and reconcile, at the Agency Account level, the investments of the Agency Accounts and will provide reports NB 1:657192.8 • 0 to the Plan Administrator with respect to such investments. The Trustee will maintain a record of the aggregate balance (principal and earnings) for all Agency Accounts. The Trust Administrator will in the ordinary course of business maintain a record of the name, address, taxpayer identification number, account number and amount of funds, including earnings, of each Employer. On periodic valuation dates (no less frequently than monthly) to be established by the Trust Administrator, the Trustee and Trust Administrator will reconcile the aggregate balance information maintained by the Trustee with the Agency Account level records maintained by the Trust Administrator pursuant to this Trust Agreement. 1.13 "OPEB shall mean "other post - employment benefits," such as medical, dental, vision, life insurance, long -term care and other similar benefits provided to retirees, other than pension benefits. 1.14 "OPEB Obligation" shall mean an Employer's obligation to provide post - employment health care and welfare benefits to its Eligible Employees as specified in such Employer's policies and /or applicable collective bargaining agreements. 1.15 "Plan" shall mean the Public Agencies Post - Retirement Health Care Plan, adopted by each Employer as a separate Plan for that Employer upon the execution of an Adoption Agreement and the satisfaction of certain other requirements contained herein. 1.16 "Plan Administrator" shall mean the individual designated by position of employment at the Employer to act on its behalf in all matters relating to the Employer's participation in the Trust. 1.17 "Trust" shall mean the Public Agencies Post- Retirement Health Care Plan trust arrangement. 1.18 "Trust Administrator" shall mean Public Agency Retirement Services or any successor trust administrator appointed by the Employers as provided herein. The Trust Administrator shall serve as trust administrator to the Trust established pursuant to this Trust Agreement until such Trust Administrator resigns or is removed as provided in Article III. 1.19 "Trust Agreement" shall mean this Public Agencies Post- Retirement Health Care Plan trust document adopted by each Employer upon execution of an Adoption Agreement, as amended from time to time. 1.20 "Trustee" shall mean Union Bank of California, N.A., or any successor trustee appointed by the Employers as provided herein. The Trustee shall serve as trustee of the Trust established pursuant to the provisions of this Trust Agreement until such Trustee resigns or is removed as provided in Article III. 2 N a 1:657192.8 0 0 ARTICLE 11 THE TRUST 2.1 Multiple Employer Trust The Trust is a multiple employer trust arrangement established to provide economies of scale and efficiency of administration to public agencies that adopt it to hold the assets used to fund its OPEB Obligation. The Trust is divided into Agency Accounts to hold the Assets of each Employer as described in Section 2.4. 2.2 Purpose The Trust is established with the intention that it qualify as a tax- exempt trust performing an essential governmental function within the meaning of Section 115 of the Code and any regulations issued thereunder and as a tax - exempt trust under the provisions of the relevant state's statutory provisions of each Employer. This Trust Agreement shall be construed and the Trust shall be administered in a manner consistent with such intention. The fundamental purpose of the Trust is to fund post - employment benefits (other than pension benefits), such as medical, dental, vision, life insurance, long -term care and similar benefits, offered by the Employer 'to its employees as specified in each Employer's policies and /or applicable collective bargaining agreements. It is intended that adopting Employers retain an interest in the underlying securities held in the Trust on their behalf, rather than in the Trust itself. 2.3 Employers Any public agency may, by action of its governing body in writing accepted by the Trustee, adopt the provisions of the Trust Agreement. Executing an adoption instrument for the Trust ( "Adoption Agreement "), in the form attached hereto as Exhibit "A" (or such other form as may be approved by the Trustee), shall constitute such adoption, unless the Trustee requires additional evidence of adoption. In order for such adoption to be effective, the public agency must also execute an Agreement for Administrative Services with Public Agency Retirement Services, the Trust Administrator, pursuant to section 3.6 of this Trust Agreement. Such adopting Employer shall then become an Employer of the Trust. Each such Employer shall, at a minimum, famish the Trust Administrator with the following documents to support its adoption of the Trust: (a) a certified copy of the resolution(s) of the governing body of the Employer authorizing the adoption of the Trust Agreement and the appointment of the Plan Administrator for such Employer; 3 NB 1:657192.3 0 0 (b) an original of the Adoption Agreement executed by the Plan Administrator or other duly authorized Employer employee; (c) an original of the Agreement for Administrative Services with Public Agency Retirement Services executed by the Plan Administrator or other duly authorized Employer employee and Public Agency Retirement Services; (d) an address notice; and (e) such other documents as the Trustee may reasonable request. (f) Any action taken by the Plan Administrator for an Employer shall'be deemed to have been taken by such Employer. Any notice given to or delivered by the Plan Administrator for an Employer shall be deemed to have been given to or delivered by such Employer. 2.4 Agency Accounts Upon an Employer's adopting the Trust Agreement, as provided in Section 2.3, a separate "Agency Account" shall be established under the Trust for that Employer, and all Assets of the Trust attributable to that Employer shall be held in that Employer's Agency Account. The Assets of the Trust that are held in an Employer's Agency Account shall be available only to pay post - employment health care and welfare benefits of Eligible Employees of that Employer (including reimbursement of the Employer for payments to health care providers with respect to such benefits) and shall not be available to pay any obligations incurred by any other Employer as provided in Section 2.8. 2.5 Assets of Agency Account The assets held in an Agency Account shall consist of all contributions and transfers received by the Trust on behalf of the Employer, together with the income and earnings from such contributions and transfers, and any increments accruing to them, net of any investment losses, benefits, expenses or other costs ( "Assets "). All contributions or transfers shall be received by the Trustee in cash or in other property acceptable to the Trustee. The Trustee shall manage and administer the Assets held in Agency Accounts without distinction between principal and income. The Trustee and the Trust Administrator shall have no duty to compute any amount to be transferred or paid to the Agency Account by the Employer, and the Trustee and the Trust Administrator shall not be responsible for the collection of any contributions or transfers to the Agency Account. 2.6 Aggregate Balance for Investment and Administration The balances of the Assets of more than one Agency Account may be aggregated by the Trustee in one or more Omnibus Accounts for investment and administrative purposes, to provide economies of scale and efficiency of administration to the Agency Accounts. The responsibility for Plan and Agency 4 NBI.657192.8 Account level accounting within this Omnibus Account(s) shall be that of the Trust Administrator. 2.7 Trustee Accounting The Trustee shall be responsible only for maintaining records and maintaining accounts for the aggregate assets of the Trust. The responsibility for Plan level accounting for each Agency Account, based upon the Omnibus Account(s), shall be that of the Trust Administrator. 2.8 No Diversion of Assets The Assets in each Agency Account shall be held in trust for the exclusive purpose of providing post - employment health care and welfare benefits to the Eligible Employees of the Employer for which such Agency Account was established and defraying the reasonable administrative and actuarial expenses of such Employer's participation in the Trust. The Assets in each Agency Account shall not be used for or diverted to, any other purpose, including, but not limited to, the satisfaction of any other Employer's OPEB Obligation. 2.9 Type and Nature of Trust Neither the full faith and credit nor the taxing power of each Employer is pledged to the distribution of benefits hereunder. Except for contributions and other amounts hereunder, no other amounts are pledged to the distribution of benefits hereunder. Distributions of benefits are neither general nor special obligations of any Employer, but are payable solely from the Assets held in such Employer's Agency Account, as more fully described herein. No employee of any Employer or beneficiary may compel the exercise of the taxing power by any Employer. Distributions of Assets from any Agency Account are not debts of any Employer within the meaning of any constitutional or statutory limitation or restriction. Such distributions are not legal or equitable pledges, charges, liens or encumbrances, upon any of an Employer's property, or upon any of its income, receipts, or revenues, except amounts in the accounts which are, under the terms of each Plan and the Trust set aside for distributions. Neither the members of the governing body of any Employer nor its officers, employees, agents or volunteers are liable hereunder. 2.10 Loss of Tax - Exempt Status as to Any Employer If any Employer participating in the Trust receives notice from the Internal Revenue Service that the Trust as to such Employer fails to satisfy the requirements of Section 115 of the Code, or if any Employer consents to the Internal Revenue Service's determination that the Trust fails to meet such requirements, Assets having a value equal to the funds then held in such Employer's Agency Account shall be segregated and placed in a separate trust by the Trustee for the exclusive benefit of such Employer's Eligible Employees 5 NB 1:657192.8 • • within a reasonable time after the Trust Administrator notifies the Trustee of the Internal Revenue Service's determination. Each Employer participating in the Trust agrees to immediately notify the Trust Administrator upon receiving such notice or giving such consent. The separate trust provided for in this Section 2.10 shall thereafter be considered as a separate trust containing all of the provisions of this Trust Agreement until terminated as provided in this Trust Agreement. ARTICLE III ADMINISTRATIVE MATTERS 3.1 Appointment of Trustee The Employers may, with the approval of two - thirds (2/3) or more of the Employers then participating in the Trust, act to appoint a bank, trust company, retirement board, insurer, committee or such other entity as permitted by law, to serve as the trustee of this Trust. Such action must be in writing. Upon the written acceptance of such entity it shall become the Trustee of the Trust. If the Trustee is removed or resigns pursuant to Section 3.2, the Employers shall appoint a successor Trustee in accordance with the voting requirements set forth in this Section 3.1. 3.2 Resignation or Removal of Trustee The Employers may act to remove the Trustee, provided that such action must satisfy the voting requirements set forth in Section 3.1 and notice of such action must be promptly delivered to the Trust Administrator, the Trustee and each Plan Administrator. The Trustee may also resign at any time by giving at least ninety (90) days prior written notice to the Trust Administrator and to the Plan Administrator of each Employer that has adopted the Trust Agreement and not terminated its participation in the Trust; provided, however, that the Trustee may resign immediately upon the earlier of the approval date or the effective date of any amendment of the Trust Agreement by the Employers that would change or modify the duties, powers or liabilities of the Trustee hereunder without the Trustee's consent. The Trustee shall, upon the appointment and acceptance of a successor trustee, transfer and deliver the Assets and all records relating to the Trust to the successor, after reserving such reasonable amount as it shall deem necessary to provide for its fees and expenses and any sums chargeable against the Trust for which it may be liable. The Trustee shall do all acts necessary to vest title of record in the successor trustee. 3.3 Withdrawal of Employer An Employer may elect to withdraw from the Trust by giving at least ninety (90) days prior written notice to the Trustee and the Trust Administrator. If an Employer so elects to withdraw, Assets having a value equal to the funds held in 6 NB I :657192.8 • • such Employer's Agency Account shall be segregated by the Trustee and, as soon as practicable, shall be transferred to a trust established by the Employer, provided that (i) such trust shall satisfy the requirements of Section 115 of the Code, and (ii) all assets held by such trust shall qualify as "plan assets" within the meaning of GASB Statement No. 45, in each case as reasonably determined by the Employer and certified in writing by the Employer to the Trust Administrator. The Employer shall appoint a trustee for the such Employer's separate trust, and such appointment shall vest the successor trustee with title to the transferred Assets upon the successor trustee's acceptance of such appointment. 3.4 The Plan Administrator The governing body of each Employer shall have plenary authority for the administration and investment of such Employer's Agency Account pursuant to any applicable state laws and applicable federal laws and regulations. Each Employer shall by resolution designate a Plan Administrator. Unless otherwise specified in the instrument the Plan Administrator shall be deemed to have authority to act on behalf of the Employer in all matters pertaining to the Employer's participation in the Trust and in regard to the Agency Account of the Employer. Such appointment of a Plan Administrator shall be effective upon receipt and acknowledgment by the Trustee and the Trust Administrator and shall be effective until the Trustee and the Trust Administrator are furnished with a resolution of the Employer that the appointment has been modified or terminated. 3.5 Failure to Appoint Plan Administrator If a Plan Administrator is not appointed, or such appointment lapses, the Employer shall be deemed to be the Plan Administrator. As used in this document the term "Plan Administrator" shall be deemed to mean "Employer" when a Plan Administrator has not been appointed for such Employer. 3.6 Delegatee The Plan Administrator, acting on behalf of the Employer, may delegate certain authority, powers and duties to a Delegatee to act in those matters specified in the delegation. Any such delegation must be in a writing that names and identifies the Delegatee, states the effective date of the delegation, specifies the authority and duties delegated, is executed by the Plan Administrator, is acknowledged in writing by the Delegatee, and is certified as required in Section 3.7 to the Trust Administrator. Such delegation shall be effective until the Trustee and the Trust Administrator are directed in writing by the Plan Administrator that the delegation has been rescinded or modified. 3.7 Certification to Trustee The governing body of each Employer, or other duly authorized official, shall certify in writing to the Trustee and the Trust Administrator the names and specimen signatures of the Plan Administrator and Delegatee, if any, and all 7 N B 1:657192.8 0 • others authorized to act on behalf of the Employer whose names and specimen signatures shall be kept accurate by the Employer acting through a duly authorized officer or governing body of the Employer. The Trustee and the Trust Administrator shall have no liability if they act upon the direction of a Plan Administrator or Delegatee that has been duly authorized, as provided in Section 3.6, if that Plan Administrator or Delegatee is no longer authorized to act, unless the Employer has informed the Trustee and the Trust Administrator of such change. 3.8 Directions to Trustee All directions to the Trustee from the Plan Administrator or Delegatee must be in writing and must be signed by the Plan Administrator or Delegatee, as the case may be. For all purposes of this Trust Agreement, direction shall include any certification, notice, authorization, application or instruction of the Plan Administrator, Delegatee or Trustee appropriately communicated. The above notwithstanding direction may be implied if the Plan Administrator or Delegatee has knowledge of the Trustee's intentions and fails to file written objection. The Trustee shall have the power and duty to comply promptly with all proper directions of the Plan Administrator or Delegatee, appointed in accordance with the provisions of this Trust Agreement. In the case of any direction deemed by the Trustee to be unclear or ambiguous the Trustee may seek written instructions from the Plan Administrator, the Employer or the Delegatee on such matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the Delegatee should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of the Trust and /or the applicable Agency Account which may include not taking any action. The Trustee may request directions or clarification of directions received and may delay acting until clarification is received. In the absence of timely direction or clarification, or if the Trustee considers any direction to be a violation of the Trust Agreement or any applicable law, the Trustee shall in its sole discretion take appropriate action, or refuse to act upon a direction. 3.9 Appointment of Trust Administrator The Employers may, with the approval of two - thirds (2/3) or more of the Employers then participating in the Trust, act to appoint a bank, trust company, retirement board, insurer, committee or such other entity as permitted by law, to serve as Trust Administrator of the Trust. Such action must be in writing. Upon the written acceptance of such entity it shall become the Trust Administrator of the Trust. If the Trust Administrator is removed or resigns pursuant to Section 3.13, the Employers shall appoint a successor Trust Administrator in accordance with the voting requirements set forth in this Section 3.9. 8 NB 1:657192.8 0 0 3.10 Trust Administrator The Trust Administrator's duties involve the performance of the following services pursuant to the provisions of this Trust Agreement and the Agreement for Administrative Services: (a) Perfonning periodic accounting of each Agency Account and reconciling such Agency Account balances with the Trust/Omnibus Account; (b) Directing the Trustee to make distributions from the applicable Agency Account to health care providers (or to the Employer for reimbursement of payments made to health care providers) for post - employment health care and welfare benefits; (c) Allocating contributions, earnings and expenses to each Agency Account; (d) Directing the Trustee to pay the fees of the Trust Administrator and to do such other acts as shall be appropriate to carry out the intent of the Trust; (e) Such other services as the Employer and the Trust Administrator may agree in the Agreement for Administrative Services pursuant to Section 2.3. The Trust Administrator shall be entitled to rely on, and shall be under no duty to question, direction and /or data received from the Plan Administrator, or other duly authorized entity, in order to perform its authorized duties under this trust agreement. The Trust Administrator shall not have any duty to compute contributions made to the Trust, determine or inquire whether contributions made to the Trust by the Plan Administrator or other duly authorized entity are adequate to meet an Employer's OPEB Obligation as may be determined under GASB Statement Nos. 43 and 45 and any future GASB pronouncements; or determine or inquire whether contributions made to the Trust are in compliance with the Employer's policies and /or applicable collective bargaining agreements. The Trust Administrator shall not be liable for nonperformance of duties if such nonperformance is directly caused by erroneous, and /or late delivery of, directions or data from the Plan Administrator, or other duly authorized entity. 3.11 Additional Trust Administrator Services The Plan Administrator may at any time retain the Trust Administrator as its agent to perform any act, keep any records or accounts and make any computations which are required of the Employer or the Plan Administrator by this Trust Agreement or by the Employer's policies and /or applicable collective bargaining agreements. The Trust Administrator shall be separately compensated for such service and such services shall not be deemed to be contrary to the Trust Agreement. 9 N B 1:6571918 0 0 3.12 Trust Administrator's Compensation As may be agreed upon from time to time by the Employer and Trust Administrator, the Trust Administrator will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to such Employer's Agency Account and to the Trust 3.13 Resignation or Removal of Trust Administrator The Employers may act to remove the Trust Administrator, provided that such action must satisfy the voting requirements set forth in Section 3.9 and notice of such action must be promptly delivered to the Trust Administrator, the Trustee and each Plan Administrator. The Trust Administrator may also resign at any time by giving at least one hundred and twenty (120) days prior written notice to the Trustee and to the Plan Administrator of each Employer that has adopted the Trust Agreement and not terminated its participation in the Trust; provided, however, that the Trust Administrator may resign immediately upon the earlier of the approval date or the effective date of any amendment of the Trust Agreement by the Employers that would change or modify the duties, powers or liabilities of the Trust Administrator hereunder without the Trust Administrator's consent. The Trust Administrator shall, upon the appointment and acceptance of a successor trust administrator, transfer all records relating to the Trust to the successor. ARTICLE IV THE TRUSTEE 4.1 Powers and Duties of the Trustee Except as otherwise provided in Article V and subject to Article VI, the Trustee shall have full power and authority with respect to property held in the Trust to do all such acts, take all proceedings, and exercise all such rights and privileges, whether specifically referred to or not in this document, as could be done, taken or exercised by the absolute owner, including, without limitation, the following: (a) To invest and reinvest the Assets or any part hereof in any one or more kind, type, class, item or parcel of property, real, personal or mixed, tangible or intangible; or in any one or more kind, type, class, item or issue of investment or security; or in any one or more kind, type, class or item of obligation, secured or unsecured; or in any combination of them (including those issued by the Trustee of any of its affiliates, to the extent permitted by applicable law), and to retain the property for the period of time that the Trustee deems appropri ate; (b) To acquire and sell options to buy securities ( "call" options) and to acquire and sell options to sell securities ( "put" options); 10 N B 1:657192.9 0 • (c) To buy, sell, assign, transfer, acquire, loan, lease (for any purpose, including mineral leases), exchange and in any other manner to acquire, manage, deal with and dispose of all or any part of the Trust property, for cash or credit and upon any reasonable terms and conditions; (d) To make deposits, with any bank or savings and loan institution, including any such facility of the Trustee or an affiliate thereof provided that the deposit bears a reasonable rate of interest; (e) To invest and reinvest the Assets, or any part thereof in any one or more collective investment trust funds, including common and group trust funds that consist exclusively of assets of exempt pension and profit sharing trusts and individual retirement accounts qualified and tax exempt under the Code, that are maintained by the Trustee or an affiliate thereof The declaration of trust or plan of operations for any such common or collective fund is hereby incorporated herein and adopted into this Trust Agreement by this reference. The combining of money and other assets of the Trust with money and other assets of other non - qualified trusts in such fund or funds is specifically authorized. Notwithstanding anything to the contrary In this Trust Agreement, the Trustee shall have full investment responsibility over assets of the trust invested in such commingled funds. If the plan and trust for any reason lose their tax exempt status, and the Assets have been commingled with assets of other tax exempt trusts in Trustee's collective investment funds, the Trustee shall within 30 days of notice of such loss of tax exempt status, liquidate the Trust's units of the collective investment fund(s) and invest the proceeds in a money market fund pending investment or other instructions from the Plan Administrator. The Trustee shall not be liable for any loss or gain or taxes, if any, resulting fi-om said liquidation; (f) To place uninvested cash and cash awaiting distribution in one or more mutual funds and /or commingled investment funds maintained by or made available by the Trustee or any of its affiliates, and to receive compensation from the sponsor of such fund(s) for services rendered, separate and apart from any Trustee's fees hereunder. The Trustee or its affiliate may also be compensated for providing investment advisory services to any mutual fund or commingled investment funds; (g) To borrow money for the purposes of the Trust from any source with or without giving security; to pay interest; to issue promissory notes and to secure the repayment thereof by pledging all or any part of the Assets; (h) To take all of the following actions: to vote proxies of any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting NB1:fi57192.8 0 0 corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property held in the Trust; (i) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; 0) To raze or move existing buildings; to make ordinary or extraordinary repairs, alterations or additions in and to buildings; to construct buildings and other structures and to install fixtures and equipment therein; (k) To pay or cause to be paid from the Trust any and all real or personal property taxes, income taxes or other taxes or assessments of any or all kinds levied or assessed upon or with respect to the Trust; (1) , To exercise all the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under applicable federal or state laws, as amended from time to time, it being intended that, except as herein otherwise provided, the powers conferred upon the Trustee herein shall not be construed as being in limitation of any authority conferred by law, but shall be construed as consistent or in addition thereto. 4.2 Additional Trustee Powers In addition to the other powers enumerated above, the Trustee in any and all events is authorized and empowered: (a) To invest funds pending required directions in any type of interest - bearing account, including, without limitation, time certificates of deposit or interest - bearing accounts issued by the Trustee, or any mutual fund or short term investment fund ( "Fund "), whether sponsored or advised by the Trustee or any affiliate thereof); the Trustee or its affiliates may be compensated for providing such investment advice and providing other service to such Fund, in addition to any Trustee's fees received pursuant to this Trust Agreement; (b) To cause all or any part of the Trust to be held in the name of the Trustee (which in such instance need not disclose its fiduciary capacity) or, as permitted by law, in the name of any nominee, and to acquire for the Trust any investment in bearer form, but the books and records of the Trust shall at all times show that all such investments are a part of the Trust and the Trustee shall hold evidences of title to all such investments; (c) To serve as custodian with respect to the Trust Assets; 12 N 3 1:657192.8 9 0 (d) To employ such custodians, agents and counsel as may be reasonably necessary in managing and protecting the Assets and to pay them reasonable compensation from the Trust; to employ any broker - dealer or other agent, including any broker - dealer or other agent affiliated with the Trustee, and pay to such broker - dealer or other agent, at the expense of the Trust, its standard commissions or compensation; to settle, compromise or abandon all claims and demands in favor of or against the Trust; and to charge any premium on bonds purchased at par value to the principal of the Trust without amortization from the Trust, regardless of any law relating thereto; (e) In addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration of the Trust, as though the absolute owner thereof, (f) To prosecute, compromise and defend lawsuits, but without obligation to do so, all at the risk and expense of the Trust; and to tender its defense to the Employer in any legal proceeding where the interests of the Trustee and the Employer are not adverse; (g) To exercise and perform any and all of the other powers and duties specified in this Trust Agreement or the Plan, (h) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by a United States agency; (i) To comply with all requirements imposed by applicable provisions of law; (j) To seek written instructions from the Plan Administrator or other fiduciary on any matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the fiduciary should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of the Trust; (k) To compensate such executive, consultant, actuarial, accounting, investment, appraisal, administrative, clerical, secretarial, medical, custodial, depository and legal firms, personnel and other employees or assistants as are engaged by the Plan Administrator in connection with the administration of the Plan and to pay from the Trust the necessary expenses of such films, personnel and assistants, to the extent not paid by the Plan Administrator; (1) To act upon proper written directions of the Plan Administrator or Delegatee, including directions given by photostatic transmissions using facsimile signature, and such other forms of directions as the parties shall agree; (m) . To pay from the Trust the expenses reasonably incurred in the administration of the Trust as provided in the Plan; 13 NB 1:657192.8 ! 0 (n) To maintain insurance for such purposes, in such amounts and with such companies as the Plan Administrator shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries but only if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary. ARTICLE V INVESTMENTS 5.1 Discretionary Versus Directed Investment The Employer shall elect either a discretionary or directed investment approach. If the Employer elects a discretionary investment approach, the Employer shall further elect between the various investment strategies offered and the Trustee, in accordance with Article IV, shall have absolute discretion over the investment of the Assets held in such Employer's Agency Account. if the Employer elects a directed investment approach, the Trustee shall direct the investment of the Asset's of such Employer's Agency Account in accordance with the direction provided by such Employer. 5.2 Trustee Fees As may be agreed upon, in writing, between the Plan Administrator and Trustee, the Trustee will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the applicable Agency Account or the Trust. 5.3 Contributions Eligible Employees are not permitted to make contributions to the Trust. The Plan Administrator shall, on behalf of the Employer, make all contributions to the Trustee. Such contributions shall be in cash unless the Trustee agrees to accept a contribution that is not in cash. All contributions shall be .paid to the Trustee for investment and reinvestment pursuant to the terms of this Trust Agreement. The Trustee shall not have any duty to determine or inquire whether any contributions to the Trust made to the Trustee by any Plan Administrator are in compliance with the Employer's policies and /or collective bargaining agreements; nor shall the Trustee have any duty, or authority to compute . any amount to be paid to the Trustee by any Plan Administrator; nor shall the Trustee be responsible for the collection or adequacy of the contributions to meet an Employer's OPEB Obligation, as may be determined under GASB Statement No. 45. The contributions received by the Trustee from each Employer shall be held and administered pursuant to the terms hereof without distinction between income and principal. 14 NB 1:657192.8 0 0 5.4 Records (a) The Trustee shall maintain accurate records and detailed accounts of all investments, receipts, disbursements and other transactions hereunder at the Trust level. Such records shall be available at all reasonable times for inspection by the Trust Administrator. The Trustee shall, at the direction of the Trust Administrator, submit such valuations, reports or other information as the Trust Administrator may reasonably require. (b) The Assets of the Trust shall be valued at their fair market value on the date of valuation, as determined by the Trustee based upon such sources of information as it may deem reliable; provided, however, that the Plan Administrator shall instruct the Trustee as to valuation of assets which are not readily determinable on an established market. The Trustee may rely conclusively on such valuations provided by the Plan Administrator and shall be indemnified and held harmless by the Employer with respect to such reliance. If the Plan Administrator fails to provide such values, the Trustee may take whatever action it deems reasonable, including employment of attorneys, appraisers or other professionals, the expense of which will be an expense of administration of the Trust. Transactions in the account involving such hard to value assets may be postponed until appropriate valuations have been received and Trustee shall have no liability therefore. 5.5 Statements (a) Periodically as specified, and within sixty days after December 31, or the end of the Trust's fiscal year if different, Trustee shall render to the Trust Administrator as directed, a written account showing in reasonable summary the investments; receipts, disbursements and other transactions engaged in by the Trustee during the preceding fiscal year or period with respect to the Trust. Such account shall set forth the assets and liabilities of the Trust valued as of the end of the accounting period. (b) The Trust Administrator may approve such statements either by written notice or by failure to express objections to such statements by written notice delivered to the Trustee within 90 days from the date the statement is delivered to the Trust Administrator. Upon approval, the Trustee shall be released and discharged as to all matters and items set forth in such statement as if such account had been settled and allowed by a decree from a court of competent jurisdiction. 5.6 Wire Transfers The Trustee shall follow the Plan Administrator's, Delegatee's, or Trust Administrator's wire transfer instructions in compliance with the written security procedures provided by the party providing the wire transfers. The Trustee shall Perform a telephonic verification to the Plan Administrator, Trust Administrator, 15 NB 1:657192.8 • • or Delegatee, or such other security procedure as selected by the party providing wire transfer directions, prior to wiring funds or following facsimile directions as Trustee may require. The Plan Administrator assumes the risk of delay of transfer if Trustee is unable to reach the Plan Administrator, or in the event of delay as a result of attempts to comply with any other security procedure selected by the directing party. 5.7 Exclusive Benefit The Assets of an Employer's Agency Account shall be held in trust for the exclusive purpose of providing post - employment health care and welfare benefits to the Eligible Employees of the Employer pursuant to the Employer's policies and /or applicable collective bargaining agreements, and defraying the reasonable expenses associated with the providing of such benefits, and shall not be used for or diverted to any other purpose. No party shall have authority to use or divert the Assets of an Agency Account of an Employer for the payment of post - employment health care and welfare benefits or expenses of any other Employer. 5.8 Delegation of Duties The Plan Administrator, Delegatee, or Trust Administrator, may at any time retain the Trustee as its agent to perform any act, keep any records or accounts and make any computations that are required of the Plan Administrator, Delegatee or Trust Administrator by this Trust Agreement or by the Plan. The Trustee may be compensated for such retention and such retention shall not be deemed to be contrary to this Trust Agreement. 5.9 Distributions The Trustee shall, from time to time, upon the written direction of the Plan Administrator or Delegatee, make distributions from the Assets of the Trust to the insurers, third party administrators, health care and welfare providers or other entities providing Plan benefits or services, or to the Employer for reimbursement of Plan benefits and expenses paid by the Employer in such manner in such form(s), in such amounts and for such purposes as may be specified in such directions. In no event shall the Trustee have any responsibility respecting the application of such distributions, nor for determining or inquiring into whether such distributions are in accordance with the Employer's policies and /or applicable collective bargaining agreements. 16 N B I :657192.8 0 0 ARTICLE VI FIDUCIARY RESPONSIBILITIES 6.1 More Than One Fiduciary Capacity Any one or more of the fiduciaries with respect to the Trust Agreement or the Trust may, to the extent required thereby or as directed by the Plan Administrator pursuant to this Trust Agreement, serve in more than one fiduciary capacity with respect to the Trust Agreement and the Trust. 6.2 Fiduciary Discharge of Duties Except as otherwise provided by applicable law, each fiduciary shall discharge such fiduciary's duties with respect to the Trust Agreement and the Trust: (a) solely in the interest of the Eligible Employees and for the exclusive purpose of providing post - employment health care and welfare benefits to Eligible Employees, and defraying reasonable administrative and actuarial expenses associated with providing such benefits; and (b) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. 6.3 Limitations on Fiduciary Responsibility To the extent allowed by the laws of the state of each Employer No fiduciary shall be liable with respect to a breach of fiduciary duty by any other fiduciary if such breach was committed before such party became a fiduciary or after such party ceased to be a fiduciary. No fiduciary shall be liable for a breach by another fiduciary except as provided by law. No fiduciary shall be liable for carrying out a proper direction from another fiduciary, including refraining from taking an action in the absence of a proper direction from the other fiduciary possessing the authority and responsibility to make such a direction, which direction the fiduciary in good faith believes to be authorized and appropriate. 6.4 Indemnification of Trustee by Employer The Trustee shall not be liable for, and Employer shall (to the extent allowed by the laws of the state of each Employer) indemnify, defend (as set out in 6.8 of this Trust Agreement), and hold the Trustee (including its officers, agents, employees 17 NB I :657192.8 9 0 and attorneys) and other Employers harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Employer's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.5 Indemnification of Employer by Trustee The Employer shall not be liable for, and Trustee shall (to the extent allowed by the laws of the state of each Employer) indemnify, defend (as.set out in 6.8 of this Trust Agreement), and hold the Employer (including its officers, agents, employees and attorneys) and other Employers harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.6 Indemnification of Trustee by Trust Administrator The Trustee shall not be liable for, and Trust Administrator shall (to the extent allowed by the laws of the state of each Employer) indemnify and hold the Trustee (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trust Administrator's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.7 Indemnification of Trust Administrator by Trustee The Trust Administrator shall not be liable for, and Trustee shall (to the extent allowed by the laws of the state of each Employer) indemnify and hold the Trust Administrator (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.8 Indemnification Procedures Promptly after receipt by an indemnified party of notice or receipt of a claim or the commencement of any action for which indemnification may be sought, the indemnified party will notify the indemnifying party in writing of the receipt or commencement thereof. When the indemnifying party has agreed to provide a defense as set out above that party shall assume the defense of such action 18 NB I :657192.8 (including the employment of counsel, who shall be counsel reasonably satisfactory to such indemnitee) and the payment of expenses, insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the indemnifying party. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party unless (i) the employment of such counsel has been specifically authorized by the indemnifying party or (ii) the named parties to any such action (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. The indemnifying party shall not be liable to indemnify any person for any settlement of any such action effected without the indemnifying party's consent. The indemnification procedures of this Trust Agreement shall survive the termination of the Trust, any Employer's participation in the Trust and /or this Trust Agreement. 6.9 No Joint and Several Liability This document is not intended to and does not create any joint powers agreement or any joint and several liability. No Employer shall be responsible for any contributions, costs or distributions of any other Employer. ARTICLE VII AMENDMENT, TERMINATION AND MERGER 7.1 No Obligation to Continue Trust Participation in the Trust and continuation of the Employer's policies and /or applicable collective bargaining agreements that provide post - employment health care and welfare benefits are not assumed as a contractual obligation of the Employer. 7.2 Amendment of Trust (a) The Trust Agreement may be amended only by the approval of two- thirds (2/3) or more of the Employers then participating in the Trust. Any such amendment by the Employers shall be set forth in an instrument in writing and shall be delivered to the Trustee, the Trust Administrator and all Plan Administrators not less than one hundred and eighty (180) days before the effective date of such amendment; provided, however, that any party may waive in writing such 180 -day requirement with respect to any amendment (and such waiver shall not constitute a waiver with respect to any other amendment); and provided, further, that a waiver in writing of such 180 -day requirement by two - thirds (2/3) or more of the Plan Administrators of the Employers participating in the Trust as of the date the amendment is adopted shall constitute a waiver of such 19 N B 1:657192.8 0 0 0 180 -day requirement by all of the Employers then participating in the Trust. In addition, the Trust Administrator or the Trustee shall have the right to amend this Trust Agreement from time to time (without the requirement of a vote of Employers) solely for the purpose of keeping the Trust Agreement in compliance with the Code and applicable state law. Any such amendment by the Trust Administrator or the Trustee shall be set forth in an instrument in writing and shall be delivered to the Trustee, the Trust Administrator and all Plan Administrators promptly as each is made. (b) Any amendment of the Trust Agreement may be current, retroactive or prospective, provided, however, that no amendment shall: (1) Cause the Assets of any Agency Account to be used for or diverted to purposes other than for the exclusive benefit of Eligible Employees of the applicable Employer or for the purpose of defraying the reasonable expenses of administering such Agency Account. (2) Permit the Assets of any Agency Account to be used for the benefit of any other Employer. 7.3 Termination of Employer's Obligation to Provide OPEB A termination of the Employer's obligation to provide OPEB pursuant to its policies and /or applicable collective bargaining agreements for which the Employer's Agency Account was established shall not, in itself, effect a termination of the Agency Account. Upon a termination of the Employer's obligation to provide OPEB pursuant to its policies and /or applicable collective bargaining agreements, the Assets of the Agency Account shall be distributed by the Trustee when directed by the Plan Administrator in accordance with this Section 7.3. From and after the date of such tenmination and until final distribution of the Assets, the Trustee shall continue to have all the powers provided herein as are necessary or expedient for the orderly liquidation and distribution of such Assets, and the Agency Account shall continue until the Assets have been completely distributed. Such Assets shall be used first to satisfy any remaining obligations of the Employer to provide OPEBs pursuant to its policies and /or applicable collective bargaining agreements (to the extent that such distribution constitutes the exercise of an "essential governmental function" within the meaning of Section 115 of the Code) and to satisfy any of such Employer's obligations under this Trust Agreement. Any Assets remaining in the Agency Account after giving effect to the foregoing sentence shall be paid to the Employer to the extent permitted by law and consistent with the requirements of Section 115 of the Code. 7.4 Fund Recovery Based on Mistake of Fact Except as hereinafter provided or in accordance with Section 7.3, the Assets of the Trust shall never inure to the benefit of the Employer. The Assets shall be 20 NB 1:657192.8 held for the exclusive purposes of providing post - employment health care and welfare benefits to Eligible Employees and defraying reasonable expenses of administering the Trust. However, in the case of a contribution which is made by an Employer because of a mistake of fact, that portion of the contribution relating to the mistake of fact (exclusive of any earnings or losses attributable thereto) may be returned to the Employer, provided such return occurs within two (2) years after discovery by the Employer of the mistake. If any repayment is payable to the Employer, then, as a condition to such repayment, and only if requested by Trustee, the Employer shall execute, acknowledge and deliver to the Trustee its written undertaking, in a form satisfactory to the Trustee, to indemnify, defend and hold the Trustee harmless from all claims, actions, demands or liabilities arising in connection with such repayment. 7.5 Termination of Trust The Trust and this Trust Agreement may be terminated only by the unanimous agreement of all Employers. Such action must be in writing and delivered to the Trustee and Trust Administrator. Upon a termination of the Trust, the Assets of each Agency Account under the Trust shall be distributed by the Trustee when directed by the Plan Administrator for that Agency Account in accordance with this Section 7.5. From and after the date of such termination and until final distribution of the Assets, the Trustee shall continue to have all the powers provided herein with respect to each Agency Account as are necessary or expedient for the orderly liquidation and distribution of the Assets of such Agency Account, and the Agency Account shall continue until the Assets have been completely distributed. The Assets of each Agency Account shall be used first to satisfy any remaining obligations of the applicable Employer to provide OPEBs pursuant to its policies and /or applicable collective bargaining agreements (to the extent that such distribution constitutes the exercise of an "essential governmental function" within the meaning of Section 115 of the Code) and to satisfy any of such Employer's obligations under this Trust Agreement. Any Assets remaining in such Agency Account after giving effect to the foregoing sentence shall be paid to the Employer to the extent permitted by law and consistent with the requirements of Section 115 of the Code. In no case will the assets of the Trust be distributed on termination to an entity that is not a state, a political subdivision of a state or an entity the income of which is excluded from gross income under Section 115 of the Code. 21 N B 1:657192.3 0 0 ARTICLE VIII MISCELLANEOUS PROVISIONS 8.1 Nonalienation Eligible Employees do not have an interest in the Trust. Accordingly, the Trust shall not in any way be liable to attachment, gamishment, assignment or other process, or be seized, taken, appropriated or applied by any legal or equitable process, to pay any debt or liability of an Eligible Employee or any other party. Trust Assets shall not be subject to the claims of any Employer or the claims of its creditors. 8.2 Saving Clause In the event any provision of this Trust Agreement is held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the Trust Agreement, but this instrument shall be construed and enforced as if said provision had never been included. 8.3 Applicable Law This Trust Agreement and the Trust shall be construed, administered and governed under the Code and the law of the State of California. To the extent any of the provisions of this Trust Agreement are inconsistent with the Code or applicable state law, the provisions of the Code or state law shall control. In the event, however, that any provision is susceptible to more than one interpretation, such interpretation shall be given thereto as is consistent with the Trust Agreement being a tax - exempt trust within the meaning of the Code. 8.4 Joinder of Parties In any action or other judicial proceedings affecting this Trust Agreement, it shall be necessary to join as parties only the Trustee, the Plan Administrator or Delegatee. No participant or other persons having an interest in the Trust or any Agency Account shall be entitled to any notice or service of process unless otherwise required by law. Any judgment entered in such a proceeding or action shall be binding on all persons claiming under this Trust Agreement; provided, however, that nothing in this Trust Agreement shall be construed as to deprive a participant of such participant's right to seek adjudication of such participant's rights under applicable law. 8.5 Employment of Counsel The Trustee may consult with legal counsel (who may be counsel for the Trustee, the Trust Administrator or any Employer) with respect to the interpretation of this Agreement or the Trustee's duties hereunder or with respect to any legal 22 N B 1:657192.8 0 0 proceedings or any questions of law and shall be entitled to take action or not to take action in good faith reliance on the advice of such counsel and charge the Trust and, as applicable, one or more Agency Accounts. 8.6 Gender and Number Words used in the masculine, feminine or neuter gender shall each be deemed to refer to the other whenever the context so requires; and words used in the singular or plural number shall each be deemed to refer to the other whenever the context so requires. 8.7 Headings Headings used in this Trust Agreement are inserted for convenience of reference only and any conflict between such headings and the text shall be resolved in favor of the text. 8.8 Counterparts This Trust Agreement may be executed in an original and any number of counterparts by the Plan Administrator (executing an Adoption Agreement), the Trust Administrator and the Trustee, each of which shall be deemed to be an original of the one and the same instrument. * * * * * * ** Signature Page Follows * * * * * * ** 23 NB1:657192.8 • C� IN WITNESS WHEREOF, the Plan Administrator (by executing the Adoption Agreement), the Trustee and the Trust A Agreement by their duly authorized agents effective on May 16, 2007. UNION BANK OF CALIFORNIA "Trustee" By: ignature \70G[ iI Cv lk" . Typed or printed name Its: [j 'ce P ✓q s r d ov1 an Signature Typed or printed name Its: Date: UNION BANK OF CALIFORNIA BUSINESS TRUST CAPLIANCE APFZRO AL BY Gam' ec'`"� DATE �� / 9.6/ P-o °- 24 NB I :657192.8 dministrator have executed this restated Trust on the dates set forth below their names, to be PUBLIC AGENCY - RETIREMENT SERVICES "Trust Administrator" By: Signature Daniel Johnson Typed or printed name Its: President Date: 6/25L2607 • 0 Attachment E AGREEMENT FOR ADMINISTRATIVE SERVICES This agreement ( "Agreement ") is made this day of , 2009, between Phase 11 Systems, a corporation organized and existing under the laws of the State of California, doing business as Public Agency Retirement Services (hereinafter "PARS ") and the City of Rosemead ( "Agency "). WHEREAS, Agency has adopted the PARS Public Agencies Post - Retirement Health Care Plan (the "Plan "), and is desirous of retaining PARS, as Trust Administrator to the PARS Public Agencies Post- Retirement Health Care Plan Trust, to provide administrative services; NOW THEREFORE, the parties agree: 1. Services. PARS will provide the services pertaining to the Plan as described in the exhibit attached hereto as "Exhibit IA" ( "Services ") in a timely manner, subject to the further provisions of this Agreement. 2. Fees for Services. PARS will be compensated for performance of the Services as described in the exhibit attached hereto as "Exhibit 1 B ". 3. Payment Terms. Payment for the Services will be remitted directly from Plan assets unless the Agency chooses to make payment directly to PARS. In the event that the Agency chooses to make payment directly to PARS, it shall be the responsibility of the Agency to remit payment directly to PARS based upon an invoice prepared by PARS and delivered to the Agency. If payment is not received by PARS within thirty (30) days of the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per month. If payment is not received from the Agency within sixty (60) days of the invoice delivery date, payment plus accrued interest will be remitted directly from Plan assets, unless PARS has previously received written communication disputing the subject invoice that is signed by a duly authorized representative of the Agency. 4. Fees for Services Beyond Scope. Fees for services beyond those specified in this Agreement will be billed to the Agency at the rates indicated in the PARS' standard fee schedule in effect at the time the services are provided and shall be payable as described in Section 3 of this Agreement. Before any such services are performed, PARS will provide the Agency with written notice of the subject services, terms, and an estimate of the fees therefore. 5. Information Furnished to PARS. PARS will provide the Services contingent upon the Agency's providing PARS the information specified in the exhibit attached hereto as "Exhibit 1C" ( "Data "). It shall be the responsibility of the Agency to certify the accuracy, content and completeness of the Data so that PARS may rely on such information without further audit. It shall further be the responsibility of the Agency to deliver the Data to PARS in such a manner that allows for a reasonable amount of time for the Services to be performed. Unless specified in Exhibit IA, PARS shall be under no duty to question Data received from the Agency, to compute contributions made to the Plan, to determine or inquire whether contributions are adequate to meet and discharge liabilities under the Plan, or to determine or inquire whether contributions made to the Page 1 • • Plan are in compliance with the Plan or applicable law. In addition, PARS shall not be liable for non performance of Services if such non performance is caused by or results from erroneous and /or late delivery of Data from the Agency. In the event that the Agency fails to provide Data in a complete, accurate and timely manner and pursuant to the specifications in Exhibit 1C, PARS reserves the right, notwithstanding the further provisions of this Agreement, to terminate this Agreement upon no less than ninety (90) days written notice to the Agency. 6. Records. Throughout the duration of this Agreement, and for a period of five (5) years after termination of this Agreement, PARS shall provide duly authorized representatives of Agency access to all records and material relating to calculation of PARS' fees under this Agreement. Such access shall include the right to inspect, audit and reproduce such records and material and to verify reports furnished in compliance with the provisions of this Agreement. All information so obtained shall be accorded confidential treatment as provided under applicable law. 7. Confidentiality. Without the Agency's consent, PARS shall not disclose any information relating to the Plan except to duly authorized officials of the Agency, subject to applicable law, and to parties retained by PARS to perform specific services within this Agreement. The Agency shall not disclose any information relating to the Plan to individuals not employed by the Agency without the prior written consent of PARS, except as such disclosures may be required by applicable law. 8. Independent Contractor. PARS is and at all times hereunder shall be an independent contractor. As such, neither the Agency nor any of its officers, employees or agents shall have the power to control the conduct of PARS, its officers, employees or agents, except as specifically set forth and provided for herein. PARS shall pay all wages, salaries and other amounts due its employees in connection with this Agreement and shall be responsible for all reports and obligations respecting them, such as social security, income tax withholding, unemployment compensation, workers' compensation and similar matters. 9. indemnification. PARS and Agency hereby indemnify each other and hold the other harmless, including their respective officers, directors, employees, agents and attorneys, from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees and costs, incurred by the other as a consequence of PARS' or Agency's, as the case may be, acts, errors or omissions with respect to the performance of their respective duties hereunder. 10. Compliance with Applicable Law. The Agency shall observe and comply with federal, state and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding the administration of the Plan. PARS shall observe and comply with federal, state and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding Plan administrative services provided under this Agreement. Page 2 1 1. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. In the event any party institutes legal proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any state court of competent jurisdiction. 12. Force Majeure. When a party's nonperformance hereunder was beyond the control and not due to the fault of the party not performing, a party shall be excused from performing its obligations under this Agreement during the time and to the extent that it is prevented from performing by such cause, including but not limited to: any incidence of fire, flood, acts of God, acts of terrorism or war, commandeering of material, products, plants or facilities by the federal, state or local government, or a material act or omission by the other party. 13. Ownership of Reports and Documents. The originals of all letters, documents, reports, and data produced for the purposes of this Agreement shall be delivered to, and become the property of the Agency. Copies may be made for PARS but shall not be furnished to others without written authorization from Agency. 14. Designees. The Plan Administrator of the Agency, or their designee, shall have the authority to act for and exercise any of the rights of the Agency as set forth in this Agreement, subsequent to and in accordance with the written authority granted by the Governing Body of the Agency, a copy of which writing shall be delivered to PARS. Any officer of PARS, or his or her designees, shall have the authority to act for and exercise any of the rights of PARS as set forth in this Agreement. 15. Notices. All notices hereunder and communications regarding the interpretation of the terms of this Agreement, or changes thereto, shall be effected by delivery of the notices in person or by depositing the notices in the U.S. mail, registered or certified mail, return receipt requested, postage prepaid and addressed as follows: (A) To PARS: PARS; 5141 California Avenue, Ste. 150; Irvine, CA 92617; Attention: President (B) To Agency: City of Rosemead; 8838 E. Valley Boulevard, Rosemead, CA 91770; Attention: [Plan Administrator] Notices shall be deemed given on the date received by the addressee. 16. Term of Agreement. This Agreement shall remain in effect for the period beginning , 2009 and ending , 2012 ( "Term "). This Agreement may be terminated at any time by giving ninety (90) days written notice to the other party of the intent to terminate. Absent a ninety (90) day written notice to the other party of the intent to terminate, this Agreement will continue unchanged for successive twelve month periods following the Term. 17. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the parties hereto. Page 3 • 1 • 18. Entire Agreement. This Agreement, including exhibits, contains the entire understanding of the parties with respect to the subject matter set forth in this Agreement. In the event a conflict arises between the parties with respect to any term, condition or provision of this Agreement, the remaining terms, conditions and provisions shall remain in full force and legal effect. No waiver of any term or condition of this Agreement by any party shall be construed by the other as a continuing waiver of such term or condition. 19. Attorneys Fees. In the event any action is taken by a party hereto to enforce the terms of this Agreement the prevailing party herein shall be entitled to receive its reasonable attorney's fees. 20. Counterparts. This Agreement may be executed in any number of counterparts, and in that event, each counterpart shall be deemed a complete original and be enforceable without reference to any other counterpart. 21. Headings. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 22. Effective Date. This Agreement shall be effective on the date first above written, and also shall be the date the Agreement is executed. AGENCY: BY: TITLE: DATE: PARS: BY: TITLE: DATE: Page 4 [Plan Administrator] EXHIBIT IA SERVICES i PARS will provide the following services for the City of Rosemead PARS Public Agencies Post - Retirement Health Care Plan: 1. Plan Installation Services: (A) Meeting with appropriate Agency personnel to discuss plan provisions, implementation timelines, actuarial valuation process, funding strategies, benefit communication strategies, data reporting and contribution submission requirements; (B) Providing the necessary analysis and advisory services to finalize these elements of the Plan; (C) Providing the documentation needed to establish the Plan for review by Agency legal counsel; 2. Plan Administration Services: (A) Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust Program ( "Trustee "), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, reimbursements and investment activity, based upon information received from the Agency and /or Trustee; (C) Coordinating the processing of reimbursement payments pursuant to authorized direction by the Agency, and the provisions of the Plan, and, to the extent possible, based upon Agency - provided Data; (D) Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; (E) Preparing and submitting a monthly report of Plan activity to the Agency, unless directed by the Agency otherwise; (F) Preparing and submitting an annual report of Plan activity to the Agency; (G) Facilitating actuarial valuation updates and funding modifications for compliance with GASB 45; (H) Coordinating periodic audits of the Trust; (I) Monitoring Plan and Trust Compliance with federal and state laws. 3. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. In providing the services specified above, PARS will retain qualified professional service providers at its cost as it deems necessary if the service lies outside its area of expertise. Page 5 r EXHIBIT 1B FEES FOR SERVICES 0 PARS will be compensated for performance of Services, as described in Exhibit IA based upon the following schedule: (A) An annual asset fee paid from Plan assets based on the following schedule: For Plan Assets from: Annual Rate: $0 to $10,000,000 0.25% $10,000,001 to $15,000,000 0.20% $15,000,001 to $50,000,000 0.15% $50,000,001 and above 0.10% Annual rates are subject to a monthly minimum equal to $400.00. Annual rates are prorated and paid monthly. The annual asset fee shall be calculated by the following formula [Annual Rate divided by 12 (months of the year) multiplied by the Plan asset balance at the end of the month]. Trustee and Investment Management Fees are not included. (B) A fee equal to the out of pocket costs charged to PARS by an outside contractor for formatting contribution data on to a suitable magnetic media, charged only if the contribution data received by PARS from the Agency is not on readable magnetic media ( "Data Processing Fee "). Page 6 • • EXHIBIT IC DATA REQUIREMENTS PARS will provide the Services under this Agreement contingent upon receiving the following information: 1. Contribution Data — Completed Contribution Transmittal Form signed by Plan Administrator (or authorized Designee) which contains the following information: (A) Agency name (B) Contribution amount (C) Signed certification of reimbursement from the Plan Administrator, or authorized Designee 2. Reimbursement Data — Completed Payment Reimbursement Form signed by the Plan Administrator (or authorized Designee) which contains the following information: (A) Agency name (B) Payment reimbursement amount (C) Applicable statement date (D) Copy of applicable premium statement (E) Signed certification of reimbursement from the Plan Administrator (or authorized Designee) 3. Executed Legal Documents: (A) Certified Resolution (B) Adoption Agreement to the PARS Public Agencies Post- Retirement Health Care Plan (C) Trustee Investment Forms 4. Other information requested by PARS and Actuarial Provider Page 7 Otachment F N N N N N N N N o N N N N N N N N N N N N N N N N N N N N N m ° W W W W W O o W W 0 0 0 0 0 0 N 0 0 0 0 0 0 0 0 0 0 0 0 0 o m y W W W W W W W W W N N N N N N N N N N w w F m F h w" F 0 O N �- CO V !r lr A W N N O IO D] V !P lA A W N N O lD W V N lli A W N N O l0 Vf V1 N N lA W Vf VY V1 In {/1 i/1 1/V N N �A i/f N Vl N t/` i/1 to to V1 V� lM1 N i/V N Z O 00 00 V V J V T Ql Q) Ol O lli N to In N In A A A A A A A W W W W W W d A F� 1p Ol A N LD J tr W N 1p J N A N O tp V Ol A W F+ O t0 W Ol 41 A W O iD A lD A N 00 O to A A in 01 Oo O W J F+ In F+ T N 00 l!1 N O W OI V� A° A 00 O O 00 W dl Ol W V V A 0l to m w A N A l0 O l!I N W lA CO A w w w lA lA l0 J 00 y, l0 UI A VI A 1p ID l0 lO � W W lD A Ol W A lD �+ O i/I iA to th 1/� N lA 1/1 to V1 t/� VI N to (/� lA W 1A th In t/� t/� iA to to N N lA iA Z O 3 W V J J V !T 01 01 Ol Ol In lA In V1 N Ut A A A A A A A W W W W W W w F+ t0 T A N 1p J N W N t0 V l!� A N O l0 V Ol A W F� O l0 W Ol Vf A W lD A iD A F+ Oo O tr A A to m w O W V r il+ r N 00 In N O Oo O� lII A W O O 00 W tr Oi W J J A O to t0 W A A LD O to A Oo tT Oo In to tp J W° to A N A IO ID 1p l0 T W W t0 A T W A Oi b N O In W �/+ Oo F+ A A O N .N. ih Vf N w D O O Y in in in 0o ao 0o 2 n w Oo Oo Oo � N 3 m O < O w a � 0 � c 0 Q1 J J V J V J J In W W N I-` O t0 J In A pI 0° OI N N r+ r+ N N Ln V t0 D• m N m T O W I0 l0 00 A Oo w J 01 m A lD N O A N O T lli O — N A O J Oo O � A t0 V+ O N V- N W A W In Oo O I-` O O W W N Oo A A A VI A N F+ N QI N Ol A W N F+ 01 CO A O !- O N V N N N lA 01 O t0 VI A N N -{ W N lA m J N lA V Q1 A A l0 l0 Ol A Oa 0o N F+ W V l0 J 01 t0 l0 W 00 V � O 0] V V V J Ol N T Ol N N In lA In !n A A A A A A A W W W W W IO d F+ t0 m A N 10 J to w W i-+ t0 V In A N O tD J A W F+ O l0 W Ol In i0 A lD A i- Oo T to A A in Q� Oo O w J F I F T N w V N O w m to O w O O m W I0 A A w O In A Oo Oa In to 1p J W In A In A tD 1p l0 t0 O1 W W tD A W A Ol lD r O In W In Oa F+ A A O t i/I iA to th 1/� N lA 1/1 to V1 t/� VI N to (/� lA W 1A th In t/� t/� iA to to N N lA iA Z O 3 W V J J V !T 01 01 Ol Ol In lA In V1 N Ut A A A A A A A W W W W W W w F+ t0 T A N 1p J N W N t0 V l!� A N O l0 V Ol A W F� O l0 W Ol Vf A W lD A iD A F+ Oo O tr A A to m w O W V r il+ r N 00 In N O Oo O� lII A W O O 00 W tr Oi W J J A O to t0 W A A LD O to A Oo tT Oo In to tp J W° to A N A IO ID 1p l0 T W W t0 A T W A Oi b N O In W �/+ Oo F+ A A O N .N. ih Vf N w D O O in in in 0o ao 0o 2 n w Oo Oo Oo � O O O O W W J J J V Ol Ol .. 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A F+ l0 QI A N lD V lA W F l0 V Vt A N O IO V N A W N O 1p N N O l0 V N l0 A I A F w m l A A I m W O W J F V N m N w N N L A N N O Of A Oo O O m W m m W V V A T V I t A A w O I A w T w I O A N W A 10 In A to A w IO w w m w w t A O W A T t r O I W N m w N N w O o C,) n m m � A O T N M p C O O � L O m w' Q .mss Ip O w. � A N < O Q1 J J V J V J J In W W N I-` O t0 J In A pI 0° OI N N r+ r+ N N F+ t0 D• m N m T O W I0 l0 00 A Oo w J 01 m A lD N O A N O T lli O — N A O J Oo O w A t0 V+ O N V- N W A W In Oo O I-` O O W W N Oo A A A VI A N F+ N QI N Ol A W N F+ 01 CO A O !- O N V N N N lA 01 O t0 VI A N ° W N lA m J N lA V Q1 A A l0 l0 Ol A Oa 0o N F+ W V l0 J 01 t0 l0 W 00 V m 01 0 o C,) n m m � A O T N M p C O O � L O m w' Q .mss Ip O w. � A N 0 AMENDMENT TO THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead Public Agency Retirement System (PARS) Retirement Enhancement Plan (the "Plan ") for the benefit of eligible employees, and WHEREAS, the Employer has reserved the right to amend the Plan from time to time; and WHEREAS, the Employer has enhanced their benefit formula under their contract with PERS from 2.0% at 55 to the Local Miscellaneous 2.7% at 55 plan effective September 25, 2007; and WHEREAS, the Employer desires to continue to provide a PARS supplemental retirement benefit to eligible employees of the Employer in addition to the enhanced benefits employees will receive from PERS but to amend the Plan to reflect that the PARS benefit will supplement the 2.7% at 55 PERS formula for any eligible employee retiring on or after September 25, 2007. NOW THEREFORE, BE IT RESOLVED, that effective as of September 25, 2007, the Plan is hereby amended as follows: 1. Article I, Section 1.1, Eligibility for Benefits, is hereby amended and restated in its entirety as follows: 1.1 Eligibility for Benefits. a) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1, Tier I, if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer and currently retires under PERS prior to September 25, 2007, and (5) has applied for benefits under this Plan. b) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1. Tier II. if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (2) is at least sixty (60) years of age; (3) has completed at least ten (10) but not more than twenty (20) years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least ten (10) but not more than twenty (20) years immediately prior to termination of duties, (4) has terminated employment with the Employer and concurrently retires under PERS prior to September 25, 2007; and (5) has applied for benefits under this Plan. c) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1, Tier III, if he /she: (1) is a City Council member of the Employer on or after July 1, 2000, (2) is at least fifty -five (55) years of age; (3) has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (4) has terminated employment with the Employer and concurrently retires under PERS prior to September 25, 2007; and (5) has applied for benefits under this Plan. d) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1, Tier IV, if he /she: (1) is the Assistant City Manager of the Employer as of January 1, 2006; (2) has terminated employment with the Employer and concurrently retires under PERS prior to September 25, 2007; and (3) has applied for benefits under this Plan. e) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1, Tier V, if he /she: (1) is a full -time Miscellaneous Employee of the Employer, a contract City Attorney, or City Council member of the Employer, on or after September 25, 2007; (2) is at least fifty -five (55) years of age; (3) has completed twenty (20) or more years of full -lime continuous employment with the Employer as of the last day of employment with the Employer for full -time Miscellaneous Employees; or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; or has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (4) has terminated employment with the Employer and currently retires under PERS; and (5) has applied for benefits under this Plan. 2. Article II, Section 2.1, Retirement Benefits, is hereby amended by adding the following Tier V, as follows: 2.1 Retirement Benefits. The benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer for full -time Miscellaneous Employees; or the number of full and partial years retained as City Attorney, or the number of full and partial years of employment as a City Council member; completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %), the product of which shall not exceed ninety percent (90 %) of Final Pay. �J 0 (2) The number of full and partial years of full -time continuous employment with the Employer for full -time Miscellaneous Employees, or the number of full and partial years retained as City Attorney; or the number of full and partial years of employment as a City Council member; completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Enhanced Benefit Factor. The total combined PERS and PARS benefit shall not exceed ninety percent (90 %) of Final Pay. 3. Article II, Section 2.3, Pre- Retirement Death Benefits, is hereby amended to read as follows: 2.3 Pre - Retirement Death Benefits. Pre - retirement death benefits shall be provided for those actively employed Employees of the Employer who die after attaining the minimum age requirement and completing the required years of service with the Employer in accordance with Section 1.1. The benefit shall be equal to the Member's Retirement Benefit corresponding to the tier of eligibility, actuarially reduced as if the Member had retired and elected a 100% joint- and - survivor option. The benefit will be paid over the lifetime of the surviving spouse. There is no pre- retirement death benefit payable if there is no surviving spouse. 4. Article VI, Section 6.1, Definitions, is hereby amended by adding the following definition: 6.1 Definitions. "PERS Enhanced Benefit Factor" means the age factor used by the PERS Local Miscellaneous 2.7% at 55 plan, which is determined at the Member's age at retirement. K111YA IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of September 25, Executed this 13�' day of �e , 2008. By. Title: City Manaqer 0 0 Makng retirement work foryou. August 27, 2007 Oliver Chi City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91770 0 AUG 3 0 2007 Fffl� RE: City of Rosemead PARS Section 457 FICA Alternative Retirement Plan Dear Oliver: Please find enclosed for your files a fully executed original of the Trust Document pertaining to the City of Rosemead PARS 457 FICA Alternative Plan. Sincerely, Abby Billings Coordinator, Implementation Enclosure 5141 California Ave., Ste. 150 Irvine, CA 92617 -3069 800.540.6369 fax 949.823.9900 www.pars.org 0 AGENCY REnREMENT SERVICES Z&RE Makng retirement work foryou. August 27, 2007 Oliver Chi City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91770 0 AUG 3 0 2007 Fffl� RE: City of Rosemead PARS Section 457 FICA Alternative Retirement Plan Dear Oliver: Please find enclosed for your files a fully executed original of the Trust Document pertaining to the City of Rosemead PARS 457 FICA Alternative Plan. Sincerely, Abby Billings Coordinator, Implementation Enclosure 5141 California Ave., Ste. 150 Irvine, CA 92617 -3069 800.540.6369 fax 949.823.9900 www.pars.org PARS BENEFIT TRUST FBO CITY OF ROSEMEAD PARS SECTION 457 FICA ALTERNATIVE RETIREMENT PLAN Effective July 1, 2007 TRUST DOCUMENT i� • • TABLE OF CONTENTS ARTICLE PAGE I Trust Fund 3 II Investments 4 III Trustee's Powers 7 IV Trustee's Duties 12 V Restrictions on Transfer 13 VI Resignation, Removal and Succession 13 VII Amendment 14 VIII Liabilities 15 IX Duration and Termination 17 X Miscellaneous 18 2 0 PARS Benefit Trust FBO City of Rosemead PARS Section 457 FICA Alternative Retirement Plan Effective July 1, 2007 This Trust Agreement (the "Trust Agreement" or "Trust ") is made by and among City of Rosemead (the "Agency ") as the sponsor of the PARS Benefit Trust FBO City of Rosemead PARS Section 457 FICA Alternative Retirement Plan Effective July 1, 2007 (the "Plan "), the Plan Administrator or the Plan's administrative committee (the "Plan Administrator "), Union Bank of California, N.A., a national banking association as Trustee ( "Union Bank of California" or the "Trustee ") and Public Agency Retirement Services as Trust Administrator (the "Trust Administrator "). PURPOSE The Agency has established the PARS Benefit Trust FBO City of Rosemead PARS Section 457 FICA Alternative Retirement Plan Effective July 1, 2007 for the benefit of eligible employees. The Agency has established this Trust for the exclusive purpose of providing Plan benefits to its employees ( "Participants ") and their beneficiaries ( "Beneficiaries ") and defraying reasonable expenses of the Plan and Trust. The Agency has reserved the right to amend this Trust from time to time. The Plan Administrator for this Plan and Trust shall mean the person who holds a particular position or title designated by the Agency's governing body. The Plan provides that, from time to time, cash and other assets may be provided or forwarded to the Trustee by the Agency to be held and administered in trust for the uses and purposes of the Plan, solely for the purpose of providing such benefits. Subject to specific conditions set forth in this Trust Agreement, the Trustee agrees that it will receive cash and other property of the Plan acceptable to the Trustee, constituting Plan contributions from the Agency or transfers for the benefit of the Plan, and shall hold and invest such cash and other property (the "Assets ") for the uses and purposes and upon the terms and conditions stated in this Trust Agreement (the "Trust "). The Agency intends that the Plan shall qualify under Section 457(b) of the Internal Revenue Code of 1986, as amended (the "Code "), and that the Trust hereby created shall be treated as a trust exempt from tax under Section 501 of the Code, and shall not be subject to any claims of the Agency's creditors. ARTICLE I TRUST FUND 1.1 Signing Authority. The Agency's Board of Trustees, Board of Directors or other duly authorized governing body shall certify in writing to the Trustee the names and specimen signatures of all those who are authorized to act as, and on behalf of, the Plan Administrator, and those names and specimen signatures shall be updated as necessary by such governing board or other duly authorized officer of the Agency. 1.2 . Acceptance of Assets. All contributions or transfers shall be received by the Trustee in cash or in any other property acceptable to the Trustee. The Trust shall consist of the contributions and transfers of Assets received by the Trustee, together with the income and earnings from such Assets, and any increments accruing to them. The Trustee shall manage and administer the Trust without distinction 3 between principal and income. The Trustee shall have no other duty to compute any amount to be transferred or paid to it by the Agency and it shall not be responsible for the collection of any contributions or transfers due to the Trust. 1.3 Establishment of Trust. The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Agency and shall be used exclusively for the uses and purposes of Participants and Beneficiaries as herein set forth. Participants and Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. 1.4 Ongoing Contributions to Trust. Agency, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property acceptable to the Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither the Trustee nor any Participant shall have any right to compel such additional deposits. 1.5 No Duty of Trustee to Enforce Collection. Notwithstanding anything herein to the contrary, the Trustee shall have no authority or obligation to enforce the collection of any contribution or transfer to the Trust. 1.6 Plan Administration. The Agency and not the Trustee shall be responsible for administering the Plan (including without limitation determining the rights of the Agency's employees to participate in the Plan, determining any Participant's right to benefits under such Plan), and issuing statements to Participants of their interest in the Trust and Plan. 1.7 Participant Accounts. The Agency shall maintain, or cause to be maintained, a separate account for each Participant under the Plan (the "Account ") in which it shall keep a record of the share of such Participant under such Plan in the Trust. The Agency may appoint a third -party administrator or record - keeper (the "Record- keeper ") to maintain such Accounts. A Participant's Account under the Plan shall represent the portion of the Trust allocated to provide such Participant benefits under such Plan. If the Trustee is directed by the Agency to segregate the Trust into separate Accounts for each Participant, at the time it makes a contribution to the Trust, the Agency shall certify to the Trustee the amount of such contribution being made in respect of each Participant under the Plan. 1.8 Tax Reporting. The Agency and not the Trustee shall be responsible for all income tax reporting and calculation and payment of any wage withholding or other tax requirements in connection with the Trust and any contributions thereto, and any income earned thereby, and payments or distributions therefrom, and Agency agrees to indemnify and defend Trustee against any liability for any such taxes, interest or penalties resulting from or relating to the Trust, provided, however, that UBOC as Trustee shall file such tax reports for the Trust as required by law and as agreed to by the parties in writing from time to time. ARTICLE II INVESTMENTS 2.1 Plan Administrator Authority. Except as otherwise provided in this Article II, the Plan Administrator appointed by the Agency shall have all power over and responsibility for the management, disposition, and investment of the Trust Assets, and the Trustee shall comply with proper written 2 0 0 directions of the Plan Administrator concerning those Assets. The Plan Administrator shall not issue directions in violation of the terms of the Plan and Trust or prohibited by any applicable federal or state laws or regulations governing the establishment and operation of trusts by governmental entities for the purpose of providing retirement benefits for their employees or other individuals providing services to such entities, including, but not limited to, laws governing the actions of plan fiduciaries ( "Statutes "). Except to the extent required by applicable state or federal law or regulations, or otherwise provided in this Trust Agreement, the Trustee shall have no duty or responsibility to review, initiate action, or make recommendations regarding Trust Assets and shall follow investment directions and retain Assets until directed in writing by the Plan Administrator to dispose of them. The Trustee shall not be liable for any investment decisions of the Plan Administrator or any investment losses in the Account attributable to investment decisions of the Plan Administrator. 2.2 Trustee as Manager. The Plan Administrator may also delegate all or a portion of its investment authority to the Trustee for all or a portion of the Trust Assets. Upon written acceptance of that delegation, the Trustee shall have full power and authority to invest and reinvest that portion of the Trust so designated by the Plan Administrator in investments of any kind. The Trustee shall be responsible for proper diversification of the Assets only if all the Plan Assets are subject to its management. The Plan Administrator shall have the responsibility for establishing and carrying out a funding policy and method consistent with the objectives of the Plan, taking into consideration the Plan's short- term and long -term financial needs (hereinafter referred to as the "Permissible Investment Guidelines "). The Trustee's responsibility for investment and diversification of the Assets in the portion of the Trust for which Trustee has investment discretion shall be subject to, and is limited by, the funding policy and investment guidelines issued to it by the Plan Administrator and any Statutes. It is understood and acknowledged that the Plan Administrator, rather than the Trustee, shall be responsible for the funding policy, for overall diversification of Trust Assets (unless the Trustee has investment responsibility for all Plan Assets), for benefit allocation, distribution, and for overall compliance of the Trust with statutory limitations on the amount of the Trust's investment in any assets. 2.3 Insurance Contract. The Plan Administrator may direct the Trustee in writing to invest assets of the Trust in group or individual insurance contracts of all kinds authorized under the Plan, Statutes and Permissible Investment Guidelines provided such contracts are issued by an insurance company or companies qualified to do business in more than one state, and the Plan Administrator shall have the sole responsibility and shall direct the Trustee with respect to such insurance contracts. The administration of these insurance contracts shall be the sole responsibility of the Plan Administrator, and the Trustee shall follow the directions of the Plan Administrator with respect to the administration of any such contracts. 2.4 Independent Investment Manager. The Plan Administrator may appoint one or more investment managers to direct the Trustee in the investment of all or a specified portion of the Trust Assets. Any investment manager shall be a qualified investment advisor under the Investment Advisors Act of 1940. The Plan Administrator may also remove any investment manager. The Plan Administrator shall promptly notify the Trustee in writing of the appointment or removal of any investment manager. The Plan Administrator shall cause the investment manager to acknowledge to the Trustee in writing that 0 0 the investment manager is a fiduciary with respect to the Plan and Trust. If the foregoing conditions are met, the investment manager shall have the power to manage, acquire, retain, or dispose of any Trust Assets subject to the investment manager's management and direction. The Trustee shall not be liable for the acts or omissions of such investment manager, or be under an obligation to review the investments of, or to invest or otherwise manage any asset of the Trust that is subject to the management and direction of such investment manager. 2.5 Participant Directed Accounts. The Agency may, by written resolution and execution of the Adoption Agreement, terminate the Plan Administrator's right to direct the investment and management of all or any portion of the Assets of the Trust and allow Participants to direct their own account balances ( "Participant Directed Accounts "). Notwithstanding any other provision of this Trust Agreement, for Participant Directed Accounts, the Trustee shall be entitled to act upon proper directions of the Plan Administrator, Record - keeper, and Participants including directions in writing, or oral instructions which Trustee in its discretion may follow without receipt of written instructions, instruction given by photostatic teletransmission using facsimile signature, or those instructions which are digitally recorded on the UBOC Voice Response Unit ( "VRU ") or intemet website. Trustee is hereby authorized to record conversations and transmissions made in connection with the Trust. Trustee's recording or lack of recording of any such oral, intemet or digital instructions, and /or receipt or lack of receipt of facsimile transmissions, as reflected in the Trustee's records maintained in the ordinary course of business shall constitute conclusive proof of Trustee's receipt or non - receipt of such instructions. The Trustee and /or Record - keeper shall not be liable in any manner for investment or other losses or other liability attributable to Participant's directions, or lack thereof, or exercise of control over the investments of their Participant Directed Accounts. Likewise, the Trustee and /or Record - keeper shall have no duty or responsibility to review, monitor or make recommendations regarding investments made at the direction of the Participants or the Plan Administrator. In order for Agency to be relieved of investment fiduciary liability, the requirements of California law including Section 53213.5 of the California Government Code must be met. The Plan Administrator shall establish uniform and nondiscriminatory rules for the operation of the Participant Directed Accounts, including whether the Participant shall direct the Trustee or direct the Plan Administrator who then directs the Record - keeper and the Record - keeper forwards such directions to the Trustee. Agency shall designate whether Participant Directed Accounts are to be established pursuant to the provisions of section 2.5(a) or 2.5(b), below: (a) Participant Direction in Individually Directed Accounts. If the Agency has so elected, Participants may have investment direction power over their own segregated account balances ( "Individually Directed Account" or "IDA "). Investments may be directed by Participants into assets administratively acceptable to Trustee, as limited by guidelines developed by the Plan Administrator (the "Permissible Investment Guidelines "). Plan Administrator shall notify Participants of the Plan's Permissible Investment Guidelines as in effect from time to time. In the absence of directions from a Participant, the Plan Administrator may direct the investment of the IDA. The Trustee may refuse to comply with the directions of the Participant to invest in assets other than those listed in its Permissible Investments Guidelines or with directions which the Trustee deems to be improper or contrary to the provisions of the Plan and Trust or the Internal Revenue Code and shall have no liability for such refusal. 0 0 (b) Participant Directed Account within Plan Administrator Selected Investment Options ( "SelectBENEFIT Accounts "): If the Agency so elects, the Participant's Account Balance shall be segregated into a Participant Directed Account ( "SelectBENEFIT Account "), over which the Participant may direct investment into one or more investment alternatives ( "Investment Options "). The Plan Administrator or its appointed Investment Fiduciary shall have full responsibility for designating the Investment Options under the Plan and for selecting the underlying investment vehicle(s) for each designated Investment Option into which a Participant may direct investment of his or her SelectBENEFIT Account. To the extent allowed by law, neither the Agency, the Plan Administrator, the Record - keeper nor the Trustee shall have any responsibility for monitoring the directions of the Participant nor shall the Agency, the Plan Administrator, the Record - keeper or the Trustee be liable in any manner for investment or other losses or other liability for following directions of a Participant. (c) If SelectBENEFITAccounts are established, notwithstanding any other provision of this Trust Agreement, the Agency may appoint the Trustee to provide ministerial administrative services for such accounts by so indicating in the Agency's Plan, provided that an acceptable service agreement has been executed by and between the Agency, the Plan Administrator, the Trustee and the Record - keeper. ARTICLE III TRUSTEE'S POWERS 3.1 General Trustee's Powers. Except as otherwise provided in Article II, the Trustee shall have full power and authority with respect to property held in the Trust to do all such acts, take all proceedings, and exercise all such rights and privileges, whether specifically referred to or not in this document, as could be done, taken or exercised by the absolute owner, including, without limitation, the following: (a) To invest and reinvest the Trust or any part hereof in any one or more kind, type, class, item or parcel of property, real, personal or mixed, tangible or intangible; or in any one or more kind, type, class, item or issue of investment or security; or in any one or more kind, type, class or item of obligation, secured or unsecured; or in any combination of them; and to retain the property associated with such investment or reinvestment for the period of time that the Trustee deems appropriate. (b) To buy, sell, assign, transfer, acquire, loan, lease (for any purpose, including mineral leases, and for terms within or extending beyond the life of this Trust), exchange and in any other manner to acquire, manage, deal with and dispose of all or any part of the Trust property, for cash or credit and upon any reasonable terms and conditions. (c) To make "deposits" with any bank or savings and loan institution, including any such facility of the Trustee or an affiliate thereof provided that the deposit bears a reasonable rate of interest; 0 0 (d) To retain all or any portion of the Trust in cash temporarily awaiting investment or for the purpose of making distributions or other payments, without liability for interest thereon, notwithstanding Trustee's receipt of "float" from such uninvested cash; (e) To place uninvested cash and cash awaiting distribution in one or more mutual funds and/or commingled investment funds maintained by or made available by the Trustee, and to receive compensation from the sponsor of such fund(s) for services rendered, separate and apart from any trustee's fees hereunder. Trustee or Trustee's affiliate may also be compensated for providing investment advisory and other services to any such mutual fund or commingled investment funds. Agency acknowledges receipt of prospectuses for such funds; (f) To borrow money for the purposes of the Trust from any source other than a party in interest of the Plan, with or without giving security and to pay interest, to issue promissory notes and to secure the repayment thereof by pledging all or any part of the Trust assets; (g) To take all of the following actions as directed by a fiduciary or other person with investment discretion over the Trust assets; to vote proxies of any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property held in the Trust; (h) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (i) To pay, or cause to be paid, from the Trust any and all real or personal property taxes, income taxes or other taxes or assessments of any or all kinds levied or assessed upon or with respect to the Trust or the Plan; 0) To enter into, modify, renew and terminate annuity contracts of deposit administration of immediate participation or other group or individual type with one or more insurance companies and to pay or deposit all or any part of the Trust thereunder; to provide in any such contract for the investment of all or any part of funds so deposited with the insurance company in securities under separate accounts; to exercise and claim all rights and benefits granted to the contract holder by any such contracts; (k) To exercise all the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under applicable federal or state laws, as amended from time to time, it being intended that, except as herein otherwise provided, the powers conferred upon the Trustee herein shall not be construed as being in limitation of any authority conferred by law, but shall be construed as in addition thereto. 3.2 Additional Powers. In addition to the other powers enumerated above, and whether or not the Plan Administrator has retained investment authority, the Trustee in any and all events is authorized and empowered: (a) To invest funds in any type of interest - bearing account including without limitation, time certificates of deposit or interest - bearing accounts issued by Union Bank of California, N.A., or any mutual fund or short term investment fund ( "Fund "), whether sponsored or advised by Union Bank of California or any affiliate thereof; Union Bank of California, N.A. or its affiliate may be compensated for providing investment advice or other services to such Fund, in addition to any Trustee's fees received pursuant to this Trust Agreement; provided, that such compensation is reasonable; (b) To cause all or any part of the Trust to be held in the name of the Trustee (which in such instance need not disclose its fiduciary capacity) or, as permitted by law, in the name of any nominee, and to acquire for the Trust any investment in bearer form; but the books and records of the Trust shall at all times show that all such investments are a part of the Trust and the Trustee shall hold evidences of title to all such investments; (c) To serve as sole custodian with respect to the Trust assets with the sole exception of insurance policy or annuity contracts, the underlying assets of which shall be maintained by the insurance company issuer; (d) To employ such agents and counsel as may be reasonably necessary in managing and protecting the Trust assets and to pay them reasonable compensation; to employ any broker - dealer, including any broker - dealer affiliated with the Trustee, and pay to such broker - dealer its standard commissions; to settle, compromise or abandon all claims and demands in favor of or against the Trust; and to charge any premium on bonds purchased; (e) In addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration of the Trust, as though the absolute owner thereof and to exercise and perform any and all of the other powers and duties specified in this Trust Agreement; (f) To abandon, compromise, contest, arbitrate or settle claims or demands; to prosecute, compromise and defend lawsuits, but without obligation to do so, all at the risk and expense of the Trust; (g) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by United States agency and to disclose the Agency's name to issuers of securities in connection with shareholder communications unless directed otherwise in writing; (h) To comply with all requirements imposed by applicable state Statutes or other applicable provisions of state or federal law; (i) To seek written instructions from the Agency, Plan Administrator or other fiduciary or, to the extent Participants are permitted to direct the investment of all or any portion of their Accounts under the Plan, from a Participant, on any matter and await written instructions from such person without incurring any liability. If at any time the Agency, the Plan Administrator, a fiduciary or Participant should fail to give directions to the Trustee, the Trustee may but is not required to act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of this Trust. Such actions shall be conclusive on the Plan Administrator and the Agency and the Participant if written notice of the proposed action is given to the Plan Administrator five (5) days prior to the action being taken, and the Trustee receives no response; 0 0 (j) As directed by the Plan Administrator: (i) To cause the benefits provided under the Plan to be paid directly to the persons entitled thereto under the Plan, and in the amounts and in the manner specified, or to disburse such sums to the Agency, who shall be responsible to distribute sums due; and make appropriate tax reports to Participants, Beneficiaries and taxing authorities, and to charge such payments against the Trust with respect to which such benefits are payable; (ii) To compensate such executive, consultant, actuarial, accounting, investment, appraisal, administrative, clerical, secretarial, custodial, depository and legal, personnel and other employees or assistants as are engaged by the Plan Administrator in connection with the administration of the Plan and to pay from the Trust the necessary expenses of such, personnel, employees and assistants, to the extent not paid by the Agency and directed by the,Plan Administrator; (iii) To impose a reasonable charge to cover the cost of furnishing to Participants or Beneficiaries upon their written request documents as may be legally required by applicable state or federal law or regulations; (iv) To act upon proper directions of the Agency, the Plan Administrator or any other fiduciary or Participant including directions in writing, or oral instructions which Trustee in its discretion may follow prior to receipt of written instructions, instruction given by photostatic teletransmission using facsimile signature, or those instructions which are digitally recorded on the Trustee's oral recording or VRU communications system. If oral or digital instructions are given, to act upon those in Trustee's discretion prior to receipt of written instructions. Trustee's recording or lack of recording of any such oral or digital instructions taken in Trustee's ordinary course of business shall constitute conclusive proof of Trustee's receipt or non - receipt of the oral or digital or VRU instructions; In exercising the power and authority under this subparagraph (iv), the Trustee will perform telephonic verification to the Plan Administrator, or other authorized representative properly designated bythe Plan Administrator or the Agency, or such other security procedure selected by the Plan Administrator prior to wire transfer of funds as the Trustee may require. The Plan Administrator, the Agency, and the Plan assume all risk with respect to delays or transfers if the Trustee is unable to reach the Plan Administrator or other authorized representative properly designated by the Plan Administrator, or in the event of delay as a result of attempts to comply with any other security procedure selected by the Plan Administrator in connection with wire transfers or otherwise; (v) To pay from the Trust the expenses reasonably incurred in the administration of the Trust as provided in the Plan, to the extent such expenses are not paid by the Agency pursuant to Section 10.2; (vi) To maintain insurance for such purposes, in such amounts and with such companies as the Plan Administrator shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries (but only if such insurance permits recourse by the insurer against a fiduciary in the case of a breach of a fiduciary obligation by such fiduciary). 3.3 Delegatee. The Plan Administrator may delegate certain authority, powers and duties to an entity to act in those matters specified in the delegation ( "Delegatee "). Any such delegation must be in a writing that names and identifies the Delegatee, states the effective date of the delegation, specifies the 10 0 0 authority and duties delegated, is executed by the Plan Administrator and is acknowledged in writing by the Delegatee, the Trust Administrator (if not the Delegatee) and the Trustee. Such delegation shall be effective until the Trustee and the Trust Administrator are directed in writing by the Plan Administrator that the delegation has been rescinded or modified. 3.4 Directions to Trustee. Except as otherwise provided in this Trust Agreement, all directions to the Trustee from the Plan Administrator or Delegatee must be in writing and must be signed by the Plan Administrator or Delegatee, as the case may be. For all purposes of this Trust Agreement, direction shall include any certification, notice, authorization, application or instruction of the Plan Administrator, Delegatee or Trustee appropriately communicated. The above notwithstanding direction may be implied if the Plan Administrator or Delegatee has knowledge of the Trustee's intentions and fails to file written objection. The Trustee shall have the power and duty to comply promptly with all proper direction of the Plan Administrator, or Delegatee, appointed in accordance with the provisions of this Trust Agreement. In the case of any direction deemed by the Trustee to be unclear or ambiguous the Trustee may seek written instructions from the Plan Administrator, the Agency or the Delegatee on such matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the Delegatee should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of the Trust which may include not taking any action. The Trustee may request directions or clarification of directions received and may delay acting until clarification is received. In the absence of timely direction or clarification, or if the Trustee considers any direction to be a violation of the Trust Agreement or any applicable law, the Trustee shall in its sole discretion take appropriate action, or refuse to act upon a direction. 3.5 Trust Administrator. The Plan Administrator has appointed PARS as the Trust Administrator. The Trust Administrator has accepted its appointment subject to the Plan Administrator's delegation of authority, to act as such, pursuant to Section 3.3 of this Trust Agreement. The Trust Administrator's duties involve the performance of the following services pursuant to the provisions of this trust agreement and the Agreement for Administrative Services: (a) Performing periodic accounting of the Trust; (b) Directing the Trustee to make distributions from the Trust to Participants pursuant to the provisions of the Agency's Plan and liquidate assets in order to make such distributions; (c) Notifying the Investment Fiduciary of the amount of Assets in the Trust available for further investment and management by the Investment Fiduciary; (d) Allocating contributions, earnings and expenses to the Trust; (e) Directing the Trustee to pay insurance premiums, to pay the fees of the Trust Administrator and to do such other acts as shall be appropriate to carry out the intent of the Trust. (f) Such other services as the Agency and the Trust Administrator may agree. 11 0 3.6 Additional Trust Administrator Services. The Plan Administrator may at any time retain the Trust Administrator as its agent to perform any act, keep any records or accounts and make any computations which are required of the Agency or the Plan Administrator by this Trust Agreement or by the Agency's Plan. The Trust Administrator shall be separately compensated for such service and such services shall not be deemed to be contrary to the Trust Agreement. 3.7 Trust Administrator's Compensation. As may be agreed upon from time to time by the Agency and Trust Administrator, the Trust Administrator will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the Trust in accordance with Section 53217 of the California Government Code. 3.8 Resignation or Removal of Trust Administrator. The Trust Administrator may resign at any time by giving at least one hundred twenty (120) days written notice to the Plan Administrator and the Trustee. ARTICLE IV TRUSTEE'S DUTIES 4.1 Powers Subject to Duties. The Trustee shall exercise any of the foregoing powers from time to time as required by any applicable federal or state law. 4.2 Records. The Trustee shall maintain or cause to be maintained suitable records, data and information relating to its functions hereunder. The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements and other actions hereunder. Its books and records relating to the Trust shall be open to inspection and audit at all reasonable times by the Agency, the Plan Administrator or their duly authorized representatives. 4.3 Accounts. Within ninety days after the close of each Plan Year and within ninety days after the resignation or removal of the Trustee as provided in Article VI hereof, the Trustee shall render to the Agency a written account showing in reasonable summary the investments, receipts, disbursements and other transactions engaged in by the Trustee during the preceding Plan Year or accounting period with respect to the Trust. Such written accounts shall set forth the assets and liabilities of the Trust. The Agency or Plan Administrator shall have ninety days after the Trustee's mailing of each such written account within which to file with the Trustee written objections. Upon the expiration of each such period, the Trustee shall be forever released and discharged from all liability and accountability to the Agency, the Plan Administrator and Participants with respect to the propriety of its acts and transactions shown in such account except with respect to any such acts or transactions as to which the Agency files written objections within such ninety -day period with the Trustee. 4.4 Reports. The Trustee shall file such descriptions and reports and shall furnish such information and make such other publications, disclosures, registrations and other filings as are required of the Trustee by the Code or any other applicable law or regulation. 4.5 Follow Plan Administrator and Investment Manager Direction. The Trustee shall have the power and duty to comply promptly with all proper directions of the Plan Administrator, the Agency, and any duly appointed investment manager. Except as to investment directions received from the Plan 12 Administrator or investment manager, the Trustee shall not act on any directions or requests received from Participants. ARTICLE V RESTRICTIONS ON TRANSFER 5.1 Persons to Receive Payment. (a) As directed by the Plan Administrator, the Trustee shall, except as otherwise provided in subsection (b), pay all amounts distributable hereunder only to the person or persons designated under the Plan or deposit to the Participant's or Beneficiary's checking or savings account and not to any other person or corporation, and only to the extent of assets held in the Trust. The Plan Administrator's instructions to the Trustee regarding whether or not to make distributions, and the amount of such distributions, shall be conclusive on all Participants and Beneficiaries. (b) In the event any controversy shall arise as to the person or persons to whom any distribution or payment is to be made by the Trustee, or as to any other matter arising in the administration of the Plan or Trust, the Trustee may, (i) retain the amount in controversy pending resolution of the controversy or the Trustee, (ii) file an action seeking declaratory relief, (iii) interplead the Trust Assets in issue, and (iv) name the Agency and/or any or all persons making conflicting demands as necessary parties. (c) The Trustee shall not be liable for the payment of any interest or income on any amount withheld or inter-pleaded under subsection (b). (d) The expenses incurred by the Trustee for taking any action under subsection (b) shall be charged by the Trustee to the Trust unless paid by the Agency. 5.2 Assignment and Alienation Prohibited. In accordance with Section 457 of the Code, Trust Assets shall not be subject to any claims of Agency or other creditors. Additionally, no benefit or interest available hereunder shall be subject in any manner to assignment or alienation, whether voluntarily or involuntarily, or to legal process except as permitted in the Internal Revenue Code, applicable state or federal law, or as provided in the Plan. ARTICLE VI RESIGNATION, REMOVAL AND SUCCESSION 6.1 Resignation or Removal of Trustee. The Trustee may resign at any time upon ninety days' prior written notice to the Agency (which notice may be waived by the Agency). Agency may remove the Trustee upon ninety days' prior written notice to the Trustee (which notice may be waived by the Trustee). 6.2 Designation of Successor. Upon notice of the Trustee's resignation or removal, Agency shall promptly designate a Successor Trustee who will accept transfer of the assets of the Trust. If no 13 0 0 Successor Trustee is designated within thirty days of notice of Trustee's resignation or removal, the Plan Administrator shall designate a Successor Trustee. 6.3 Court Appointment of Successor. If neither the Agency nor the Plan Administrator designates a Successor Trustee within thirty days after the Trustee gives notice of resignation or receives notice of removal, the Trustee may, at the expense of the Trust, apply to a court of competent jurisdiction to appoint a Successor Trustee. Until a Successor Trustee is appointed, and all Trust assets are delivered to the Successor Trustee, the Trustee shall be entitled to be compensated for its services according to its published fee schedule then in effect for acting as Trustee in accordance with the Plan and Trust. 6.4 Successor's Powers. A Successor Trustee shall have the same powers and duties as those conferred upon the original Trustee hereunder. A resigning Trustee shall transfer the Trust Assets and shall deliver the books, accounts and records of the Trust to the Successor Trustee as soon as practicable. The resigning Trustee is authorized, however, to reserve such amount from the Assets of the Trust as may be necessary for the payment of its fees and expenses incurred prior to its resignation, and the Trust Assets shall remain liable to reimburse the resigning Trustee for any costs, expenses or attorneys' fees or losses incurred, whether before or after resignation, due solely to Trustee's holding title to and administration of the Trust Assets. 6.5 Successor's Duties. A Successor Trustee shall have no duty to audit or otherwise inquire into the acts and transactions of its predecessor. ARTICLE VII AMENDMENT 7.1 Power to Amend. The Agency shall have the right at any time, and from time to time, to modify or amend this Trust Agreement in whole or in part, effective upon thirty days' prior written notice to the Trustee, provided, however, that the Trustee's duties and responsibilities shall not be amended without the Trustee's express written consent. 7.2 Limitation on Amendment. No amendment shall be made, at anytime, under which any part of the Trust may be diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries. 7.3 Conformity with Law. Notwithstanding anything herein to the contrary, this Trust Agreement may be amended prospectively or retroactively at any time by the Agency if deemed necessary to conform to the provisions and requirements of the Internal Revenue Code or regulations promulgated pursuant thereto in order to maintain the tax - exempt status hereof thereunder, or to conform to the provisions and requirements of any law, regulation, order or ruling affecting the character or purpose of the Plan or Trust. No such Amendment shall be effective to add or change the Trustee's powers or duties absent Trustee's written consent. I 0 0 ARTICLE VIII LIABILITIES 8.1 Declaration of Intent. Nothing in this Article purports to relieve a fiduciary from liability for any responsibility, obligation or duty under any applicable Statutes. However, to the full extent permitted by law, it is the intent of this Article to relieve each fiduciary from all liability for any acts or omissions of any other fiduciary or any other person and to declare the absence of liabilities of all persons referred to in this Article to the extent not imposed by law or by provisions of this Trust Agreement. Each of the following Sections, in declaring such limitations, is set forth without limiting the generality of this Section but in each case shall be subject to the provisions, limitations and policies set forth in this Section. 8.2 General Limitations of Liability. (a) No fiduciary shall be liable with respect to a breach of fiduciary duty under any applicable Statutes if such breach was committed before he or she became a fiduciary or after he or she ceased to be a fiduciary. (b) No fiduciary shall be liable for any act or omission of any other person to whom fiduciary responsibilities (other than Trustee responsibilities) are allocated by the Plan, the Trust Agreement or by a fiduciary. 8.3 Liability of the Trustee. (a) The Trustee shall have no powers, duties or responsibilities with regard to the administration of the Plan or to determine the rights or benefits of any person having or claiming an interest under the Plan or in the Trust or under this Trust Agreement or to examine or control any disposition of the Trust or part thereof which is directed by the Plan Administrator. (b) The Trustee shall have no liability for the adequacy of contributions for the purposes of the Plan or for enforcement of the payment thereof. (c) The Trustee shall have no liability for the acts or omissions of the Agency or the Plan Administrator. (d) The Trustee shall have no liability for following proper directions of a fiduciary, the Agency, the Plan Administrator or a Participant when such directions are made in accordance with this Trust Agreement. (e) During such period or periods of time, if any person other than the Trustee, including but not limited to a Participant, is directing the investment and management of Trust Assets, the Trustee shall have no obligation to determine the existence of any conversion, redemption, exchange, subscription or other right relating to any securities purchased on the directions of such person if notice 15 of any such right was given prior to the purchase of such securities. If such notice is given after the purchase of such securities, the Trustee shall notify the Plan Administrator, which shall transmit the notice to the directing party. The Trustee shall have no obligation to exercise any such right unless it is informed of the existence of the right and is instructed to exercise such right, in writing, by a fiduciary or a Participant through the Plan Administrator within a reasonable time prior to the expiration of such right. (f) During such period or periods of time, if the Trustee is directed to purchase securities issued by any foreign government or agency thereof, or by any corporation domiciled outside of the United States, it shall be the responsibility of the directing party to advise the Trustee in writing with respect to any laws or regulations of any foreign countries or any United States territories orpossessions which shall apply, in any manner whatsoever, to such securities, including, but not limited to, receipt of dividends or interest by the Trustee for such securities. (g) If the Plan and Trust cease to be subject to Sections 457 and 501 of the Code, the Agency shall immediately notify Trustee. Agency shall indemnify the Trustee for any federal or state income taxes, and any federal estate and state estate or inheritance taxes which the Trustee is required to pay as a result of a distribution made at the direction of the Plan Administrator, in which event the Agency shall be subrogated to the right of the Trustee to proceed against such Participant, Beneficiary, the executor of the estate of a deceased Participant or any other person for reimbursement of the amount paid and any taxes due. 8.4 Indemnification of Trustee. (a) The Trustee shall not be liable for, and the Agency agrees to indemnify and hold the Trustee harmless from and against any claims, demands, loss or liability imposed on the Trustee, including reasonable attorneys' fees and costs incurred by the Trustee, caused by and related to (i) any acts taken in accordance with any directions (or any failure to act in the absence of such directions) from the Plan Administrator, or any other party to whom Plan Administrator has given authority to direct the Trustee, which the Trustee reasonably believes to have been given by any of them; (ii) the negligence or willful misconduct of the Plan Administrator, or any other person designated to act on Plan Administrator's behalf; or (iii) the Plan Administrator's execution of its duties under this Trust Agreement, except in the event of the Trustee's gross negligence or material breach of this Agreement which directly causes the loss to the Trust. (b) The Agency further agrees to indemnify the Trustee for and against any claims, demands or liabilities imposed on the Trustee, including reasonable attorneys' fees and costs incurred by the Trustee, which exceed amounts payable or available from the Trust, arising as a result of claims asserted by a third person or persons, not otherwise described in (a), and whether such person or persons are related to the Trust, for action or failure to take action with respect to Trust Assets. 8.5 Indemnification of Agency. The Trustee agrees to indemnify the Agency against, and hold the Agency harmless from, all liabilities and claims (including reasonable attorney's fees and costs incurred by the Agency) against the Agency as a result of any breach of fiduciary responsibility by the Trustee which proximately causes loss to the Trust, and where Trustee knowingly participates in such a breach, knowingly undertakes to conceal such breach, has actual knowledge of such breach and fails to take reasonable action to remedy such breach or through its gross negligence in performing its duties under this Agreement, proximately causes loss to the Trust. 16 r ARTICLE IX DURATION AND TERMINATION 9.1 Termination. It is intended that this Trust shall be treated as-being exempt from tax under Section 501(a) of the Code and that the Plan referred to herein shall qualify under Section 457(b) of the Code. However, notwithstanding any other provisions of the Trust, if the Internal Revenue Service is requested to issue to the Agency a favorable written determination or ruling with respect to the initial qualification of the Plan and exemption of the Trust from tax and such request is denied, the Trustee shall, after receiving a written direction from the Plan Administrator, pay to each Participant that portion of the Trust applicable to said Participant's voluntary contributions, if any, and provided the Plan so states, pay to the Agency any part of the Trust attributable to Agency contributions then remaining in the Trustee's possession, less any investment losses and Trustee's fees and costs incurred to date of distribution. Asa condition to such repayment, Agency shall be solely responsible for any tax reporting and withholding required, and the Agency agrees to indemnify, defend, and hold the Trustee harmless from all claims, actions, demands, or liabilities arising in connection with such repayment, and provided further that such repayment will occur within one year after the date the request for qualified status is denied. 9.2 Exclusive Benefit. This Trust may be terminated at any time by the Agency, and upon such termination, the Trust Assets shall be distributed by the Trustee as and when directed by the Plan Administrator in accordance with the provisions of this Trust Agreement and the Plan document. From the date of termination of the Plan and until the final distribution of the Trust, the Trustee shall continue to have all the powers provided under this Trust that are necessary or desirable for the orderly liquidation and distribution of the Trust. In no instance upon any termination, or discontinuance and subsequent distribution shall the Trust or any part of it be used for, or diverted to, purposes other than for the exclusive benefit of Participants, their Beneficiaries, and defraying the administrative expenses of the Plan and Trust until all Plan liabilities have been satisfied, except in the instance of the failure of the Trust initially to qualify for tax - exempt status as set forth in Section 9.1 and in the event of a return of assets mistakenly contributed as set forth in Section 9.3. 9.3 Return of Mistaken Contributions. Notwithstanding any other provision of this Agreement, it is specifically provided that if a contribution or any portion thereof is made by the Agency by virtue of a mistake of fact, the Trustee shall, upon written request of the Agency, return such amounts as may be permitted by law to the Agency. 9.4 Duration. This Trust shall continue in full force and effect for the maximum period of time permitted by law and in any event until the expiration of twenty -one years after the death of the last surviving person who was living at the time of execution hereof who at any time becomes a Participant in the Plan, unless this Trust is sooner terminated in accordance with the Plan or the terms of this Trust Agreement. 17 0 0 ARTICLE X MISCELLANEOUS 10.1 Delegation. By written notice to the Trustee, the Plan Administrator or the Agency may authorize the Trustee to act on matters in the ordinary course of the business of the Trust or on specific matters upon the signature of its delegate. 10.2 Expenses and Taxes. (a) The Agency, or at its option, the Trust, shall pay the Trustee its expenses in administering the Trust and reasonable compensation for its services as Trustee at a rate to be agreed upon by the parties to this Agreement, based upon Trustee's published fee schedule. However, the Trustee reserves the right to alter this rate of compensation at any time by providing the Agency with notice of such change at least thirty days prior to its effective date. Reasonable compensation shall include compensation for any extraordinary services or computations required, such as determination of valuation of assets when current market values are not published and interest on funds to cover overdrafts. The Trustee shall have a lien on the Trust for compensation and for any reasonable expenses including counsel, appraisal, or accounting fees, and these may be withdrawn from the Trust as and when viewed and payable, or if Agency has elected to pay expenses of the Trust, may be withdrawn from the Trust unless paid by the Agency within thirty days after mailing of the written billing by the Trustee. (b) Reasonable counsel fees, reasonable costs, expenses, and charges of the Trustee incurred or made in the performance of its duties, including but not limited to expenses relating to investment of the Trust such as broker's commissions, stamp taxes, and similar items and all taxes of any and all kinds that may be levied or assessed under existing or future laws upon or in respect to the Trust or the income thereof shall be paid from the Trust Assets, unless paid by the Agency. 10.3 Third Parties. (a) No person dealing with the Trustee shall be required to follow the application of purchase money paid or money loaned to the Trustee or inquire as to whether the Trustee has complied with the requirements hereof. (b) In any judicial or administrative proceedings, only the Agency and the Trustee shall be necessary parties and no Participant or other person having or claiming any interest in the Trust shall be entitled to any notice or service of process (except as required by law). Anyjudgment, decision or award entered in any such proceeding or action shall be conclusive upon all interested persons. 10.4 Successor Agency If any successor to an Agency continues the Plan adopted by the Agency, such successor shall concurrently become a successor first party to this Trust Agreement by giving written notice of its adoption of the Plan and this Trust Agreement to the Trustee by duly authorized persons; such successor Agency shall become a signatory to this Trust Agreement upon its written notice to Trustee of the Successor's adoption hereof. W. • 10.5 Relation to Plan. All words and phrases used herein shall have the same meanings as in the Plan, and this Trust Agreement and the Plan shall be read and construed together. Whenever the Plan provides that the Trustee shall act as therein prescribed, the Trustee shall be and is hereby authorized and empowered to do so for all purposes as fully as though specifically so provided herein or so directed by the Plan Administrator. The Trustee shall furnish the Agency with copies of the Trust Agreement and all amendments thereto. 10.6 Use of Trust Funds. Except as provided in Section 9.2 and 9.3, under no circumstances shall any part of the Trust be recoverable by the Agency from the Trustee or from any Participant or former Participant, his or her Beneficiaries, or any other person or be used for or diverted to purposes other than for the exclusive purposes of providing benefits to Participants and their Beneficiaries, provided, however, that: (a) An Agency's excess contribution may be returned to such Agency in accordance with the provisions of the Plan, and (b) The portion, if any, of the Trust attributable to an Agency not required for the satisfaction of all liabilities to Participants and their Beneficiaries shall, upon such Agency's termination of the Plan, revert to such Agency. 10.7 Location of Trust Fund Assets. Except as authorized by applicable state or federal laws or regulations, the indicia of ownership of any assets of the Trust and Plan shall not be maintained outside the jurisdiction of the District Courts of the United States. 10.8 Arbitration of Disputes. Any dispute under this Agreement shall be resolved by submission of the issue to a member of the American Arbitration Association who is chosen by the Agency and the Trustee. If the Agency and the Trustee cannot agree on such a choice, each shall nominate a member of the American Arbitration Association, and the two nominees will then select an arbitrator. Expenses of the arbitration shall be paid as decided by the arbitrator. 10.9 Partial Invalidity. If any provision of this Trust Agreement is held to be invalid or unenforceable for any reason, this Agreement shall be construed and enforced as if such provisions had not been included and such illegality or invalidity shall not affect the remaining portions of this Trust Agreement, unless such invalidity prevents accomplishment of the objectives and purposes of this Trust Agreement and the Plan. In the event of any such holding, the parties will immediately amend this Trust Agreement as necessary to remedy any such defect. 10.10 Construction. This Trust Agreement shall be constructed, administered and enforced according to the Internal Revenue Code and where state law is applicable, under applicable Statutes and laws of the State of California applied fairly and equitably in accordance with the purposes of the Plan. IN 0 w ADOPTION Executed this 21�day of , 2007. CITY OF ROSEMEAD, Sponsor of: PARS Benefit Trust FBO City of Rosemead PARS Section 457 FICA Alternative Retirement Plan Effective July 1, 2007. By: (ZAt7w Oliver Chi (typed or printed name) City Manager (title) UNION BANK OF CALIFORNIA, N.A. TRUSTEE Accepted thiV'l day ofe" 2007 By: (Si enY st oer union Bank of ds4fomia, NA (typed or printed name) (title) PUBLIC AGENCY RETIREMENT SERVICES TR UST ADMINISTRATOR Accepted this rtday U L 2007 By: � (Si ature) Daniel Johnson (typed or printed name) (title) 20 Accepted this day of 12007. By: (Signature) (typed or printed name) (title) 0 0 PUBLIC ENT r� • AGENCY I1ut[(� RETREMENT SERVICES Making retirement work /or you. Irvine, CA Austin, TX Dublin, OH December 6, 2006 Donald Wagner Jr. Assistant City Manager City of Rosemead P.O. Box 399 Rosemead, CA 91770 Dear Mr. Wagner, • Please find enclosed, for your files, a fully executed amendment to the Trust Agreement to the City of Rosemead PARS Excess Benefit Plan. We have kept a copy for our records. If you have any questions regarding the enclosed amendment, please feel free to contact me at (800) 540 -6369, extension 105. Sincerely, Abby Billings Administrator, Implementation /enclosure 5141 California Ave., Ste. 150 Irvine, CA 92617 -3069 800.540.6369 fax 949.823.9900 www.parsinfo.org I J• • C� J AMENDMENT TO THE EXCESS BENEFIT TRUST AGREEMENT BETWEEN THE CITY OF ROSEMEAD AND UNION BANK OF CALIFORNIA, N.A. WHEREAS, the City of Rosemead (the "Employer') entered into a trust agreement with Union Bank of California (the "Trustee "); WHEREAS, the Public Agency Retirement Services ( "PARS ") has been providing trust administration services to the City of Rosemead and providing direction to Union Bank of California; and WHEREAS, the City of Rosemead has reserved the right to amend the Trust Agreement from time to time in accordance with Section 7.1. NOW THEREFORE, the parties mutually agree to the following provisions: By adding Section 1.13 to the Trust Agreement as follows: 1.13 'Trust Administrator shall mean Public Agency Retirement Services." By adding Section 3.3 to the Trust Agreement as follows: "33 Delegatee The Plan Administrator may delegate certain authority, powers and duties to an entity to act in those matters specified in the delegation ( "Delegatee "). Any such delegation must be in a writing that names and identifies the Delegatee, states the effective date of the delegation, specifies the authority and duties delegated, is executed by the Plan Administrator and is acknowledged in writing by the Delegatee, the Trust Administrator (if not the Delegatee) and the Trustee. Such delegation shall be effective until the Trustee and the Trust Administrator are directed in writing by the Plan Administrator that the delegation has been rescinded or modified." By adding Section 3.4 to the Trust Agreement as follows: 2567v12 "3.4 Directions to Trustee Except as otherwise provided in this Trust Agreement, all directions to the Trustee from the Plan Administrator or Delegatee must be in writing and must be signed by the Plan Administrator or Delegatee, as the case may be. For all purposes of this Trust Agreement, direction shall include any certification, notice, authorization, application or instruction of the Plan Administrator, Delegatee or Trustee appropriately communicated. The above notwithstanding direction may be implied if the Plan Administrator or Delegatee has knowledge of the Trustee's intentions and fails to file written objection. The Trustee shall have the power and duty to comply promptly with all proper direction of the Plan Administrator, or Delegatee, appointed in accordance with the provisions of this Trust Agreement. In the case of any direction deemed by the Trustee to be unclear or ambiguous the Trustee may seek written instructions from the Plan Administrator, the Employer or the Delegatee on such matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the Delegatee should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of the Trust Agreement which may include not taking any action. The Trustee may request directions or clarification of directions received and may delay acting until clarification is received. In the absence of timely direction or clarification, or if the Trustee considers any direction to be a violation of the Trust Agreement or any applicable law, the Trustee shall in its sole discretion take appropriate action, or refuse to act upon a direction." By adding Section 3.5 to the Trust Agreement as follows: "3.5 Trust Administrator The Plan Administrator has appointed PARS as the Trust Administrator. The Trust Administrator has accepted its appointment subject to the Plan Administrator's delegation of authority, to act as such, pursuant to Section 3.3 of this Trust Agreement. The Trust Administrator's duties involve the performance of the following services pursuant to the provisions of this trust agreement and the Agreement for Administrative Services: (a) Performing periodic accounting of the Trust; (b) Directing the Trustee to make distributions from the Trust to Participants pursuant to the provisions of the Plan and liquidate assets in order to make such distributions; 2567_12 PEL 0 0 (c) Notifying the Investment Fiduciary of the amount of Assets in the Trust available for further investment and management by the Investment Fiduciary; (d) Allocating contributions, earnings and expenses to the Trust; (e) Directing the Trustee to pay insurance premiums, to pay the fees of the Trust Administrator and to do such other acts as shall be appropriate to carry out the intent of the Trust. (f) Such other services as the Employer and the Trust Administrator may agree." By adding Section 3.6 to the Trust Agreement as follows: "3.6 Additional Trust Administrator Services The Plan Administrator may at any time retain the Trust Administrator as its agent to perform any act, keep any records or accounts and make any computations which are required of the Employer or the Plan Administrator by this Trust Agreement or by the Plan. The Trust Administrator shall be separately compensated for such service and such services shall not be deemed to be contrary to the Trust Agreement." By adding Section 3.7 to the Trust Agreement as follows: "3.7 Trust Administrator's Compensation As may be agreed upon from time to time by the Employer and Trust Administrator, the Trust Administrator will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the Trust in accordance with Section 53217 of the California Government Code." By adding Section 3.8 to the Trust Agreement as follows: "3.8 Resignation or Removal of Trust Administrator The Trust Administrator may resign at any time by giving at least one hundred twenty (120) days written notice to the Plan Administrator and the Trustee." 3 2567_12 PEL IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers on the date(s) set forth below. EMPLOYER CITY OF ROSEMEAD By: Its: Dat THE TRUSTEE UNION BANK OF CALIFORNIA, N.A By: ' racy Keve Title: Trust Office nion Bank of California, N.A. Date: -y�oy n 2567_12 PEL THE TRUST ADMINISTRATOR PUBLIC AGENCY RETIREMENT SERVICES By: Title: Date: ( k12 c 16(' 0 r 0 AMENDMENT TO THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead Public Agency Retirement System (PARS) Retirement Enhancement Plan (the "Plan ") for the benefit of eligible employees, and WHEREAS, the Employer has reserved the right to amend the Plan from time to time. NOW THEREFORE, BE IT RESOLVED, that effective October 24, 2006, the Plan is hereby amended to provide an additional tier of eligibility and benefits as follows: 1. Article I, Section 1.1, Eligibility for Benefits, is hereby amended and restated as follows: 1.1 Eligibility for Benefits a) An Employee shall be eligible to receive Retirement Benefits described under Section 2. 1, Tier I, if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer and currently retired under PERS; and (5) has applied for benefits under this Plan. b) An Employee shall be eligible to receive Retirement Benefits described under Section 2. 1, Tier II, if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract City Attorney on or after July 1, 2000; (2) is at least sixty (60) years of age; (3) has completed at least ten (10) but not more than twenty (20) years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously 0 as City Attorney for at least ten (10) but not more than twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer and concurrently retired under PERS; and (5) has applied for benefits under this Plan. c) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1, Tier III, if he /she: (1) is a City Council member of the Employer on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (4) has terminated employment with the Employer and concurrently retired under PERS; and (5) has applied for benefits under this Plan. d) An Employee shall be eligible to receive Retirement Benefits described under Section 2. 1, Tier IV, if he /she: (1) is the Assistant City Manager of the Employer as of January 1, 2006; (2) has terminated employment with the Employer and concurrently retired under PERS; and (3) has applied for benefits under this Plan. 2. Article II, Section 2.1 is hereby amended to add the following Tier IV of benefits: Tier IV: 'Be benefit shall be paid in the Normal Form of Benefit and shall be an amount equal to one - twelfth of the Member's Final Pay times three percent (3.00 %) times 1.404. IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of October 24, 2006. Executed this 3 O day of © 2006. By: VU Title: City Manager 0 0 0 0 AMENDMENT TO THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) ,RETIREMENT ENHANCEMENT PLAN WHEREAS, the City of Rosemead (the "Employer ") has previously adopted the City of Rosemead Public Agency Retirement System (PARS) Retirement Enhancement Plan (the "Plan") for the benefit of eligible employees, and WHEREAS, the Employer has reserved the right to amend the Plan from time to time. NOW THEREFORE, BE IT RESOLVED, that effective June 1, 2005, the Plan is hereby amended to provide a pre- retirement death benefit as follows. 1. Article II, Section 2.3, Pre - Retirement Death Benefits, is hereby amended in its entirety as follows: 2.3 Pre - Retirement Death Benefits Pre- retirement death benefits shall be provided for those actively employed Employees of the Employer who die after attaining the minimum age requirement and completing the required years of service with the Employer under Tier I, Tier II, or Tier III of Section 1.1. The benefit shall be equal to the Member's Retirement Benefit corresponding to the tier of eligibility, actuarially reduced as if the Member had retired and elected a 100% joint - and - survivor option. The benefit will be paid over the lifetime of the surviving spouse. There is no pre- retirement death benefit payable if there is no surviving spouse. day of Ii'&_ , 2005. LN Title: 0 0 AMENDMENT TO THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN WHEREAS, City of Rosemead (the "Agency ") has previously adopted the City of Rosemead PARS Retirement Enhancement Plan (the "Plan "); and WHEREAS, the Agency has the right to amend that Plan; and WHEREAS, effective as of January 1, 2005, the State of California has enacted the California Domestic Partners Rights and Responsibilities Act of 2003 (the "Act "); and WHEREAS, certain provisions of the Plan are governed exclusively by Federal Law; and WHEREAS, Section 297.5(k) of the California Family Code indicates that the Act does not amend or modify federal laws or the benefits, protections and responsibilities provided by those laws; and WHEREAS, the Agency deems it to be in the best interest of the Agency and the Plan to amend the Plan to comply with the terms of the Act. NOW, THEREFORE, BE IT RESOLVED, that Section 2.4 of the Plan is hereby amended by adding the following paragraph at the end thereof to read as follows: "Effective as of January 1, 2005, for purposes of this Section 2.4 only: (1) all references to 'marriage' shall also include 'registered domestic partnerships,' (2) individuals in a 'registered domestic partnership' shall be considered `married,' and (3) all references to a'spouse' shall also include a registered domestic partner. A `registered domestic partner' and a `registered domestic partnership' refers to persons and partnerships satisfying the requirements of the California Family Code and officially registered as of the date of death with the Secretary of State as such in accordance with Section 298.5 of the California Family Code." IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of January 1, 2005. DATED: City By: Its: NBI:649324.1 June 7, 2005 Donald Wagner Assistant City Manager City of Rosemead P.O. Box 399 Rosemead, CA 91770 Maktirg retwewe�tt work for you, RE: City of Rosemead / PARS Plan Amendment/Spousal Rights for Registered Domestic Partners Dear Mr. Wagner: I've enclosed a new set of amendments relative to the California Domestic Partners Rights and Responsibilities Act for the City of Rosemead's PARS Retirement Enhancement Plan. The word "include" was inadvertently omitted from the next to the last paragraph. Please retain one signed copy for your records and the second signed copy should be returned to our office in the enclosed envelope. If you have any further questions about the enclosed plan amendment, please feel free to contact me at (800) 540 -6369 x 132. Sincerely, Shauna Volcan Implementation Manager PARS /enclosure S141 California Avenue, Suite ISO • Irvine, California 92611.3069 - 800.540.6369 • 800.660.8057 fax • www.parsinfo.org ® 0 AMENDMENT TO THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN WHEREAS, City of Rosemead (the "Agency ") has previously adopted the City of Rosemead PARS Retirement Enhancement Plan (the "Plan"); and WHEREAS, the Agency has the right to amend that Plan; and WHEREAS, effective as of January 1, 2005, the State of California has enacted the California Domestic Partners Rights and Responsibilities Act of 2003 (the "Act "); and WHEREAS, certain provisions of the Plan are governed exclusively by Federal Law; and WHEREAS, Section 297.5(k) of the California Family Code indicates that the Act does not amend or modify federal laws or the benefits, protections and responsibilities provided by those laws; and WHEREAS, the Agency deems it to be in the best interest of the Agency and the Plan to amend the Plan to comply with the terms of the Act. NOW, THEREFORE, BE IT RESOLVED, that Section 2.4 of,the Plan is hereby amended by adding the following paragraph at the end thereof to read as follows: "Effective as of January 1, 2005, for purposes of this Section 2.4 only: (1) all references to 'marriage' shall also include 'registered domestic partnerships; (2) individuals in a 'registered domestic partnership' shall be considered `married,' and (3) all references to a'spouse' shall also include a registered domestic partner. A `registered domestic partner' and a `registered domestic partnership' refers to persons and partnerships satisfying the requirements of the California Family Code and officially registered as of the date of death with the Secretary of State as such in accordance with Section 298.5 of the California Family Code." IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of January 1, 2005. / DATED:07 i S If City of Rosemead By: ° Its: Assist t Citv ' ana er " NB1:649324.1 • . • Phase II Systems PARS Trust Administrator PUBLIC• AGENC}'• RE PIRkNIENT- SYSTEM Crenlivr Snboinn.v f n Public Agenciev^ November 25, 2003 Donald Wagner Assistant City Manager City of Rosemead 8838 E. Valley Blvd Rosemead, CA 91770 Dear Mr. Wagner: Our office is preparing to mail, out the PARS REP Annual Estimate of Benefits Statement for 2003.Enclosed for your review are the following materials: 1. Cover Letter to PARS Participants 2. Sample Estimate of Benefits Statement 3. Plan Information Sheet Please review and provide me with any comments or changes. If you approve of the materials listed above, we will immediately mail copies of the statements to all applicable individuals to their home address. If we do not hear from you by November 25, 2003, we will assume that all of the information is correct and mail the materials. If you would like a copy of each employee's Annual Estimate of Benefits Statement, please contact me at (800) 540 -6369, ext. 103. Sincerely, `1111vau Michelle Sweeney Senior Administrator, Plan Enrollments Phase II Systems, PARS Trust Administrator 3961 MacArthur Blvd. • Suite 200 • Newport Beach • Califomia • 92660 • (800) 731.7884 • W W W.PARSINFO.ORG • Fax (949) 250.1252 0 0 RETIREMENT ENHANCEMENT PLAN City of Rosemead Dear PARS Participant: Your 2003 PARS REP Annual Estimate of Benefits Statement is enclosed. Please review this information carefully as it contains important information about the retirement benefits available through the City of Rosemead PARS Retirement Enhancement Plan. At the time you retire, if you meet the eligibility requirements of the plan, you will be entitled to receive benefits from PARS, which are paid in addition to and separately from your CalPERS retirement allowance. The enclosed Estimate of Benefits Statement provides an estimate of potential benefits available to you under the PARS plan. This estimate is based upon assumptions provided by the City and is intended to assist you with your personal financial planning. Certain assumptions were made with regards to future salary increases and service with the City of Rosemead. There will be no guarantee that you will receive the same benefits under this plan as illustrated on this Estimate of Benefits Statement. All benefits will be ultimately determined by the rules set forth in the Plan Document. Included on the back of the statement is a Plan Information Sheet that summarizes the provisions of the City's PARS REP. _. 1. We hope these materials provide you with a better understanding of your retirement benefits available through PARS. Please call the PARS Plan Enrollments Department with any questions at (800) 731 -7884. Sincerely, Michelle Sweeney Senior Administrator, Plan Enrollments Phase Il Systems, PARS Trust Administrator 0 City of Rosemead Prepared for: Sample Employee Date Prepared: 11/18/2003 Assumptions 0 PARS Retirement Enhancement Plan Date of Birth Date of Hire (assuming continuous full -time service until retirement) Annual Salary (applicable to retirement) Projected Annual Salary Increase until retirement Projected CalPERS Lifetime + Monthly Benefit' Benefit Summary 10/20/1946 04/15/67 $58,556 3.00% Projected PARS Lifetime = Total Monthly Monthly Benefit2 Benefit3 Retirement at age 55 #VALUE! + N/A = N/A Retirement at age 57 $3,647 + $1,552 = $5,199 Retirement at age 60 $4,647 + $1,516 = $6,163 Retirement at age 62 $5,425 + $1,454 = $6,879 Retirement at age 65 $6,510 + $1,567 = $8,077 1 Based on City of Rosemead service only. Does not include CalPERS service earned outside of this City. CalPERS benefit projections are based on the unmodified benefit amount. Please check with CalPERS for estimates of your benefits available from that retirement system. , 2 Estimated benefits are based on the unmodified benefit amount. Benefits will be reduced if a survivor continuance option is selected. 3 Total Monthly Benefit represent the total combined unmodified benefit from PARS and CalPERS based on City of Rosemead service. All Lifetime monthly benefits include a 2.00% compound COLA. Federal limits on benefit amounts may apply at your retirement. Benefit Disclaimer The information provided on this benefit summary is intended only as a estimate of future benefits available to you from the City of Rosemead's PARS Retirement Enhancement Plan. The benefit amounts are based on certain assumptions listed above regarding salary and service. Under no circumstances do these assumptions guarantee future salary increases or your continued employment with the City. The illustration assumes that you will have uninterrupted full -time employment from your hire date until your date of retirement from the City of Rosemead. There will be no guarantee that you will receive the same amounts listed on this page when you retire. To receive a retirement benefit under the PARS plan, you must meet the eligibility requirements set forth in the Plan Document. If you fail to meet the eligibility requirements of the PARS plan you will not receive any benefits from the PARS plan. Please contact PARS at (800) 731 -7884 for further information. *AN INFORMATION AEET City of Rosemead Introduction The Rosemead City Council approved the establishment of a PARS Retirement Enhancement Plan (REP) for eligible City of Rosemead employees, effective July 1, 2000. The Plan provides a supplemental benefit in addition to your current CAPERS retirement benefit The Plan Information sheet provides a brief summary of the requirements and benefits of this plan. For more detailed information, please refer to the Plan Summary. A Plan Summary can be obtained from the City's Personnel Office. Plan Eligibility Requirements You are eligible to participate in the Plan if you meet all of the following requirements. You must: (a) be a City Council member of the City of Rosemead on or after July 1, 2000; (b) be at least fifty -five (55) years of age and'have completed at least twelve (12) years of service as a City Council member with the City of Rosemead as of the last day of employment with the City, (c) have terminated your employment with the City and retire from PERS under a regular service retirement; and (d) have applied for benefits under this Plan. Employee Contributions No Employee contributions are required to participate in the program. The City of Rosemead will make all required contributions to fund the benefits available under this plan. Benefit Description The PARS REP supplements your current CalPERS benefit to provide you with a combined total retirement benefit equivalent to a 3% at 55 plan. The PARS REP monthly lifetime benefit is calculated by taking the difference between (i) and (ii) below and multiplying it by one - twelfth (1/12). (i) PARS Age Factor at retirement xYears of City of Rosemead Service as a City Council member x Highest 12 months salary at the City (ii) CalPERS Age Factor at retirement x Years of City of Rosemead Service as a City Council member x Highest 12 months salary at the City Age Factor Chart Age at Retirement CaIPERS Age Factor PARS Age Factor (12 years of City Service) 55 2.000% 3.000% 56 2.052% 3.000% 57 2.104% 3.0000/' 58 2.156% 3.000% 59 2.210% 3.000% 60 2.262% 3.000% 61 2.314% 3.000% 62 2.366% 3.000% 63+ . 2.418% 3.000% Benefit Payments PARS benefits begin the first of the month following retirement, provided that you have submitted all properly completed PARS enrollment materials at least two months prior to resignation from City employment. Participants have the option of electing payments in the following options: 1. Lifetime Option: a monthly cash payment for your lifetime. 2. Joint - and -100% Survivor Option: a modified monthly lifetime payment; upon your death, the payment continues at the same level for the lifetime of your beneficiary; upon your beneficiary's death, the payment ends. Cost of Living Adjustment (COLA) Your benefit will increase by a 2% compounding COLA each year. The COLA will become effective on the anniversary date of your retirement. How to Enroll in the Plan Upon meeting the eligibility requirements for the PARS REP, contact Phase II Systems/PARS for an "Application for PARS Benefit" Form. Upon receipt of the completed fonn, Phase lI Systems/PARS will verify your eligibility and send you a PARS REP Enrollment Packet to complete and return. For Additional Information Please contact the PARS Plan Enrollments Department with any questions at: (800) 731 -7884 The information on this sheet provides a general description of what you can expect as a participant in the Plan. The Plan Document contains a more detailed description, and your Employer has a copy that you may read. The Plan Document shall govern if this description states something different. 0 0 AMENDMENT TO THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The City of Rosemead PARS Retirement Enhancement Plan effective July 1, 2000 is hereby amended as follows: 1. Effective January 1, 2002 (except as otherwise provided), the following Appendix B is added to read as follows: "APPENDIX B GOOD FAITH EGTRRA COMPLIANCE B.I. Adoption and Effective Date of Appendix B. This Appendix B is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ( "EGTRRA "). This Appendix B is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this Appendix B shall be effective as of the first day of the first Plan Year beginning after December 31, 2001. This Appendix B shall supersede the provisions of the Plan and Appendix A to the extent those provisions are inconsistent with the provisions of this Appendix B. B.2. New Mortality Table. Notwithstanding any other Plan provisions to the contrary, the applicable mortality table used for purposes of adjusting any benefit or limitation under Section 415(b)(2)(B), (C), or (D) of the Code is the table prescribed in Rev. Rul. 2001 -62. Such table shall not be used for any other purpose under the Plan. This Section B.2 shall apply to distributions with annuity starting dates on or after December 31, 2002. B.3. Increase in Compensation Limit. The annual compensation of each Member taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2001 shall not exceed $200,000. Annual compensation means compensation during the Plan Year or such other consecutive 12 -month period over which compensation is otherwise determined under the Plan (the determination period). The $200,000 limit on annual compensation described in this Section B.3 shall be adjusted for cost -of- living increases in accordance with Section 401(a)(17)(B) of the Code. The cost -of- living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. NB I :574818.5 • I • For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001, the annual compensation limit described in this Section B.3 for determination periods beginning before January 1, 2002 shall be $150,000 for any determination period beginning in 1996 or earlier; $160,000 for any determination period beginning in 1997, 1998, of 1999; and $170,000 for any determination period beginning in 2000 or 2001. Notwithstanding the foregoing, this Section B.3 shall not apply to any Member eligible for a higher limit on annual compensation under the transition rule described in Section 1.401(a)(17)- I (d)(4)(ii) of the Treasury Regulations. 13.4. Modification of Definition of Eligible Retirement Plan. For purposes of the direct rollover provisions in the Plan, an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. 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. This Section B.4 shall apply to distributions made after December 31, 2001. 13.5. Increase in Benefits Limit. (a) This Section B.5 shall be effective for Limitation Years ending after December 31, 2001. Notwithstanding the foregoing, this Section B.5 shall not apply to any Member eligible for higher limit on benefits under the special rule described in Section 415(b)(10) of the Code. (b) Benefit increases resulting from the increase in the limitations of Section 415(b) of the Code shall be provided to all Employees participating in the Plan who have one hour of service on or after the first day of the first Limitation Year ending after December 31, 2001. (c) The Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed the maximum permissible benefit. (d) Definitions. (i) Defined benefit dollar limitation. The "defined benefit dollar limitation" is $160,000, as adjusted, effective January 1 of each year, under Section 415(d) of the Code in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under Section 415(d) will apply to Limitation Years ending with or within the calendar year for which the adjustment applies. (ii) Maximum permissible benefit. The "maximum permissible benefit" is the defined benefit dollar limitation (adjusted where required, as provided in (A) and, if applicable, in (B) or (C) below). NBI:574818.5 2 (A) If the Member has fewer than ten Years of Participation in the Plan, the defined benefit dollar limitation shall be multiplied by a fraction, (i) the numerator of which is the number of full and partial Years of Participation in the Plan and (ii) the denominator of which is ten. (B) If the Annual Benefit of a Member begins prior to age 62, the defined benefit dollar limitation applicable to the Member at such earlier age is an Annual Benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the defined benefit dollar limitation applicable to the Member at age 62 (adjusted under (A) above, if required). The defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of (i) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate and mortality table (or other tabular factor) specified in the plan for early retirement calculations and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate and the applicable mortality table. Any decrease in the defined benefit dollar limitation determined in accordance with this paragraph (B) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Member. If any benefits are forfeited upon death, the full mortality decrement is taken into account. (C) If the benefit of a Member begins after the Member attains age 65, the defined benefit dollar limitation applicable to the Member at the later age is the Annual Benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the Member at age 65 (adjusted under (A) above, if required). The actuarial equivalent of the defined benefit dollar limitation applicable at an age after age 65 is determined as (i) the lesser of the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for late retirement benefits, and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate assumption and the applicable mortality table. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored." NEn:574818.5 3 1] 0 2. Effective January 1, 2003, the following Appendix C is added to read as follows: "APPENDIX C MINIMUM DISTRIBUTION REQUIREMENTS C.1. Adoption and Effective Date of Appendix C. This Appendix C is adopted to reflect the final Treasury Regulations promulgated under Section 401(a)(9) of the Code. Except as otherwise provided, this Appendix C shall apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year. This Appendix C shall supersede the provisions of the Plan and Appendix A to the extent those provisions are inconsistent with the provisions of this Appendix C. All distributions required under this Appendix C will be determined and made in accordance with the Treasury Regulations promulgated under Section 401(a)(9) of the Code. Notwithstanding the other provisions of this Appendix C, distributions may be made under a designation made before January 1, 1984, in accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act ( "TEFRA ") and the provisions of the Plan that relate to Section 242(b)(2) of TEFRA. C.2. Time and Manner of Distribution. (a) Required Beginning Date. The Member's entire interest will be distributed, or begin to be distributed, to the Member no later than the Member's Required Beginning Date. (b) Death of Member Before Distributions Begin. If the Member dies before distributions begin, the Member's entire interest will be distributed, or begin to be distributed, no later than as follows: (i) If the Member's surviving spouse is the Member's sole Designated Beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Member died, or by December 31 of the calendar year in which the Member would have attained age 70 %z, if later. (ii) If the Member's surviving spouse is not the Member's sole Designated Beneficiary, then distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Member died. (iii) If there is no Designated Beneficiary as of September 30 of the year following the year of the Member's death, the Member's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Member's death. (iv) If the Member's surviving spouse is the Member's sole Designated Beneficiary and the surviving spouse dies after the Member but before distributions to the surviving spouse begin, this Section C.2(b), other than Section C.2(b)(i), will apply as if the surviving spouse were the Member. N61:574818.5 4 0 0 For purposes of this Section C.2(b) and Section C.5, distributions are considered to begin on the Member's Required Beginning Date (or, if Section C.2(b)(iv) applies, the date distributions are required to begin to the surviving spouse under Section C.2(b)(i)). If annuity payments irrevocably commence to the Member before the Member's Required Beginning Date (or to the Member's surviving spouse before the date distributions are required to begin to the surviving spouse under Section C.2(b)(i)), the date distributions are considered to begin is the date distributions actually commence. (c) Form of Distribution. Unless the Member's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections C.3, CA and C.5 of this Appendix C. If the Member's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury Regulations. Any part of the Member's interest which is in the form of an individual account described in Section 414(k) of the Code will be distributed in a manner satisfying the requirements of Section 401(a)(9) of the Code and the Treasury Regulations that apply to individual accounts. C.3. Determination of Amount to be Distributed Each Year. (a) General Annuity Requirements. If the Member's interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements: (i) the annuity distributions will be paid in periodic payments made at intervals not longer than one year; (ii) the distribution period will be over a life (or lives) or over a period certain not longer than the period described in Section CA or C.5; (iii) once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted; (iv) payments will either be nonincreasing or increase only as follows: (A) by an annual percentage increase that does not exceed the annual percentage increase in a cost -of- living index that is based on prices of all items and issued by the Bureau of Labor Statistics; (B) to the extent of the reduction in the amount of the Member's payments to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period described in Section CA dies or is no longer the Member's Beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p) ; (C) to provide cash refunds of employee contributions upon the Member's death; or (D) to pay increased benefits that result from a plan amendment. NU 1:574818.5 5 • o (b) Amount Required to be Distributed by Required Beginning Date. The amount that must be distributed on or before the Member's Required Beginning Date (or, if the Member dies before distributions begin, the date distributions are required to begin under Section C.2(b)(i) or C.2(b)(ii)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi- monthly, monthly, semi - annually, or annually. All of the Member's benefit accruals as of the last day of the first Distribution Calendar Year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Member's Required Beginning Date. (c) Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the Member in a calendar year after the first Distribution Calendar Year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. (d) Election to Allow Members or Beneficiaries to Elect 5 -Year Rule. Members or Beneficiaries may elect on an individual basis whether the 5 -year rule or the life expectancy rule in Sections C.2(b) and C.5 of this Appendix C applies to distributions after the death of a Member who has a Designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under Section C.2(b) of this Appendix C, or by September 30 of the calendar year which contains the fifth anniversary of the Member's (or, if applicable, surviving spouse's) death. If neither the Member nor Beneficiary makes an election under this paragraph, distributions will be made in accordance with Sections C.2(b) or C.5 of this Appendix C. CA. Requirements For Annuity Distributions That Commence During Member's Lifetime. (a) Joint Life Annuities Where the Beneficiary Is Not the Member's Spouse. If the Member's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Member and a nonspouse Beneficiary, annuity payments to be made on or after the Member's Required Beginning Date to the Designated Beneficiary after the Member's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Member using the table set forth in Q &A -2 of Section 1.401(a)(9) -6T of the Treasury Regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the Member and a nonspouse Beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the Designated Beneficiary after the expiration of the period certain. (b) Period Certain Annuities. Unless the Member's spouse is the sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Member's lifetime may not exceed the applicable distribution period for the Member under the Uniform Lifetime Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the Member reaches age 70, the applicable distribution period for the Member is the distribution period for age 70 under the NB1:574818.5 6 Uniform Lifetime Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations plus the excess of 70 over the age of the Member as of the Member's birthday in the year that contains the annuity starting date. If the Member's spouse is the Member's sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Member's applicable distribution period, as determined under this Section CA(b), or the joint life and last survivor expectancy of the Member and the Member's spouse as determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9) -9 of the Treasury Regulations, using the Member's and spouse's attained ages as of the Member's and spouse's birthdays in the calendar year that contains the annuity starting date. (c) Election to Allow Designated Beneficiary Receiving Distributions Under 5 -Year Rule to Elect Life Expectancy Distributions. A Designated Beneficiary who is receiving payments under the 5 -year rule may make a new election to receive payments under the life expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the life expectancy rule for all Distribution Calendar Years before 2004 are distributed by the earlier of December 31, 2003 or the end of the 5 -year period. C.5. Requirements For Minimum Distributions Where Member Dies Before Date Distributions Begin. (a) Member Survived by Designated Beneficiary. Except as otherwise provided, if the Member dies before the date distribution of his or her interest begins and there is a Designated Beneficiary, the Member's entire interest will be distributed, beginning no later than the time described in Section C.2(b)(i) or C.2(b)(ii), over the life of the Designated Beneficiary or over a period certain not exceeding: (i) unless the annuity starting date is before the first Distribution Calendar Year, the life expectancy of the Designated Beneficiary determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year immediately following the calendar year of the Member's death; or (ii) if the annuity starting date is before the first Distribution Calendar Year, the life expectancy of the Designated Beneficiary determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year that contains the annuity starting date. (b) No Designated Beneficiary. If the Member dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Member's death, distribution of the Member's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Member's death. (c) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the Member dies before the date distribution of his or her interest begins, the Member's surviving spouse is the Member's sole Designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this Section C.5 will apply as if the surviving spouse were the Member, except that the time by which distributions must begin will be determined without regard to Section C.2(b)(i) . NBI:574818.5 7 C.6. Definitions. (a) Designated Beneficiary. The individual who is designated as the Beneficiary consistent with the terns of the Plan and is the Designated Beneficiary under Section 401(a)(9) of the Code and Section 1.401(a)(9) -1, Q &A -4, of the Treasury Regulations. (b) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Member's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Member's Required Beginning Date. For distributions beginning after the Member's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin under Section C.2(b). (c) Life Expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9) -9 of the Treasury Regulations. (d) Required Beginning Date. The April 1 of the calendar year following the later of either the calendar year in which the employee attains age 70'h or the calendar year in which the employee retires." Executed thi�& day of '2003. City of Rosemead NB 1:574818.5 0 PARS Phase II Systems YEHLIC •ACR8C1'•RF.TIREAIENT•51'STESI PARS Trust Administrator Creative Solutions for Public Agencies^ TO: PARS Plan Administrator FROM: Phase II Systems, PARS Trust Administrator DATE: March 17, 2003 SUBJECT: Financial Statements and Report of Independent Certified Public Accountants The Financial Statements and Report of Independent Certified Public Accountants for the PARS Trust are now available. Enclosed is your Agency's copy. As required by law, this information must be made available to PARS participants. If you have any questions, please contact us at anytime. Outside the (949) area code, you may call us toll -free at (800) 540 -6369. 3961 MacArthur Blvd. • Suite 200 • Newport Beach • California • 92660 • (800) 540.6369 • WWW.PARSINFO.ORG • Fax (949) 250.1250 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS .NNE 30, 2002 PUBLIC AGENCY RETIREMENT SYSTEM TRUST TABLE OF CONTENTS June 30, 2002 Independent Auditors' Report Financial Statements: Page Number Statement of Net Assets Held In Trust 2 Statement of Changes in Net Assets Held In Trust Notes to Financial Statements 4 - 9 Required Supplementary Information: Actuarial Information 10 Notes to Required Supplementary Information 11 INDEPENDENTAUDITORS' REPORT The Governing Board Public Agency Retirement System Trust Newport Beach, California We have audited the accompanying statement of net assets held in trust of the Public Agency Retirement System (PARS) Trust as of June 30, 2002 and the related statement of changes in net assets held in trust for the year then ended. These statements include only the net assets of qualified retirement plans of California Public agencies that are members of the PARS Trust. These financial statements are the responsibility of the Trust Administrator. Our responsibility is to express an opinion on these financial statements based on our audit. We have not audited the retirement plans of the PARS member agencies and accordingly do not express an opinion on these plans. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets of the Public Agency Retirement System Trust as of June 30, 2002 and its changes in net assets for the year then ended in conformity with accounting principles generally accepted in the United States of America. The actuarial data included as supplementary information on pages 10 and 11 is not a required part of the basic financial statements of the Public Agency Retirement System Trust, but is information required by the California State Controller's Office. We have applied certain limited procedures which consist principally of inquiries of management regarding the methods of measurement and presentation of the supplemental information. However, we did not audit this information and express no opinion on -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008.2389 (760) 729 -2343 • FAX (760) 729 -2234 613 W. VALLEY PARKWAY, SUITE 330 ESCONDIDO, CALIFORNIA 92025.2598 (760) 741 -3141 • FAX (760) 741 -9890 ©DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIDNS CRAG . P SPRAREA CPA MTN P. PATEL, CPA RORE CALNNAN, CAA RMUP 2121 ALTON PARKWAY, SUITE lOO H. • YHWP H. HOLIKULP CPA IRVINE, CALIFORNIA 92606 -4906 • THOMAS M. PERLOwSK, CPA (949) 399 -0600 • FAX (949) 399 -0610 • HARYEYI.. FIUEIRIEDMEDER CPA HLCHAEL C. AN, CPA www.diehlevans.corn December 2, 2002 A PROMSIONAL CORPORATON INDEPENDENTAUDITORS' REPORT The Governing Board Public Agency Retirement System Trust Newport Beach, California We have audited the accompanying statement of net assets held in trust of the Public Agency Retirement System (PARS) Trust as of June 30, 2002 and the related statement of changes in net assets held in trust for the year then ended. These statements include only the net assets of qualified retirement plans of California Public agencies that are members of the PARS Trust. These financial statements are the responsibility of the Trust Administrator. Our responsibility is to express an opinion on these financial statements based on our audit. We have not audited the retirement plans of the PARS member agencies and accordingly do not express an opinion on these plans. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets of the Public Agency Retirement System Trust as of June 30, 2002 and its changes in net assets for the year then ended in conformity with accounting principles generally accepted in the United States of America. The actuarial data included as supplementary information on pages 10 and 11 is not a required part of the basic financial statements of the Public Agency Retirement System Trust, but is information required by the California State Controller's Office. We have applied certain limited procedures which consist principally of inquiries of management regarding the methods of measurement and presentation of the supplemental information. However, we did not audit this information and express no opinion on -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008.2389 (760) 729 -2343 • FAX (760) 729 -2234 613 W. VALLEY PARKWAY, SUITE 330 ESCONDIDO, CALIFORNIA 92025.2598 (760) 741 -3141 • FAX (760) 741 -9890 • • PUBLIC AGENCY RETIREMENT SYSTEM TRUST STATEMENT OF NET ASSETS HELD IN TRUST June 30, 2002 ASSETS: Cash Short - term investments in money market funds (Note 3) Receivables: Contributions Investment earnings Total receivables Other Investments (Note 3): U.S. Government securities Investment contracts with insurance companies Mutual funds Common/collective funds Total other investments TOTAL ASSETS LIABILITIES: Accrued administrative expenses NET ASSETS HELD IN TRUST Defined Defined Contribution Benefit Plans Plans Totals $ 2,940,000 $ - $ 2,940,000 7,422,257 4,992,672 12,414,929 3,295,278 - 3,295,278 3,725,936 500,198 4,226,134 7,021,214 500,198 7,521,412 219,724,104 27,732,618 247,456,722 19,788,824 829 19,789,653 7,163,043 4,840,222 12,003,265 17,302,138 3,334,673 20,636,811 263,978,109 35,908,342 299,886,45T- 281,361,580 41,401,212 322,762,792 154,814 165,293 320,107 $ 281,206,766 $ 41,235,919 $ 322,442,685 See independent auditors' report and notes to financial statements. -2- PUBLIC AGENCY RETIREMENT SYSTEM TRUST STATEMENT OF CHANGES IN NET ASSETS HELD IN TRUST For the year ended June 30, 2002 DEDUCTIONS FROM NET ASSETS Benefits and refunds Defined Defined 33,944,311 Purchases of allocated annuity contracts (Note 4) Contribution Benefit 9,980,480 Administrative expenses Plans Plans Totals ADDITIONS TO NET ASSETS: 3,545,234 55,250 3,600,484 Contributions: TOTAL DEDUCTIONS 28,871,470 Employer $ 20,388,665 $ 29,957,964 $ 50,346,629 Employee 27,302,561 341,442 27,644,003 Total contributions 47,691,226 30,299,406 77,990,632 Investment income 15,799,134 2,329,723 18,128,857 Less: investment expense (184,047) (31,940) (215,987) Net investment income 15,615,087 2,297,783 17,912,870 TOTAL ADDITIONS 63,306,313 32,597,189 95,903,502 DEDUCTIONS FROM NET ASSETS Benefits and refunds 23,226,691 10,717,620 33,944,311 Purchases of allocated annuity contracts (Note 4) - 9,980,480 9,980,480 Administrative expenses 2,099,545 1,254,319 3,353,864 Transfers out (Note 5) 3,545,234 55,250 3,600,484 TOTAL DEDUCTIONS 28,871,470 22,007,669 50,879,139 NET INCREASE 34,434,843 10,589,520 45,024,363 NET ASSETS HELD IN TRUST - BEGINNING OF YEAR 246,771,923 30,646,399 277,418,322 NET ASSETS HELD IN TRUST - END OF YEAR $ 281,206,766 $ 41,235,919 $ 322,442,685 See independent auditors' report and notes to financial statements. -3- PUBLIC AGENCY RETIREMENT SYSTEMS TRUST NOTES TO FINANCIAL STATEMENTS June 30, 2002 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Basis of Accounting: The financial statements of the Public Agency Retirement System Trust ( "the Trust ") have been prepared under the accrual basis of accounting. Contributions are recognized in the period in which the contributions are due and there exists a formal commitment to provide the contributions. Interest income due, but not yet received, is accrued at year end. Liabilities related to investment and administrative expenses are recognized when incurred. Those related to obligations for employee benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Benefits payable to terminated employees who cannot be located total $260,140 and are maintained in a separate escheatment account. These amounts are included in net assets held in trust for plan benefits for defined contribution plans. B. Investment Valuation: Short-term investments consist of deposits held by money market funds which are invested in short-term U.S. Government securities. These investments as well as investments in U.S. Government securities, mutual funds and common stocks are carried at current fair market value. Investments in group annuity contracts with insurance companies are valued at contract value. Contract value represents contributions made under the contract, plus interest at the contract rate, less funds used to make benefit payments and pay administrative expenses. C. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that reflect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of additions and deductions. Actual results could differ from these estimates. See independent auditors' report. -4- 0 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2002 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): D. Concentration: All investments of the Trust as described in Note 3 are held by the Trustee, Union Bank of California, except for the investments held at Transamerica Asset Management and United of Omaha. 2. HISTORY AND ORGANIZATION: The Public Agency Retirement System Trust ( "the Trust ") is a public agency multiple employer retirement trust under Sections 401(a) and 501 of the Intemal Revenue Code. Any public agency may join the Trust by formal adoption of the Trust and establishment of a retirement plan. The Trust was established on July 1, 1991 to provide member public agencies economies of scale while allowing each agency to design its own retirement plan(s). The accompanying statements present the net assets and changes in net assets for the qualified retirement plans of California Public agencies that are members of the Trust. The basic duties of the Trust are receiving and tracking contributions based solely on data received from the member public agencies; accumulating and transferring those contributions into investment accounts; and paying benefits to the participants of the qualified retirements plans contained within the Trust. Member agencies include cities, counties, school districts and other special districts. The Trust holds assets of approximately 350 governmental agency plans. Each agency plan in the Trust stands alone as an independent entity for tax and legal purposes. As a governmental plan not subject to Title I of ERISA, the Trust and its plans operate under the Pre -ERISA (pre 1974) rules of the Internal Revenue Code. The governing body of the Trust is composed of a coalition of public agency employers. Each member public agency appoints its individual Plan administrator to serve as a member of the governing body. The Trust has appointed a Trust Administrator to perform such administrative services as deemed necessary by the Trustee. Certain provisions of the Trust may be changed by a two thirds vote of the members of the governing body. The plans of participating agencies in the Trust are qualified under Section 401(a) of the Intemal Revenue Code (the Code) and are therefore exempt from Federal income taxes under Section 501(a) of the Code, and from applicable state income taxes. See independent auditors' report. -5- 0 • PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2002 3. INVESTMENTS: Investments of defined contribution plans by institution are as follows: HighMark Capital Management, Inc. Laddered U.S. Treasury Account Select Benefit Los Angeles County Investment Pool Hartford Life Insurance Company Transamerica Asset Management United of Omaha Money U.S. Common Market Government Investment Mutual Collective Funds Securities Contracts Funds Funds $ 5,523,180 $ 106,339,745 $ 1,686,147 113,384,359 212,930 - $ 5,594,453 $12,734,127 1,568,590 - 4,568,011 18,312,513 - 85,977 1.390.334 $ 7.422.257 $ 219.724.104 X19.788.824 $ 7.163.043 17302.138 Investments of defined benefit plans by institution are as follows: Laddered U.S. Treasury Account This fund consists of investments in United States Treasury Notes and in a money market fund of United States Treasury Securities. Only one agency has funds in this account. This account is managed separately from the other PARS investments by the agency's plan administrator. See independent auditors' report. -6- Money U.S. Common/ Market Government Investment Mutual Collective Funds Securities Contracts Funds Funds HighMark Capital Management, Inc. $ 4,992,672 $ 27,732,618 $ - $ 4,840,222 $ 3,334,673 Hartford Life Insurance Company 829 $ 4.992.672 $_27.732.618 $ 829 $ 4.840.222 $ 3.334.673 Descriptions of individual investments are as follows: Laddered U.S. Treasury Account This fund consists of investments in United States Treasury Notes and in a money market fund of United States Treasury Securities. Only one agency has funds in this account. This account is managed separately from the other PARS investments by the agency's plan administrator. See independent auditors' report. -6- 9 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2002 3. INVESTMENTS (CONTINUED): Descriptions of individual investments (Continued): HighMark Capital Management, Inc. HighMark Capital Management, Inc. ( "HighMark") is a registered investment advisor and wholly -owned subsidiary of UnionBanCal Corporation (the holding company for Union Bank of California, the Trustee). HighMark offers Trust participants three principal investment strategies: short-term, capital preservation, balanced, income and customized strategies. The short-term strategy provides investment in a portfolio of U.S. Treasury bills, notes and bonds as well as U.S Government Agencies securities with average maturities of three years. These investments can be supplemented by an investment fund invested primarily in Investment Contracts (ICs), Bank Investment Contracts (BICs) and Synthetic Investment Contracts (SICs) issued by major insurance companies and other financial institutions. The capital preservation strategy invests funds in the HighMark Government Money Market Fund which invests in U.S. Treasury bills, notes and other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentality's some of which may be subjected to repurchase agreements. The balanced strategy offers diversified investment in money market, fixed income and equity mutual funds managed by HighMark. The income strategy invests mostly in fixed income related assets and provides a consistent level of inflation protected income over the long term. The Trust utilizes the HighMark 100% U.S. Treasury Money Market Fund at the Union Bank of California as a depository for plan contributions. Cash contributions into the Trust are received in the depository accounts and invested in the Money Market Fund within 24 hours. Once a month contributions, net of funds scheduled for immediate participant distributions, are transferred from the depository accounts to other investments. At June 30, 2002, the Money Market Fund had an effective interest rate of 1.34 %. See independent auditors' report. -7- • s PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2002 3. INVESTMENTS (CONTINUED): Descriptions of individual investments (Continued): Investment Contracts with Insurance Companies The Trust has entered into two Immediate Participation Guarantee (IPG) contracts with Hartford Life Insurance Companies (Hartford). The contracts are credited with actual earnings on the underlying investments (principally government bonds and corporate securities) and charged for withdrawals and administrative expenses charged by Hartford. The IPG has guaranteed interest rates ranging from 4.00% to 4.50% in the 2002 contract year. The contracts are included in the financial statements at June 30, 2002 at a contract value of $18,313,342 as reported by Hartford. Los Angeles County Investment Pool Investments in the pool consist primarily of U.S. Government Securities. Only one agency has funds in this account. Select Benefit Select Benefit consists primarily of mutual funds and is a plan's participant directed investment program. Transamerica Asset Management and United of Omaha The Trust has entered into several investment contracts with Transamerica Asset Management and United of Omaha. At June 30, 2002 the values of the investment contracts with Transamerica Asset Management and United Omaha were $85,977 and $1,390,334, respectively. These investment contracts were not managed by the Trust but were administered by Transamerica Asset Management and United Omaha. The Trust will gain control of these assets as they mature. See independent auditors' report. - 8 - PUBLIC AGENCY RETIREMENT SYSTE141 TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2002 4. ALLOCATED ANNUITY CONTRACTS: The Trust purchases allocated annuity contracts from various life insurance companies for certain retiring employees of participating retirement plans. Allocated annuity contracts are contracts under which these companies have the legal obligation to make all benefit payments for which it has received the premiums or consideration requested. Accordingly, funds in the allocated contracts have been excluded from the net assets of the Trust. In 2002, at the direction of certain participating plan administrators, the Trust purchased $9,980,480 of annuity contracts to pay benefits to named employees or their beneficiaries. 5. TRANSFERS OUT: During the year ended June 30, 2002, the Trust transferred $3,417,927 of escheatment accounts to California State Controller's Office. In addition, other assets were transferred out for terminated plans during the year. The above transfers totaled $3,600,484 for the year ended June 30, 2002. See independent auditors' report. M 0 0 REQUIRED SUPPLEMENTARY INFORMATION • • PUBLIC AGENCY RETIREMENT SYSTEM TRUST ACTUARIAL INFORMATION June 30, 2002 6/30/2002 $19,603,032 $ 21,661,644 $ 2,058,612 90.50% $ 0 N/A Schedule of Employer Contributions Year Ended Annual Required Percent June 30, Contributions Contributed 2000 Schedule of Funding Progress 100% 2001 3,855,126 Aggregate Agency 2002 9,490,228 PARS Supplementary Defined Benefit Retirement Plans Actuarial Accrued UAAL as Actuarial Liability Unfunded Annualized a % of Actuarial Value of (AAL) AAL Funded Covered Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b -a) (a/b) (c) ((b -a) /cl 6/30/2002 $19,603,032 $ 21,661,644 $ 2,058,612 90.50% $ 0 N/A Schedule of Employer Contributions Year Ended Annual Required Percent June 30, Contributions Contributed 2000 $ 21,913,958 100% 2001 3,855,126 100% 2002 9,490,228 100% The information presented in the required supplementary schedules was determined as a part of the actuarial valuation at the date indicated. See independent auditors' report. 10- 1•LIC AGENCY RETIREMENT SYSTET TRUST NOTES TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2002 ACTUARIAL INFORMATION The information presented in the required supplementary information is an aggregate of the following systems: 1. Bellflower Unified School District 2. Burlingame School District 3. Capistrano Unified School District 4. Carlsbad Unified School District 5. Cerritos Community College District 6. Cerritos Community College District 7. City of Newport Beach 8. City of Newport Beach 9. City of Newport Beach 10. City of Westminster 11. Cotati - Rohnert Park Unified School District 12. Fountain Valley School District 13. Fountain Valley School District 14. Fullerton Joint Union High School District 15. Grant Joint Union High School District 16. Huntington Beach City School District 17. Huntington Beach City School District 18. Huntington Beach Union High School District 19. Huntington Beach Union High School District 20. Irvine Unified School District 25. Mt. San Antonio Community College District 26. Mt. San Antonio Community College District 27. Mt. San Antonio Community College District 28. Newport-Mesa Unified School District 29. Oceanside Unified School District 30. Oceanside Unified School District 31. Ontario - Montclair School District 32. Ontraio- Montclair School District 33. Orange County Department of Education 34. Orange County Department of Education 35. Paramount Unified School District 36. Pasadena Unified School District 37. Pomona Unified School District 38. Pomona Unified School District 39. Riverside Community College District 40. Riverside Community College District 41. San Francisco Unified School District 42. Santa Maria - Bonita School District 43. Santa Maria- Bonita School District 44. South San Francisco Unified School District 21. Irvine Unified School District 45. St. Helena Unified School District 22. Long Beach Community College District 46. St. Helena Unified School District 23. Los Angeles Community College District 47. Visalia Unified School District 24. Los Angeles Community College District 48. Westminster School District Actuarial assumptions may be obtained from the individual certifications for each system See independent auditors' report. -11- 0 0 P1A � Phase II Systems i PARS Trust Administrator PUBLIC• AGENCY •RETIRE1IF.NT • til'STE)1 Crmire ,5'nlvnnns for Pnblia AKencier- ALTERNATE RETIREMENT SYSTEM (ARS) March 12, 2002 Donald Wagner Assistant City Manager City of Rosemead P.O. Box 399 Rosemead, CA 91770 Dear PARS Plan Administrator: The Financial Statements and Report of Independent Certified Public Accountants for the PARS Trust are now available. Enclosed is your Agency's copy. As required by law, this information must be made available to PARS participants. We suggest that you prepare an announcement similar to the sample announcement included to inform employees of the location of this information. If you have any questions, please contact us at anytime. Outside the (949) area code, you may call us toll -free at (800) 540 -6369. Sincerely, Ryan Nicasio Manager, Plan Accounting Phase II Systems, PARS Trust Administrator 3961 MacArthur Blvd. • Suite 200 • Newport Beach • Califomia • 92660 • (800) 731.7884 • W W W.PARSINFO.ORG • Fax (949) 250.1252 IMPORTANT ANNOUNCEMENT TO ALL FULL -TIME EMPLOYEES PARTICIPATING IN THE PUBLIC AGENCY RETIREMENT SYSTEM (PARS) The Financial Statements and Report of Independent Certified Public Accountants for the PARS Trust are now available. These reports are available in the City Clerk's office. Contact: Nancy Valderrama, City Clerk I PUBLIC AGENCY RETIREMENT SYSTEM TRUST FINANCIAL STATEMENTS WITH REPORT ON AUDIT BYINDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 2001 PUBLIC AGENCY RETIREMENT SYSTEM TRUST TABLE OF CONTENTS June 30, 2001 0 Independent Auditors' Report Financial Statements: Statement of Net Assets Held In Trust Statement of Changes in Net Assets Held In Trust Notes to Financial Statements Required Supplementary Information: Actuarial Information Notes to Required Supplementary Information Page Number 1 F1 3 10 11 DIEHL, EVANS &. COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 2121 ALTON PARKWAY, SUITE 100 IRVINE, CALIFORNIA 926064906 - (949) 399 -0600 • FAX (949) 399 -0610 www,dichlevans.com November 20, 2001 0 INDEPENDENT AUDITORS' REPORT The Governing Board Public Agency Retirement System Trust Newport Beach, California MICHAEL & CPA CRAIG W. SPRAK CPA NITIN P. PATEL, CPA ' PHILIP H. HOLTRAMP. CPA • THOMAS M. PERLOWSIO. CPA • HARVET J. SCHROEDER, CPA A MEM.0NAL COWMTON We have audited the accompanying . statement of net assets held in trust of the Public Agency Retirement System (PARS) Trust as of June 30, 2001 and the related statement of changes in net assets held in trust for the year then ended. These financial statements are the responsibility of the Trust Administrator. Our responsibility is to express an opinion on these financial statements based on our audit. We have not audited the retirement plans of the PARS member agencies and accordingly do not express an opinion on these plans. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets of the Public Agency Retirement System Trust as of June 30, 2001 and its changes in net assets for the year then ended in conformity with accounting principles generally accepted in the United States of America. The actuarial data included as supplementary information on pages 10 and 11 is not a required part of the basic financial statements of the Public Agency Retirement System Trust, but is information required by the California State Controller's Office. We have applied certain limited procedures which consist principally of inquiries of management regarding the methods of measurement and presentation of the supplemental information. However, we did not audit this information and express no opinion on it. OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SLHTE 330 CARLSBAD, CALIFORNIA 92008.2389 ESCONDIDO, CALIFORNIA 92025 -2598 (760) 729 -2343 - FAX (760) 729 -2234 (760) 741 -3141 • FAX (760) 741-9890 I 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST STATEMENT OF NET ASSETS HELD IN TRUST ASSETS: Short - term investments in money market funds (Note 3) Receivables: Contributions Investment earnings Total receivables Other Investments (Note 3): U.S. Government securities Investment contracts with insurance companies Mutual funds Common /Collective funds Total Other Investments TOTAL ASSETS LIABILITIES: Accrued administrative expenses NET ASSETS HELD IN TRUST (SEE SCHEDULE OF FUNDING PROGRESS ON PAGE 10) June 30, 2001 Defined Defined Contribution Benefit Plans Plans_ Totals S 1_ 5_ 717 852 $ 2,409,146 5 18,126,998 3,553,698 3,553,698 4,111,652 3,636,128 475,524 475,524 7,665,350 184,943,953 24,158, 764 209,102,717 20,889,144 3,929 20,893,073 10,197,685 1,558,93 9 11,756,624 8,0271207 2,161,331 10,188,538 � ---'-- 224,057,989 �_ 27,882,963 _—� 2 251,940,952 246965,667 30,767,633 �-- -- 277,733,300 193,744 121234 314,978 S 246,771,923 S 30,646,399 S 2718,322 See independent auditors' report and notes to financial statements- -2- i • C, PUBLIC AGENCY RETIREMENT SYSTEM TRUST STATEMENT OF CHANGES IN NET ASSETS HELD IN TRUST For the year ended June 30, 2001 ADDITIONS TO NET ASSETS: Contributions: Employer Employee Total contributions Investment income Less: investment expense Net investment income TOTAL ADDITIONS DEDUCTIONS FROM NET ASSETS: Benefits and refunds Purchases of allocated annuity contracts (Note 4) Administrative expenses Transfers out (Note 5) TOTAL DEDUCTIONS NET INCREASE (DECREASE) NET ASSETS HELD IN TRUST - BEGINNING OF YEAR NET ASSETS HELD IN TRUST - END OF YEAR Defined Defined Contribution Benefit Plans Plans Totals $ 20,489,290 $ 23,650,478 $ 44,139,768 25,176,789 547,579 25,724,368 45,666,079 24.198,057 69,864,136 18,172,994 2,619,814 20,792,808 211,927 34,925 246,852 17,961,067 1584,889 20.545,956 63,627,146 26,782,946 90,410,092 20,761,985 14,248,355 35,010,340 15,570,115 15,570,115 1,950,369 1.253,058 3,203,427 18,774,606 1,755,884 20,530,490 41,486,960 32,827,412 74,314,372 22,140,186 (6,044,466) 16,095,720 r 224,631,737 36,690,865 261,322,602 $ 246,771,923 $ 30,646,399 $ 277.418,322 See independent auditors' report and notes to financial' statements. 3 9 • PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS June 30, 2001 SUMMARY OF SIGNIFICANTT ACCOUNTING POLICIES: A. Basis of Accounting: The financial statements of the Public Agency Retirement System Trust ( "the Trust ") have been prepared under the accrual basis of accounting. Contributions are recognized in the period in which the contributions are due and there exists a formal commitment to provide the contributions. Interest income due but not yet received, is accrued at year end. Liabilities related to investment and administrative expenses are recognized when incurred. Those related to obligations for employee benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Benefits payable to terminated employees who cannot be located total $793,178 and are maintained in a separate escheatment account. These amounts are included in net assets held in trust for plan benefits for-defined contribution plans. B. Investment Valuation: Short-term investments consist of deposits held by money market funds which are invested in short-term U.S. Government securities. These investments as well as investments in U.S. Goverment securities, mutual funds and common stocks are carried at current fair market value. Investments in group annuity contracts with insurance companies are valued at contract value. Contract value represents contributions made under the contract, plus interest at the contract rate, less funds used to make benefit payments and pay administrative expenses. C. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that reflect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of additions and deductions. Actual results could differ from these estimates. See independent auditors' report. M 0 • PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): D. Concentration: All investments of the Trust as described in Note 3 are held by the Trustee, Union Bank of California. 2. HISTORY AND ORGANIZATION: The Public Agency Retirement System Trust ( "the Trust ") is a public agency multiple employer retirement trust under Sections 401(a) and 501 of the Intemal Revenue Code. Any public agency may join the Trust by formal adoption of the Trust and establishment of a qualified retirement plan. The Trust was established on July 1, 1991 to provide member public agencies economies of scale while allowing each agency to design its own qualified retirement plan(s). The basic duties of the Trust are receiving and tracking contributions based solely on data received from the member public agencies; accumulating and transferring those contributions into investment accounts; and paying benefits to the participants of the qualified retirements plans contained within the Trust. The Trust holds plan assets of 194 governmental agencies, including school districts, cities, counties and special government districts. Each agency plan in the Trust stands alone as an independent entity for tax and legal purposes. As a governmental plan not subject to Title I of ERISA, the Trust and its plans operate under the Pre -ERISA (pre 1974) rules of the Intemal Revenue Code. The goveming body of the Trust is composed of a coalition of public agency employers. Each member public agency appoints its individual Plan administrator to serve as a member of the governing body. The Trust has appointed a Trust Administrator to perform such administrative services as deemed' necessary by the Trustee. Certain provisions of the Trust may be changed by a two thirds vote of the members of the governing body. The plans of participating agencies in the Trust are qualified under Section 401(a) of the Internal Revenue Code (the Code) and are therefore exempt from Federal income taxes under Section 501(a) of the Code, and from applicable state income taxes. See independent auditors' report. - 5 - PUBLIC AGENCY RETIREMENT.SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 3. INVESTMENTS: Investments of defined contribution plans by institution are as follows: HighMark Capital Management, Inc. Laddered U.S. Treasury Account Select Benefit Los Angeles County Investment Pool Hartford Life Insurance Company Transamerica Asset Management United of Omaha Money U.S. Common Market Government Investment Mutual Collective Funds Securities Contracts Funds Funds $ 3,502,799 $ 90,341,823 $ - $ 5,356,118 $ 8,027,207 12,215,053 94,602,130 - - - - - - 429,680 - 4,411,887 - 19,452,767 - 103,019 1,333.358 $ 15.717.852 $ 184.943.953 $20.889.144 L 10.197.685 $ 8.027.207 Investments of defined benefit plans by institution are as follows: Money U.S. Common/ Market Government Investment Mutual Collective Funds Securities Contracts Funds Funds HighMark Capital Management, Inc. $ 2,409,146 $ 24,158,764 $ $ 1,558,939 $ 2,161,331 Hartford Life Insurance Company - 3.929 . $ 2.409.146 $ 24.158.764 $ 3.929 $ 1.558.939 $ 2.161331 See independent auditors' report. M 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 3. INVESTMENTS (CONTINUED): Descriptions of individual investments are as follows: Laddered U.S. Treasury Account This fund consists of investments in United States Treasury Notes and in a money market fund of United States Treasury Securities. Only one agency has funds in this account. This account is managed separately from the other PARS investments by the agency's plan administrator. HighMark Capital Management. Inc. HighMark Capital Management, Inc. ( "HighMark ") is a registered investment advisor and wholly -owned subsidiary of Union Ban Cal Corporation (the holding company for Union Bank of California, the Trustee). HighMark offers Trust participants three principal investment strategies: short-term, capital preservation and balanced.. The short-term strategy provides investment in a portfolio of U.S. Treasury bills, notes and bonds as well as U.S Government Agencies securities with average maturities of three years. These investments can be supplemented by an investment fund invested primarily in Investment Contracts (ICs); Bank Investment Contracts (BICs) and Synthetic Investment Contracts (SICs) issued by major insurance companies and other financial institutions. The capital preservation strategy invests funds in the HighMark Government Money Market Fund which invests in U.S. Treasury bills, notes and other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentality's some of which may be subjected to repurchase agreements. The balanced strategy offers diversified investment in money market, fixed income and equity mutual funds managed by HighMark. The income strategy invests mostly in fixed income related assets and provides a consistent level of inflation protected income over the long term. The Trust utilizes the HighMark 100% U.S. Treasury Money Market Fund at the Union Bank of California as a depository for plan contributions. Cash contributions into the Trust are received in the depository accounts and invested in the Money Market Fund within 24 hours. Once a month contributions, net of funds scheduled for immediate participant distributions, are transferred from the depository accounts to other investments. At June 30, 2001, the Money Market Fund had an effective interest rate of 3.49 %. See independent auditors' report. -7- • 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 3. INVESTMENTS (CONTINUED): Investment Contracts with Insurance Companies . The Trust has entered into two Immediate Participation Guarantee (IPG) contracts with Hartford Life Insurance Companies (Hartford). The contracts are credited with actual earnings on the underlying investments (principally government bonds and corporate securities) and charged for withdrawals and administrative expenses charged by Hartford. The IPG has guaranteed interest rates ranging from 5.25% to 5.75% in the 2001 contract year. The contracts are included in the financial statements at June 30, 2001 at a contract value of $19,456,696 as reported by Hartford. Los Aneeles County Investment Pool Investments in the pool consist primarily of U.S. Government Securities. Only one agency has funds in this account. Select Benefit Select Benefit consists primarily.of mutual, funds and is a plan's participant directed investment program. Transamerica Asset Management and United of Omaha The Trust has entered into several investment contracts with Transamerica Asset Management and United of Omaha. At June 30, 2001 the values of the investment contracts with Transamerica Asset Management and United Omaha were $103,019 and $1,333,3581 respectively. These investment contracts were not a part of the Trust's assets but were administered by Transamerica Asset Management and United Omaha. The Trust will gain ownership of these assets as they mature progressively. 4. ALLOCATED ANNUITY CONTRACTS: The Trust purchases allocated annuity contracts from various life insurance companies for certain retiring employees of participating retirement plans. Allocated annuity contracts are contracts under which these companies have the legal obligation to make all benefit payments for which it has received the premiums or consideration requested. Accordingly, funds in the allocated contracts have been excluded from the net assets of the Trust. In 2001, at the direction of certain participating plan administrators, the'Trust purchased $15,570,115 of annuity contracts to pay benefits to named employees or their beneficiaries. See independent auditors' report. PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 . 5. TRANSFERS OUT: During the year ended June 30, 2001, the Trust transferred funds on escheatment accounts to California State Controller's Office. In addition, assets were transferred out for terminated plans during the years. The above transfers totaled $20,530,490 for the year ended June 30, 2001. See independent auditors' report. -9- 0 REQUIRED SUPPLEMENTARY INFORMATION 0 • PUBLIC AGENCY RETIREMENT SYSTEM TRUST ACTUARIAL INFORMATION June 30, 2001 Schedule of Funding Progress Aggregate Agency PARS Supplementary Retirement Plans Schedule of Employer Contributions Year Ended Annual Required Percent June 30, Contributions Contributed 1998 34,151,071 100% 1999 26,124,281 100% 2000 21,913,958 100% The information presented in the required supplementary schedules was determined as a part of the actuarial valuation at the date indicated. See independent auditors' report. -10- Actuarial Accrued UAAL as Actuarial Liability Unfunded Annualized a % of Actuarial Value of (AAL) AAL Funded Covered Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b -a) (alb) (c) [(b -a) /cl 6/30/2000 $ 26,467,601 $ 45,422,921 $ 18,955,320 58.27% $ 0 N/A _ Schedule of Employer Contributions Year Ended Annual Required Percent June 30, Contributions Contributed 1998 34,151,071 100% 1999 26,124,281 100% 2000 21,913,958 100% The information presented in the required supplementary schedules was determined as a part of the actuarial valuation at the date indicated. See independent auditors' report. -10- • 0 PUBLIC AGENCY RETIREMENT SYSTEM TRUST NOTES TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2001 ACTUARIAL INFORMATION The information presented in the required supplementary information is an aggregate of the following systems: I . Baldwin Park Unified School District 2. Bellflower Unified School District 3. Benicia Unified School District 4. Benicia Unified School District 5. Benicia Unified School District 6. Benicia Unified School District 7. Benicia Unified School District 8. Burlingame School District 9. Carlsbad Unified School District 10. Cerritos Community College District 11. Cerritos Community College District 12. Cerritos Community College District 13. Cerritos Community College District 14. City of Newport Beach 15. City of Newport Beach 16. City of Newport Beach 17. City of Westminster 18. Cotati - Rohnert Park Unified School District 19. Elk Grove Unified School District 20. Fountain Valley School District 21. Fountain Valley School District 22. Fresno Unified School District 23. Fresno Unified School District 24. Fullerton Joint Union High School District 25. Fullerton Joint Union High School District 26. Fullerton Joint Union High School District 27. Grant Joint Union High School District 28. Huntington Beach City School District 29. Huntington Beach City School District 30. Huntington Beach City School District 31. Huntington Beach Union High School District 32. Huntington Beach Union High School District 33. Huntington Beach Union High School District 34. Huntington Beach Union High School District 35. Irvine Unified School District 36. Irvine Unified School District 37.1aguna Salada School District 38. Lindsay Unified School District 39. Long Beach Community College District 40. Long Beach Unified School District 41. Long Beach Unified School District 42. Los' Angeles Community College District 43. Los Angeles Community College District 44. Mt. San Antonio College 45. Mt. San Antonio College 46. Mt. San Antonio College 47. Newport-Mesa Unified School District . 48. Oceanside Unified School District 49. Oceanside Unified School District 50. Ontario- Montclair School District 51. Orange County DOE 52. Orange County DOE 53. Orange County DOE 54. Paramount Unified School District 55. Pasadena Unified School District 56. Pomona Unified School District 57. Rancho Santiago Community College District 58. Riverside Community College District 59. Riverside Community College District 60. Saddleback Valley Unified School District 61. San Francisco Unified School District 62. San Francisco Unified School District 63. San Francisco Unified School District 64. San Jose Unified School District 65. San Jose Unified School District 66. San Jose Unified School District 67. Santa Ana Unified School District 68. Santa Ana Unified School District 69. Santa Maria - Bonita School District 70. Santa Maria- Bonita School District 71. Santa Maria- Bonita School District 72. Santa Maria- Bonita School District 73. South San Francisco Unified School District 74. St. Helena Unified School District 75. St. Helena Unified School District 76. St. Helena Unified School District 77. St. Helena Unified School District 78. Visalia Unified School District 79. Visalia Unified School District 80. Westminster School District 81. Westminster School District Actuarial assumptions may be obtained from the individual certifications for each system. See independent auditors' report. -I1- PARSPhase II Systems PARS trust Administrator PUBLIC -A GENC4• RN;TIRF,p1ENT•51'$ "1'EAI Creative Solutions for Public Agencies- January 11, 2002 Mr. Donald Wagner Assistant City Manager 8838 E. Valley Blvd. Rosemead, CA 91770 Dear Donald, Enclosed is fully executed Trust Agreement for the City of Rosemead Excess Benefit Plan. The Trust maintains the City's signature, and now is inclusive of the Trustees signature (Union Bank of California) as well. Please keep this original on file for future reference. If you have any questions, please call me at (800) 540 -6369 ext. 123. Sincerely, N Nrc �c 0 Carrie Seranella Implementation Coordinator Phase II Systems, PARS Trust Administrator 3961 MacArthur Blvd. • Suite 200 • Newport Beach • California • 92660 • (800) 540.6369 • WWW.PARSINFO.ORG • Fax (949) 250.1250 CITY OF ROSEMEAD EXCESS BENEFIT TRUST AGREEMENT 0 TABLE OF CONTENTS • Page ARTICLE I ESTABLISHMENT AND GENERAL OPERATION OF TRUST 1.1 Establishment of Trust ................................................. ..............................2 1.2 Revocability .................................................................. ..............................2 1.3 Grantor Trust ................................................................ ..............................2 1.4 Trust Contributions ....................................................... ..............................2 1.5 Payments to Employer ................................................. ..............................2 1.6 Signing Authority, Administrator ................................... ..............................2 1.7 Acceptance of Assets; Trust Composition ................... ..............................3 1.8 Trust Contributions ....................................................... ..............................3 1.9 No Duty of Trustee to Enforce Collection ..................... ..............................3 1.10 Plan Administration. * .................................................... ..............................3 1.11 Participant Accounts ................................................... ............................... 3 1.12 Tax Reporting .............................................................. ..............................3 ARTICLE II INVESTMENTS 2.1 Employer Directs Investments ..................................... ..............................4 2.2 Appointment of Trustee (or Other Individual or Entity) as Investment Manager..................................................................... ..............................4 2.3 Funding Policy and Investment Guidelines .................. ..............................4 2.4 Disposition of Income ................................................... ..............................5 ARTICLE III TRUSTEE'S POWERS 3.1 General Trustee's Powers ............................................ ..............................5 3.2 Additional Powers ........................................................ ..............................7 ARTICLE IV TRUSTEE AND EMPLOYER DUTIES 4.1 Legal Duties ................................................................. ..............................9 4.2 Payments to Participants ............................................ ............................... 9 4.3 Accounts and Records ................................................ .............................11 4.4 Reports .................................................................... .............................11 4.5 Follow Employer Direction .......................................... .............................12 4.6 Information to be Provided to Trustee ......................... .............................12 PARS /City of Rosemead 415(m) 0 0 ARTICLE V RESTRICTIONS ON TRANSFER 5.1 Persons to Receive Payment ...................................... .............................12 15 5.2 Assignment and Alienation Prohibited ........................ .............................13 ARTICLE VI RESIGNATION, REMOVAL AND SUCCESSION 6.1 Resignation or Removal of Trustee ............................ .............................13 6.2 Designation of Successor ........................................... .............................13 6.3 Upon Resignation ....................................................... .............................13 6.4 Court Appointment of Successor ................................ .............................14 6.5 Successor's Powers .................................................... .............................14 6.6 Successor's Duties ...................................................... .............................14 ARTICLE VII AMENDMENT 7.1 Power to Amend ......................................................... .............................14 ARTICLE VIII LIABILITIES 8.1 Declaration of Intent .................................................... .............................14 8.2 Liability of the Trustee ............................................... ............................... 15 8.3 Indemnification ............................................................ .............................16 ARTICLE IX DURATION, TERMINATION AND REPAYMENTS TO EMPLOYER 9.1 Revocation and Termination ....................................... .............................17 9.2 Duration .................................................................... .............................17 ARTICLE X MISCELLANEOUS 10.1 Emergencies and Delegation ...................................... .............................17 10.2 Expenses and Taxes .................................................. .............................18 10.3 Third Parties ................................................................ .............................19 10.4 Adoption by Affiliate Employer .................................... .............................19 10.5 Binding Effect; Successor Employer ........................... .............................19 10.6 Relation to Plan ........................................................... .............................19 10.7 Arbitration of Disputes ................................................. .............................19 10.8 Attorney Fees and Costs ............................................ .............................20 10.9 Partial Invalidity ........................................................... .............................20 10.10 Construction ................................................................ .............................20 10.11 Notices .................................................................... .............................20 PARS /City of Rosemead 415(m) ii 10/1/01 • • ARTICLE XI DISTRIBUTIONS IN THE EVENT OF INSOLVENCY OF EMPLOYER 11.1 Trustee Responsibility ................................................. .............................21 ARTICLE XII EFFECTIVE DATE 12.1 Effective Date .............................................................. .............................24 Addresses of Parties for Notice ................................ ............................... 24 PARS /City of Rosemead 415(m) iii 10/1/01 TRUST UNDER THE CITY OF ROSEMEAD EXCESS BENEFIT PLAN This Trust Agreement (the "Trust Agreement ") is made and dated this 1St day July, 2000 by and between the City of Rosemead (the "Employer") and UNION BANK OF CALIFORNIA, N.A. (the "Trustee "). PURPOSE (a) WHEREAS, the Employer has adopted the plan or plans attached as Exhibit A or which subsequently may be designated in writing by the Employer (the "Plan ") pursuant to which the Employer expects to incur unfunded liabilities with respect to certain employees of the Employer. (b) WHEREAS, Employer wishes to establish a trust (hereinafter called "Trust ") and to contribute to the Trust assets that shall be held therein, subject to the claims of Employer's creditors in the event of Employer's Insolvency, as herein defined, until paid to Plan participants in such manner and at such times as specified in the Plan; (c) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of employees; (d) WHEREAS, it is the intention of Employer to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: PARS /City of Rosemead (415(m) 1 10/1/01 0 0 ARTICLE I ESTABLISHMENT OF TRUST 1.1 Establishment of Trust. The Employer hereby deposits with Trustee in Trust a sum of money which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in the Trust Agreement. REVOCABILITY 1.2 Revocability. The Trust hereby established shall be revocable by Employer. 1.3 Grantor Trust. The Trust is intended to be a grantor trust, of which Employer is the grantor, within the meaning of Subpart E, Part I, Subchapter J, Chapter 1, Subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. 1.4 Trust Assets. The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Employer and shall be used exclusively for the uses and purposes of Participants and Employer's general creditors as herein set forth. Plan participants and beneficiaries of deceased participants (hereinafter called "Participants ") shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Participants against Employer. Any assets held by the Trust will be subject to the claims of Employer's general creditors under federal and state law in the event of Insolvency, as defined in Article XI herein. 1.5 Payments to Employer. The Employer shall maintain the right and power to direct Trustee to return to Employer or to divert to others any of the Trust assets before all payment(s) of benefits have been made to Participants pursuant to the terms of the Plan. 1.6 Signing Authority; Administrator. The Employer shall certify in writing to the Trustee the names and specimen signatures of all those who are authorized to act as or on behalf of the Employer, and those names and specimen signatures shall be updated as necessary by a duly authorized official of the Employer. The Employer shall promptly notify the Trustee if any person so designated is no longer authorized to act on behalf of the Employer. Until the Trustee receives written notice that a person is no longer authorized to act on behalf of the Employer, the Trustee may continue to rely on the Employer's designation of such person. PARS /City of Rosemead 415(m) 2 10/1/01 • 0 1.7 Acceptance of Assets; Trust Composition. All contributions or transfers shall be received by the Trustee in cash or in any other property acceptable to the Trustee. The Trust shall consist of the contributions and transfers received by the Trustee, together with the income and earnings from them and any increments to them. The Trustee shall hold, manage and administer the Trust in accordance with this Trust Agreement without distinction between principal and income. 1.8 Trust Contributions. Employer, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Participant shall have any right to compel such additional deposits. 1.9 No Duty of Trustee to Enforce Collection. Notwithstanding anything herein to the contrary, Trustee shall have no authority or obligation to enforce the collection of any contribution or transfer to the Trust. 1.10 Plan Administration. The Employer and not the Trustee shall be responsible for administering the Plan (including without limitation determining the rights of the Employer's employees to participate in the Plan, determining any Participant's right to benefits under such Plan), and issuing statements to Participants of their interest in the trust and Plan. The Employer may delegate such responsibilities to a record keeper. 1.11 Participant Accounts. If required, the Employer shall maintain in an equitable manner a separate account for each Participant under the Plan ( "Account ") in which it shall keep a record of the share of such Participant under such Plan in the Trust. The Employer may appoint a record keeper to maintain such Accounts. A Participant's Account under the Plan shall represent the portion of the Trust allocated to provide such Participant benefits under such Plan. If the Trustee is directed by the Employer to segregate the Trust into separate Accounts for each Participant, at the time it makes a contribution to the Trust, the Employer shall certify to the Trustee the amount of such contribution being made in respect of each Participant under each Plan. The Trustee may rely on information provided to the Trustee by the Employer and the Trustee's and Employer's determination of Account values shall be conclusive and binding on all interested parties. 1.12 Tax Reporting. The Trustee shall be responsible for individual tax reporting and withholding as directed by the Employer. The Employer agrees to indemnify and defend the Trustee against any liability for the payment of such taxes, interest or penalties resulting from or related to the Trust. PARS /City of Rosemead 415(m) 3 10/1/01 0 0 ARTICLE If INVESTMENTS 2.1 Employer Directs Investments. Except as provided in Section 2.2 below, the Employer shall have all power over, and responsibility for, the management, disposition and investment of the Trust assets, and the Trustee shall comply with proper written directions of the Employer concerning those assets. The Employer shall not issue directions in violation of the terms of the Plan and Trust or prohibited by the laws and Constitution of the State of California and applicable federal laws and regulations. Except to any extent required by the laws and Constitution of the State of California and applicable federal laws and regulations, or otherwise provided in this Trust Agreement, the Trustee shall have no duty or responsibility to review, initiate action, or make recommendations regarding Trust assets and shall retain all such assets until directed in writing by the Employer to dispose of them. 2.2 Appointment of Trustee (or Other Individual or Entity) as Investment Manager. The Employer may appoint the Trustee or other appropriately regulated individual or entity as Investment Manager, thereby delegating to the Trustee or other individual or entity the full power, authority and duty to direct the investment and management of all or any portion of the assets of the Trust as specified by the Employer and to the extent provided in Article III, subject to the investment guidelines established by the Employer as provided below. The Employer represents and warrants that any appointment made pursuant to this Section 2.2 complies with the laws and Constitution of the State of California and applicable federal laws and regulations. No appointment and delegation made pursuant to this Section 2.2 shall be effective unless made in writing and signed by both the Trustee and the Employer. 2.3 Funding Policy and Investment Guidelines. The Employer shall have the responsibility for establishing and carrying out a funding policy and method, consistent with the objectives of the Plan and, subject to the laws and Constitution of the State of California and applicable federal laws and regulations, taking into consideration the Plan's short-term and long -term financial needs. To the extent that the Trustee is appointed Investment Manager of all or a portion of the assets of the Trust in accordance with Section 2.2 above, the Trustee's responsibility for investment and diversification of such portion of the assets shall be subject to, and is limited by, the investment guidelines issued to it by the Employer in writing. It is understood that, unless otherwise agreed in writing, the Employer, rather than the Trustee, shall be responsible for the overall diversification of Trust assets. PARS /City of Rosemead 415(m) 4 10/1/01 0 0 2.4 Disposition of Income. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. ARTICLE III TRUSTEE'S POWERS 3.1 General Trustee's Powers. Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (a) To invest and reinvest the Trust or any part thereof in any one or more kind, type, class, item or parcel of property, real, personal or mixed, tangible or intangible; or in any one or more kind, type, class, item or issue of investment or security; or in any one or more kind, type class or item of obligation, secured or unsecured; or in any combination of them; (b) To acquire, sell and exercise options to buy securities ( "call" options) and to acquire, sell and exercise options to sell securities ( "put" options); (c) To buy, sell, assign, transfer, acquire, loan, lease (for any purpose, including beyond the life of this Trust), exchange and in any other manner to acquire, manage, deal with and dispose of all or any part of the Trust property, for cash or credit; (d) To make deposits with any bank or savings and loan institution, including any such facility of the Trustee or an affiliate thereof, provided that the deposit bears a reasonable rate of interest; (e) To retain all or any portion of the Trust in cash temporarily awaiting investment or for the purpose of making distributions or other payments, without liability for interest thereon, notwithstanding the Trustee's receipt of float; (f) To borrow money for the purposes of the Trust from any source other than a party in interest of the Plan, with or without giving security; to pay interest; to issue promissory notes and to secure the repayment thereof by pledging all or any part of the Trust assets; PARS /City of Rosemead 415(m) 5 10/1/01 0 0 (g) To take all of the following actions: to vote proxies of any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property held in the Trust; (h) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (i) To pay or cause to be paid from the Trust any and all real or personal property taxes, income taxes or other taxes or assessments of any or all kinds levied or assessed upon or with respect to the Trust or the Plan; Q) Subject to the limitations of 3.1, to hold term or ordinary life insurance contracts or to acquire annuity contracts on the lives of Participants (but in the case of conflict between any such contract and a Plan, the terms of the Plan shall prevail); to pay from the Trust the premiums on such contracts; to distribute, surrender or otherwise dispose of such contracts; to pay the proceeds, if any, of such contracts to the proper persons in the event of the death of the insured Participant; to enter into, modify, renew and terminate annuity contracts of deposit administration, of immediate participation or other group or individual type with one or more insurance companies and to pay or deposit all or any part of the Trust thereunder; to provide in any such contract for the investment of all or any part of funds so deposited with the insurance company in securities under separate accounts; to exercise and claim all rights and benefits granted to the contract holder by any such contracts. All payments and exercise of all powers with respect to insurance contracts shall be solely on the direction of Employer; (k) To exercise all the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under applicable federal or state laws, as amended from time to time, it being intended that, except as otherwise provided in this Trust, the powers conferred upon the Trustee herein shall not be construed as being in limitation of any authority conferred by law, but shall be construed as in addition thereto. PARS /City of Rosemead 415(m) 6 10/1/01 (1) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701 -2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. 3.2 Additional Powers. In addition to the other powers enumerated above, the Trustee is authorized and empowered: (a) To invest funds in any type of interest - bearing account including, without limitation, time certificates of deposit or interest - bearing accounts issued by UNION BANK OF CALIFORNIA, N.A. To use other services or facilities provided by the UnionBanCal Corporation (UNBC), its subsidiaries or affiliates including Union Bank of California, N.A. (Bank), to the extent allowed by applicable law and regulation. Such services may include but are not limited to (1) the placing of orders for the purchase, exchange, investment or reinvestment of securities through any brokerage service conducted by, and (2) the purchase of units of any registered investment company managed or advised by Bank, UNBC, or their subsidiaries or affiliates and /or for which Bank, UNBC or their subsidiaries or affiliates act as custodian or provide other services for a fee, including, without limitation, the HighMark Group of mutual funds. The parties hereby acknowledge that the Bank may receive fees for such services in addition to the fees payable under this Agreement. Fee schedules for additional services shall be delivered to the appropriate party in advance of the provision of such services. Independent fiduciary approval of compensation being paid to the Bank will be sought in advance to the extent required under applicable law and regulation. If Union Bank of California, N.A. does not have investment discretion, the services referred to above, as well as any additional services, shall be utilized only upon the appropriate direction of an authorized party. (b) To cause all or any part of the Trust to be held in the name of the Trustee (which in such instance need not disclose its fiduciary capacity) or, as permitted by law, in the name of any nominee, including the nominee name of any depository, and to acquire for the Trust any investment in bearer form; but the books and records of the Trust shall at all times show that all such investments are a part of the Trust and the Trustee shall hold evidences of title to all such investments as are available; PARS /City of Rosemead 415(m) 7 10/1/01 0 0 (c) To serve as custodian with respect to the Trust assets, to hold assets or to hold eligible assets at the Depository Trust Company or other depository; (d) To employ such agents and counsel as may be reasonably necessary in administration and protection of the Trust assets and to pay them reasonable compensation; to employ any broker - dealer covered in the self - dealing section, and pay to such broker - dealer its standard commissions; to settle, compromise or abandon all claims and demands in favor of or against the Trust; and to charge any premium on bonds purchased at par value to the principal of the Trust without amortization from the Trust, regardless of any law relating thereto; (e) To abandon, compromise, contest, arbitrate or settle claims or demands; to prosecute, compromise and defend lawsuits, but without obligation to do so, all at the risk and expense of the Trust; (f) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by United States or state agency during normal business hours of the Trustee; (g) To comply with all requirements imposed by law; (h) To seek written instructions from the Employer on any matter and await written instructions without incurring any liability. If at any time the Employer should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion it deems advisable under the circumstances for carrying out the purposes of this Trust. Such actions shall be conclusive on the Employer and the Participants on any matter if written notice of the proposed action is given to Employer five (5) days prior to the action being taken, and the Trustee receives no response; (i) To compensate such executive, consultant, record keeper, actuarial, accounting, investment, appraisal, administrative, clerical, secretarial, custodial, depository and legal firms, personnel and other employees or assistants as are engaged by the Employer in connection with the administration of the Plan and to pay from the Trust the necessary expenses of such firms, personnel and assistants, to the extent not paid by the Employer; Q) To impose a reasonable charge to cover the cost of furnishing to Participants statements or documents; (k) To act upon proper written directions of the Employer or any Participant including directions given by photostatic teletransmission PARS /City of Rosemead 415(m) 8 10/1/01 0 0 using facsimile signature. If oral instructions are given, to act upon those in Trustee's discretion prior to receipt of written instructions. Trustee's recording or lack of recording of any such oral instructions taken in Trustee's ordinary course of business shall constitute conclusive proof of Trustee's receipt or non - receipt of the oral instructions; (1) To pay from the Trust the expenses reasonably incurred in the administration of the Trust; (m) To maintain insurance for such purposes, in such amounts and with such companies as the Employer shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries (but only if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary); (n) As directed by the Employer, to cause the benefits provided under the Plan to be paid directly to the persons entitled thereto under the Plan, and in the amounts and at the times and in the manner specified by the Plan, and to charge such payments against the Trust and Accounts with respect to which such benefits are payable; (o) To exercise and perform any and all of the other powers and duties specified in this Trust Agreement or the Plan; and in addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration of the Trust, as though the absolute owner thereof. ARTICLE IV TRUSTEE AND EMPLOYER DUTIES 4.1 Legal Duties. The Trustee and Employer shall exercise any of the foregoing powers from time to time as required by law. 4.2 Payments to Participants (a) Employer shall deliver to Trustee a schedule (the "Payment Schedule ") that indicates the amounts payable in respect of each Participant, that provides a formula or other instructions acceptable to Trustee for determining the amount so payable, the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Participants in accordance with such Payment Schedule. As directed PARS /City of Rosemead 415(m) 9 10/1/01 0 0 by Employer, the Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by Employer. (b) The entitlement of a Participant to benefits under the Plan shall be determined by Employer or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. (c) Employer may make payment of benefits directly to Participants as they become due under the terms of the Plan. Employer shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Participants. In addition, if the principal of the Trust, and earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, Employer shall make the balance of each such payment as it falls due. Trustee shall notify Employer where principal and earnings are not sufficient. Trustee shall have no duty or obligation to enforce or compel Employer to make payments hereunder. Employer may direct Trustee to reimburse Employer for payments made directly by Employer to Participants, and shall provide the Trustee with such documentation to evidence those direct payments as the Trustee may reasonably request. (1) In the event payments are made by Employer directly to Participants, Employer shall have sole responsibility for the reporting and withholding of any federal, state, or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authority. (2) Trustee shall have no duty or responsibility with respect to the above stated reporting, withholding or payment of taxes and shall have no responsibility to determine that Employer has provided for such reporting, withholding or payment of such taxes. (3) Employer shall indemnify and hold Trustee harmless from any and all losses, claims, penalties or damages which may occur as a result of Trustee following in good faith the written direction of the Employer to reimburse Employer for payments made hereunder to Participants and arising from Employer's tax reporting, withholding and payment obligations hereunder. PARS /City of Rosemead 415(m) 10 10/1/01 0 0 (d) Upon the satisfaction of all liabilities of the Employer under the Plan to all Participants the Trustee shall hold or distribute the Trust in accordance with the written instructions of the Employer. Except as provided in (c) above, at no time prior to the Employer's Insolvency, as defined in Article XI, or the satisfaction of all liabilities of the Employer under the Plan in respect of all Participants having Accounts hereunder shall any part of the Trust revert to the Employer. 4.3 Accounts and Records. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements and all other transactions required to be done, including such specific records as shall be agreed upon in writing between the Employer and the Trustee. All such accounts, books and records shall be open to inspection and audit at all reasonable times by the Employer and by the Participants. Within sixty (60) days after the close of each quarter and Plan year and within sixty (60) days after the resignation or removal of the Trustee as provided in Article VI hereof, the Trustee shall render to the Employer a written account showing in reasonable summary the investments, receipts, disbursements and other transactions engaged in by the Trustee during the preceding Plan Year or accounting period with respect to the Trust. Such account shall set forth the assets and liabilities of the Trust. The Employer shall have ninety (90) days after the Trustee's mailing of each such quarterly or final account within which to file with the Trustee written objections to such account. Upon approval or by failure to file with the Trustee written objections to such account within the 90 -day period, the Employer shall release and discharge the Trustee from all liability and accountability to the Employer as to all matters and items set forth in such account as if such account had been settled and allowed by a decree from a court of competent jurisdiction, such settlement and allowance to be final and binding. Notwithstanding anything herein to the contrary, the Trustee shall have no duty or responsibility to obtain valuations of any assets of the Trust Fund, the value of which is not readily determinable on an established market. Employer shall bear sole responsibility for determining said valuations and shall be responsible for providing said valuations to Trustee in a timely manner. Trustee may conclusively rely on such valuations provided by Employer and shall be indemnified and held harmless by Employer with respect to such reliance. 4.4 Reports. The Trustee shall file such descriptions and reports and shall furnish such information and make such other publications, disclosures, registrations and other filings as are required of the Trustee by law. The Trustee shall have no responsibility to file reports or descriptions, publish information or make disclosures, registrations or other filings unless directed by the Employer. PARS /City of Rosemead 415(m) 11 10/1/01 4.5 Follow Employer Direction. The Trustee shall have the power and duty to comply promptly with all proper directions of the Employer. 4.6 Information to be Provided to Trustee. The Employer shall maintain and furnish the Trustee with all reports, documents and information as shall be required by the Trustee to perform its duties and discharge its responsibilities under this Trust Agreement, including without limitation a certified copy of each of the Plan and all amendments thereto. The Trustee shall be entitled to rely on the most recent reports, documents and information furnished to it by the Employer. The Employer shall be required to notify the Trustee as to the termination of employment of any Participant by death, retirement or otherwise. The Employer shall arrange for each Investment Manager if appointed pursuant to Section 2.1, and each insurance company issuing contracts held by the Trustee pursuant to Section 3.1(k), to furnish the Trustee with such valuations and reports as are necessary to enable the Trustee to fulfill its obligations under this Trust Agreement, and the Trustee shall be fully protected in relying upon such valuations and reports. ARTICLE V RESTRICTIONS ON TRANSFER 5.1 Persons to Receive Payment. (a) The Trustee shall, except as otherwise provided in section 4.2(d) and' subsection (b) hereunder, pay all amounts payable hereunder only to the person or persons designated under the Plan or deposit such amounts to the Participant's checking or savings account as directed by the Employer and not to any other person or corporation, and only to the extent of assets held in the Trust, and shall follow written instructions by the Employer. The Employer's written instructions, to the Trustee to make distributions or not to make distributions, and the amount thereof, shall be conclusive on all Participants. (b) Should any controversy arise as to the person or persons to whom any distribution or payment is to be made by the Trustee, or as to any other matter arising in the administration of the Plan or Trust, the Trustee may retain the amount in controversy pending resolution of the controversy or the Trustee may file an action seeking declaratory relief and /or may interplead the Trust assets in issue, and name as PARS /City of Rosemead 415(m) 12 10/1/01 Ll 0 necessary parties the Employer, the Participants and /or any or all persons making conflicting demands. (c) The Trustee shall not be liable for the payment of any interest or income, except for that earned as a Trust investment, on any amount withheld or interpleaded under subsection (b). (d) The expense of the Trustee for taking any action under subsection (b) shall be paid to the Trustee from the Trust. 5.2 Assignment and Alienation Prohibited. Benefits payable to Participants under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. Notwithstanding the foregoing, the Trust shall at all times remain subject to the claims of creditors of the Employer in the event the Employer becomes Insolvent as provided in Article Xl. ARTICLE VI RESIGNATION, REMOVAL AND SUCCESSION 6.1 Resignation or Removal of Trustee. Trustee may resign at any time by written notice to the Employer, which shall be effective thirty (30) days after receipt of such notice unless Employer and Trustee agree otherwise. The Employer may remove the Trustee at any time by written notice to the Trustee, which shall be effective thirty (30) days after receipt of such notice unless the Trustee and Employer otherwise agree. 6.2 Designation of Successor. Upon notice of the Trustee's resignation or removal, the Employer shall promptly designate a successor Trustee who will accept transfer of the assets of the Trust. If no successor Trustee is designated within thirty (30) days of notice of Trustee's resignation or removal, then the Trustee may apply to a court of competent jurisdiction for appointment of a successor or instructions as provided in Section 6.4 below. 6.3 Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed as soon as administratively feasible after receipt of notice of resignation, removal or transfer and appointment of and acceptance by successor Trustee, unless Employer extends the time limit. PARS /City of Rosemead 415(m) 13 10/1/01 • , 0 6.4 Court Appointment of Successor. If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 6.2 hereof, by the effective date of resignation or removal under paragraph 6.1 of this section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. Until a successor Trustee has accepted its appointment and received transfer of the Trust assets, the Trustee shall be entitled to be compensated for its services according to its published fee schedule then in effect for acting as Trustee. 6.5 Successor's Powers. A successor Trustee shall have the same powers and duties as those conferred upon the original Trustee hereunder. A resigning Trustee shall transfer the Trust assets and shall deliver the assets of the Trust to the successor Trustee as soon as practicable. The resigning Trustee is authorized, however, to reserve such amount as may be necessary for the payment of its fees and expenses incurred prior to its resignation, and the Trust assets shall remain liable to reimburse the resigning Trustee for all fees and costs, expenses or attorneys' fees or losses incurred, whether before or after resignation, due solely to Trustee's holding title to and administration of Trust assets. 6.6 Successor's Duties. A successor Trustee shall have no duty to audit or otherwise inquire into the acts and transactions of its predecessor. ARTICLE VII FIMI4MUL JAI 4.11l 7.1 Power to Amend. This Trust Agreement may be amended by a written instrument executed by Trustee and Employer. No such amendment shall conflict with the terms of the Plan. ARTICLE VIII LIABILITIES 8.1 Declaration of Intent. To the full extent permitted by law, it is the intent of this Article to relieve each fiduciary from all liability for any acts or omissions of any other fiduciary or any other person and to declare the absence of liabilities of all persons referred to in this Article to the extent not imposed by law or by provisions of this Trust Agreement. Each of the following Sections, in declaring such limitation, is set forth without limiting the generality of this Section but in each case shall be subject to the provisions, limitations and policies set forth in this Section. PARS /City of Rosemead 415(m) 14 10/1/01 0 0 8.2 Liability of the Trustee. (a) The Trustee shall have no powers, duties or responsibilities with regard to the administration of the Plan or to determine the rights or benefits of any person having or claiming an interest under the Plan or in the Trust or under this Trust Agreement or to examine or control any disposition of the Trust or part thereof which is directed by the Employer, as applicable. (b) The Trustee shall have no liability for the adequacy of contributions for the purposes of the Plan or for enforcement of the payment thereof. (c) The Trustee shall have no liability for the acts or omissions of the Employer or Fiduciaries. (d) The Trustee shall have no liability for following proper directions of Employer or Employer's designated Fiduciaries, or any Participant when such directions are made in accordance with this Trust Agreement and the Plan. (e) During such period or periods of time, if any, as Employer or Investment Manager (collectively, "Fiduciary") is directing the investment and management of Trust assets, the Trustee shall have no obligation to determine the existence of any conversion, redemption, exchange, subscription or other right relating to any securities purchased on the directions of such Fiduciary if notice of any such right was given prior to the purchase of such securities. If such notice is given after the purchase of such securities, the Trustee shall notify such Fiduciary. The Trustee shall have no obligation to exercise any such right unless it is instructed to exercise such right, in writing, by the Fiduciary within a reasonable time prior to the expiration of such right. (f) During such period or periods of time, if any, as a Fiduciary is directing the investment and management of Trust assets, if such Fiduciary directs the Trustee to purchase securities issued by any foreign government or agency thereof, or by any corporation domiciled outside of the United States, it shall be the responsibility of the Fiduciary to advise the Trustee in writing with respect to any laws or regulations of any foreign countries or any United States territories or possessions which shall apply, in any manner whatsoever, to such securities, including, but not limited to, receipt of dividends or interest by the Trustee for such securities. 8.3 Indemnification. PARS /City of Rosemead 415(m) 15 10/1/01 0 (a) The Trustee shall not be liable for, and Employer shall indemnify, defend, and hold the Trustee (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of (1) any acts taken by the Trustee in accordance with directions (or failure to act in the absence of directions) from the Employer, Investment Manager or any other person or entity authorized to act on their behalf which the Trustee reasonably believes to have been given by them, or (2) the Employer's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. (b) The Employer shall not be liable for, and Trustee shall indemnify, defend, and hold the Employer (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. (c) Promptly after receipt by an indemnified party of notice or receipt of a claim or the commencement of any action for which indemnification may be sought, the indemnified party will notify the indemnifying party in writing of the receipt or commencement thereof. When the indemnifying party has agreed to provide a defense as set out above that party shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to such indemnitee) and the payment of expenses, insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the indemnifying party. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party unless (i) the employment of such counsel has been specifically authorized by the indemnifying party or (ii) the named parties to any such action (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. The indemnifying party shall not be liable to indemnify any person for any settlement of any such action effected without the indemnifying party's consent. PARS /City of Rosemead 415(m) 16 10/1/01 L ARTICLE IX 0 DURATION, TERMINATION AND REPAYMENTS TO EMPLOYER 9.1 Revocation and Termination. The Trust shall not terminate until the date on which Participants are no longer entitled to benefits pursuant to the terms of the Plan,unless sooner revoked in accordance with Section 1.2 hereof. Upon termination of the Trust any assets remaining in the Trust shall be returned to Employer. In the event the Trust is terminated following the distribution of all payments and benefits called for herein, from the date of such termination of the Trust and until the final distribution of the remaining Trust assets, if any, the Trustee shall continue to have all the powers provided under this Trust Agreement that are necessary or desirable for the orderly liquidation and distribution of the Trust. 9.2 Duration. This Trust shall continue in full force and effect for the maximum period of time permitted by law and in any event until the expiration of twenty - one years after the death of the last surviving person who was living at the time of execution hereof who at any time becomes a Participant in the Plan, unless this Trust is sooner terminated in accordance with this Trust Agreement. ARTICLE X MISCELLANEOUS 10.1 Emergencies and Delegation. (a) In case of an emergency, the Trustee may act in the absence of directions from any other person having the power and duty to direct the Trustee with respect to the matter involved and shall incur no liability in so acting. (b) By written notice to the Trustee, the Employer may authorize the Trustee to act on matters in the ordinary course of the business of the Trust or on specific matters upon the signature of its delegate. 10.2 Expenses and Taxes. (a) The Employer, or at its option, the Trust, shall quarterly pay the Trustee its expenses in administering the Trust and reasonable PARS /City of Rosemead 415(m) 17 10/1/01 0 • compensation for its services as Trustee at a rate to be agreed upon by the parties to this Trust Agreement, based upon Trustee's published fee schedule. However, the Trustee reserves the right to alter this rate of compensation at any time by providing the Employer with notice of such change at least thirty (30) days prior to its effective date. Reasonable compensation shall include compensation for any extraordinary services or computations required, such as determination of valuation of assets when current market values are not published and interest on funds to cover overdrafts. The Trustee shall have a lien on the Trust for compensation and for any reasonable expenses including counsel, appraisal, or accounting fees, and these shall be withdrawn from the Trust and may be reimbursed by the Employer. (b) Reasonable counsel fees, reasonable costs, expenses and charges of the Trustee incurred or made in the performance of its duties, expenses relating to investment of the Trust such as broker's commissions, stamp taxes, and similar items and all taxes of any and all kinds that may be levied or assessed under existing or future laws upon or in respect to the Trust or the income thereof, and the Trustee's charges for issuing distribution checks to Participants or their representatives shall be paid from, and shall constitute a charge upon the Trust. (c) In the event any Participant is determined to be subject to federal income tax on any amount under this Trust Agreement prior to the time of payment hereunder, the entire amount determined to be so taxable shall, at the Employer's direction, be distributed by the Trustee to such Participant from the Trust. For the above purposes, a Participant shall be determined to be subject to federal income tax with respect to the Trust upon the earlier of: (a) a final determination by the United States Internal Revenue Service ( "IRS ") addressed to the Participant which is not appealed to the courts; (b) an opinion of legal counsel designated in writing by the Employer, addressed to the Employer and the Trustee, that, by reason of Treasury Regulations, amendments to the Code, published IRS rulings, court decisions or other substantial precedent, amounts hereunder subject the Participant to federal income tax prior to payment. The Employer shall undertake at its discretion and at its sole expense to defend any tax claims described herein which are asserted by the IRS against any Participant, including attorney fees and costs of appeal, and shall have the sole authority to determine whether or not to appeal any determination made by the IRS or by a lower court. The Employer also agrees to reimburse any Participant under this Section for any interest or penalties in respect of tax claims hereunder upon receipt of documentation thereof. PARS /City of Rosemead 415(m) 18 10/1/01 0 0 10.3 Third Parties. (a) No person dealing with the Trustee shall be required to follow the application of purchase money paid or money loaned to the Trustee nor inquire as to whether the Trustee has complied with the requirements hereof. (b) In any judicial or administrative proceedings, only the Employer and the Trustee shall be necessary parties and no Participant or other person having or claiming any interest in the Trust shall be entitled to any notice or service of process (except as required by law). Any judgment, decision or award entered in any such proceeding or action shall be conclusive upon all interested persons. 10.4 Adoption by Affiliated Employer. Any affiliate of the Employer (an "Affiliated Employer') may adopt one or more of the Employer's Plans with the approval of the Employer, and the Affiliated Employer shall concurrently become a party to this Trust Agreement by giving written notice of its adoption of the Plan and this Trust Agreement to the Trustee. Upon such written notice, the Affiliated Employer shall become a signatory to this Trust Agreement. 10.5 Binding Effect; Successor Employer. This Trust Agreement shall be binding upon and inure to the benefit of any successor to the Employer or its business as the result of merger, consolidation, reorganization, transfer of assets or otherwise and any subsequent successor thereto. In the event of any such merger, consolidation, reorganization, transfer of assets or other similar transaction, the successor to the Employer or its business or any subsequent successor thereto shall promptly notify the Trustee in writing of its successorship and shall promptly supply information required by the Trustee. 10.6 Relation to Plan. All words and phrases used herein shall have the same meaning as in the Plan, and this Trust Agreement and the Plan shall be read and construed together. In the event of any conflict between the terms of the Plan and this Trust Agreement with respect to the rights and duties of the Trustee, this Trust Agreement shall control. Whenever in the Plan it is provided that the Trustee shall act as therein prescribed, the Trustee shall be and is hereby authorized and empowered to do so for all purposes as fully as though specifically so provided herein or so directed by the Employer. 10.7 Mediation and Arbitration of Disputes.. If a dispute arises under this Trust Agreement between or among the Employer and Trustee or any Participant, except as provided in Sections 5.1(b) and 6.4, the parties agree first to try in good faith to settle the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association. Thereafter, any remaining unresolved controversy or claim arising out of or relating to this Agreement, or PARS /City of Rosemead 415(m) 19 10/1/01 the performance or breach thereof, shall be decided by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and Title 9 of California Code of Civil Procedure Sections 1280 et seq. The sole arbitrator shall be a retired or former Judge associated with the American Arbitration Association. Judgement upon any award rendered by the arbitrator shall be final and may be entered in any court having jurisdiction. Each party shall bear its own costs, attorney's fees and its share of arbitration fees. The Alternate Dispute Resolution Agreement in this Agreement does not constitute a waiver of the parties' rights to a judicial forum in instances where arbitration would be void under applicable law, and does not preclude Bank from exercising its rights to interplead the funds of the Account at the cost of the Account. 10.8 Attorney Fees and Costs. If any action is brought by the Trustee or the Employer against the other in a court of law in order to compel arbitration pursuant to Section 10.7 above, the prevailing party in such proceeding to compel arbitration shall be entitled to recover from the other party reasonable attorneys' fees, court costs and necessary disbursements incurred in connection with such proceeding, including but not limited to copying costs, filing fees, expert costs and fees and word processing fees. 10.9 Partial Invalidity. Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. In the event of any such holding, the Employer and Trustee and, if applicable, Participants, will immediately amend this Trust Agreement as necessary to remedy any such defect. 10.10 Construction. This Trust Agreement shall be governed by and construed in accordance with the laws of California. 10.11 Notices. Any notice, report, demand or waiver required or permitted hereunder shall be in writing, shall be deemed received upon the date of delivery if given personally or, if given by mail, upon the receipt thereof, and shall be given personally or by prepaid registered or certified mail, return receipt requested, addressed to Employer and Trustee as listed below in Article XII; if to a Participant, to the last mailing address provided to the Trustee with respect to such individual, provided, however, that if any party or his or its successor shall have designated a different address by written notice to the other parties, then to the last address so designated. ARTICLE XI DISTRIBUTIONS IN THE EVENT OF INSOLVENCY OF EMPLOYER PARS /City of Rosemead 415(m) 20 10/1/01 9 0 11.1 Trustee and Employer Responsibility upon notice of Employer's Insolvency: (a) Insolvency. Trustee shall cease payment of benefits to Participants if the Employer is Insolvent. Employer shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Employer is unable to pay its debts as they become due, or (ii) Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1.4 hereof, the principal and income of the Trust shall be subject to claims of general creditors of Employer under federal and state law as set forth below. (1) The Governing Board and the Plan Administrator designated by the Employer shall have the duty to inform Trustee in writing of Employer's Insolvency. If a person claiming to be a creditor of Employer alleges in writing to Trustee that Employer has become Insolvent, Trustee shall determine whether Employer is Insolvent and,, pending such determination, Trustee shall discontinue payment of benefits to Participants. If Trustee is unable to obtain information sufficient to ascertain Insolvency, Trustee may seek instructions of a court of law or submit the matter for arbitration before the American Arbitration Association or interplead the Trust Assets at the expense of the Trust. (2) Unless Trustee has actual knowledge of Employer's Insolvency, or has received written notice from Employer or a person claiming to be a creditor alleging that Employer is Insolvent, Trustee shall have no duty to inquire whether Employer is Insolvent. Trustee may in all events rely on such evidence concerning Employer's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Employer's solvency. (3) If at any time Trustee has determined that Employer is Insolvent, Trustee shall discontinue payments to Participants and shall hold the assets of the Trust for the benefit of Employer's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as general creditors of Employer with respect to benefits due under the Plan or otherwise. (4) Trustee shall resume the payment of benefits to Participants in accordance with Section 4.2 of this Trust Agreement only after PARS /City of Rosemead 415(m) 21 10/1/01 0 0 Trustee has determined that Employer is not Insolvent (or is no longer Insolvent). (c) Determination of Insolvencv. Upon receipt of the aforesaid written notice of the Employer's Insolvency, the Trustee shall notify the Employer, and the Employer, within thirty (30) days of receipt of such notice, shall engage an arbitrator (the "Arbitrator ") acceptable to Trustee, from the American Arbitration Association to determine the Employer's solvency or Insolvency. The Employer shall cooperate fully and assist the Arbitrator, as may be requested by the Arbitrator, in such determination and shall pay all costs relating to such determination. The Arbitrator shall notify the Employer and Trustee separately by registered mail of its findings. If the Arbitrator determines that the Employer is solvent or if once found Insolvent the Employer is no longer Insolvent, the Trustee shall resume holding the Trust assets for the benefit of the Participants and may make any distributions called for under this Trust Agreement, including any amounts which should have been distributed during the period when the Trustee suspended distributions in response to a notice of the Employer's Insolvency, including earnings (or losses) on such suspended distributions. If the Arbitrator determines that the Employer is Insolvent or is unable to make a conclusive determination of the Employer's Insolvency, the Trustee shall continue to retain the assets of the Trust until the Employer's status of solvency or Insolvency is decided by a court of competent jurisdiction or it distributes all or a portion of the Trust assets to any duly appointed receiver, trustee in bankruptcy, custodian or to the Employer's general creditors, but only as such distribution is ordered by a court of competent jurisdiction. The Trustee shall have no liability for relying upon the determination of the Arbitrator as to the Employer's solvency or Insolvency. (d) If a court of competent jurisdiction orders distribution of only part of the Trust assets and does not specify the manner in which Trust assets are to be liquidated, the Trustee shall liquidate Trust assets as directed by the Employer. If the Employer fails to provide instructions as to the manner of liquidation within five (5) business days prior to the date the Trustee is required to comply with the court's order, the Trustee shall liquidate and shall have the authority to order any Investment Manager to liquidate the Trust assets in such manner as the Trustee shall determine in its sole and absolute discretion. The Trustee shall not be liable for any damages resulting from the Trustee's exercise in good faith of its power to liquidate assets as provided in this paragraph. PARS /City of Rosemead 415(m) 22 10/1/01 0 L (e) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to subsection (b)(3) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Participants by Employer in lieu of the payments provided for hereunder during any such period of discontinuance of which Trustee has actual knowledge. Nothing in this Trust Agreement shall in any manner diminish any right of a Participant to pursue his or her rights as a general creditor of the Employer with regard to payments under the Trust or otherwise. PARS /City of Rosemead 415(m) 23 10/1/01 ARTICLE XII EFFECTIVE DATE The effective date of this Trust Agreement shall be July 1, 2000. Executed at , California. UNION BANK OF CALIFORNIA, N.A. Trustee 475 Sansome Street, 12th floor (Address) San Francisco, CA 94111 0 0 (typed or printed name) (typed or printed name) PARS /City of Rosemead 415(m) CITY OF ROSEMEAD "Employer', Sponsor of the City of Rosemead Excess Benefit Plan [PLAN] 8838 E. Valley Blvd. (Address) Rosemead. CA 91770 By: D nald Calmer (type rinte me) (typed or printed name) Approved by Counsel to Employer: Counsel 24 10/1/01 0 0 s Phase II Systems PNIILS PARS Trust Administrator PIIH IN-ACC,R!'1'•RETIRMIP.N'I SWI'EN _— C'rrnri. rSbLni l'rdrlirArenaiev- December 12. 2001 Mr. Donald Wagner Assistant City Manager Cite of Rosemead 8838 E. 'galley Blvd. Rosemead, CA 91770 Dear Donald; Enclosed you will find the following documents required for implementation of the City of Rosemead Excess Benefit Plan: • The Citv of Rosemead Excess Benefit Trust Agreement (2)- Please return both originals to Phase II Systems. We will forward an original to you upon Trustee sic-mature. • Union Bank of California Trustee Services Fee Schedule (I)- Please return the original to Phase II Systems. • Union Bank of California Investment Strategv Selection Form (1)- Please return the original to Phase II Systems. • Union Bank of California Discretionary Non -ERISA Emplovee Benefi t Accounts Form (1)- Please return the original to Phase II Systems. The Excess Benefit Plan document was already executed some time ado, so the documents listed above are the remaining items needed to complete the Excess Benefit Plan. Please approve and sign the enclosed documents, then return them to Phase II Systems. Once we receive the documents back from you, they will be forwarded to Union Bank of California to establish an account. If you have any questions, please feel free to contact me. I can be reached at (800) 540 -6369 extension 123. A Sincerely, Came Seranella v Implemeniation Coordinator Phase Il Systems, PARS Trust Administrator cc: Kevin Murphy, Phase II Systems Wrl 1.A.' a"k— 141 "A ')nn ai(rn . (Prim ,An r'rQ . "ruin vAP(ZTN ;n OW, . r'w (GAM ')an 19Sn 9 0 CITY OF ROSEMEAD EXCESS BENEFIT TRUST AGREEMENT TABLE OF CONTENTS 0 Page ARTICLE I ESTABLISHMENT AND GENERAL OPERATION OF TRUST 1.1 Establishment of Trust .................................................. ..............................2 1.2 Revocability .................................................................. ..............................2 1.3 Grantor Trust ............................................................... ............................... 2 1.4 Trust Contributions ....................................................... ..............................2 1.5 Payments to Employer ........................... ........... 2 1.6 Signing Authority, Administrator ................................... ..............................2 1.7 Acceptance of Assets; Trust Composition .................. ............................... 3 1.8 Trust Contributions ...................................................... .............................:. 3 1.9 No Duty of Trustee to Enforce Collection .................... ............................... 3 1.10 Plan Administration ........... ......................................................................... 3 1.11 Participant Accounts ................................................... ............................... 3 1.12 Tax Reporting ............................................................. ............................... 3 ARTICLE II INVESTMENTS 2.1 Employer Directs Investments ..................................... ..............................4 2.2 Appointment of Trustee (or Other Individual or Entity) as Investment Manager..................................................................... ..............................4 2.3 Funding Policy and Investment Guidelines .................. ..............................4 2.4 Disposition of Income ................................................... ..............................5 ARTICLE III TRUSTEE'S POWERS 3.1 General Trustee's Powers ........................................... ............................... 5 3.2 Additional Powers ....................................................... ............................... 7 ARTICLE IV TRUSTEE AND EMPLOYER DUTIES 4.1. Legal Duties ................................................................ ............................... 9 4.2 Payments to Participants ............................................ ............................... 9 4.3 Accounts and Records ................................................ .............................11 4.4 Reports .................................................................... .............................11 4.5 Follow Employer Direction .......................................... .............................12 4.6 Information to be Provided to Trustee ......................... .............................12 PARS /City of Rosemead 415(m) i 0 0 ARTICLE V RESTRICTIONS ON TRANSFER 5.1 Persons to Receive Payment ...................................... .............................12 5.2 Assignment and Alienation Prohibited ........................ .............................13 ARTICLE VI RESIGNATION, REMOVAL AND SUCCESSION 6.1 Resignation or Removal of Trustee ............................ .............................13 17 6.2 Designation of Successor ........................................... .............................13 6.3 Upon Resignation ....................................................... .............................13 6.4 Court Appointment of Successor ................................ .............................14 6.5 Successor's Powers .................................................... .............................14 6.6 Successor's Duties ...................................................... .............................14 19 ARTICLE VII AMENDMENT 7.1 Power to Amend ......................................................... .............................14 ARTICLE VIII LIABILITIES 8.1 Declaration of Intent .................................................... .............................14 8.2 Liability of the Trustee ................................................. .............................15 8.3 Indemnification ............................................................ .............................16 ARTICLE IX DURATION, TERMINATION AND REPAYMENTS TO EMPLOYER 9.1 Revocation and Termination ..................................... ............................... 17 9.2 Duration ......................................... ............................... .......17 .................. ARTICLE X MISCELLANEOUS 10.1 Emergencies and Delegation ...................................... .............................17 10.2 Expenses and Taxes .................................................. .............................18 10.3 Third Parties: ............................................................................................ 19 10.4 Adoption by Affiliate Employer .................................... .............................19 10.5 Binding Effect; Successor Employer ........................... ..:..........................19 10.6 Relation to Plan ........................................................... ...:.........................19 10.7 Arbitration of Disputes ................................................. .............................19 10.8 Attorney Fees and Costs .......................................... ............................... 20 10.9 Partial Invalidity ........................................................... .............................20 10.10 Construction ..........................................:..................... .............................20 10.11 Notices .................................................................... .............................20 PARS /City of Rosemead 415(m) - ii 10/1/01 L ARTICLE XI DISTRIBUTIONS IN THE EVENT OF INSOLVENCY OF EMPLOYER 11.1 . Trustee Responsibility ................................................. .............................21 ARTICLE XII EFFECTIVE DATE 12.1 Effective Date: .......................................................................................... 24 Addresses of Parties for Notice .................................. .............................24 PARS /City of Rosemead 415(m) iii 10/1101 • TRUST UNDER THE CITY OF ROSEMEAD EXCESS BENEFIT PLAN This Trust Agreement (the "Trust Agreement ") is made and dated this 151 day July, 2000 by and between the City of Rosemead (the "Employer ") and UNION BANK OF CALIFORNIA, N.A. (the "Trustee "). PURPOSE (a) WHEREAS, the Employer has adopted the plan or plans attached as Exhibit A or which subsequently may be designated in writing by the Employer (the. "Plan ") pursuant to which the Employer expects to incur unfunded liabilities with respect to certain employees of the Employer. (b) WHEREAS, Employer wishes to establish a trust (hereinafter called "Trust ") and to contribute to the Trust assets that shall be held therein, subject to the claims of Employer's creditors in the event of Employer's Insolvency, as herein defined, until paid to Plan participants in such manner and at such times as specified in the Plan; (c) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of employees; (d) WHEREAS, it is the intention of Employer to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: PARS /City of Rosemead (415(m) 1 10/1/01 0 0 ARTICLE I ESTABLISHMENT OF TRUST 1.1 Establishment of Trust. The Employer hereby deposits with Trustee in Trust a sum of money which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in the Trust Agreement. REVOCABILITY 1.2 Revocability. The Trust hereby established shall be revocable by Employer. 1.3 Grantor Trust. The Trust is intended to be a grantor trust, of which Employer is the grantor, within the meaning of Subpart E, Part I, Subchapter J, Chapter 1, Subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. 1.4 Trust Assets. The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Employer and shall be used exclusively for the uses and purposes of Participants and Employer's general creditors as herein set forth. Plan participants and beneficiaries of deceased participants (hereinafter called "Participants ") shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Participants against Employer. Any assets held by the Trust will be subject to the claims of Employer's general creditors under federal and state law in the event of Insolvency, as defined in Article XI herein. 1.5 Payments to Employer. The Employer shall maintain the right and power to direct Trustee to return to Employer or to divert to others any of the Trust assets before all payment(s) of benefits have been made to Participants pursuant to the terms of the Plan. 1.6 Signing Authority: Administrator. The Employer shall certify in writing to the Trustee the names and specimen signatures of all those who are authorized to act as or on behalf of the Employer, and those names and specimen signatures shall be updated as necessary by a duly authorized official of the Employer. The Employer shall promptly notify the Trustee if any person so designated is no longer- authorized to act on behalf of the Employer. Until the Trustee receives written notice that a person is no longer authorized to act on behalf of the Employer, the Trustee may continue to rely on the Employer's designation of such person. PARS /City of Rosemead 415(m) 2 1011/01 ! 0 1.7 Acceptance of Assets; Trust Composition. All contributions or transfers shall be received by the Trustee in cash or in any other property acceptable to the Trustee. The Trust shall consist of the contributions and transfers received by the Trustee, together with the income and earnings from them and any increments to them. The Trustee shall hold, manage and administer the Trust in accordance with this Trust Agreement without distinction between principal and income. 1.8 Trust Contributions. Employer, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Participant shall have any right to compel such additional deposits. 1.9 No Duty of Trustee to Enforce Collection. Notwithstanding anything herein to the contrary, Trustee shall have no authority or obligation to enforce the collection of any contribution or transfer to the Trust. 1.10 Plan Administration. The Employer and not the Trustee shall be responsible for administering the Plan (including without limitation determining the rights of the Employer's employees to participate in the Plan, determining any Participant's right to benefits under such Plan), and issuing statements to Participants of their interest in the trust and Plan. The Employer may delegate such responsibilities to a record keeper. 1.11 Participant Accounts. If required, the Employer shall maintain in an equitable manner a separate account for each Participant under the Plan ( "Account ") in which it shall keep a record of the share of such Participant under such Plan in the Trust. The Employer may appoint a record keeper to maintain such Accounts. A Participant's. Account under the Plan shall represent the portion of the Trust allocated to provide such Participant benefits under such Plan. If the Trustee is directed by the Employer to segregate.the Trust into separate Accounts for each Participant, at the time it makes a contribution to the Trust, the Employer shall. certify to the Trustee the amount of such contribution being made in respect of each Participant under each Plan. The Trustee may rely on information provided to the Trustee by the Employer and the Trustee's and Employer's determination of Account values shall be conclusive and binding on all interested parties. 1.12 Tax Reporting. The Trustee shall be responsible for individual tax reporting and withholding as directed by the Employer. The Employer agrees to indemnify and defend the Trustee against any liability for the payment of such taxes, interest or penalties resulting from or related to the Trust. PARS /City of Rosemead 415(m) 3 10/1/01 ARTICLE II INVESTMENTS 2.1 Employer Directs Investments. Except as provided in Section 2.2 below, the Employer shall have all power over, and responsibility for, the management, disposition and investment of the Trust assets, and the Trustee shall comply with proper written directions of the Employer concerning those assets. The Employer shall not issue directions in violation of the terms of the Plan and Trust or prohibited by the laws and Constitution of the State of California and applicable federal laws and regulations. Except to any extent required by the laws and Constitution of the State of California and applicable federal laws and regulations, or otherwise provided in this Trust Agreement, the Trustee shall have no duty or responsibility to review, initiate action, or make recommendations regarding Trust assets and shall retain all such assets until directed in writing by the Employer to dispose of them. 2.2 Appointment of Trustee (or Other Individual or Entity) as Investment Manager. The Employer may appoint the Trustee or other appropriately regulated individual or entity as Investment Manager, thereby delegating to the Trustee or other individual or entity the full power, authority and duty to direct the investment and management of all or any portion of the assets of the Trust as specified by the Employer and to the extent provided in Article III, subject to the investment guidelines established by the Employer as provided below. The Employer represents and warrants that any appointment made pursuant to this Section 2.2 complies with the laws and Constitution of the State of California and. applicable federal laws and regulations. No appointment and delegation made pursuant to this Section 2.2 shall be effective unless made in writing and signed by both the Trustee and the Employer. 2.3 Funding Policy and Investment Guidelines. The Employer shall have the responsibility for establishing and carrying out a funding policy and method, consistent with the, objectives of the Plan and, subject to the laws and Constitution of the State of California and applicable federal laws and regulations, taking into consideration the Plan's short-term and long -term financial needs. To the extent that the Trustee is appointed Investment Manager of all or a portion of the assets of the Trust in accordance with Section 2.2 above, the Trustee's responsibility for investment and diversification of such portion of the assets shall be subject to, and is limited by, the investment guidelines issued to it by the Employer in writing. It is understood that, unless otherwise agreed in writing, the Employer, rather than the Trustee, shall be responsible for the overall diversification of Trust assets. PARS /City of Rosemead 415(m) 4 10/1/01 0 0 2.4 Disposition of Income. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. ARTICLE III TRUSTEE'S POWERS 3.1 General Trustee's Powers. Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (a) To invest and reinvest the Trust or any part thereof in any one or more kind, type, class, item or parcel of property, real, personal or mixed, tangible or intangible; or in any one. or more kind, type, class, item or issue of investment or security; or in any one or more kind, type class or item of obligation, secured or unsecured; or in any combination of them; (b) To acquire, sell and exercise options to buy securities ( "call" options) and to acquire, sell and exercise options to sell securities ( "put" options); (c) To buy, sell, assign, transfer, acquire, loan, lease (for any purpose, including beyond the life of this Trust), exchange and in any other manner to acquire, manage, deal with and dispose of all or any part of the Trust property, for cash or credit; (d) To make deposits with any bank or savings and loan institution, including any such facility of the Trustee or an affiliate thereof, provided that the deposit bears a reasonable rate of interest; (e) To retain all or any portion of the Trust in cash temporarily awaiting . investment or for the purpose of making distributions or other payments, without liability for interest thereon, notwithstanding the Trustee's receipt of float; (f) To borrow money for the purposes of the Trust from any source other than a party in interest of the Plan, with or without giving security; to pay interest; to issue promissory notes and to secure the repayment thereof by pledging all or any part of the Trust assets; PARS /City of Rosemead 415(m) 5 1 10/1/01 0 0 (g) To take all of the following actions: to vote proxies of any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks; bonds, securities or other property held in the Trust; (h) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (i) To pay or cause to be paid from the Trust any and all real or personal property taxes, income taxes or other taxes or assessments of any or all kinds levied or assessed upon or with respect to the Trust or the Plan; Q) Subject to the limitations of 3.1, to hold term or ordinary life insurance contracts or to acquire annuity contracts on the lives of Participants (but in the case of conflict between any such contract and a Plan, the terms of the Plan shall prevail); to pay from the Trust the premiums on such contracts; to distribute, surrender or otherwise dispose of such contracts; to pay the proceeds, if any, of such contracts to the proper persons in the event of the death of the insured Participant; to enter into, modify, renew and terminate annuity contracts of deposit administration, of.immediate participation or other group or individual type with one or more insurance companies and to pay or deposit all or any part of the Trust thereunder; to provide in any such contract for the investment of all or any part of funds so deposited with the insurance company in securities under separate accounts; to exercise and claim all,rights and benefits granted to the contract holder by any such contracts. All payments and exercise of all powers with respect to insurance contracts shall be solely on the direction of Employer; (k) To exercise all the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under applicable federal or state laws, as amended from time to time, it being intended that, except as otherwise provided .in this Trust, the powers conferred upon the Trustee herein shall not be construed as being in limitation of any authority conferred by law, but shall be construed as in addition thereto. PARS /City of Rosemead 415(m) 6 10/1/01 0 0 (1) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701 -2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. 3.2 Additional Powers. In addition to the other powers enumerated above, the Trustee is authorized and empowered: (a) - To invest funds in any type of interest - bearing account including, without limitation, time certificates of deposit or interest - bearing accounts issued by UNION BANK OF CALIFORNIA, N.A. To use other services or facilities provided by the.UnionBanCal Corporation . (UNBC), its subsidiaries or affiliates including Union Bank of California, N.A. (Bank), to the extent allowed by applicable law and regulation. Such services may include but are not limited to (1) the placing of orders for the purchase, exchange, investment or reinvestment of securities through any brokerage service conducted by, and (2) the purchase of units of any registered investment company managed or advised by Bank, UNBC, or their subsidiaries or affiliates and /or for which Bank, UNBC or their subsidiaries or affiliates act as custodian or provide other services for a fee, including, without limitation, the HighMark Group of mutual funds. The parties hereby acknowledge that the Bank may receive fees for such services in addition to the fees payable under this Agreement. Fee schedules for additional services shall be delivered to the appropriate party in advance of the provision of such services. Independent fiduciary approval of compensation being paid to the Bank will be sought in advance to the extent required under applicable law and regulation. If Union Bank of California, N.A. does not have investment discretion, the services referred to above, as well as any additional services, shall be utilized only upon the appropriate direction of an authorized party. (b) To cause all or any part of the Trust to be held in the name of the Trustee (which in such instance need not disclose its fiduciary capacity) or, as permitted by law, in the name of any nominee, including the nominee name of any depository, and to acquire for the Trust any investment in bearer form; but the books and records of the Trust shall at all times show that all such investments are a part of the Trust and the Trustee shall hold evidences of title to all such investments as are available; PARS /City of Rosemead 415(m) 7 10/1/01 (c) To serve as custodian with respect to the Trust assets, to hold assets or to hold eligible assets at the Depository Trust Company or other depository; (d) To employ such agents and counsel as may be reasonably necessary in administration and. protection of the Trust assets and to pay them reasonable compensation; to employ any broker - dealer covered in the - self - dealing section, and pay to such broker - dealer its standard commissions; to settle, compromise or abandon all claims and demands in favor of or against the Trust; and to charge any premium on bonds purchased at par value to the principal of the Trust without amortization from the Trust, regardless of any law relating thereto; (e) To abandon, compromise, contest, arbitrate or settle claims or demands; to prosecute, compromise and defend lawsuits, but without obligation to do so, all at the risk and expense of the Trust;. (f) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by United States or state agency during normal business hours of the Trustee; (g) To comply with all requirements imposed by law; (h) To seek written instructions from the Employer on any matter and await written instructions without incurring any liability. If at any time the Employer should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion it deems advisable under the circumstances for carrying out the purposes of this Trust. Such actions shall be conclusive on the Employer and the Participants on any matter if written notice of the proposed action is given to Employer five (5).days prior to the action being taken, and the Trustee. receives no response; (i) To compensate such executive, consultant, record keeper, actuarial, accounting, investment, appraisal, administrative, clerical, secretarial, custodial, depository and legal firms, personnel and other employees or assistants as are engaged by the Employer in connection with the administration of the Plan and to pay from the Trust the necessary expenses of such firms, personnel and assistants, to the extent not paid by the Employer; (j) To impose a reasonable charge to cover the cost of furnishing to Participants statements or documents; (k) To act upon proper written directions of the Employer or any Participant including directions given by photostatic teletransmission PARS /City of Rosemead 415(m) 8 10/1/01 0 1 0 using facsimile signature. If oral instructions are given, to act upon those in Trustee's discretion prior to receipt of written instructions. Trustee's recording or lack of recording of any such oral instructions taken in Trustee's ordinary course of business shall constitute conclusive proof of Trustee's receipt or non - receipt of the oral instructions; (1) To pay from the Trust the expenses reasonably incurred in the administration of the Trust; (m) To maintain insurance for such purposes, in such amounts and with such companies as the Employer shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries (but only if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary); (n) As directed by the Employer, to cause the benefits provided under the Plan to be paid directly to the persons entitled thereto under the Plan, and in the amounts and at the times and in the manner specified by the . Plan, and to charge such payments against the Trust and Accounts with respect to which such benefits are payable; (o) To exercise and perform any and all of the other powers and duties specified in this Trust Agreement or the Plan; and in addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration of the Trust, as though the absolute owner thereof. ARTICLE IV TRUSTEE AND EMPLOYER DUTIES. 4.1 Legal Duties. The Trustee and Employer shall exercise any of the foregoing powers from time to time as required by law. 4.2 Payments to Participants (a) Employer shall deliver to Trustee a schedule (the "Payment Schedule ") that indicates the amounts payable in respect of each Participant, that provides a formula or other instructions acceptable to Trustee for determining the amount so payable, the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Participants in accordance with such Payment Schedule. As directed PARS /City of Rosemead 415(m) 9 10/1/01 by Employer, the Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by Employer. (b) The entitlement of a Participant to benefits under the Plan shall be determined by Employer or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. (c) Employer may make payment of benefits directly to Participants as they become due under the terms of the Plan. Employer shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Participants. In addition, if the principal of the Trust, and earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, Employer shall make the balance of each such payment as it falls due. Trustee shall notify Employer where principal and earnings are not sufficient. Trustee shall have no duty or obligation to enforce or compel Employer to make payments hereunder. Employer may direct Trustee .to reimburse Employer for payments made directly by Employer to Participants, and shall provide the Trustee with such documentation to evidence those direct payments as the Trustee may reasonably request. (1) In the event payments are made by Employer directly to Participants, Employer shall have sole responsibility for the reporting and withholding of any federal, state, or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authority. (2) Trustee shall have no duty or responsibility with respect to the .above stated reporting, withholding or payment of taxes and shall have no responsibility to determine that Employer has provided for such reporting, withholding or payment of such taxes. (3) Employer shall indemnify and hold Trustee harmless from any and all losses, claims, penalties or damages which may occur as a result of Trustee following in good faith the written direction of the Employer to reimburse Employer for payments made hereunder to Participants and arising from Employer's tax reporting, withholding and payment obligations hereunder. PARS /City of Rosemead 415(m) 10 10/1/01 1 0 0 (d) Upon the satisfaction of all liabilities of the Employer under the Plan to all Participants the Trustee shall hold or distribute the Trust in accordance with the written instructions of the Employer. Except as provided in (c) above, at no time prior to the Employer's Insolvency, as defined in Article XI, or the satisfaction of all liabilities of the Employer under the Plan in respect of all Participants having Accounts hereunder shall any part of the Trust revert to the Employer. 4.3 Accounts and Records. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements and all other transactions required to be done, including such specific records as shall be agreed upon in writing between the Employer and the Trustee. All such accounts, books and records shall be open to inspection and audit at all reasonable times by the Employer and by the Participants. Within sixty (60) days after the close of each quarter and Plan year and within sixty (60) days after the resignation or removal of the Trustee as provided in Article VI hereof, the Trustee shall render to the Employer a written account showing in reasonable summary the investments, receipts, disbursements and other transactions engaged in by the Trustee during the preceding Plan Year or accounting period with respect to the Trust. Such account shall set forth the assets and liabilities of the Trust. The Employer shall have ninety (90) days after the Trustee's mailing of each such quarterly or final account within which to file with the Trustee written objections to such account. Upon approval or by failure to file with the Trustee written objections to such account within the 90 -day period, the Employer shall release and discharge the Trustee from all liability and accountability to the Employer as to all matters and items set forth in such account as if such account had been settled and allowed by a decree from a court of competent jurisdiction, such settlement and allowance to be final and binding. Notwithstanding anything herein to the contrary, the Trustee shall have no duty or responsibility to obtain valuations of any assets of the Trust Fund, the value of which is, not readily determinable on an established market. Employer shall bear sole responsibility for determining said valuations and shall be responsible for providing said valuations to Trustee in a timely manner. Trustee may conclusively rely on such valuations provided by Employer and shall be indemnified and held harmless by Employer with respect to such reliance. 4.4 Reports. The Trustee shall file such descriptions and reports and shall furnish such information and make such other publications, disclosures, registrations and other filings as are required of the Trustee by law. The Trustee shall have no responsibility to file reports or descriptions, publish information or make disclosures, registrations or other filings unless directed by the Employer. PARS /City of Rosemead 415(m) 11 1011/01 4.5 Follow Employer Direction. The Trustee shall have the power and duty to comply promptly with all proper directions of the Employer. 4.6 Information to be Provided to Trustee. The Employer shall maintain and furnish the Trustee with all reports, documents and information as shall be required by the Trustee to perform its duties and discharge its responsibilities under this Trust Agreement, including without limitation a certified copy of each of the Plan and all amendments thereto. The Trustee shall be entitled to rely on the most recent reports, documents and information furnished to it by the Employer. The Employer shall be required to notify the Trustee as to the termination of employment of any Participant by death, retirement or otherwise. The Employer shall arrange for each Investment Manager if appointed pursuant to Section 2.1, and each insurance company issuing contracts held by the Trustee pursuant to Section 3.1(k), to furnish the Trustee with such valuations and reports as are necessary to enable the Trustee to fulfill its obligations under this Trust Agreement, and the Trustee shall be fully protected in relying upon such valuations and reports. ARTICLE V RESTRICTIONS ON TRANSFER 5.1 Persons to Receive Payment. (a) The Trustee shall, except as otherwise provided in section 4.2(d) and subsection (b) hereunder, pay all amounts payable hereunder only to the person or persons designated under the Plan or deposit such amounts to the Participant's checking or savings account as directed by the Employer and not to any other person or corporation, and only to the extent of assets held in the Trust, and shall follow written instructions by the Employer. The Employer's written instructions, to the Trustee to make distributions or not to make distributions, and the amount thereof, shall be conclusive on all Participants. (b) Should any controversy arise as to the person or persons to whom any distribution or payment is to be made by the Trustee, or as to any other matter arising in the administration of the Plan or Trust, the Trustee may retain the amount in controversy pending resolution of the controversy or the Trustee may file an action seeking declaratory relief and /or may interplead the Trust assets in issue, and name as PARS /City of Rosemead 415(m) 12 10/1101 0 0 necessary parties the Employer, the Participants and /or any or all persons making conflicting demands. (c) The Trustee shall not be liable for the payment of any interest or income, except for that earned as a Trust investment, on any amount withheld or interpleaded under subsection (b). (d) The expense of the Trustee for taking any action under subsection (b) shall be paid to the Trustee from the Trust. 5.2 Assignment and Alienation Prohibited. Benefits payable to Participants under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. Notwithstanding the foregoing, the Trust shall at all times remain subject to the claims of creditors of the Employer in the event the Employer becomes Insolvent as provided in Article XI. ARTICLE VI RESIGNATION, REMOVAL AND SUCCESSION 6.1 Resignation or Removal of Trustee. Trustee may resign at any time by written notice to the Employer, which shall be effective thirty (30) days after receipt of such notice unless Employer and Trustee agree otherwise. The Employer may remove the Trustee at any time by written notice to the Trustee, which shall be effective thirty (30) days after receipt of such notice unless the Trustee and Employer otherwise agree. 6.2 Designation of Successor. Upon notice of the Trustee's resignation or removal, the Employer shall. promptly designate a successor Trustee who will accept transfer of the assets of the Trust. If no successor Trustee is designated within thirty (30) days of notice of Trustee's resignation or removal, then the Trustee may apply to a court of competent jurisdiction for appointment of a successor or instructions as provided in Section 6.4 below. 6.3 Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed as soon as administratively feasible after receipt of notice of resignation, removal or transfer and appointment of and acceptance by successor Trustee, unless Employer extends the time limit. PARS /City of Rosemead 415(m) 13 10/1/01 • • 6.4 Court Appointment of Successor. If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 6.2 hereof, by the effective date of resignation or removal under paragraph 6.1 of this section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. Until a successor Trustee has accepted its appointment and received transfer of the Trust assets, the Trustee shall be entitled to be compensated for its services according to its published fee schedule then in effect for acting as Trustee. 6.5 Successor's Powers. A successor Trustee shall have the same powers and duties as those conferred upon the original Trustee hereunder. A resigning Trustee shall transfer the Trust assets and shall deliver the assets of the Trust to the successor Trustee as soon as practicable. The resigning Trustee is authorized, however, to reserve such amount as may be necessary for the payment of its fees and expenses incurred prior to its resignation, and the Trust assets shall remain liable to reimburse the resigning Trustee for all fees and costs, expenses or attorneys' fees or losses incurred, whether before or after resignation, due solely to Trustee's holding title to and administration of Trust assets. 6.6- Successor's Duties. A successor Trustee shall have no duty to audit or otherwise inquire into the acts and transactions of its predecessor. ARTICLE VII AMENDMENT 7.1 Power to Amend. This Trust Agreement may be amended by a written instrument executed by Trustee and Employer. No such amendment shall conflict with the terms of the Plan. ARTICLE VIII LIABILITIES 8.1 Declaration of Intent. To the full extent permitted by law, it is the intent of this Article to relieve each fiduciary from all liability for any acts or omissions of any other fiduciary or any other person and to declare the absence of liabilities of all persons referred to in this Article to the extent not imposed by law or by provisions of this Trust Agreement. Each of the following Sections, in declaring such limitation, is set forth without limiting the generality of this Section but in each case shall be subject to the provisions, limitations and policies set forth in this Section. PARS /City of Rosemead 415(m) 14 10/1/01 • 8.2 Liability of the Trustee. (a) The Trustee shall have no powers, duties or responsibilities with regard to the administration of the Plan or to determine the rights or benefits of any person having or claiming an interest under the Plan or in the Trust or under this Trust Agreement or to examine or control any disposition of the Trust or part thereof which is directed by the Employer, as applicable. (b) The Trustee shall have no liability for the adequacy of contributions for the purposes of the Plan or for enforcement of the payment thereof. (c) The Trustee shall have no liability for the acts or omissions of the Employer or Fiduciaries. (d) The Trustee shall have no liability for following proper directions of Employer or Employer's designated Fiduciaries, or any Participant when such directions . are made in accordance with this Trust Agreement and the Plan. (e) During such period or periods of time, if any, as Employer or Investment Manager -(collectively, "Fiduciary") is directing the investment and management of Trust assets, the Trustee shall have no obligation to determine the existence of any conversion, redemption, exchange;. subscription or other right relating to any securities purchased on the directions of such Fiduciary if notice of any such right was given prior to the purchase of such securities. If such notice is given after the purchase of such securities, the Trustee shall notify such Fiduciary. The Trustee shall have no obligation to exercise any such right unless it is instructed to exercise such right, in writing, by the Fiduciary within a reasonable time prior to the expiration of such right. (f) During such period or periods of time, if any, as a Fiduciary is directing the investment and management of Trust assets, if such Fiduciary directs the Trustee to purchase securities issued by any foreign government or agency thereof, or by any corporation domiciled outside of the United States, it shall be the responsibility of the Fiduciary to advise the Trustee in writing with respect to any laws or regulations of any foreign countries or any United States territories or possessions which shall apply, in any manner. whatsoever, to such securities, including, but not limited to, receipt of dividends or interest by the Trustee for such securities. 8.3 Indemnification. PARS /City of Rosemead 415(m) 15 10/1/01 0 1 0 (a) The Trustee shall not be liable for, and Employer shall indemnify, defend, and hold the Trustee (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of (1) any acts taken by the Trustee in accordance with directions (or failure to act in the absence of directions) from the Employer, Investment Manager or any other person or entity authorized to act on their behalf which the Trustee reasonably believes to have been given by them, or (2) the Employer's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. (b) The Employer shall not be liable for, and Trustee shall indemnify, defend, and hold the Employer . (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. (c) Promptly after receipt by an indemnified. party of notice or receipt of a claim or the commencement of any action for which indemnification may be sought, the indemnified party will notify the indemnifying party in writing of the receipt or commencement thereof. When the indemnifying party has agreed to provide a defense as set out above that party shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to such indemnitee) and the payment of expenses, insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the indemnifying party. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party unless (i) the employment of such counsel has been specifically authorized by the indemnifying party or (ii) the named parties to any such action (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. The indemnifying party shall not be liable to indemnify any person for any settlement of any such action effected without the indemnifying party's consent. PARS /City of Rosemead 415(m) 16 10/1/01 0 ARTICLE IX 0 DURATION, TERMINATION AND REPAYMENTS TO EMPLOYER 9.1 Revocation and Termination. The Trust shall not terminate until the date on which Participants are no longer entitled to benefits pursuant to the terms of the Plan,unless sooner revoked in accordance with Section 1.2 hereof. Upon termination of the Trust any assets remaining in the Trust shall be returned to Employer. In the event the Trust is terminated following the distribution of all payments and benefits called for herein, from the date of such termination of the Trust and until the final distribution of the remaining Trust assets, if any, the Trustee shall continue to have all the powers provided under this Trust Agreement that are necessary or desirable for the orderly liquidation and distribution of the Trust. 9.2 Duration. This Trust shall continue in full force and effect for the maximum period of time permitted by law and in any event until the expiration of twenty - one years after the death of the last surviving person who was living at the time of execution hereof who at any time becomes a Participant in the Plan, unless this Trust is sooner terminated in accordance with this Trust Agreement. ARTICLE X MISCELLANEOUS 10.1 Emergencies and Delegation. (a) In case of an emergency, the Trustee may act in the absence of directions from any other person having the power and duty to direct the Trustee with respect to the matter involved and shall incur no liability in so acting.. (b) By written notice to the Trustee, the Employer may authorize the Trustee to act on matters in the ordinary course of the business of the Trust.or on specific matters upon the signature of its delegate. 10.2 Expenses and Taxes. (a) The Employer, or at its option, the Trust, shall quarterly pay the Trustee its expenses in administering the Trust and reasonable PARS /City of Rosemead 415(m) 17 1011/01 compensation for its services as Trustee at a rate to be agreed upon by the parties to this Trust Agreement, based upon Trustee's published fee schedule. However, the Trustee reserves the right to alter this rate of compensation at any time by providing the Employer with notice of such change at least thirty (30) days prior to its effective date. Reasonable compensation shall include compensation for any extraordinary services or computations required, such as determination of valuation of assets when current market values are not published and interest on funds to cover overdrafts. The Trustee shall have a lien on the Trust for compensation and for any reasonable expenses including counsel, appraisal, or accounting fees, and these shall be withdrawn from the Trust and may be reimbursed by the Employer. (b) Reasonable counsel fees, reasonable costs, expenses and charges of the Trustee incurred or made in the performance of its duties, expenses relating to investment of the Trust such as broker's commissions, stamp taxes, and similar items and all taxes of any and all kinds that may be levied or assessed under existing or future laws upon or in respect to the Trust or the income thereof, and the Trustee's charges for issuing distribution checks to Participants or their representatives shall be paid from, and shall constitute a charge upon the Trust. (c) In the event any Participant is determined to be subject to federal income tax on any amount under this Trust Agreement prior to the time of payment hereunder, the entire amount determined to be so taxable shall, at the Employer's direction, be distributed by the Trustee to such Participant from the Trust. For the above purposes, a Participant shall be determined to be subject to federal income tax with respect to the Trust upon the earlier of: (a) a final determination by the United States Internal Revenue Service ( "IRS ") addressed to the Participant which is not appealed to the courts; (b) an opinion of legal counsel designated in writing by the Employer, addressed to the Employer and the Trustee_, that, by reason of Treasury Regulations, amendments to the Code, published IRS rulings, court decisions or other substantial precedent, amounts hereunder subject the Participant to federal income tax prior to payment. The Employer shall undertake at its discretion and at its sole expense to defend any tax claims described herein which are asserted by the IRS against any Participant, including attorney fees and costs of appeal, and shall have the sole authority to determine whether or not to appeal any determination made by the IRS or by a lower court. The Employer also agrees to reimburse any Participant under this Section for any interest or penalties in respect of tax claims hereunder upon receipt of documentation thereof. PARS /City of Rosemead 415(m) 18 10/1/01 • • 10.3 Third Parties. (a) No person dealing with the Trustee shall be required to follow the application of purchase money paid or money loaned to the Trustee nor inquire as to whether the Trustee has complied with the requirements hereof. (b) In any judicial or administrative proceedings, only the Employer and the Trustee shall be necessary parties and no Participant or other person having or claiming any interest in the Trust shall be entitled to any notice or service of process (except as required by law). Any judgment, decision or award'entered in any such proceeding or action shall be conclusive upon all interested persons. 10.4 Adoption by Affiliated Employer. Any affiliate of the Employer (an "Affiliated Employer ") may adopt one or more of the Employer's Plans with the approval of the Employer, and the Affiliated Employer shall concurrently become a party to this Trust Agreement by giving written notice of its adoption of the Plan and this Trust Agreement to the Trustee. Upon such written notice, the Affiliated Employer shall become a signatory to this Trust Agreement. 10.5 Binding Effect; Successor Employer. This Trust Agreement shall be binding upon and inure to the benefit of any successor to the Employer or its business as the result of merger, consolidation, reorganization, transfer of assets or otherwise and any subsequent successor thereto. In the event of any such merger, consolidation, reorganization, transfer of assets or other similar transaction, the successor to the Employer or its business or any subsequent successor thereto shall promptly notify the Trustee in writing of its successorship and shall promptly supply information required by the Trustee. 10.6 Relation to Plan. All words and phrases used herein shall have the same meaning as in the Plan, and this Trust Agreement and the Plan shall be read and construed together. In the event of any conflict between the terms of the Plan and this Trust Agreement with respect to the rights and duties of the Trustee, this Trust Agreement shall control. Whenever in the Plan it is provided that the Trustee shall act as therein prescribed, the Trustee shall be and is hereby authorized and empowered to do so for all purposes as fully as though specifically so provided herein or so directed by the Employer. 10.7 Mediation and Arbitration of Disputes. If a dispute arises under this Trust Agreement between or among the Employer and Trustee or any Participant, except as provided in Sections 5.1(b) and 6.4, the parties agree first to try in good faith to settle the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association. Thereafter, any remaining unresolved controversy or claim arising out of or relating to this Agreement, or PARS /City of Rosemead 415(m) 19 10/1/01 the performance or breach thereof, shall be decided by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and Title 9 of California Code of Civil Procedure Sections 1280 et seq. The sole arbitrator shall be a retired or former Judge associated with the American Arbitration Association. Judgement upon any award rendered by the arbitrator shall be final and may be entered in any court having jurisdiction. Each party shall bear its own costs, attorney's fees and its share of arbitration fees. The Alternate Dispute Resolution Agreement in this Agreement does not constitute a waiver of the parties' rights to a judicial forum in instances where arbitration would be void under applicable law, and does not preclude Bank from exercising its rights to interplead the funds of the Account at the cost of the Account. 10.8 Attorney Fees and Costs. If any action is brought by the Trustee or the Employer against the other in a court of law in order to compel arbitration pursuant to Section 10.7 above, the prevailing party in such proceeding to compel arbitration shall be entitled to recover from the other party reasonable attorneys' fees, court costs and necessary disbursements incurred in connection with such proceeding, including but not limited to copying costs, filing fees, expert costs and fees and word processing fees. 10.9 Partial Invalidity. Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. In the event of any such holding, the Employer and Trustee and, if applicable, Participants, will immediately amend this Trust Agreement as necessary to remedy any such defect. 10.10 Construction. This Trust Agreement shall be governed by and construed in accordance with the laws of California. 10.11 Notices. Any notice, report, demand or waiver required or permitted hereunder shall be in writing, shall be deemed received upon the date of delivery if given personally or, if given by mail, upon the receipt thereof, and shall be given personally or by prepaid registered or certified mail, return receipt requested, addressed to Employer and Trustee as listed below in Article XII; if to a Participant, to the last mailing address provided to the Trustee with respect to such individual, provided, however, that if any party or his or its successor shall have designated a different address by written notice to the other parties, then to the last address so designated. ARTICLE XI DISTRIBUTIONS IN THE EVENT OF INSOLVENCY OF EMPLOYER PARS /City of Rosemead 415(m) 20 10/1/01 0 11.1 Trustee and Employer Responsibility upon notice of Employer's Insolvency: (a) Insolvency. Trustee shall cease payment of benefits to Participants if the Employer is Insolvent. Employer shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Employer is unable to pay its debts as they become due, or (ii) Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1.4 hereof, the principal and income of the Trust shall be subject to claims of general creditors of Employer under federal and state law as set forth below. (1) The Governing Board and the Plan Administrator designated by the Employer shall have the duty to inform Trustee in writing of Employer's Insolvency. If a person claiming to be a creditor of Employer alleges in writing to Trustee that Employer has become Insolvent, Trustee shall determine whether Employer is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Participants. If Trustee is unable to obtain information sufficient to ascertain Insolvency, Trustee may seek instructions of a court of law or submit the matter for arbitration before the American Arbitration Association or interplead the Trust Assets at the expense of the Trust. (2) Unless Trustee has actual knowledge of Employer's Insolvency, or has received written notice from Employer or a person claiming to be a creditor alleging that Employer is Insolvent, Trustee shall have no duty to inquire whether Employer is Insolvent. Trustee may in all events rely on such evidence concerning Employer's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Employer's solvency. (3) If at any time Trustee has determined that Employer is Insolvent, Trustee shall discontinue payments to Participants and shall hold the assets of the Trust for the benefit of Employer's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as general creditors of Employer with respect to benefits due under the Plan or otherwise. (4) Trustee shall resume the payment of benefits to Participants in accordance with Section 4.2 of this Trust Agreement only after PARS /City of Rosemead 415(m) 21 1 10/1/01 0 0 Trustee has determined that Employer is not Insolvent (or is no longer Insolvent). (c) Determination of Insolvency. Upon receipt of the aforesaid written notice of the Employer's Insolvency, the Trustee shall notify the Employer, and the Employer, within thirty (30) days of receipt of such notice, shall engage an arbitrator (the "Arbitrator ") acceptable to Trustee, from the American Arbitration Association to determine the Employer's solvency or Insolvency. The Employer shall cooperate fully and assist the Arbitrator, as may be requested by the Arbitrator, in such determination and shall pay all costs relating to such determination. The Arbitrator shall notify the Employer and Trustee separately by registered mail of its findings. If the Arbitrator determines that the Employer is solvent or if once found Insolvent the Employer is no longer Insolvent, the Trustee shall resume holding the Trust assets for the benefit of the Participants and may make any distributions called for under this . Trust Agreement, including any amounts which should have been distributed during the period when the Trustee suspended distributions in response to a notice of the Employer's Insolvency, including earnings (or losses) on such suspended distributions. If the Arbitrator determines that the Employer is Insolvent or is unable to make a conclusive determination of the Employer's Insolvency, the Trustee shall continue to retain the assets of the Trust until the Employer's status of solvency or Insolvency is decided by a court of competent jurisdiction or it distributes all or a portion of the Trust assets to any duly appointed receiver, trustee in bankruptcy, custodian or to the Employer's general creditors, but only as such distribution is ordered by a court of competent jurisdiction. The Trustee shall have no liability for relying upon the determination of the Arbitrator as to the Employer's solvency or Insolvency. (d) . If a court of competent jurisdiction orders distribution of only part of the Trust assets and does not specify the manner in which Trust assets are to be liquidated, the Trustee shall liquidate Trust assets as directed by the Employer. If the Employer .fails to provide instructions as to the manner of liquidation within five (5) business days prior to the date the Trustee is required to comply with the court's order, the Trustee shall liquidate and shall have the authority to order any Investment Manager to liquidate the Trust assets in such manner as the Trustee shall determine in its sole and absolute discretion. The Trustee shall not be liable for any damages resulting from the Trustee's exercise in good faith of its power to liquidate assets as provided in this paragraph. PARS /City of Rosemead 415(m) 22 10/1/01 0 0 (e) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to subsection (b)(3) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Participants by Employer in lieu of the payments provided for hereunder during any such period of discontinuance of which Trustee has actual knowledge. Nothing in this Trust Agreement shall in any manner diminish any right of a Participant to pursue his or her rights as a general creditor of the Employer with regard to payments under the Trust or otherwise. PARS /City of Rosemead 415(m) 23 10/1/01 0 ARTICLE XII EFFECTIVE DATE 0 The effective date of this Trust Agreement shall be July 1, 2000. Executed at California. UNION BANK OF CALIFORNIA, N.A. Trustee 475 Sansome Street, 12th floor (Address) San Francisco, CA 94111 M M (typed or printed name) (typed or printed name) CITY OF ROSEMEAD "Employer', Sponsor of the City of Rosemead Excess Benefit Plan [PLAN] 8838 E. Valley Blvd. (Address) Rosemead, CA 91770 By: "on Id a er (typed . or inte name) By: (typed or printed name) Approved by Counsel to Employer: Counsel PARS /City of Rosemead 415(m) 24 1011/01 Business Trost 'NewAccount +Rackac]r.,.. <.. TRUSTEE SERVICES i.FEESCHEDULE. UNION BANK OF CALIFORNIA, N.A. Trustee Services Fee Schedule Prepared For The CITY OF ROSEMEAD Set Up'Fee,i; One time initial fee upon acceptance of relationship .................................................... ............................... ...........................$250 minimum (waived) .. Fiduciary Tax Letter, Non - Qualified Plan .............................................................................................................................. ............................... $440 TrusUCustody Fees - Fees are calculated on the market value of the assets held in the account at the following rates: .25% on the first - S 2,000,000 .1 0./. on the next 523,000,000 .05% on all over $25,000,000 Accounts managed by UBOC will 0e suajed to the Investment Management Sertlres Fee Srdeaule. I. BENEFIT PAYMENTS & CHECK ISSUANCE • Single disbursement ....................................................................................................................... ............................... $10 each • Recurring periodic disbursement to same individual ....................................................................... ..............................S 2 each Above charges include tax withholding, tax reporting, and mailing as applicable. II. INVESTMENT TRANSACTIONS (FOR DIRECTED ACCOuNTs ONLY) • Purchase, sale, transfer, or reorganization items including but not limited to mergers, full and partial calls, conversions, exchanges, and tender /purchase offers .............................................. .............. ....... . ......... . ............. .......:.................. . S 25 each Excluded are activities in UBOC advised mutual funds & collective funds III. INSURANCE POLICIES Set up, addition and surrender of life insurance policies .............................................................. ............................... S 10 each Annualholding fee ................................................ :....................................................................................................... S 10 each 1 ExtraordinaryFees Other services performed by the Trustee not specifically mentioned above shall be subject to an extraordinary fee based upon the time and services rendered in performing services. By way of example, services subject to extraordinary fees shall include, but not limited to the following: Proxy services for pass - through voting to participants. Employee presentations Real estate acquisition, holding, management or disposition Special reports or schedules Follow -up on loan delinquencies and foreclosure proceedings Review or amendment of documents Out -of- pocket expenses Tax preparation charges Management of individual Guaranteed Investment Contracts Other special services Preparation of non - qualified plan reporting requirements (i.e., Form 1041, Form W -2, etc.), if applicable For administrative convenience, Trustee may from time to time hold uninvested cash awaiting disbursement without paying interest thereon, and as a result may receive indirect compensation on such funds. - Termination or Transfer Based on services performed, subject to a minimum charge of $500 per account or subaccount plus 525 per asset transferred or sold. Accounts closed within 12 months of opening are subject to the minimum annual fee: Payment of Fees, Fees are calculated and charged to the account quarterly. If account cannot be charged after 30 days, fees not paid will be subject to a late charge of 1 % per month on the unpaid balance. Changes to this Fee Schedule may be made at any time by UBOC upon reasonable notice. r ACKNOWLEDGED AND APPROVED, Excess Benefit Plan Name o /,Plonrrust "Accouni numberjs). s.. WA�� r ii � 1• �. Ci 11 0 BUSINESS TRUST MUTUAL FUND DISCLOSURE STATEMENT FOR DISCRETIONARY NON -ERISA EMPLOYEE BENEFIT ACCOUNTS Union Bank of California, N.A. ("Bank ") makes a variety of mutual funds available to its clients. Among the funds available is the HighMark^ Funds ("Funds "), a family of mutual funds sponsored and distributed by SEI Investments Distribution Co. ( "SEI "). HighMark Capital Management, Inc. ( "HCM "), an affiliate of the Bank, serves as the investment advisor for the Funds. The Bank serves as custodian and provides certain additional services to the Funds. Certain fees for services, which are fully described on the reverse, are paid to HCM, the Bank or its affiliates by the Funds for the services provided to the Funds. In addition, the Bank charges your account certain fees for the trusteeship, custody and other services provided to your account. To avoid possible duplication, fees are treated as follows: To the extent your account is invested in the Funds, no investment advisory fee is charged to your account for the HighMark invested funds. HCM and the Bank retain the fees paid to them by the Funds or its distributor which are attributable to your account. HCM and the Bank may also receive certain indirect benefits from having your account(s) invested in the Funds. For example, a larger fund size allows for certain economies of scale and lowers the expense ratio of each fund in the Funds. To the extent these factors will help each fund to grow, it is to the benefit of HCM and the Bank whose fees are partially based on the size of each fund in the Funds. Prospectuses containing complete information on the investment objectives, operation and fees for all portfolios of the Funds which are available to employee benefit accounts accompany this disclosure. Additional copies of the prospectuses are available from your trust officer. If you prefer, you may contact the Distributor as follows: HighMark Funds, SE] Investments Distribution Co., Oaks, PA 19087 -1658, 1- 800 -433 -6884. HighMark Funds offers its shares solely through its distributor, which is not affiliated with HCM or the Bank. The Bank does not endorse nor sponsor the Funds. The Funds are not obligations of the Bank and are not insured by the FDIC or any other government agency. Investments in the Funds, like any mutual fund investments, involve risk, including risk of loss of the principal amount invested. FEES FOR SERVICES The services performed for the Funds by HCM, the Bank or its affiliates and the fees paid for such services are fully set forth below. Any such fees may, from time -lo -time, be voluntarily reduced pursuant to agreement with the Funds. Any such voluntary reduction in the fees of a fund(s) will lower the expenses of the Funds, and thus increase each affected fund's yield during the period such voluntary reductions are in effect. Investment Advisor Services: For the expenses incurred and services provided by HCM, a wholly owned investment management subsidiary of UnionBanCal Corporation, as the Funds' investment advisor, HCM receives the following fees, computed daily and paid monthly: MONEY MARKET FUNDS: At the annual rate of thirty one - hundredths of one percent (.30 %) of each fund's average daily net assets. EQUITY AND BALANCED FUNDS: For each fund, except the Emerging Growth Fund, the International Fund, and the Small Cap Value Fund, at the annual rate of sixty one - hundredths of one percent (.60 %) of each fund's average daily net assets. For the Emerging Growth Fund at the annual rate of eighty one - hundredths of one percent (.80 %) of the fund's average daily net assets. For the International Fund at the annual rate of ninety-five one - hundredths of one percent (.95 %) of the fund's average daily net assets. -For the Small Cap Value Fund at the annual rate of one percent (1.00 %) of the fund's average daily net assets. BOND FUNDS: For the Bond Fund, and the Intermediate Term Bond Fund at the annual rate of fifty one - hundredths of one percent (.50 %) of each fund's average daily net assets. For the Convertible Securities Fund and the Government Securities Fund at the annual rate of sixty one - hundredths of one percent (.60 %) of each fund's average daily net assets. 11364.DOC OJS (Rev. 9098) 475 SANSOME STREf T, 12TH. FLOOR., SAN FRANCSCO, CAL IF ORNIA 94 11 1 PO. BOY 45000, SAN FRANCISCO, CAUFORNIA 94145 415 296 6666 FAx 415 296 6669 L 0 . Mc\U BUSINESS TRUST Custodian Services: For its services as the Funds' domestic custodian, the Bank is entitled to receive a custodian fee at an annual rate of one one - hundredths of one percent ( .01 %) of each fund's average daily net assets. The Bank is entitled to receive transaction fees for securities lending through revenue sharing with the Bank receiving 40% and the Funds receiving 60% of the incremental revenues earned. Global custody fees shall be ad valorem and transaction fees which vary with the country in which settlement takes place. The Bank is also entitled to be reimbursed for reasonable out -of- pocket expenses incurred in connection with its custodian services. For more detailed information, please feel free to contact the Fund at the number set forth above. Shareholder Servicing Fees: The Bank provides certain shareholder support services to the Fund. Fees payable under the Funds' shareholder servicing fee vary from time to time, but may be up to twenty -five one - hundredths of one percent (.25 %) of the average daily net assets of a fund. Sub- Administrator Services: HCM provides certain sub - administration services to SEI, the administrator of the Funds. Fees payable under this arrangement are paid to HCM by SEI and are not paid by the Funds, and do not affect net asset value. Nevertheless, because SEI receives fees for the administrative services performed for the Funds, the Funds may be considered to pay these fees indirectly. HCM is entitled to receive fees at an annual rate of up to five one - hundredths of one percent (.05 %) of each fund's average daily net assets plus HCM's out -of- pocket expenses, depending on the services actually being performed. Other Services: HCM and the Bank reserve the right to direct that certain brokerage transactions be performed through their affiliates. Such transactions would be entered into solely pursuant to the provisions of applicable law or regulatory relief, and after approval of the Board of Trustees of the Funds. In the event of such transactions, the affiliates would be paid brokerage fees by the Funds. CONSENT TO THE USE OF PROPRIETARY MUTUAL FUNDS FOR NON -ERISA EMPLOYEE BENEFIT ACCOUNTS Applicable fiduciary law and regulations requires full disclosure of relevant fee information so that an independent fiduciary may monitor the reasonableness of the total fees being received by the Bank for its services to the Plan. Please sign below indicating you have read this disclosure and consent to the use of the above - referenced Funds and to the receipt of the fees by the Bank. I hereby acknowledge receipt of the prospectuses of the HighMark Funds. I further acknowledge that I have read the information set forth on this disclosure, and hereby authorize the investment of Plan assets in any portfolio of the HighMark Funds in the Bank's discretion in accordance with the investment policies of the Plan. I also approve the receipt of fees by the Bank in accordance with the information set forth above, in the fund prospectuses, and in my, account fee schedule. Company Name City of Rosemead Authorized Signer (Print Signature of Authorized 11364.DOC OJS (Rev. 82/88) 475 SANSOME STREEI, 12TH FLOOF., SAN FRANCISCO, CALIFORNIA 94111 P.O. 50r 45000, SAN FRANCISCO, CALIFORNIA 94145 415 296 o666 FA 41 5 296 6669 Title Assistant City Manager 0 0 Investment Strategy Selection Date: Agency or District: City of Rosemead P1anName Excess Benefit Plan To: HighMark Capital Management, Inc. and Union Bank of California, N.A. Please invest the assets of the above - referenced Plan and Trust for which you have been appointed Investment Manager in the Capital Preservation Strategy II Utilizing HighMark 100% Government Money Market Mutual Fund. Sincerely, (Title) 9 Capital Preservation, Strate -,v 11 (For Public Funds) The Capital Preservation Strategy is intended to provide income; liquidity and stability of principal. Funds are invested in the HighMark Government Money Market Fund which invests in U.S. Treasury bills, notes and other obligations issued or guaranteed by the U.S. Government, its agencies, or instrumentalities (such as obligations issued by the Government National Mortgage .Association and the Export-Impon Bank of the United States) some of which may be subject to repurchase agreements. This fund is rated and complies with the requirements of the California Government Code for the investment of Public Funds. 0 0 t , � n TO: HONORABLE MAYOR AND MEMBERS ROSEMEAD CITY COUNCIL FROM: ROBERT L. KRESS, CITY ATTORNEY DATE: JULY 5, 2001 0 RE: RESOLUTION NO. 01 -20- RETIREE MEDICAL INSURANCE COSTS During the Council's budget study session, the City Attorney was directed to prepare the necessary documentation for the City to pay the health insurance premiums for retirees. I have researched this matter and discussed the implementation with our contacts at PERS. The resolution, presented for your consideration tonight, is a PERS format. Currently, the City pays $134.00 a month towards the full premium cost for the one PERS retiree who has elected to take that benefit. The City contribution increases by the amount of 5% of the current year's premium each year. If adopted, this Resolution would continue the City's full payment of health insurance premiums for employees once they retire. Currently, retirees who participate in the PERS health insurance program, have the portion of the premium cost, which is not paid by the City, deducted from their pensions. This Resolution would allow retirees to receive their full pensions with the City paying PERS, directly for the cost of retiree health insurance. RECOMMENDATION: It is recommended that the Rosemead City Council adopt Resolution No. 01 -20. JUL 10 2001 ITEM i .i7. . RESOLUTION NO. 01-20 A RESOLUTION OF THE ROSEMEAD CITY COUNCIL FIXING THE EMPLOYER'S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE ACT WHEREAS, Government Code Section 22825.6 provides that a local agency contracting under the Public Employees' Medical and Hospital Care Act shall fix the amount of the employer's contribution at an amount not less than the amount required under Section 22825 of the Act, and WHEREAS, the City of Rosemead is a local agency contracting under the Act; now therefore be it RESOLVED That the employer's contribution for each employee or annuitant shall be the amount necessary to pay the cost of his/her enrollment, including the enrollment of his/her spouse and his/her eligible family members, in a health benefit plan, up to a maximum of the rate. for PERSCaze for family enrollments, plus administrative fees and Contingency Reserve Fund Assessments. FURTHER RESOLVED that this Resolution shall take effect on July 1, 2002. Approved and Adopted this 10th day of July, 2001 at a regular meeting of the Rosemead City Council. Attest: Nancv Valderrama, CMC City Clerk Jay T. Imperial, Mayor Health Benefit Services Division An�, /�i P.O. Box 942714 1I Sacramento, CA 94229 -2714 Telecommunications Device for the Deaf - (916) 326 -3240 CalPERS Toll Free: (800) 237 -3345 Local: (916) 326 -3970 FAX (916) 558 -4106 June 4, 2002 Agency Code: 1595 Donald Wagner City of Rosemead 8838 E Valley Blvd. Rosemead, CA 91770 Dear Mr. Wagner. The resolution passed by your Board of Directors to fix the employer's contribution toward health benefits, as designated below, was filed with our board and approved on January 9, 2002. The new employer contribution as designated below, is effective July 1, 2002 (Resolution #01 -20). CODE BARGAINING UNIT MONTHLY EMPLOYER'S CONTRIBUTION 000 All Employees PERSCare Basic /Supplement Premium If you have any questions, please call me at (916) 326 -3593. Sincerely, J nice Matsumoto ealth Benefits Program Analyst Health Benefit Services Division 9 0 MAYOR: MARGARET CLARK MAYOR PRO TEM: JAY T. IMPERIAL COUNCILMEMBERS: ROBERT W. BRUESCH GARY A. TAYLOR JOE VASQUEZ TO: FROM: DATE: RE: Posemcaa 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569 -2100 FAX (626) 307 -9218 MEMORANDUM ALL FULL TIME EMPLOYEES CITY MANAGEa. � OCTOBER 5, 2000 NOTICE TO INTERESTED PARTIES- PARS RETIREMENT ENHANCEMENT PLAN The Internal Revenue Service (IRS) requires that the City of Rosemead notify all eligible employees of its application to the IRS for a determination that the PARS Retirement Enhancement Plan is eligible for tax - qualified status. Attached is a copy of an official notice of the application. The notice will also be posted on all employee bulletin boards. If you have any questions or need a copy of the plan document, trust agreement or the application for determination, please contact Don Wagner at extension 102. NOTICE TO ALL PARTICIPANTS OF APPLICATION FOR DETERMINATION OF THE CITY OF ROSEMEAD RETIREMENT ENHANCEMENT PLAN FOR ELIGIBLE EMPLOYEES OF CITY OF ROSEMEAD (EFFECTIVE JULY 1, 2000) An initial application is to be made to the Internal Revenue Service for a determination that the following employee benefit plan is eligible for tax - qualified status under section 401(a) of the Internal Revenue Code of 1986. Name of the Plan: City of Rosemead — Retirement Enhancement Plan for eligible employees of City of Rosemead effective as of July 1, 2000 Applicant and Plan Administrator: Citv of Rosemead 100 N. Garfield Ave., Room 345 Pasadena CA 91 109 Applicant's Emplover Identification Number: 95- 2079994 The application will be filed on October 13, 2000 with the Key District Director. Internal Revenue Service, EP/E.O. Division, P.O. Box 192. Covington, KY 41012 -0192 for a determination that the plan is eligible for tax - qualified status under section 401 of the Internal Revenue Code of 1986. An employee shall be eligible to receive benefits under this Supplement if he: Tier 1: (1) is a full -time Miscellaneous Employee of the Employer or a contact city attorney on or after July 1, 2000; (2) is at least fifty -five years of age; (3) has completed twenty or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. Tier IL (1) is a full -time Miscellaneous Employee of the Employer or a contract city attomey on or after July 1, 2000; (2) is at least sixty years of age; (3) y has completed at least ten but not more than twen years of fulltime continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuousiv as City Attorney for at least ten but not more than twenty years immediately prior to termination of duties; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. Tier 111: (1) is a City Council member of the Employer on or after July 1. 2000; (2) is at least fifty -five years of age; (3) has completed twelve or more years of service as a City Council member with the Employer as of the last day of employment with the Emplover, (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. RIGHTS OF INTERESTED PARTIES You have the right to submit to the Key District Director. at the above address. either individually or jointly with other interested parties, your comments as to whether this Plan meets the qualification requirements of the Internal Revenue Code. You may instead. individually orjointly with other interested parties, request the Department of Labor to submit on your behalf comments to the Key District Director regarding qualification of the Plan. if the Department declines to comment on all or some of the matters you raise, you may individually, or jointly if your request was made to the Department jointly, submit your comments on these matters directly to the Key District Director. REQUEST FOR COMMENTS BY THE DEPARTMENT OF LABOR The Department of Labor may not comment on behalf of interested parties unless requested to do so by the lesser - often 10 (ten) employees or 10 (ten) percent of the employees who qualify as interested parties. Thus, at least 10 (ten) interested parties must make request for the Department to comment on their behalf with respect to this Plan. If you request the Department to comment, your request must (1) be in writing; (2) speciA, the matters upon which comments are requested; (3) include the name of the Plan, the Plan Number. and the name and address of the Applicant; and (4) include the number of persons needed for the Department to comment. A request to the Department to comment should be addressed as follows: Deputy Assistant Secretary, Pension and Welfare Benefits Administration U.S. Department of Labor 200 Constitution Avenue N.W. Washington D.C. 20210 Attention 3001 Comment Reauest COMMENTS TO THE INTERNAL REVENUE SERVICE Comments submitted by you to the Key District Director must be in writing and received by him by November 27, 2000. However, if you request the Department of Labor to comment upon your behalf and the Department declines, you may submit comments regarding these matters to the Key District Director. He /she must receive these comments within 15 days from the time the Department notifies you that it will not comment on a particular matter, or by November 27. 2000, whichever is later. In no event, however, may the Key District Director receive the comments later than December I L 2000. A request to comment on your behalf must be received by the Department of Labor by November 6, 2000 (if you wish to preserve your right to comment on a matter upon which the Department of Labor declines to comment), or by October 28, 2000: if you wish to waive the right. ADDITIONAL INFORMATION Detailed information regarding the requirements for notification of interested parties may be found in sections 18 and 19 of Revenue Procedure 96 -6. Additional information concerning this application (including, where applicable, a copy of the Plan and related trust; the application for determination; additional documents dealing with the application that have been submitted to the IRS; and copies ofsections 18 and 19 of Revenue Procedure 96 -6) is available at the offices of City of Rosemead at the address listed above. 0 0 0 0 PA � Phase II Systems 1�i PARS Trust Administrator PURI,IC•ACI?6CY•RETIRE.6I ENT• SYSTEM Creative Solutima far Public Agenciev^ DATE: September 11, 2000 TO: Frank Tripepi City Manager City of Rosemead FROM: Cherie Wong Administrator, Plan Distributions Phase II Systems, PARS Trust Administrator RE: Legal Documents for the July 1, 2000 PARS Retirement Enhancement Plan Enclosed you will find the original Adoption Agreement completed and signed by the Trustee. Please retain this copy for your records. If you have any questions, please contact me at (800) 540 -6369 x 103. 3961 MacArthur Blvd. • Suite 200 • Newport Beach • California • 92660 (800) 540.6369 • WWW.PARSINFO.ORG • Fax (949) 250.1250 EXHIBIT "A" ADOPTION AGREEMENT TO THE PARS TRUST AGREEMENT Member Agency: City of Rosemead Plan Name: PARS Supplementary Retirement Plan Plan Effective: July 1, 2000 Plan Administrator: Frank Tripepi Title: City Manager Address: 8838 E. Valley Blvd. Rosemead. CA 91770 The above referenced California public agency ( "Member Agency ") adopts the PARS Trust Agreement, as amended and restated effective 7/1/99, as the trust portion ( "Agency Trust") of the above referenced qualified plan ( "Plan "), effective of the date set out above. Pursuant to Resolution Number 00-40 , dated 7 1-0 , which authorizes the adoption of the PARS Trust Agreement and names the above referenced individual by position of employment to act on behalf of the Member Agency in all matters relating to the Member Agency's participation in the PARS Trust Program and Agency Trust ( "Plan Administrator "), the Plan Administrator certifies the following entities within the Agency Trust: TRUSTEE: Union Bank of California N.A. TRUST ADMINISTRATOR: Phase II Systems INVESTMENT FIDUCIARY: Union Bank of California N.A., acting through its affiliate Highmark Capital Management Date: 9'—/0-00 ACCEPTED: Trust Administrator: Ph ystems By: Title: Date: III Truste null vestm nt Fidgciary:PUnion Bank of California, N.%HNFULTON By: ��'' Title: VICE PRESIDENT & TRUST OFFICER Date: 0 0 I 0 • 11:30 Phase II Systems �k PARS Trust Administrator PUBLIC• AGENCY• RENREMEN'r• SYSTEM Creative Solutions for Public AKendev August 2, 2000 Mr. Donald Wagner Assistant City Manager City of Rosemead 8838 E. Valley Boulevard Rosemead, CA 91.770 Dear Don: Enclosed you will find the documents required for implementation of the PARS Retirement Enhancement Plan. Please complete these documents as described in the following checklist and return to our office as soon as possible: Trust Agreement (Please keep this document for your files) The PARS Trust is a multiple employer trust originally established by Huntington Beach City School District and State Center Community College District. The Trust Agreement provides in Section 2.4 that any other employer "may, by action of its governing body in a writing accepted by the Trustee, adopt the provisions of the PARS Trust Agreement as the trust portion of a qualified governmental retirement plan established for the benefit of its employees ". The Trust Agreement provides for the administration of the assets of many plans and is therefore relatively general in nature, laying out the broad powers and duties of the Trustee with respect to plans in general. Adoption Agreement to the PARS Trust Agreement (Return all 4 copies to our office) The Adoption Agreement to the PARS Trust Agreement is required for the official adoption of the PARS Trust Agreement and is only valid with the City Council adopted Plan Administrator's signature. Enclosed are four originals, please sign and return all four signed originals to our office. An original will be forwarded upon execution by Phase II Systems and the PARS Trustee. Plan Document (Return one copy to our office) The Plan Document outlines the terms of the City's PARS plan that include plan provisions and benefit levels. Please sign and return one copy to our offices and retain one for your records. We are working to complete the Excess Benefit Plan and will forward this under separate cover. Administrative Services Agreement (2 copies — Return one copy to our office) The Administrative Services Agreement outlines the services that are provided and the billing practices of Phase II Systems, the PARS Trust Administrator. Please sign and date both copies of this agreement and return one copy to our office. 3961 MacArthur Blvd. • Suite 200 • Newport Beach • California • 92660 • (800) 540.6369 • WWW.PARSINFO.ORG • Fax (949) 250.1250 1-1 6- Z S Power of Attorney Form and PARS IRS Information Form (Please complete and return both forms to our office) The IRS Power of Attorney Form and the PARS IRS Information Form are necessary to file an application with the IRS to receive a Letter of Plan Determination. The Tax - Qualified status of /he plan will be established by an IRS Letter of Plan Determination. O Investment Strategy Selection (Please complete and return to our office) This document states that your agency has selected the specific investment strategy indicated on the form. Union Bank of California, as investment fiduciary to the plan, will invest plan assets in accordance with this selection. We will need to meet with the Trustee to consider alternative investment strategies in the near future. Please call me with your availability. Stable Value Participation Agreement (Please sign and return to our office) This agreement acknowledges receipt of the Disclosure Statement and Policies and Procedures. The Participation Agreement states the terms and conditions under which plan assets can be invested in the fund, including limitations on investment changes and withdrawals. 11� Fee Schedule (Please sign and return to our office) This document discloses fees charged by Union Bank of California for investment management ervices provided by its affiliate HighMark Capital Management. HighMark Disclosure Form for Discretionary Non -ERISA E.B. Accounts (Please sign and return to our office) This document discloses fees earned by Union Bank of California for its services as investment advisor to the Fund and acknowledges your receipt of the accompanying Mutual Fund Prospectus. Neither PARS, nor Phase II Systems, the PARS Trust Administrator, is licensed to provide tax, accounting or legal advice. We submit these documents with the understanding that they will receive proper review by the appropriate City counsel. Please call if you require further information. Sincerely, Kevin J. Mur y Senior Vice - President Phase II Systems, PARS Trust Administrator cc: Cherie Wong, Administrator, Plan Distributions 0 AGREEMENT FOR ADMINISTRATIVE SERVICES This agreement ( "Agreement ") is made this 2nd day of August, 2000, between Phase II Systems ( "Phase II Systems "), a corporation organized and existing under the laws of the State of California and the City of Rosemead ( "Agency "). WHEREAS, Agency is desirous of retaining Phase II Systems, as Trust Administrator to the PARS Trust, to provide administrative and consulting services; NOW THEREFORE, the parties agree: 1. Services. Phase II Systems will provide the services pertaining to the Plan ( "Services ") as described in the exhibit attached hereto as "Exhibit IA" in a timely manner, subject to the further provisions of this Agreement. 2. Fees for Services. Phase II Systems will be compensated for performance of Services as described in the exhibit attached hereto as "Exhibit I B ". 3. Payment Terms. Payment for Services will be remitted directly from Plan assets unless otherwise stated in Exhibit 1B. In the event that the Agency chooses to make payment directly to Phase II Systems, it shall be the responsibility of the Agency to remit payment directly to Phase II Systems based upon an invoice prepared by Phase II Systems and delivered to the Agency. If payment is not received by Phase II Systems within thirty (30) days of the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per month. If payment is not received from the Agency within ninety (90) days of the invoice delivery date, payment plus accrued interest will be remitted directly from Plan assets, unless Phase II Systems has previously received written communication disputing the subject invoice that is signed by a duly authorized representative of the Agency. 4. Fees for Services Beyond Scope. Fees for services beyond those specified in this Agreement will be billed to the Agency at the rates indicated in Phase II Systems' standard fee schedule in effect at the time the services are provided, subject to the terms established in Section 3 of this Agreement. Before any such services are performed, Phase II Systems will provide the Agency with written notice of the subject services, terms, and an estimate of the associated fees. 5. Information Furnished to Phase II Systems. Phase II Systems will provide the Services under this Agreement contingent upon the Agency providing Phase II Systems information ( "Data "), as specified in the exhibit attached hereto as "Exhibit 1C ". It shall be the responsibility of the Agency to certify the accuracy, content and completeness of the Data so that Phase II Systems may rely on such information without further audit. It shall further be the responsibility of the Agency to deliver the Data to Phase II Systems in such a manner that allows for a reasonable amount of time for the Services to be performed. Unless specified in Exhibit IA, Phase II Systems shall be under no duty to question Data received from the Agency, or compute contributions made to the Plan, or determine or inquire whether contributions are adequate to meet and discharge liabilities under the Plan, or determine or inquire whether contributions made to the Plan are in Page 1 compliance with the Plan or applicable law. Furthermore, Phase II Systems shall not be liable for non - performance of Services if such non - performance is directly caused by erroneous and/or late delivery of Data from the Agency. In the event that the Agency fails to provide Data in a complete, accurate and timely manner, and pursuant to the specifications in Exhibit 1C, Phase II Systems reserves the right, notwithstanding the further provisions of this Agreement, to terminate this Agreement upon written notice of ninety (90) days. 6. In the Event of Suspension of Contributions. In the event contributions are suspended, either temporarily or permanently, prior to the complete discharge of Phase II Systems' obligations under this Agreement, Phase II Systems reserves the right to bill the Agency for Services under this Agreement at the rates indicated in Phase II Systems' standard fee schedule in effect at the time the services are provided, subject to the terms established in Section 3 of this Agreement. Before any such services are performed, Phase II Systems will provide the Agency with written notice of the subject services, terms, and an estimate of the associated fees. 7. Records. Throughout the duration of this Agreement, and for a period of five (5) years after termination of this Agreement, Phase II Systems shall provide duly authorized representatives of Agency access to all records and material relating to calculation of Phase II Systems' fees under this Agreement. Such access shall include the right to inspect, audit and reproduce such records and material and to verify reports furnished in compliance with the provisions of this Agreement. All information so obtained shall be accorded confidential treatment as provided under applicable law. 8. Confidentiality. Phase II Systems shall not disclose any information relating to the Plan except to duly authorized officials of Agency, subject to applicable law, and to parties retained by Phase II Systems to perform specific services within this Agreement. Agency shall not disclose any information relating to the Plan to individuals not employed by the Agency without the prior written consent of Phase II Systems, except as such disclosures may be required by applicable law. 9. Independent Contractor. Phase II Systems is and at all times hereunder shall be an Independent Contractor. As such, neither the Agency nor any of its officers, employees or agents shall have the power to control the conduct of Phase II Systems, its officers, employees or agents, except as specifically set forth and provided for herein. Phase II Systems shall pay all wages, salaries and other amounts due its employees in connection with this Agreement and shall be responsible for all reports and obligations respecting them, such as social security, income tax withholding, unemployment compensation, workers' compensation and similar matters. 10. Indemnification. Phase II Systems and Agency agree to indemnify each other and to hold the other harmless, including their respective officers, directors, employees, agents and attorneys, from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees and costs, incurred by the other as a consequence of Phase II Systems' or Agency's, as the case may be, negligent acts, intentional acts or errors or omissions with respect to the performance of their respective duties hereunder. Page 2 11. Omissions. In the event that either party hereto discovers any material omission in the provisions of this Agreement which such party believes is essential to the successful performance of this Agreement, the party may so inform the other party in writing, and the parties hereto shall thereafter promptly negotiate in good faith with respect to such matters for the purpose of making such reasonable adjustments as may be necessary to perform the objectives of this Agreement. 12. Compliance with Applicable Law. The Agency shall observe and comply with federal, State and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding the administration of the Plan. Phase II Systems shall observe and comply with federal, State and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding Plan administrative services provided under this Agreement. 13. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. In the event any party institutes legal proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any state court of competent jurisdiction sitting in Orange County, California. 14. Force Majuere. When satisfactory evidence of a cause beyond a party's control is presented to the other party, and nonperformance is unforeseeable, beyond the control and not due to the fault of the party not performing, a party shall be excused from performing its obligations under this Agreement during the time and to the extent that it is prevented from performing by such cause, including but not limited to: any incidence of fire, flood, acts of God, commandeering of material, products, plants or facilities by the federal, state or local government, or a material act or omission by the other party. 15. Ownership of Reports and Documents. The originals of all letters, documents, reports, and data produced for the purposes of this Agreement shall be delivered to, and become the property of the Agency. Copies may be made for Phase II Systems but shall not be furnished to others without written authorization from Agency. 16. Designees. The Plan Administrator of the Agency, or their designee, shall have the authority to act for and exercise any of the rights of the Agency as set forth in this Agreement, subsequent to and in accordance with the authority granted by the Governing Board of the Agency. Any officer of Phase II Systems, or their designees, shall have the authority to act for and exercise any of the rights of Phase II Systems as set forth in this Agreement. 17. Notices. All notices hereunder and communications regarding the interpretation of the terms of this Agreement, or changes thereto, shall be effected by delivery of the notices in person or by depositing the notices in the U.S. mail, registered or certified mail, return receipt requested, postage prepaid and addressed as follows: (A) To Phase II Systems: Phase II Systems; 3961 MacArthur Boulevard, Ste. 200; Newport Beach, CA 92660; Attention: President (B) To Agency: City of Rosemead; 8838 Valley Boulevard, Rosemead, CA 91770; Attention: City Manager Page 3 9 0 18. Term of Agreement. This Agreement shall remain in effect for the period beginning August 2, 2000 and ending June 30, 2002 ( "Term "). This Agreement will continue unchanged for successive twelve -month periods following the Term unless either party gives written notice to the other party of the intent to terminate prior to 90 days before the end of the Term. 19. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the Designees of the parties as contained in this Agreement. 20. Entire Agreement. This Agreement, including exhibits, contains the entire understanding of the parties with respect to the subject matter set forth in this Agreement. In the event a conflict arises between the parties with respect to any term, condition or provision of this Agreement, the remaining terms, conditions and provisions shall remain in full force and legal effect. No waiver of any term or condition of this Agreement by any party shall be construed by the other as a continuing waiver of such term or condition. 21. Counterparts. This Agreement may be executed in any number of counterparts, and in that event, each counterpart shall be deemed a complete original and be enforceable without reference to any other counterpart. 22. Headings. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 23. Effective Date. This Agreement shall be effective on the date first above written, and also shall be the date the Agreement is executed. AGENCY: BY: TITLE: DATE: PHASE 11 SYSTEMS: t !41i111l�,a - DATE: V- -Z —0 0 Page 4 0 0 EXHIBIT IA SERVICES Phase II Systems will provide the following services for the City of Rosemead: 1. Plan Installation Services: (A) Meeting with appropriate Agency personnel to discuss plan provisions, implementation timelines, benefit communication strategies, data reporting and contribution submission requirements; (B) Providing the necessary analysis and advisory services to finalize these elements of the Plan; (C) Providing for review by Agency legal counsel the documentation needed to establish the Plan; (D) Upon Agency authorization, preparing and submitting application to the Internal Revenue Service for a determination that the Plan is qualified (the application fee for which shall be paid by the Agency). 2. Plan Administration Services: (A) Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust Program ( "Trustee "), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, including the allocation of employer contributions, distributions, investment activity and expenses (if applicable), based upon information received from the Agency and/or Trustee; (C) Acting as on -going liaison between the Participant and the Agency in regard to distribution payments, which shall include use by the Participants of toll -free telephone communication to Phase II Systems; (D) Producing benefit illustrations and processing enrollments; (E) Coordinating the processing of Participant distribution payments pursuant to authorized written Agency certification of distribution eligibility, authorized direction by the Agency, and the provisions of the Plan; and, to the extent possible based upon Agency - provided Data; (F) Directing Trustee to liquidate Plan assets (if necessary) and make Participant distribution payments, which includes the provision of required tax filings in regards to these distribution payments; (G) Notifying the Trustee of the amount of Plan assets available for further investment and management; or, the amount of Plan assets necessary to be liquidated in order to fund Participant distribution payments; (H) Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; Page 5 (I) Preparing and submitting a monthly report of Plan activity to the Agency, unless directed by the Agency otherwise; (J) Preparing and submitting an annual report of Plan activity to participants and to the Agency; (K) Coordinating and selection of licensed actuary to perform actuarial valuation on a periodic basis to comply with state and federal laws (the actuarial certification fee for which shall be paid by the City); (L) Preparing and submitting the Annual Report of Financial Transactions to the California State Controller, as required by law, for the PARS Trust Program, including the required certified audit of the PARS Trust. Phase II Systems is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. In providing the services specified above, we will retain qualified professional service providers at our cost as we deem necessary if the service lies outside our area of expertise. Page 6 L EXHIBIT 1B FEES FOR SERVICES 0 1. Phase II Systems will be compensated for performance of Services, as described in Exhibit A based upon the following schedule: (A) A one -time set -up fee upon implementation of Plan not to exceed $12,000.00 ( "Set- up Fee "), which is based on the standard Phase II Systems hourly fee schedule and shall be paid directly by the Agency to Phase II Systems; (B) An on -going administration fee equal to the sum of 1.) and 2.) below: 1.) A monthly fee of $1,500 ( "Monthly Fee ") which is subject to an annual 3% cost of living increase; 2.) An annual asset fee equal to 0.50% of the first $1 million in plan assets, 0.30% of plan assets between $1 million and $2 million, and 0.10% of plan assets above $2 million, as calculated at the end of each plan year. These fees are exclusive of trustee and investment management fees; (C) A fee equal to actuarial expenses charged to Phase II Systems by an outside contractor for an actuarial valuation of the City's plan ( "Actuarial Valuation Fee ") which occurs beginning at the conclusion of the second plan year and every year thereafter. Page 7 0 L.J I OVA ±ia Elm arig DATA REQUIREMENTS Phase II Systems will provide the Services under this Agreement contingent upon the Agency providing Phase II Systems the following employee information as required to process a benefit distribution: 1. Participant Data: (A) Participant's legal name; (B) Participant's position; (C) Participant's social security number (D) Participant's address; (E) Participant's phone number; (F) Participant's birth date; (G) Participant's hire date; (H) Participant's highest 3 years of compensation subject to PERS deduction while employed with the City; (I) Years of City Service (J) Retirement Date; Page 8 0 0 0 Resolution No. 00 -40 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD, CALIFORNIA AUTHORIZING THE ESTABLISHMENT OF THE PARS SUPPLEMENTAL RETIREMENT PLAN TO BE ADMINISTERED BY PHASE II SYSTEMS, PARS TRUST ADMINISTRATOR. WHEREAS, on June 6, 2000 the City Council adopted Resolution 00 -28 finding that it is in the best interest of the City to provide a competitive retirement plan to attract and retain City employees; and WHEREAS, Resolution 00 -28 declared the City's intention to become a member of PARS and adopt the PARS Supplementary Retirement Plan for Rosemead City employees and officials currently in the PERS system; and WHEREAS, Resolution 00 -28 instructed the staff to negotiate and bring to the City Council for final approval the legal documents to implement the PARS plan, with said plan effective July 1, 2000; and WHEREAS, the CITY is eligible to be a member of the Public Agency Retirement System (PARS), and provide to its' employees a governmental plan, qualifying under relevant sections of the Internal Revenue Code and the California Government Code. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ROSEMEAD, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: 1. The COUNCIL does hereby adopt the PARS Trust, including the PARS Supplementary Retirement Plan (SRP) for City employees effective July 1, 2000. 2. The CITY's PARS Administrator is hereby authorized to execute the PARS legal and administrative service documents on behalf of the CITY to implement a PARS supplemental plan to CaIPERS. In addition, if the CITY's PARS Administrator finds that the PARS supplemental plan benefit must be limited under Section 415 of Internal Revenue Code, then the Plan Administrator will implement a replacement benefit program at no additional cost to the City. The COUNCIL hereby appoints the City Manager, or the designee of the City Manager, as CITY Administrator for PARS, and further authorizes him /her to implement the Plans and to take whatever additional actions are necessary to maintain the participation of the CITY in PARS and to maintain PARS compliance with relevant regulations issued or as may be issued by the Federal or State government or agencies. STATE OF CALIFORNIA COUNTY OF LOS ANGELES The City Clerk of the City of Rosemead, CALIFORNIA, hereby certifies that the above and foregoing resolution was duly and regularly adopted by the said CITY at a regular meeting thereof held on the 11`" day of July, 2000 and passed by the following vote: AYES: NOES: ABSENT: ABSTAIN; IN WITNESS WHEREOF I have hereunto set my hand seal this City Clerk ATTACHMENT City of Rosemead PARS Supplementary Retirement Plan: Proposed Plan Design Plan Effective Date: _ _July 1, 2000 Eligibility: . Age 55 with 20 years of City Service for Full -Time Miscellaneous Employees for a 3.0% at 55 plan • Age 60 with 10 years of City Service for Full -Time Miscellaneous Employees for a 2.5% at 60 plan • Age 55 with 12 years of City Service for City Council members for a 3.0% at 55 plan COLA • Retirement from CalPERS under a regular service retirement basis while under City employment Service Credit Recognition: Based on continuous City of Rosemead miscellaneous . service only (with the exception of the City Council) Final Pay Single Highest Year Vesting: 0% Vested until meeting eligibility requirements Benefit Level: Age factor based on Age and Service Requirements (City Council) Aga Factor Age Factor Ago Factor Age with 10 years with 20 years with 12 years of Service of Servlce of Service 55 - - - - 3.00% 3.00% 56 - - - - 3.00% 3.00% 57 - - - - 3.00% 3.00% 58 - - - - 3.00% 3.00% 59 - - - - 3.00% 3.00% 60+ 2,50% 3.00% 3.00% COLA 2.00% Compounding COLA effective on the anniversary date of retirement Benefit Distribution Optio ^s . Lifetime Benefit . 100% Joint -an u- Survivor Employer Contributions: Based on Funding Strategy selected Employee Contributions: None Benefit Limitations: 415 Limits for Defined Benefit governmental employees (Excess Benefit Plan may be required) City of Rosemead Supplementary Retirement Plan Service and Fee Summary, Plan Set -Up (one -time fee); • Prepare Analysis of Alternative Plan Designs and Costs • Draft and Finalize Legal Documents • IRS Letter of Determination Coordination • Participant Orientations • Investment Strategy Coordination With Trustee • Total Fee $12,000 (one -time) Administration (fee paiQ from plan assets): • Monitor Receipt of Contributions • Perform Regular Accounting of Plan assets • Answer Participant Inquiries • Process Enrollments and Benefit Illustrations • Coordinate Distribution Payments with Trustee • Coordinate Tax Filings with Trustee • Monthly Summary Report of Plan Activity to Agency • Preparing Annual Report to Participants and Agency • Coordinate and Select Actuary to Perform Report to Comply with Governmental Accounting Standards Board Requirements • Prepare and Submit Annual State Controllers Report • Monthly Fees are $1,500, subject to annual 3% COLA, and annual asset fee equal to 0.500/a of first $1 million in plan assets, 0.300/0 of plan assets between $1 million and $2 million, and 0.10% of plan assets above $2 million • Fees equal to actuarial expenses with licensed actuary beginning with conclusion of second plan year to perform periodic actuarial valuations of Pian • Total ie Year Fee is $18,790 ($1,500 /mo. X 12 + 158,000 x 0.50%) • Plan Contributions: $ 158,000 • One -Time Set -Up; 12,000 • Monthly Administration: 18,790 • Total Plan Costs 1" Year 188,790 0 ATTACHMENT A AGREEMENT FOR ADMINISTRATIVE SERVICES This agreement ( "Agreement ") is made this 6th day of June, 2000, between Phase II Systems ( "Phase II Systems "), a corporation organized and existing under the laws of the State of California and the City of Rosemead ( "Agency "). WHEREAS, Agency is desirous of retaining Phase II Systems, as Trust Administrator to the PARS Trust, to provide administrative and consulting services; NOW THEREFORE, the parties agree: 1. Services. Phase II Systems will provide the services pertaining to the Plan ( "Services ") as described in the exhibit attached hereto as "Exhibit 1A" in a timely manner, subject to the further provisions of this Agreement. 2. Fees for Services. Phase II Systems will be compensated for performance of Services as described in the exhibit attached hereto as "Exhibit 1B ". 3. Payment Terms. Payment for Services will be remitted directly from Plan assets unless otherwise stated in Exhibit 1 B. In the event that the Agency chooses to make payment directly to Phase II Systems, it shall be the responsibility of the Agency to remit payment directly to Phase II Systems based upon an invoice prepared by Phase II Systems and delivered to the Agency. If payment is not received by Phase II Systems within thirty (30) days of the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per month. If payment is not received from the Agency within ninety (90) days of the invoice delivery date, payment plus accrued interest will be remitted directly from Plan assets, unless Phase II Systems has previously received written communication disputing the subject invoice that is signed by a duly authorized representative of the Agency. 4. Fees for Services Beyond Scope. Fees for services beyond those specified in this Agreement will be billed to the Agency at the rates indicated in Phase II Systems' standard fee schedule in effect at the time the services are provided, subject to the terms established in Section 3 of this Agreement. Before any such services are performed, Phase II Systems will provide the Agency with written notice of the subject services, terms, and an estimate of the associated fees. . 5. Information Furnished to Phase II Systems. Phase II Systems will provide the Services under this Agreement contingent upon the Agency providing Phase II Systems information ( "Data "), as specified in the exhibit attached hereto as "Exhibit 1C ". It shall be the responsibility of the Agency to certify the accuracy, content and completeness of the Data so that Phase II Systems may rely on such information without further audit. It shall further be the responsibility of the Agency to deliver the Data to Phase II Systems in such a manner that allows for a reasonable amount of time for the Services to be performed. Unless specified in Exhibit IA, Phase II Systems shall be under no duty to question Data received from the Agency, or compute contributions made to the Plan, or determine or inquire whether contributions are adequate to meet and discharge liabilities under the Plan, or determine or inquire whether contributions made to the Plan are in Page 1 0 0 compliance with the Plan or applicable law. Furthermore, Phase II Systems shall not be liable for non - performance of Services if such non - performance is directly caused by erroneous and/or late delivery of Data from the Agency. In the event that the Agency fails to provide Data in a complete, accurate and timely manner, and pursuant to the specifications in Exhibit IC, Phase II Systems reserves the right, notwithstanding the further provisions of this Agreement, to terminate this Agreement upon written notice of ninety (90) days. 6. In the Event of Suspension of Contributions. In the event contributions are suspended, either temporarily or permanently, prior to the complete discharge of Phase II Systems' obligations under this Agreement, Phase II Systems reserves the right to bill the Agency for Services under this Agreement at the rates indicated in Phase II Systems' standard fee schedule in effect at the time the services are provided, subject to the terms established in Section 3 of this Agreement. Before any such services are performed, Phase II Systems will provide the Agency with written notice of the subject services, terms, and an estimate of the associated fees. 7. Records. Throughout the duration of this Agreement, and for a period of five (5) years after termination of this Agreement, Phase II Systems shall provide duly authorized representatives of Agency access to all records and material relating to calculation of Phase II Systems' fees under this Agreement. Such access shall include the right to inspect, audit and reproduce such records and material and to verify reports furnished in compliance with the provisions of this Agreement. All information so obtained shall be accorded confidential treatment as provided under applicable law. 8. Confidentiality. Phase II Systems shall not disclose any information relating to the Plan except to duly authorized officials of Agency, subject to applicable law, and to parties retained by Phase II Systems to perform specific services within this Agreement. Agency shall not disclose any information relating to the Plan to individuals not employed by the Agency without the prior written consent of Phase II Systems, except as such disclosures may be required by applicable law. 9. Independent Contractor. Phase II Systems is and at all times hereunder shall be an Independent Contractor. As such, neither the Agency nor any of its officers, employees or agents shall have the power to control the conduct of Phase II Systems, its officers, employees or agents, except as specifically set forth and provided for herein. Phase II Systems shall pay all wages, salaries and other amounts due its employees in connection with this Agreement and shall be responsible for all reports and obligations respecting them, such as social security, income tax withholding, unemployment compensation, workers' compensation and similar matters. 10. Indemnification. Phase II Systems and Agency agree to indemnify each other and to hold the other harmless, including their respective officers, directors, employees, agents and attorneys, from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees and costs, incurred by the other as a consequence of Phase II Systems' or Agency's, as the case may be, negligent acts, intentional acts or errors or omissions with respect to the performance of their respective duties hereunder. Page 2 11. Omissions. In the event that either party hereto discovers any material omission in the provisions of this Agreement which such party believes is essential to the successful performance of this Agreement, the party may so inform the other party in writing, and the parties hereto shall thereafter promptly negotiate in good faith with respect to such matters for the purpose of making such reasonable adjustments as may be necessary to perform the objectives of this Agreement. 12. Compliance with Applicable Law. The Agency shall observe and comply with federal, State and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding the administration of the Plan. Phase II Systems shall observe and comply with federal, State and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding Plan administrative services provided under this Agreement. 13. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. In the event any party institutes legal proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any state court of competent jurisdiction sitting in Orange County, California. 14. Force Majuere. When satisfactory evidence of a cause beyond a party's control is presented to the other party, and nonperformance is unforeseeable, beyond the control and not due to the fault of the party not performing, a party shall be excused from performing its obligations under this Agreement during the time and to the extent that it is prevented from performing by such cause, including but not limited to: any incidence of fire, flood, acts of God, commandeering of material, products, plants or facilities by the federal, state or local government, or a material act or omission by the other party. 15. Ownership of Reports and Documents. The originals of all letters, documents, reports, and data produced for the purposes of this Agreement shall be delivered to, and become the property of the Agency. Copies may be made for Phase II Systems but shall not be furnished to others without written authorization from Agency. 16. Designees. The Plan Administrator of the Agency, or their designee, shall have the authority to act for and exercise any of the rights of the Agency as set forth in this Agreement, subsequent to and in accordance with the authority granted by the Governing Board of the Agency. Any officer of Phase II Systems, or their designees, shall have the authority to act for and exercise any of the rights of Phase II Systems as set forth in this Agreement. 17. Notices. All notices hereunder and communications regarding the interpretation of the terms of this Agreement, or changes thereto, shall be effected by delivery of the notices in person or by depositing the notices in the U.S. mail, registered or certified mail, return receipt requested, postage prepaid and addressed as follows: (A) To Phase II Systems: Phase II Systems; 3961 MacArthur Boulevard, Ste. 200; Newport Beach, CA 92660; Attention: President (B) To Agency: City of Rosemead; 8838 Valley Boulevard, Rosemead, CA 91770; Attention: City Manager Page 3 0 0 18. Term of Agreement. This Agreement shall remain in effect for the period beginning June 6„ 2000 and ending June 30, 2002 ( "Term "). This Agreement will continue unchanged for successive twelve -month periods following the Term unless either party gives written notice to the other party of the intent to terminate prior to 90 days before the end of the Term. 19. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the Designees of the parties as contained in this Agreement. 20. Entire Agreement. This Agreement, including exhibits, contains the entire understanding of the parties with respect to the subject matter set forth in this Agreement. In the event a conflict arises between the parties with respect to any term, condition or provision of this Agreement, the remaining terms, conditions and provisions shall remain in full force and legal effect. No waiver of any term or condition of this Agreement by any party shall be construed by the other as a continuing waiver of such term or condition. 21. Counterparts. This Agreement may be executed in any number of counterparts, and in that event, each counterpart shall be deemed a complete original and be enforceable without reference to any other counterpart. 22. Headings. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 23. Effective Date. This Agreement shall be effective on the date first above written, and also shall be the date the Agreement is executed. AGENCY: BY: TITLE: DATE: PHASE II SYSTEMS: BY: TITLE: DATE: Page 4 0 EXHIBIT IA SERVICES 0 Phase II Systems will provide the following services for the City of Rosemead: 1. Plan Installation Services: (A) Meeting with appropriate Agency personnel to discuss plan provisions, implementation timelines, benefit communication strategies, data reporting and contribution submission requirements; (B) Providing the necessary analysis and advisory services to finalize these elements of the Plan; (C) Providing for review by Agency legal counsel the documentation needed to establish the Plan; (D) Upon Agency authorization, preparing and submitting application to the Internal Revenue Service for a determination that the Plan is qualified (the application fee for which shall be paid by the Agency). 2. Plan Administration Services: (A) Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust Program ( "Trustee "), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, including the allocation of employer contributions, distributions, investment activity and expenses (if applicable), based upon information received from the Agency and/or Trustee; (C) Acting as on -going liaison between the Participant and the Agency in regard to distribution payments, which shall include use by the Participants of toll -free telephone communication to Phase II Systems; (D) Producing benefit illustrations and processing enrollments; (E) Coordinating the processing of Participant distribution payments pursuant to authorized written Agency certification of distribution eligibility, authorized direction by the Agency, and the provisions of the Plan; and, to the extent possible based upon Agency - provided Data; (F) Directing Trustee to liquidate Plan assets (if necessary) and make Participant distribution payments, which includes the provision of required tax filings in regards to these distribution payments; (G) Notifying the Trustee of the amount of Plan assets available for further investment and management; or, the amount of Plan assets necessary to be liquidated in order to fund Participant distribution payments; (H) Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; Page 5 11 (I) Preparing and submitting a monthly report of Plan activity to the Agency, unless directed by the Agency otherwise; (.1) Preparing and submitting an annual report of Plan activity to participants and to the Agency; (K) Coordinating and selection of licensed actuary to perform actuarial valuation on a periodic basis to comply with state and federal laws (the actuarial certification fee for which shall be paid by the City); (L) Preparing and submitting the Annual Report of Financial Transactions to the California State Controller, as required by law, for the PARS Trust Program, including the required certified audit of the PARS Trust. 3. Phase II Systems is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. In providing the services specified above, we will retain qualified professional service providers at our cost as we deem necessary if the service lies outside our area of expertise. Page 6 ! • EXHIBIT 1B FEES FOR SERVICES 1. Phase II Systems will be compensated for performance of Services, as described in Exhibit A based upon the following schedule: (A) A one -time set -up fee upon implementation of Plan not to exceed $12,000.00 ( "Set- up Fee "), which is based on the standard Phase II Systems hourly fee schedule and shall be paid directly by the Agency to Phase II Systems; (B) An on -going administration fee equal to the sum of 1.) and 2.) below: 1.) A monthly fee of $1,500 ( "Monthly Fee ") which is subject to an annual 3% cost of living increase; 2.) An annual asset fee equal to 0.50% of the first $1 million in plan assets, 0.30% of plan assets between $1 million and $2 million, and 0.10% of plan assets above $2 million, as calculated at the end of each plan year. These fees are exclusive of trustee and investment management fees; (C) A fee equal to actuarial expenses charged to Phase II Systems by an outside contractor for an actuarial valuation of the City's plan ( "Actuarial Valuation Fee ") which occurs beginning at the conclusion of the second plan year and every year thereafter. Page 7 T YVNTTIT T' 1 r' DATA REQUIREMENTS Phase II Systems will provide the Services under this Agreement contingent upon the Agency providing Phase II Systems the following employee information as required to process a benefit distribution: 1. Participant Data: (A) Participant's legal name; (B) Participant's position; (C) Participant's social security number (D) Participant's address; (E) Participant's phone number; (F) Participant's birth date; (G) Participant's hire date; (H) Participant's highest 3 years of compensation subject to PERS deduction while employed with the City; (I) Years of City Service (.I) Retirement Date; Page 8 ATTACHMENT 111 PUBLIC AGENCY RETIREMENT SYSTEM (PARS) TRUST AGREEMENT L PREAMBLE 0 The Huntington Beach City School District and State Center Community College District formed and adopted the Public Agency Retirement System Trust ( "PARS Trust") on July 1,1991 ( "Effective Date "). Subsequent to the Effective Date other California public agencies adopted the PARS Trust as the funding vehicle for tax qualified retirement plans for employees. Subsequent to the Effective Date the PARS Trust was amended. Effective as of July 1, 1999 ( "Amended Effective Date ") the PARS Trust was amended and restated in its entirety as contained herein. This amended and restated Trust shall supersede all prior versions of the PARS Trust as of the Amended Effective Date. TABLE OF CONTENTS ARTICLE ARTICLE I DEFINITIONS ARTICLE II THE PARS TRUST PROGRAM ARTICLE III ADMINISTRATIVE MATTERS ARTICLE IV THE TRUSTEE ARTICLE V INVESTMENTS ARTICLE VI FIDUCIARY RESPONSIBILITIES ARTICLE VII AMENDMENT, TERMINATION AND MERGER ARTICLE VIII MISCELLANEOUS PROVISIONS ARTICLE IX ACKNOWLEDGMENT AND ACCEPTANCE N 2567_12 PFL PAGE 3 4 7 12 18 25 28 30 32 9 0 Article I DEFINITIONS 1.1 "Act" shall mean California Government Code Sections 53215 - 53224, or their successor sections. 1.2 "Agreement for Administrative Services" shall mean the agreement executed between the Member Agency and the Trust Administrator which authorizes the Trust Administrator to perform specific duties of administering the Member Agency Plan and related Agency Trust. 1.3 "Amended Effective Date" shall mean July 1, 1999, the date the PARS Trust Agreement was amended and restated in its entirety. 1.4 "Assets" shall mean all contributions and transfers of assets received by an Agency Trust on behalf of a Member Agency's Plan, together with the income and earnings from such contributions and transfers and any increments accruing to them. 1.5 "Agency Trust shall mean the legally separate and individual trust, whose provisions are identical to those of the PARS Trust Agreement, that is established by a Member Agency when it adopts the PARS Trust by executing an Adoption Agreement. 1.6 "Alternate Trustee" shall mean a trustee, other than the Trustee of the PARS Trust Program, appointed by a Member Agency to serve as a trustee of a portion of such Agency Trust's assets as to which the Trustee serves as custodian. 1.7 "Code" shall mean the Internal Revenue Code of 1986 as amended.from time to time. 1.8 "Custodian" shall mean Union Bank of California, N.A. whose duties are limited to those specified in Section 4.3. 1.9 "Delegatee" shall mean an individual or entity, appointed by the Plan Administrator or Member Agency to act in such matters as are specified in the appointment. 1.10 "Effective Date" shall mean July 1, 1991, the date the PARS Trust Program was established. 1.11 "Investment Fiduciary" shall mean the fiduciary with the authority and duty to direct the investment and management (including the power to direct the. 3 2567_12 PEL acquisition and disposition) of some or all of the Assets of the Agency Trust appointed by a Member Agency for its Agency Trust. 1.12 "Omnibus Account" shall mean an account, established for record keeping purposes only, to commingle the Assets of the Agency Trust. 1.13 "Member Agency" shall mean a California public agency that adopts the provisions of the PARS Trust Agreement. 1.14 "Plan" shall mean the tax qualified plan whose assets the Agency Trust holds. 1.15 'Plan Administrator shall mean the individual designated by position of employment at the Member Agency to act on its behalf in all matters relating to the Member Agency's participation in the PARS Trust Program and Agency Trust. 1.16 "PARS Trust Agreement" or "Trust Agreement" shall mean the pro forma Public Agency Retirement System trust document adopted by each Member Agency upon execution of an Adoption Agreement, as amended from time to time. 1.17 "PARS Trust Program" shall mean the Public Agency Retirement System trust arrangement. 1.18 "Participant" shall mean individual participating in a Member Agency Plan or that individual's beneficiary. 1.19 "Trust Administrator" shall mean Phase II Systems. 1.20 'Trustee" shall mean the entity appointed as trustee of the PARS Trust that shall also serve as trustee of each Agency Trust established pursuant to the provisions of this trust agreement except where an Alternate. Trustee has been appointed. Article II THE PARS TRUST PROGRAM 2.1 Multiple Employer Trust The PARS Trust Program is a multiple employer trust arrangement established to provide economies of scale and efficiency of administration to public agencies that adopt it to hold the assets of their Member Agency Plans maintained for the benefit of their employees. The PARS Trust Program consists of the Agency Trusts adopted and not terminated by Member Agencies. 4 2567_12 PEL 2.2 Qualified Governmental Retirement Trust The PARS Trust Program is established pursuant to the provisions of Section 501 of the Internal Revenue Code of 1986, as amended (the "Code "), and California Government Code Sections 53215 through 53224 providing for pension trusts established by public agencies. 2.3 Date of Adoption The date as of which each Member Agency adopts the PARS Trust Program shall be the "Effective Date" of the PARS Trust Agreement and the Agency Trust, as defined in Section 2.5, as to that Member Agency. 2.4 Member Agencies Any California public agency may, by action of its governing body in a writing accepted by the Trustee, adopt the provisions of the PARS Trust Agreement as the trust portion of a qualified governmental retirement plan established for the benefit of its employees. Executing an adoption instrument for the PARS Trust Program ( "Adoption Agreement "), attached hereto as Exhibit "A ", shall constitute such adoption, unless the Trustee requires additional evidence of adoption. In order for such adoption to be effective, the public agency must also execute an Agreement for Administrative Services with Phase II Systems, the Trust Administrator, pursuant to section 3.6 of this PARS Trust Agreement. Such adopting employer shall then become a Member Agency of the PARS Trust Program. Each such Member Agency shall, at a minimum, furnish the Trust Administrator with the following documents to support its adoption of the PARS Trust Program: (a) a certified copy of the Member Agency governing body resolution authorizing the adoption of the PARS Trust Agreement and the appointment of an individual designated by position of employment at the Member Agency to act on its behalf in all matters relating to the Member Agency's participation in the PARS Trust Program and Agency Trust ( "Plan Administrator "); (b) an original of the Adoption Agreement executed by the Plan Administrator or other duly authorized Member Agency employee; (c) an original of the Agreement for Administrative Services with Phase II Systems executed by the Plan Administrator or other duly authorized Member Agency employee and Phase II Systems; (d) an address notice; and 5 2567 12 r [I. ri (e) such other documents as the Trustee may reasonably request. 2.5 Agency Trust By adopting the PARS Trust Agreement, as provided in Section 2.4, a Member Agency shall be deemed to have adopted a legally separate and individual Agency Trust whose provisions are identical to those of the PARS Trust Agreement. The Assets of an Agency Trust shall be available only to pay benefits pursuant to the provisions of the Plan to participants and beneficiaries of the Member Agency entitled to receive benefits under the provisions of the Plan. The Agency Trust is created for the purpose of receiving contributions made to fund the Member Agency's Plan; accumulating, managing and investing those contributions; and providing benefits to active or retired participants of the Plan, their joint annuitants, or their beneficiaries. Each Agency Trust shall be used to fund only a single Plan maintained by the Member Agency. A Member Agency may establish additional Agency Trusts to fund the assets of additional Plans by executing one or more additional Adoption Agreement(s). 2.6 Assets of Agency Trust The assets of the Agency Trust shall consist of all contributions and transfers received by the Agency Trust on behalf of the Member Agency's Plan, together with the income and earnings from such contributions and transfers, and any increments accruing to them ( "Assets "). All contributions or transfers shall be received by the Trustee in cash or in other property acceptable to the Trustee. The Trustee shall manage and administer the Assets of the Agency Trust without distinction between principal and income. The Trustee and the Trust Administrator shall have no duty to compute any amount to be transferred or paid to the Agency Trust by the Member Agency and the Trustee and the Trust Administrator shall not be responsible for the collection of any contributions or transfers to the Agency Trust. 2.7 Commingling for Investment and Administration The Assets of more than one Agency Trust may be commingled by the Trustee or Investment Fiduciary in one or more Omnibus Accounts for investment and administrative purposes, to provide economies of scale and efficiency of administration to the Agency Trusts. The responsibility for Plan level accounting within this Omnibus Account(s) shall be that of the Trust Administrator. 2.8 Trustee Accounting The Trustee shall be responsible only for maintaining records and maintaining accounts for the aggregate assets of the PARS Trust Program. The A 2567_12 PEL 0 0 responsibility for Plan level accounting for each Agency Trust, based upon the Omnibus Account(s), shall be that of the Trust Administrator. 2.9 No Diversion of Assets The Assets in each Agency Trust shall be held in trust for the exclusive purpose of providing benefits to the Participants of the Plan for which the Agency Trust is holding assets and defraying the reasonable expenses of such Plan. The Assets shall not be used for or diverted to, any other purpose. 2.10 Type and Nature of Trust Neither the full faith and credit nor the taxing power of each Member Agency, the State of California or any political subdivision thereof other than each Member Agency is pledged to the distribution of benefits hereunder. Except for contributions and other amounts hereunder, no other amounts are pledged to the distribution of benefits hereunder. Distributions of benefits are neither general nor special obligations of any Member Agency, but are payable solely from the Assets of each Agency Trust, as more fully described herein. No employee of any Member Agency or beneficiary may compel the exercise of the taxing power by any Member Agency. Distributions of Assets under any Agency Trust are not debts of any Member Agency, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. Such distributions are not legal or equitable pledges, charges, liens or encumbrances, upon any of a Member Agency's property, or upon any of its income, receipts, or revenues, except amounts in the accounts which are, under the terms of each Plan, Agency Trust and the Act, set aside for distributions. Neither the members of the legislative body of any Member Agency nor its officers, employees, agents or volunteers are liable hereunder. Article III ADMINISTRATIVE MATTERS 3.1 Appointment of Trustee Two thirds or more of the Member Agencies acting jointly, may by a two- thirds or greater vote, act to appoint a bank, trust company, retirement board, insurer, committee or such other entity as permitted by California law, to serve as the trustee of the PARS Trust Program ( "Trustee "). Such action must be in writing. Upon the written acceptance of such entity it shall become the Trustee of the PARS Trust Program and, subject to the provisions of Section 3.10, the trustee of each Agency Trust, By.executing an Adoption Agreement, the adopting Member 2567_12 PEL 0 0 Agency hereby appoints the Union Bank of California, N.A. as the Trustee as of the Amended Effective Date. 3.2 Removal of Trustee Two thirds or more of the Member Agencies acting jointly, may by a vote of two - thirds or greater, act to remove the Trustee. Such action must be in writing and delivered to the Trustee and the Trust Administrator. Upon such removal from the PARS Trust the Trustee shall also be removed as trustee of each of the Agency Trusts. The Plan Administrator may remove the Trustee as trustee of an Agency Trust by giving at least ninety (90) days prior written notice to the Trustee and the Trust Administrator and withdrawing from the PARS Trust Program. 3.3 Resignation of Trustee The Trustee may resign as trustee of the PARS Trust Program at any time by giving at least ninety (90) days prior written notice to the Trust Administrator and to each Plan Administrator of each Member Agency that has adopted the PARS Trust Agreement and not terminated its participation in the PARS Trust Program. Such resignation shall also be deemed a resignation as trustee of each of the Agency Trusts. The Trustee may resign as trustee of an Agency Trust by giving at least ninety (90) written notice to the Plan Administrator of such Agency Trust and to the Trust Administrator. The Member Agency's appointment of a successor trustee to the Agency Trust will vest the successor trustee with title to the Assets of its Agency Trust upon the successor trustee's acceptance of such appointment. 3A The Plan Administrator The governing body of each Member Agency shall have plenary authority for the administration and investment of the Agency Trust pursuant to the laws and Constitution of the State of California and applicable - federal laws and regulations. Each Member Agency shall by resolution designate a Plan Administrator. Unless otherwise specified in the instrument the Plan Administrator shall be deemed to have authority to act on behalf of the Member Agency in all matters pertaining to the Member Agency's participation in the PARS Trust Program and in regard to the Agency Trust of the Member Agency. Such appointment of a Plan Administrator shall be effective upon receipt and acknowledgment by the Trustee and the Trust Administrator and shall be effective until the Trustee and Trust Administrator are furnished with a resolution of the Member Agency that the appointment has been modified or terminated. 3.5 Failure to Appoint Plan Administrator If a Plan Administrator is not appointed, or such appointment lapses, the Member Agency shall be deemed to be the Plan Administrator. As used in this document 0 2567_12 PEL 0 0 Plan Administrator shall be deemed to mean Member Agency when a Plan Administrator has not been appointed. 3.6 Delegatee The Plan Administrator, acting on behalf of the Member Agency, may delegate certain authority, powers and duties to an entity to act in those matters specified in the delegation ( "Delegatee "). Any such delegation must be in a writing that names and identifies the Delegatee, states the effective date of the delegation, specifies the authority and duties delegated, is executed by the Plan Administrator and is acknowledged in writing by the Delegatee, the Trust Administrator (if not the Delegatee) and the Trustee. Such delegation shall be effective until the Trustee and the Trust Administrator are directed in writing by the Plan Administrator that the delegation has been rescinded or modified. 3.7 Certification to Trustee The governing body of each Member Agency, or other duly authorized official, shall certify in writing to the Trustee and the Trust Administrator the names and specimen signatures of the Plan Administrator and Delegatee, if any, and all others authorized to act on behalf of the Member Agency whose names and specimen signatures shall be kept accurate by the Member Agency acting through a duly authorized official or governing body of the Member Agency. The Trustee and the Trust Administrator shall have no liability if it acts upon the direction of a Plan Administrator or Delegatee that has been duly authorized, as provided in Section 3.6, if that Plan Administrator or Delegatee is no longer authorized to act, unless the Member Agency has informed the Trustee and the Trust Administrator of such change. 3.8 Directions to Trustee Except as provided in Section 5.18 of this Trust Agreement, all directions to the Trustee from the Plan Administrator or Delegatee must be in writing and must be signed by the Plan Administrator or Delegatee, as the case may be. For all purposes of this Trust Agreement, direction shall include any certification, notice, authorization, application or instruction of the Plan Administrator, Delegatee or Trustee appropriately communicated. The above notwithstanding direction may be implied if the Plan Administrator or Delegatee has knowledge of the Trustee's intentions and fails to file written objection. The Trustee shall have the power and duty to comply promptly with all proper direction of the Plan Administrator, or Delegatee, appointed in accordance with the provisions of this PARS Trust Agreement. In the case of any direction deemed by the Trustee to be unclear or ambiguous the Trustee may seek written instructions from the Plan Administrator, the Agency or the Delegatee on such 9" 2567_12 PEL 0 0 matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the Delegatee should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of the PARS Trust Program and /or any Agency Trust which may include not taking any action. The Trustee may request directions or clarification of directions received and may delay acting until clarification is received. In the absence of timely direction or clarification, or if the Trustee considers any direction to be a violation of the PARS Trust Agreement or any applicable law, the Trustee shall in its sole discretion take appropriate action, or refuse to act upon a direction. 3.9 Alternate Trustee A Member Agency may appoint a trustee, other than the Trustee, as to a portion of the assets in the Agency Trust by designating such person or entity as an Alternate Trustee on the Adoption Agreement and by specifying which assets shall be subject to the fiduciary management of the Alternate Trustee. Such appointment shall not be effective unless it is in writing, specifies clearly the assets as to which the Alternate Trustee is to have trustee powers, is acknowledged in writing by the Alternate Trustee, is delivered to and acknowledged by the Trustee and the Trust Administrator. Only a bank, trust company, retirement board, insurer, the Member Agency or such entity as permitted by California law to be a trustee may be appointed an Alternate Trustee. Such appointment will become effective upon acceptance by the Alternate Trustee. 3.10 Powers Of Alternate Trustee The Alternate Trustee shall be deemed to have all of the powers and duties and responsibilities specified in the PARS Trust Agreement for the PARS Trustee in Article IV unless otherwise specified in the Adoption Agreement. 3.11 Responsibility of Trustee Upon Appointment of Alternate Trustee Upon the appointment of an Alternate Trustee, the Trustee shall have no liability or responsibility for any matters relating to the management, investment or administration of those assets as to which the Alternate Trustee has been appointed and shall only have the duties set forth in Section 4.3. 3.12 Trust Administrator The Member Agencies have appointed Phase II Systems as the Trust Administrator. The Trust Administrator has accepted its appointment subject to each Member Agency's delegation of authority, to act as such, pursuant to Section 3.6 of this PARS Trust Agreement. The Trust Administrator's duties io 256712 PEL involve the performance of the following services pursuant to the provisions of this trust agreement and the Agreement for Administrative Services: (a) Performing periodic accounting of the Agency Trust; (b) Directing the Trustee to make distributions from the Agency Trust to Participants pursuant to the provisions of the Member Agency's Plan and liquidate assets in order to make such distributions; (c) Notifying the Investment Fiduciary of the amount of Assets in the Agency Trust available for further investment and management by the Investment Fiduciary; (d) Allocating contributions, earnings and expenses to each Agency Trust; (e) Directing the Trustee to pay insurance premiums, to pay the fees of the Trust Administrator and to do such other acts as shall be appropriate to carry out the intent of the Agency Trusts. (f) Such other services as the Member Agency and the Trust Administrator may agree in the Agreement for Administrative Services pursuant to Section 2.4. 3.13 The Trust Administrator shall be entitled to rely on, and shall be under no duty to question, direction and /or data received from the Plan Administrator, or other duly authorized entity, in order to perform its authorized duties under this trust agreement. The Trust Administrator shall not have any duty to compute contributions made to the Agency Trust, determine or inquire whether contributions made to the Agency Trust by the Plan Administrator or other duly authorized entity are adequate to meet and discharge liabilities under the Plan; or determine or inquire whether contributions made to the Agency Trust are in compliance with the Plan; The Trust Administrator shall not be liable for non performance of duties if such non performance is directly caused by erroneous, and /or late delivery of, directions or data from the Plan Administrator, or other duly authorized entity. 3.14 Additional Trust Administrator Services The Plan Administrator may at any time retain the Trust Administrator as its agent to perform any act, keep any records or accounts and make any computations which are required of the Member Agency or the Plan Administrator by this PARS Trust Agreement or by the Member Agency's Plan. The Trust Administrator shall be separately compensated for such service and such services shall not be deemed to be contrary to the PARS Trust Agreement. 11 256712 PEL 0 0 3.15 Trust Administrator's Compensation As may be agreed upon from time to time by the Member Agency and Trust Administrator, the Trust Administrator will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the Agency Trust and to the PARS Trust Program in accordance with Section 53217 of the Act. 3.16 Resignation or Removal of Trust Administrator The Trust Administrator may resign at any time by giving at least one hundred twenty (120) days written notice to each Member Agency of the PARS Trust Program and the Trustee. The Member Agencies, by a two- thirds or greater vote, may remove the Trust Administrator by delivering, at least one hundred twenty (120) days prior to the effective date of such removal, written notice to the Trust Administrator and to the Trustee. Article IV THE TRUSTEE 4.1 Powers and Duties of the Trustee Except as otherwise provided in Article V and subject to Article Vl, the Trustee shall have full power and authority with respect to property held in the Agency Trust to do all such acts, take all proceedings, and exercise all such rights and privileges, whether specifically referred to or not in this document, as could be done, taken or exercised by the absolute owner, including, without limitation, the following: (a) To invest and reinvest the Assets or any part hereof in any one or more kind, type, class, item or parcel of property, real, personal or mixed, tangible or intangible; or in any one or more kind, type, class, item or issue of investment or security; or in any one or more kind, type, class or item of obligation, secured or unsecured; or in any combination of them. To retain the property for the period of time that the Trustee deems appropriate; (b) To acquire and sell options to buy securities ( "call" options) and to acquire and sell options to sell securities ( "put" options); (c) To buy, sell, assign, transfer, acquire, loan, lease (for any purpose, including mineral leases), exchange and in any other manner to acquire, manage., deal with and dispose of all or any part of the Agency Trust 12 2567_12 PEL 0 0 property, for cash or credit and upon any reasonable terms and conditions; (d) To make deposits, with any bank or savings and loan institution, including any such facility of the Trustee or an affiliate thereof provided that the deposit bears a reasonable rate of interest; (e) To invest and reinvest the Assets, or any part thereof in any one or more collective investment trust funds, including common and group trust funds that consist exclusively of assets of exempt pension and profit sharing trusts and individual retirement accounts qualified and tax exempt under the Code, that are maintained by the Trustee or an affiliate thereof. The declaration of trust or plan of operations for any such common or collective fund is hereby incorporated herein and adopted into this PARS Trust Agreement by this reference. The combining of money and other assets of the Agency Trust with money and other assets of other qualified trusts in such fund or funds is specifically authorized. Notwithstanding anything to the contrary in this trust agreement, the Trustee shall have full investment responsibility over assets of the trust invested in such commingled funds. If the plan and trust for any reason lose their tax exempt status, and the Assets have been commingled with assets of other tax exempt trusts in Trustee's collective investment funds, the Trustee shall within 30 days of notice of such loss of tax exempt status, liquidate the Agency Trust's units of the collective investment fund(s) and invest the proceeds in a money market fund pending investment or other instructions from the Plan Administrator. The Trustee shall not be liable for any loss or gain or taxes, if any, resulting from said liquidation; (f) To place uninvested cash and cash awaiting distribution in one or more mutual funds and /or commingled investment funds maintained by or made available by the Trustee, and to receive compensation from the sponsor of such fund(s) for services rendered, separate and apart from any Trustee's fees hereunder. Trustee or Trustee's affiliate may also be compensated for providing investment advisory services to any mutual fund or commingled investment funds; (g) To borrow money for the purposes of the Agency Trust from any source with or without giving security; to pay interest; to issue promissory notes and to secure the repayment thereof by pledging all or any part of the Assets; (h) To take all of the following actions as directed by the Investment Fiduciary or other person with investment discretion over the trust assets: to vote proxies of any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, 13 2567_12 PEI. 0 0 and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property held in the Agency Trust; (i) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; Q) To raze or move existing buildings; to make ordinary or extraordinary repairs, alterations or additions in and to buildings; to construct buildings and other structures and to install fixtures and equipment therein; (k) To pay or cause to be paid from the Agency Trust any and all real or personal property taxes, income taxes or other taxes or assessments of any or all kinds levied or assessed upon or with respect to the Agency Trust or the Plan;. (1) As directed by the Trust Administrator, to hold term or ordinary life insurance contracts on the lives of Participants (but in the case of conflict between any such contract and the Plan, the terms of the Plan shall prevail); to pay from the Agency Trust the premiums on such contracts; to distribute, surrender or otherwise dispose of such contracts; to pay the proceeds, if any, of such contracts to the proper persons in the event of the death of the insured Participant; to enter into, modify, renew and terminate annuity contracts of deposit administration of immediate participation or other group or individual type with one or more insurance companies and to pay or deposit all or any part of the Agency Trust Assets thereunder; to provide in any such contract for the investment of all or any part of funds so deposited with the insurance company in securities under separate accounts; to exercise and claim all rights and benefits granted to the contract holder by any such contracts; (m) To exercise all the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under applicable federal or California laws, as amended from time to time, it being intended that, except as herein otherwise provided, the powers conferred upon the Trustee herein shall not be construed as being in limitation of any authority conferred by law, but shall be construed as consistent or in addition thereto. is 2567_12 PEL 0 0 4.2 Additional Trustee Powers In addition to the other powers enumerated above, and whether or not the Member Agency has retained investment authority or delegated it to an Investment Fiduciary or Participants in Participant Directed Accounts, the Trustee in any and all events is authorized and empowered: (a) To invest funds pending required directions in any type of interest- bearing account including without limitation, time certificates of deposit or interest - bearing accounts issued by Union Bank of California N.A., or any mutual fund or short term investment fund ( "Fund "), whether sponsored or advised by Union Bank of California or any affiliate thereof; Union Bank of California, N.A. or its affiliate may be compensated for providing such investment advice and providing other services to such Fund, in addition to any Trustee's fees received pursuant to this Trust Agreement; (b) To cause all or any part of the Agency Trust to be held in the name of the Trustee (which in such instance need not disclose its fiduciary capacity) or, as permitted by law, in the name of any nominee, and to acquire for the Agency Trust any investment in bearer form, but the books and records of the Agency Trust shall at all times show that all such investments are a part of the Agency Trust and the Trustee shall hold evidences of title to all such investments; (c) To serve as sole custodian with respect to the Agency Trust Assets; (d) To employ such agents and counsel as may be reasonably necessary in managing and protecting the Assets and to pay them reasonable compensation; to employ any broker - dealer, including a broker - dealer affiliated with the Trustee, and pay to such broker - dealer at the expense of the Agency Trust, its standard commissions; to settle, compromise or abandon all claims and demands in favor of or against the Agency Trust; and to charge any premium on bonds purchased at par value to the principal of the Agency Trust without amortization from the Agency Trust, regardless of any law relating thereto; (e) In addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration of the Agency Trust, as though the absolute owner thereof; (f) To abandon, compromise, contest, arbitrate or settle claims or demands; to prosecute, compromise and defend lawsuits, but without obligation to do so, all at the risk and expense of the Agency Trust; (g) To exercise and perform any and all of the other powers and duties specified in this Trust Agreement or the Plan; 15 2567_12 PEL (h) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by United States agency; (i) To comply with all requirements imposed by applicable provisions of law; Q) To seek written instructions from the Plan Administrator or other fiduciary on any matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the fiduciary should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of this Agency Trust; (k) As directed by the Plan Administrator or Delegatee if duly authorized, to cause the benefits provided under the Plan to be paid directly to the persons entitled thereto under the Plan, and in the amounts and in the manner specified, and to charge such payments against the Agency Trust with respect to which such benefits are payable; (1) To compensate such executive, consultant, actuarial, accounting, investment, appraisal, administrative, clerical, secretarial, medical, custodial, depository and legal firms, personnel and other employees or assistants as are engaged by the Plan Administrator in connection with the administration of the Plan and to pay from the Agency Trust the necessary expenses of such firms, personnel and assistants, to the extent not paid by the Plan Administrator; (m) To act upon proper written directions of the Plan Administrator or Delegatee, including directions given by photostatic transmissions using facsimile signature; (n) To pay from the Agency Trust the expenses reasonably incurred in the administration of the Agency Trust as provided in the Plan; (o) To maintain insurance for such purposes, in such amounts and with such companies as the Plan Administrator shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries but only if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary. Mp 2567_12 PEL • • 4.3 Custodial Powers If an Alternate Trustee has been appointed pursuant to Section 3.9, Union Bank of California, N.A., ( "Bank ") as Custodian, shall only have the following responsibilities: (a) Keep records of all transactions entered into for the Agency Trust and furnish to Alternate Trustee statements no less frequently than quarterly showing all principal and income transactions and Agency Trust Assets, which shall be deemed ratified and approved by Alternate Trustee unless Custodian is advised to the contrary within ninety (90) days of Custodian's mailing thereof by first class mail to Alternate Trustee; (b) Receive payments of income and principal on Agency Trust Assets, and retain or remit in accordance with Alternate Trustee's written instructions; (c) Hold Agency Trust Assets in Bank's name as Custodian for Alternate Trustee or in Bank's nominee name, or, as to securities eligible to be held by the depository trust company or other depository, in its nominee name; (d) Purchase and sell securities, attend to the exchange of securities, deposit or exchange securities of companies in reorganization, and tender securities on redemption or tender offer solely upon direction of Alternate Trustee; (e) Sign the name of Alternate Trustee to stock and bond powers and any other instruments required for the proper exercise of Bank's duties, and Bank is appointed Alternate Trustee's attorney -in -fact for these purposes; (f) Forward all proxies and accompanying materials to Alternate Trustee to be voted unless directed in writing to the contrary. Disclose Alternate Trustee's name and address in response to requests from issuers of securities and others to facilitate direct communication for proxy and tender offer response; (g) Sell all fractional shares of stock received as a result of stock dividends or other corporate action; (h) Notify Alternate Trustee of any inability to collect income or principal if the securities or other property constituting Assets upon which such amount is payable is in default, or if payment is refused after due demand. Bank shall be under no obligation or duty to take any action to effect collection of defaulted payments, or to file or pursue any bankruptcy or class action claims with respect to Agency Trust. 17 2567_12 PEL 9 (i) Perform a telephonic verification to Alternate Trustee or Alternate Trustee's authorized representative or such other security procedure selected by Alternate Trustee prior to wiring funds or following facsimile directions as Bank may require. Alternate Trustee assumes all risk of delay of transfer if Bank is unable to reach Alternate Trustee or Alternate Trustee's authorized representative, or in the event of delay as a result of attempts to comply with any other security procedure selected by Alternate Trustee. Article V INVESTMENTS 5.1 Investment Fiduciary Except as herein provided, the Plan Administrator shall be the Investment Fiduciary. 5.2 Appointment of Trustee or an Investment Manager as Investment Fiduciary The Plan Administrator may appoint the Trustee or an investment manager as the Investment Fiduciary, with the authority and duty to direct the investment and management of all or any portion of the Assets of the Agency Trust. 5.3 Appointment of Investment Fiduciary No action of the Plan Administrator pursuant to 5.2 shall be effective until a certified copy of the revised Adoption Agreement and, if_ required, any such resolution of the governing body of the Member Agency or Plan Administrator action is delivered to the Trustee. Upon receipt and acceptance, the Trustee or investment manager, as the case may be, shall assume fiduciary responsibility with respect to the investment and management of such assets of the Agency Trust as are specified in the resolution or action. Any transfer of investment authority to the Trustee or to an investment manager may be revoked by delivering to the Trustee or the investment manager a written notice from either the Member Agency governing body or the Plan Administrator, as the case may be. 5.4 Reliance by Trustee on Investment Fiduciary The appointment, selection and retention of an Investment Fiduciary shall be solely the responsibility of the Member Agency acting through its governing body or the Plan Administrator. The Trustee may rely upon the fact that the 18 256712 PCL $0 0 Investment Fiduciary is authorized to direct the investment and management of the Assets of the Agency Trust until such time as the Plan Administrator shall notify the Trustee in writing that another Investment Fiduciary has been appointed to replace the Investment Fiduciary named, or, in the alternative, that the Investment Fiduciary named has been removed. 5.5 When Trustee is not Investment Fiduciary The Trustee shall not be the Investment Fiduciary and shall have no responsibility or authority for the investment and management of assets unless specifically designated as the Investment Fiduciary as to some or all of the assets in the Agency Trust and accepts such designation. (a) During such period or periods of time, if any, as the Plan Administrator or an Investment Fiduciary is authorized to direct the investment and management of the Assets of the Agency Trust, the Trustee shall (subject to the overriding limitations hereinafter set forth) effect and change investment of the Assets of the Agency Trust as directed in writing by the Plan Administrator, or Investment Fiduciary, as the case may be, and shall neither effect nor change any such investments without such direction and shall have no right, duty or responsibility to recommend investments or investment changes. The following provisions shall govern the Trustee during such period or periods of time; if any, during which the Plan Administrator or an Investment Fiduciary is authorized to direct the investment and management of the Assets of any Agency Trust: (b) So long as the Plan Administrator retains or reacquires full power and responsibility to direct the Trustee with respect to the investment and management of all or any portion of the Assets of the Agency Trust, the Trustee shall not be liable nor responsible for losses or unfavorable results arising from the Trustee's compliance with proper directions of the Plan Administrator which are made in accordance with the terms of this Trust Agreement and which are not contrary to the provisions of any applicable federal or state statute regulating such investment. (c) In the event an Investment Fiduciary is given authority and responsibility with respect to the investment and management of the Assets of the Agency Trust, neither the Trustee nor the Plan Administrator shall be liable or responsible in any way for any losses or other unfavorable results arising from the Trustee's compliance with investment or management directions received by the Trustee from the Investment Fiduciary. 5.6 Investment Directions Must be in Writing Subject to the provisions of Section 5.18, in order to be valid all directions concerning investments made by the Plan Administrator, or the Investment 1s 2567_12 PEL 0 0 Fiduciary, or PARS Trustee must be signed by the authorized person or persons acting on behalf of the Plan Administrator, Investment Fiduciary or Trustee, as the case may be. 5.7 Trustee Reliance On Directions (a) The Trustee shall be entitled to rely upon directions which the Trustee receives. The Trustee shall be under no duty to question any directions of the Investment Fiduciary or Plan Administrator nor to review any securities or other property of the PARS Trust or Agency Trust constituting assets thereof with respect to which an Investment Fiduciary or the Plan Administrator has investment responsibility, nor to make any suggestions to the Investment Fiduciary or Plan Administrator in connection therewith. The Trustee shall, as promptly as possible, comply with any written directions given by the Plan Administrator or an Investment Fiduciary hereunder. The Trustee shall not be liable, in any manner nor for any reason, for the making or retention of any investment pursuant to such directions, nor shall the Trustee be liable for its failure to invest any or all of the Assets of the Agency Trust in the absence of such written directions. The Trustee shall be under no obligation to seek written clarification in the event of ambiguity. (b) During such period of time, if any, as the Plan Administrator, or an Investment Fiduciary, is authorized to direct the Trustee, the Trustee shall have no obligation to determine the existence of any conversion, . redemption, exchange, subscription or other right relating to any securities purchased of which notice was given prior to the purchase of such securities, and shall have no obligation to exercise any such right unless the Trustee is informed of the existence of the right and is instructed to exercise such right, in writing, by the Plan Administrator or the Investment Fiduciary, as the case may be, within a reasonable time prior to the expiration of such right. (c) In any event, neither the Plan Administrator nor any Investment Fiduciary referred to above shall direct the purchase, sale or retention of any Assets of the Agency Trust if such directions are not in compliance with applicable law. 5.8 Trustee Fees As may be agreed upon, in writing, between the Plan Administrator and Trustee, the Trustee will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the Agency Trust or the PARS Trust. go 256712 PEI. Ol 5.9 Contributions 0 The Plan Administrator shall make all of its contributions to the Trustee, and shall also transmit all contributions of Plan participants, as may be required or allowed by the Plan, to the Trustee. Such contributions shall be in cash unless the Trustee agrees to accept a contribution that is not in cash. All contributions shall be paid to the Trustee for investment and reinvestment pursuant to the terms of this Trust Agreement. The Trustee shall not have any duty to determine or inquire whether any contributions to the Agency Trust made to the Trustee by any Plan Administrator are in compliance with the Plan; nor shall the Trustee have any duty or authority to compute any amount to be paid to the Trustee by any Plan Administrator; nor shall the Trustee be responsible for the collection or adequacy of the contributions to meet and discharge liabilities under the Plan. The contributions received by the Trustee from each Member Agency shall be held and administered pursuant to the terms hereof without distinction between income and principal. 5.10 Money Market Fund Pending any investment directions, such cash in the Agency Trust in an amount as is reasonable in the discretion of the Trustee, may be deposited in a money market fund selected by the Trustee or the Member Agency. 5.11 Purchase of Contracts The Trustee shall have the authority to purchase individual or group insurance, annuity, preliminary term, group pension, and variable annuity contracts in accordance with the directions of the Plan Administrator or other insurance contracts at the direction of the Plan Administrator or Investment Fiduciary if such contracts are acceptable to the Trustee. The Trustee shall act as custodian of such contracts if an Alternate Trustee is appointed as to such contracts. 5.12 Records (a) The Trustee shall maintain accurate records and detailed accounts of all investments, receipts, disbursements and other transactions hereunder at the PARS Trust level. Such records shall be available at all reasonable times for inspection by the Trust Administrator. The Trustee shall, at the direction of the Trust Administrator, submit such valuations, reports or other information as the Trust Administrator may reasonably require. (b) Valuation. The assets of the Agency Trust shall be valued at their fair market value on the date of valuation, as determined by the Trustee based upon such sources of information as it may deem reliable; provided, however, that the Plan Administrator shall instruct the Trustee as to valuation of assets which are not readily determinable on an established 21 2567 12 PEL market. The Trustee may rely conclusively on such valuations provided by the Plan Administrator and shall be indemnified and held harmless by the Plan Administrator with respect to such reliance. If the Plan Administrator fails to provide such values, the Trustee may take whatever action it deems reasonable, including employment of attorneys, appraisers or other professionals, the expense of which will be an expense of administration of the Agency Trust. Transactions in the account involving such hard to value assets may be postponed until appropriate valuations have been received and Trustee shall have no liability therefore. 5.13 Statements (a) Periodically as specified, and within sixty days after June 30, or the end of the PARS Trust's fiscal year if different, Trustee shall render to the Trust Administrator as directed, a written account showing in reasonable summary the investments, receipts, disbursements and other transactions engaged in by the Trustee during the preceding fiscal year or period with respect to the PARS Trust. Such account shall set forth the assets and liabilities of the PARS Trust valued as of the end of the accounting period. (b) The Trust Administrator may approve such statements either by written notice or by failure to express objections to such statements by written notice delivered to the Trustee within 90 days from the date the statement is delivered to the Trust Administrator. Upon approval, the Trustee shall be released and discharged as to all matters and items set forth in such statement as if such account had been settled and allowed by a decree from a court of competent jurisdiction. 5.14 Wire Transfers The Trustee shall follow the Plan Administrator's, Delegatee's, or Trust Administrator's wire transfer instructions in compliance with the written security procedures provided by the parry providing the wire transfers. The Trustee shall perform a telephonic verification to the Plan Administrator, Trust Administrator, or Delegatee, of such other security procedure, as selected by the party providing wire transfer directions, prior to wiring funds or following facsimile directions as Trustee may require. The Plan Administrator assumes the risk of delay of transfer if Trustee is unable to reach the Plan Administrator, or in the event of delay as a result of attempts to comply with any other security procedure selected by the directing party. 5.15 Exclusive Benefit The Assets of the Agency Trust shall be held in trust for the exclusive purpose of providing benefits to the participants and their beneficiaries of the Member Agency Plan, and defraying reasonable expenses of the Plan, and shall not be 22 2567_12 PEL 0 0 used for or diverted to any other purpose. No party shall have authority to use or divert such Plan's Assets for the payment of benefits or expenses of any other Member Agency's Plan. 5.16 Delegation of Duties The Plan Administrator, Delegatee, or Trust Administrator, may at any time retain the Trustee as its agent to perform any act, keep any records or accounts and make any computations that are required of the Plan Administrator, Delegatee or Trust Administrator by this Trust Agreement or by the Plan. The Trustee may be compensated for such retention and such retention shall not be deemed to be contrary to this Trust Agreement. 5.17 Distributions All benefits payable pursuant to the Plan shall be paid out of the Assets of the Agency Trust by the Trustee pursuant to the direction of the Plan Administrator or Delegatee. The Trustee shall, from time to time, upon the written direction of the Plan Administrator or Delegatee, make distributions from the Assets of the Agency Trust to or for the benefit of such persons, in such manner in such form(s), in such amounts and for such purposes as may be specified in such directions. The Trustee at the direction of the Plan Administrator or Delegatee may make any distribution required to be made by it hereunder by delivering to the Plan Administrator or Delegatee: Its check payable to the person to whom such distribution is to be made, for delivery to such person; or Its check payable to an insurer for the benefit of such person, for delivery by such insurer; or insurance contracts held on the life of the Participant to whom or with respect to whom the : distribution is being made, for redelivery to the person to whom such distribution is to be made; provided that any contract distributed shall be endorsed as non- transferable. In directing the Trustee to make distributions, the Plan Administrator or Delegatee shall follow the provisions of the Plan and shall not direct that any distribution be made either during the existence or upon discontinuance of the Plan, which would cause any part of the Assets of the Agency Trust to be used for or diverted to purposes other than as provided in the Plan and this PARS Trust. In no event shall the Trustee have any responsibility respecting the application of such distributions, nor for determining or inquiring into whether such distributions are in accordance with the Plan. 23 2567_12 PEL 0 0 5.18 Participant Directed Accounts The Member Agency may, by written resolution and execution of the Adoption Agreement, terminate the Plan Administrator's right to direct the investment and management of all or any portion of the Assets of the Agency Trust and allow Participants to direct their own account balances ( "Participant Directed Accounts "). Notwithstanding any other provision of this Trust Agreement, for Participant Directed Accounts, the Trustee shall be entitled to act upon proper directions of the Plan Administrator, Trust Administrator, and Participants including directions in writing, or oral instructions which Trustee in its discretion may follow without receipt of written instructions, instruction given by photostatic teletransmission using facsimile signature, or those instructions which are digitally recorded on the UBOC Voice Response Unit ( "VRU ") or internet website. Trustee is hereby authorized to record conversations and transmissions made in connection with the Agency Trust. Trustee's recording or lack of recording of any such oral, internet or digital instructions, and /or receipt or lack of receipt of facsimile transmissions, as reflected in the Trustee's records maintained in the ordinary course of business shall constitute conclusive proof of Trustee's receipt or non - receipt of such instructions. The Trustee and /or Trust Administrator shall not be liable in any manner for investment or other losses or other liability attributable to Participant's directions, or lack thereof, or exercise of control over the investments of their Participant Directed Accounts. Likewise, the Trustee and /or Trust Administrator shall have no duty or responsibility to review, monitor or make recommendations regarding investments made at the direction of the Participants or the Plan Administrator. In order for Member Agency to be relieved of investment fiduciary liability, the requirements of California law including Section 53213.5 of the California Government Code must be met. The Plan Administrator shall establish uniform and nondiscriminatory rules for the operation of the Participant Directed Accounts, including whether the Participant shall direct the Trustee or direct the Plan Administrator who directs the Trust. Administrator who forwards such directions to the Trustee. Member Agency shall. designate whether Participant Directed Accounts are to be established pursuant to the provisions of section 5.18(a) or 5.18(b), below: (a) Participant Direction in Individually Directed Accounts. If the Member Agency has so elected, Participants may have investment direction power over their own segregated account balances ( "Individually Directed Account" or "IDA "). Investments may be directed by Participants into assets administratively acceptable to Trustee, as limited by guidelines developed by the Plan Administrator (the "Permissible Investment Guidelines "). Plan Administrator shall notify Participants of the Plan's Permissible Investment Guidelines as in effect from time to time. In the absence of directions from a Participant, the Plan Administrator may direct the investment of the IDA. The Trustee may refuse to comply with the 24 2567_12 PEL 0 directions of the Participant to invest in assets other than those listed in its Permissible Investments Guidelines or with directions which the Trustee deems to be improper or contrary to the provisions of the Plan and Agency Trust or the Internal Revenue Code and shall have no liability for such refusal. (b) Participant Directed Account within Plan Administrator Selected Investment Options ( "SelectBENEF(T Accounts "): If the Member Agency so elects, the Participant's Account Balance shall be segregated into a Participant Directed Account ( "SelectBENEFIT Account "), over which the Participant may direct investment into one or more investment alternatives ( "Investment Options'). The Plan Administrator or its appointed Investment Fiduciary shall have full responsibility for designating the Investment Options under the Plan and for selecting the underlying investment vehicle(s) for each designated Investment Option into which a Participant may direct investment of his or her SelectBENEFIT Account. To the extent allowed by law, neither the Member Agency, the Plan Administrator, the Trust Administrator nor the Trustee shall have any responsibility for monitoring the directions of the Participant nor shall the Member Agency, the Plan Administrator, the Trust Administrator or the Trustee be liable in any manner for investment or other losses or other liability for following directions of a Participant. (c) If SelectBENEFIT Accounts are established, notwithstanding any other provision of this Trust Agreement, the Member Agency may appoint the Trustee to provide ministerial services as recordkeeper for such accounts by so indicating in the Member Agency's Adoption Agreement, provided that an acceptable service agreement has been executed by and between the Member Agency, the Plan Administrator, the Trustee and the Trust Administrator. Article VI FIDUCIARY RESPONSIBILITIES 6.1 More Than One Fiduciary Capacity Any one or more of the fiduciaries with respect to the PARS Trust Agreement or the Agency Trust may, to the extent required thereby or as directed by the Plan Administrator pursuant to this PARS Trust Agreement and the Plan, serve in more than one fiduciary capacity with respect to the PARS Trust Agreement, the Agency Trust and the Plan. 25 256712 PFL 0 0 6.2 Fiduciary Discharge of Duties Except as otherwise provided in the Code and applicable law each fiduciary shall discharge such fiduciary's duties with respect to the PARS Trust Agreement and the Plan: Solely in the interest of the Participants and for the exclusive purpose of providing benefits to Participants, and defraying reasonable expenses of administering the Plan. With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. By diversifying the investments of the Plan and the Agency Trust so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so. 6.3 Limitations on Fiduciary Responsibility To the extent permitted by applicable law: No fiduciary shall be liable with respect to a breach of fiduciary duty by any other fiduciary if such breach was committed before such party became a fiduciary or after such party ceased to be a fiduciary. No fiduciary shall be liable for a breach by another fiduciary unless the non - breaching fiduciary knowingly participates in such a breach, knowingly undertakes to conceal such breach, or has actual knowledge of such breach and fails to take reasonable steps to remedy such breach. No fiduciary shall be liable for carrying out a proper direction from another fiduciary, including refraining from taking an action in the absence of a proper direction from the other fiduciary possessing the authority. and responsibility to make such a direction, which direction the fiduciary in good faith believes to be authorized and appropriate. 6.4 Indemnification of Trustee by Member Agency The Trustee shall not be liable for, and Member Agency shall indemnify, defend (as set out in 6.8 of this Trust Agreement), and hold the Trustee (including its officers, agents, employees and attorneys) and other Member Agencies and Alternate Trustees, harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Member Agency's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 26 2567 12 PEL 0 0 6.5 Indemnification of Member Agency by Trustee The Member Agency shall not be liable for, and Trustee shall indemnify, defend (as set out in 6.8 of this Trust Agreement), and hold the Member Agency (including its officers, agents, employees and attorneys) and other Member Agencies and Alternate Trustees, harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.6 Indemnification of Trustee by Trust Administrator The Trustee shall not be liable for, and Trust Administrator shall indemnify and hold the Trustee (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trust Administrator's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.7 Indemnification of Trust Administrator by Trustee The Trust Administrator shall not be liable for, and Trustee shall indemnify and hold the Trust Administrator (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in. the execution or performance of its duties under this Trust Agreement. 6.8 Indemnification Procedures Promptly after receipt by an indemnified party of notice or receipt of a claim or the commencement of any action for which indemnification may be sought, the indemnified party will notify the indemnifying party in writing of the receipt or commencement thereof. When the indemnifying party has agreed to provide a defense as set out above that party shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to such indemnitee) and the payment of expenses, insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the indemnifying party. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the 27 256712 PEL 0 9 indemnifying party unless (i) the employment of such counsel has been specifically authorized by the indemnifying party or (ii) the named parties to any such action (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. The indemnifying party shall not be liable to indemnify any person for any settlement of any such action effected without the indemnifying party's consent. 6.9 No Joint and Several Liability This document is not intended to and does not create any joint powers agreement or any joint and several liability. No Member Agency shall be responsible for any contributions, costs or distributions of any other Member Agency. Article VII AMENDMENT, TERMINATION AND MERGER 7.1 No Obligation to Continue Plan and Trust Continuance of the Agency Trust, participation in the PARS Trust Program and continuation of the Plan are not assumed as a contractual obligation of the Member Agency. 7.2 Amendments (a) The PARS Trust Agreement may only be amended or terminated as provided herein. A two- thirds majority or greater of the Member Agencies shall have the right to amend this Trust Agreement from time to time, and to similarly amend or cancel any amendments. A copy of all amendments shall be delivered to the Trustee, the Trust Administrator and Plan Administrators promptly as each is made. (b) Such amendments shall be set forth in an instrument in writing executed by the amending party, the Trust Administrator and the Trustee. Any amendment may be current, retroactive or prospective, provided, however, that no amendment shall: (1) Cause the Assets of any Agency Trust to be used for or diverted to purposes other than for the exclusive benefit of Participants who have an interest in such Agency Trust or for the purpose of defraying the reasonable expenses of administering such Agency Trust. 2e 2567_12 PEI. • 9 (2) Have any retroactive effect so as to reduce the benefits of any Participant having an interest in the Agency Trust as of the date the amendment is adopted, except that such changes may be made as may be required to permit this PARS Trust Agreement to meet the requirements of applicable law. (3) Change or modify the duties, powers or liabilities of the Trustee or the Trust Administrator hereunder without its consent. (4) Permit the Assets of any Agency Trust to be used for the benefit of any other Plan of the Member Agency unless the Member Agency agrees to such use. 7.3 Termination of Plan A termination of the Plan for which the Agency Trust was established shall not, in itself, effect a termination of an Agency Trust. Upon any termination of the Plan, the Assets of the Agency Trust shall be distributed by the Trustee as and when directed by the Plan Administrator. From and after the date of such termination of the Plan and until final distribution of the Assets the Trustee shall continue to have all the powers provided herein as are necessary or expedient for the orderly liquidation and distribution of such assets and the Agency Trust shall continue until the interests of all Participants have been completely distributed to or for the benefit of the Participants in accordance with the Plan. 7.4 Reversion In the event a Member Agency's Plan is terminated, the vested interest of any Participant shall not be diminished or adversely affected. Except as may be provided in this Trust Agreement or the Plan, such termination shall not vest in the Member Agency any corpus or income under the Agency Trust, nor permit the Plan to discriminate as to coverage, or as to allocation:of contributions or earnings, in favor of employees who are officers, shareholders, or highly compensated, nor cause the Agency Trust to lose its exemption pursuant to 501(a) of the Code. No modification, amendment or termination of the Plan shall be construed to be a termination of the Agency Trust so as to require the Trustee to make a distribution of any of the Assets of the Agency Trust to any Participant. In order to make such distribution the Trustee must receive written instructions from the Plan Administrator or Delegatee in a form acceptable to the Trustee. If any Member Agency adopts a Plan whose assets are maintained in an Agency Trust and makes application to the Internal Revenue Service, within one year from the date of adoption of such Plan, for a determination that such Plan is a qualified plan under Section 401 (a) of the Code, and if such Plan is determined by the Internal Revenue Service not to be a qualified Plan, then all contributions 29 256712 PLL 9 9 and investment income attributable to such Plan shall be returned to the Member Agency upon application to the Trustee. 7.5 Fund Recovery Based on Mistake of Fact Except as hereinafter provided, the Assets of the Agency Trust shall never inure to the benefit of the Member Agency. The Assets shall be held for the exclusive purposes of providing benefits to Participants having an interest in the Plan and defraying reasonable expenses of administering the Agency Trust. The sole exception to the foregoing is as follows: Mistake of Fact. In the case of a contribution which is made by the Plan Administrator because of a mistake of fact; that portion of the contribution relating to the mistake of fact (exclusive of any earnings or losses .attributable thereto) may be returned to the Plan Administrator, provided such .return occurs within one (1) year after discovery by the Plan Administrator of the mistake. If any repayment is payable to the Plan Administrator, then, as a condition to such repayment, and only if requested by Trustee, the Plan Administrator shall execute, acknowledge and deliver to the Trustee its written undertaking, in a form satisfactory to the Trustee, to indemnify, defend and hold the Trustee harmless from all claims, actions, demands or liabilities arising in connection with such repayment. 7.6 Transfers from Other Qualified Plans Notwithstanding any other provision hereof, there may be transferred to the Trustee, upon direction of the Plan Administrator, all or any of the assets held (whether by a trustee, custodian or otherwise) on behalf of any other plan which satisfies the applicable requirements of Section 401 of the Code, and which is maintained for the benefit of any persons who are or will become Participants in the Plan. 7.7 Termination The PARS Trust Agreement may be terminated only by a unanimous agreement of all Member Agencies. Such action must be in writing and delivered to the Trustee and Trust Administrator, Article VIII MISCELLANEOUS PROVISIONS 8.1 Nonalienation To the maximum extent permitted by law, a Participant's interest in the Agency Trust shall not in any way be liable to attachment, garnishment, assignment or 30 2567_12 PEL other process, or be seized, taken, appropriated or applied by any legal or equitable process, to pay any debt or liability of the Participant or any other party. Agency Trust Assets shall not be subject to the claims of the Member Agency or the claims of its creditors. 8.2 Saving Clause In the event any provision of this PARS Trust Agreement and each Agency Trust is held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the PARS Trust and /or Agency Trust, but this instrument shall be construed and enforced as if said provision had never been included. 8.3 Applicable Law This PARS Trust Agreement and each Agency Trust. shall be construed, administered and governed under the Code and the applicable provisions of California law. To the extent any of the provisions of this Trust Agreement or the Plan are inconsistent with the Code or applicable California law, the provisions of the Code or California law shall control. In the event, however, that any provision is susceptible to more than one interpretation, such interpretation shall be given thereto as is consistent with the Trust Agreement and the Plan being a qualified governmental retirement trust and plan within the meaning of the Code. 8.4 Joinder of Parties In any action or other judicial proceedings affecting this Trust Agreement, it shall be necessary to join as parties only the Trustee, the Plan Administrator or Delegatee. No participant or other persons having an interest in any Agency Trust shall be entitled to any notice or service of process unless otherwise required by law. Any judgment entered in such a proceeding or action shall be binding on all persons claiming under this Trust Agreement, provided, however, that nothing in this Trust Agreement shall be construed as to. deprive a participant of such participant's right to seek adjudication .of such .participant's rights under applicable law. 8.5 Employment of Counsel The Trustee may consult with legal counsel (who may be counsel for the Trustee or Member Agency Plan Administrator) and charge the Agency Trust. 8.6 Gender and Number Words used in the masculine, feminine or neuter gender shall each be deemed to refer to the other whenever the context so requires; and words used in the singular or plural number shall each be deemed to refer to the other whenever the context so requires. 31 2567_12 PEL L 8.7 Headings 0 Headings used in this Trust Agreement are inserted for convenience of reference only and any conflict between such headings and the text shall be resolved in favor of the text. 8.8 Counterparts The Adoption Agreement of this Trust Agreement may be executed in an original and any number of counterparts by the Plan Administrator (executing an Adoption Agreement), the Trust Administrator and the Trustee, each of which shall be deemed to be an original of the one and the same instrument. Article IX ACKNOWLEDGMENT AND ACCEPTANCE The provisions of the PARS Trust Agreement as contained herein are hereby amended and restated as of July 1, 1999 (the "Amended Effective Date ") IN WITNESS WHEREOF, the Plan Administrator (by executing the Adoption Agreement) the Trust Administrator and Trustee have executed this Trust Agreement by their.duly authorized agents on this19th day of January, 2000. ACKNOWLEDGED AND ACCEPTED this 19th day of January, 2000. THE TRUSTEE UNION BANK OF CALIFORNIA, N.A. By: i C Title: Senior Vice President THE TRUST ADMINISTRATOR PHASE II SYSTEMS mm Title: President 32 2567_12 PEL F T 1�"_; err .. � • __ ._ _ : 1 ATTACHMENT IV THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN EFFECTIVE JULY 1, 2000 DEFINED BENEFIT PLAN F.T. CEIPA S_RE GENCMSU.,s.md\Defimd Bmrft Plan D.mm(Vemion 4). d. —I- T I . TABLE OF CONTENTS 0 Page INTRODUCTION......................................................................................... ............................... 3 ARTICLE I - PARTICIPATION 1.1 Eligibility for Benefits ........................................................................ ............................... 4 1.2 Commencement of Benefits ................................................................ ............................... 5 ARTICLE II - BENEFITS 2.1 Retirement Benefits ............................................................................ ............................... 6 2.2 Survivor Continuance Benefit ............................................................. ............................... 7 2.3 Pre - Retirement Death Benefits ........................................................... ............................... 7 2.4 Designation of Beneficiary ................................................................. ............................... 7 ARTICLE III - VESTING 3.1 Vesting ................................................................................................. ..............................9 3.2 Full or Partial Termination .................................................................. ............................... 9 3.3 Attainment of Normal Retirement Age ............................................... ............................... 9 3.4 Affect of Vesting ................................................................................. ............................... 9 I / ARTICLE IV - DISTRIBUTIONS 4.1 Normal Form of Benefit .................................................................... ............................... 10 4.2 Optional Forms of Benefit ................................................................ ............................... 10 4.3 Cash Out of Small Benefits ............................................................... ............................... 11 4.4 Actuarial Equivalence ....................................................................... ............................... 11 4.5 Direct Rollovers ................................................................................ ............................... 1 I ARTICLE V - ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights not Subject to Execution ...................................... ............................... 13 5.2 Rules and Regulations ....................................................................... ............................... 13 5.3 Military Service ................................................................................ ............................... 13 ARTICLE VII - DEFINITIONS 6.1 Definitions ........................................................................................... .............................14 APPENDIX A - ANNUAL ADDITIONAL LIMITS F: LLANChlFARS _ e—m Mn Oocunnent(vwdon4)doe —2— INTRODUCTION The City of Rosemead ( "Employer ") has adopted this tax - qualified governmental defined benefit plan for the benefit of its eligible employees to provide supplemental retirement benefits to eligible employees of the Employer in addition to the benefits employees will receive from the Public Employees' Retirement System ( "PERS "). It is intended that this plan and the trust established to hold the assets of the plan shall be qualified under section 401(a) and tax- exempt under Section 501 (a) of the Internal Revenue Code of 1986, together with any amendments thereto ( "Code "). It is further intended that this plan and the trust established hereunder shall meet the requirements of a pension trust under California Government Code ( "Act ") sections 53215 - 53224, or their successor sections (the "Act "). This document, together with Appendix A — Annual Additional Limits, constitutes the City of Rosemead Public Agency Retirement System Retirement Enhancement Plan. FV,ANCENARS R GENCMS seme inW Bmeft Ran DO mt(VO on 4)d —3— 0 ARTICLE I PARTICIPATION 1.1 Eligibility for Benefits. 0 a) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1 Tier 1 if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract city attorney on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. b) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1 Tier Il if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract city attorney on or after July 1, 2000; (2) is at least sixty (60) years of age; (3) has completed at least ten (10) but not more than twenty (20) years of full- time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City MAN(tVARS_R GBNCI�Bm P �(V 4) E -4- 0 Attorney for at least ten (10) but not more than twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. C) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1 Tier III if he /she: (1) is a City Council member of the Employer on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. 1.2 Commencement of Benefits. Benefits shall commence as of the first day of the month after an Employee meets the eligibility requirements of section 1.1. MANCENA0.5_ B KPm �(Va Gn 4)E -5- 11 ARTICLE II BENEFITS 2.1 Retirement Benefits. 0 Tier 1: The benefit shall be paid in the Normal Form of Benefit and shall be equal to an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Benefit Factor. Tier II: The benefit shall be paid in the Normal Form of Benefit and shall be equal to an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times two - and -one half percent (2.50 %). F � S ner Gc CIEs o=mm Wemw Pw Mo (V tlon4), c —6— 0 (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Benefit Factor. Tier III: The benefit shall be paid in the Normal Form of Benefit and shall be equal to an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of employment as a City Council member with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Benefit Factor. 2.2 Survivor Continuance Benefit. No Survivor Continuance Benefit shall be provided unless the Member elects to have the benefit paid in an Optional Form of Benefit. 2.3 Pre- Retirement Death Benefits. No Pre - Retirement Death Benefits shall be provided. 2.4 Designation of Beneficiary. Each Member shall have the right to designate a Beneficiary to receive the death benefits, if any, that are payable to a Beneficiary from this Plan. Such designation does not permit the FV.�_RE A Q CffSRU� Bm AP OOnmmt(VV a).tl —7— 0 0 Member to change a person identified under another provision of the Plan as being eligible to receive a benefit. Such designation must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. The Beneficiary for a married Member shall be the Member's spouse at the date of death, unless the written consent of such spouse is provided upon a form acceptable to the Employer. Each such designation for death benefits must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. If no such designation is on file with the Employer at the time of the death of the Member, or if for any reason at the sole discretion of the Employer, such designation is defective, then the spouse of such Member shall be conclusively deemed to be the Beneficiary designated to receive such benefit. The signature of the Member's spouse shall be required on a designation of beneficiary form or an application for a benefit under the Plan if the spouse is not the beneficiary, unless the Member declares in writing that one of the following conditions exists: (1) The Member is not married; (2) The Member does not know, and has taken all reasonable steps to determine, the whereabouts of the spouse; (3) The spouse is incapable of executing the acknowledgment because of an incapacitating mental or physical condition; (4) The Member and spouse have executed a marriage settlement agreement that makes the community property laws inapplicable to the marriage; or (5) The current spouse has no identifiable community proprietary interest in the benefits. MANCt SR GENCIE� BwtltP DOC t(VV m4)Eoc —8- 1] 3.1 Vesting. ARTICLE III VESTING C] A Member will be fully vested in his Retirement Benefit upon meeting the requirements of Section 1.1. 3.2 Full or Partial Termination. Notwithstanding the vesting schedule, upon the complete discontinuance of Employer contributions to the Plan or upon any full or partial termination of the Plan, the Member's Retirement Benefit shall become one hundred percent (100 %) Vested. 3.3 Attainment of Normal Retirement A Member shall be fully vested in his Retirement Benefit upon attainment of Normal Retirement Age and fulfilling all requirements established in Section 1.1. 3.4 Affect of Vesting. Vesting shall entitle a Member to payment during his lifetime of the Retirement Benefit at the times and upon the conditions specified herein, and shall entitle the Member's survivor or Beneficiary to any death benefits provided herein. Any unpaid Retirement Benefits are forfeited upon the Member's death. P;W�S REP GENCIEMo.emamDM Bmen PW BOt 1(Va cn l) d -9- ARTICLE IV DISTRIBUTIONS 4.1 Normal Form of Benefit. L Unless the member elects an optional form of benefit under Section 4.2, payments to a Member of a Retirement Benefit shall be made in the form of monthly payments commencing with the first day of the month following the Member's retirement on or after Normal Retirement Age and ending on the first day of the month in which the Member's death occurs, in the amount specified in Section 2.1. The Retirement Benefit shall be subject to an annual 2% compounding cost -of- living adjustment effective on the anniversary date of commencement of the Retirement Benefit. This form of payment shall be the "Normal Form of Benefit." 4.2 Optional Forms of Benefit. In lieu of the Normal Form of Benefit, a Member may elect a form of benefit payment of Actuarial Equivalent value to the Normal Form of Benefit in one of the following forms: a) Survivor Continuance. Under this form of payment: (1) The Member receives a reduced monthly benefit, and if the Member predeceases the Beneficiary, the Beneficiary will receive a monthly payment for the life of the Beneficiary equal to 100% of such reduced monthly benefit. (2) If the beneficiary predeceases the Member, the Member's reduced monthly payment will not increase. (3) The Member's designation of a Beneficiary shall become irrevocable upon the Member's retirement if electing this form of payment. F:LLANChI MS -MMGE CRiSYb.m TLlf Bm a p t(VV 4)tlo -10- 0 0 4.3 Cash Out of Small Benefits. If the Actuarial Equivalent of a Member's Normal Retirement Benefit is less than $5,000 at the time of termination of employment, such benefit shall be paid as a single cash lump sum in lieu of any other benefits hereunder. 4.4 Actuarial Equivalence. For the purpose of establishing Actuarial Equivalence between the Normal and an Optional Form of Benefit, the mortality assumption shall be the 1983 Group Annual Mortality Table with 6% interest per annum and 6% load and the interest assumption shall be 6% per 4.5 Direct Rollovers. This section applies to all distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this plan, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. Definitions (1) Eligible rollover distribution An eligible rollover 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 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 F V.ANCEV BEF.AGENCB'.SBo� BCUN P COt. ,(VV ..)&O _11- 0 Section 410(a)(9) of the Internal Revenue Code, any hardship distribution, and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer 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, or a qualified trust described in Section 401(a) of the Code that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement plan, individual retirement account, or an individual retirement annuity. 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. (3) Direct Rollover A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. P LLANC AB$_BEPAGENCB!blBnt®� BCtt Pan po I(VC .. a)E -12- 0 ARTICLE V 11 ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights Not Subject To Execution. The right of a Member to a benefit under this Plan is not assignable and is not subject to execution or any other process whatsoever, except to the extent permitted by the Code of Civil Procedure and the Family Code of the State of California. Any payment hereunder required under the California Family Code to a person other than the Member must not alter the form or amount of benefits hereunder, except that to the extent provided in a valid court order, an Actuarial Equivalent payment may be made to the spouse or child of a beneficiary pursuant to a qualified domestic relations order (as defined in Code Section 414(p) prior to the Member's retirement. 5.2 Rules and Regulations. The Employer has full discretionary authority to supervise and control the operation of this Plan in accordance with its terms and may make rules and regulations for the administration of this Plan that are not inconsistent with the terms and provisions hereof. The Employer shall determine any questions arising in connection with the interpretation, application or administration of the Plan (including any question of fact relating to age, employment, compensation or eligibility of Employees) and its decisions or actions in respect thereof shall be conclusive and binding upon any and all persons and parties. 5.3 Military Service. 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 with section 414(u) of the Code. FWANChI S Bm fi Pl DOr l(VmM i)doc —13— 0 6.1 Definitions. ARTICLE VI DEFINITIONS 1] Whenever the following terms are used in the Plan, with the first letter capitalized, they shall have the meanings specified below. "Act" means California Government Code. "Anniversary Date" means July 1. "Beneficiary" means any person or persons, other than the Employer or the Trustee, designated by a Participant to receive any benefits, which may be due upon the Participant's death. The Beneficiary of a married Participant shall be the Spouse of the Participant and may not be changed unless Spousal Consent is obtained. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Compensation" means all compensation for that portion of the Plan Year during which the Employee was a Member, paid in cash by the Employer to the Member for personal services. Compensation in excess of $150,000 shall be disregarded. Such amount shall be adjusted for increases in the cost of living in accordance with Code Section 401(a)(17), except that the dollar increase in effect on January 1 of any calendar year shall be effective for the Plan Year beginning with or within such calendar year. For any short Plan Year the Compensation limit shall be an amount equal to the Compensation limit for the calendar year in which the Plan Year begins multiplied by a ratio obtained by dividing the number of full months in the short Plan Year by twelve (12). "Effective Date" means July 1, 2000. P:LLANC MS GBNCIBSVtovMn DeNwl Benefit Ran DOCUmmt(VWon4)doe -14- • i "Eligible Employee" is an employees who meets the requirements of one of the three tiers as described in Section 1.1 and is eligible to receive Retirement Benefits. "Employee" means a full -time miscellaneous employee of the Employer or the contract city attorney of the Employer. "Employer" means the City of Rosemead that has adopted this Plan. "Final Pay" means the highest average annual compensation paid to an Employee during any twelve consecutive months of employment with the Employer. "Member" means an Employee eligible to receive benefits under this Plan. "Normal Form of Benefit" is the form of benefit described in Section 4.1. "Normal Retirement Age" means fifty -five (55) years of age. "Normal Retirement Date" means the first day of the month coincident with or next following the date on which the Member attains Normal Retirement Age. "PERS" means the California Public Employees' Retirement System. "PERS Benefit Factor" means the age factor used by the PERS Local Miscellaneous 2% at 55 plan, which is determined at the Member's age at retirement. "Plan" means the City of Rosemead PARS Retirement Enhancement Plan. "Plan Year" means the consecutive twelve -month period beginning on July 1 and ending on June 30. "Plan Administrator" means the individual or position designated by the Employer to act on behalf of the Employer in matters relating to this Plan. If no designation is made, the Employer shall be the Plan Administrator. If a Plan Administrator has been appointed the word "Employer" as used in this Plan shall mean Plan Administrator unless the context indicates a different meaning is intended. F�_P GENCIFS0.emnoQ�Utl' dB�.P WV t(VV Gn 4) plc —15— 9 • "Public Agency" means an employer authorized under California Government Code Article 1.5, sections 53215 through 53224 to establish a pension trust. "Retirement Benefits" means the benefits payable to the Member following retirement, as described in Article II. "Regulations" means the regulations adopted or proposed by the Department of Treasury from time to time pursuant to the Code. "Trust" means the trust established as part of the Public Agency Retirement Trust to hold the assets of the Plan. "Trustee" means the trustee of the Trust. "Vested" means the nonforfeitable portion of any account maintained on behalf of a Member. FY.�S-ME GE C@SJlownoQ�OeN 9mcfll PW M. NV tl..1� l -16- 9 0 APPENDIX A ANNUAL ADDITIONAL LIMITS A.1 Definitions. As used in this Appendix A, the following terms shall have the meanings specified below. "Affiliated Company" means a company required to be aggregated with the Employer for Purposes of Code Sections 414(b) and (c), provided, however, the determination under Section 414 (b) and (c) of the Code shall be made as if the phrase "more than 50 percent" were substituted for the phrase "at least 80 percent" each place it is incorporated into Section 414 (b) and (c) of the Code. "Annual Benefit" means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which Employees do not contribute and under which no rollover contributions are made, or to which assets have been transferred from a qualified plan that was not maintained by the Employer. If the benefit is payable in a form other than a straight life annuity, such form must be adjusted actuarial to the equivalent of a straight life annuity before applying the limitations of Section A.2(a). No actuarial adjustment is required for the following: qualified joint and survivor annuity benefits, pre- retirement disability benefits, preretirement death benefits, post- retirement medical benefits, and the value of post - retirement cost -of- living increases made in accordance with the Code and Treas. Reg. Section 1.415- 3(c)(2)(iii). Subject to Revenue Ruling 98 -1, the adjusted benefit shall be equal to the greater of (x) an adjustment based on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) an adjustment based on the factors specified in the Plan to adjust the applicable form of benefits. Mi CB~S REMAGENCIESTo,...dt fiioed BendR PIM B Mmt(vmion 4)dm A -1 0 "Average 415 Compensation" means the average Section 415 Compensation during a Member's high three years of service, which period is the actual number of consecutive calendar years (or, the actual number of consecutive years of employment for those Employees who are employed for less than three consecutive years with the Employer) during which the Employee had the greatest aggregate Section 415 Compensation from the Employer. "Defined Contribution Fraction" means for any Limitation Year: (a) the sum of the annual additions to the Member's account under the defined contribution plans maintained by the Employer as of the close of the Limitation Year, divided by: (b) the sum of the lesser of the following amounts determined for the Limitation Year and for each prior year of his service for the Employer: (i) the product of 1.25, multiplied by the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code for the Limitation Year (determined without regard to Section 415(c)(6) of the Code) , or (ii) the product of 1.4, multiplied by an amount equal to 25% of the Member's Section 415 Compensation for the Limitation Year. Notwithstanding the foregoing, the numerator of the Defined Contribution Plan Fraction shall be adjusted pursuant to Treas. Reg. Section 1.415- 7(d)(1), Questions T -6 and T -7 of Internal Revenue Service Notice 83 -10, and Questions Q -3 and Q -14 of Internal Revenue Service Notice 87 -21. "Defined Benefit Fraction" means for any Limitation Year: The Projected Annual Benefit of the Member under this Plan and any Related Plan determined as of the close of the Limitation Year, divided by the lesser of: (a) the product of 1.25, multiplied by the dollar limitation determined for the Limitation Year under Sections 415(b) and (d) of the Code and in accordance with Section A.2(b) in effect under F:LL MCElPARS_BEPV GENC�Utoavnm ine Bmdt Plan Dootmmt (Vmion 4)&c A-2 Section 415(b)(1)(A) of the Code for the Limitation Year, or (b) the product of 1.4, multiplied by 100% of the Member's Average Section 415 Compensation, including any adjustments under Section 415(b) of the Code. If the Employee was a Member as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the Annual Benefits under such plans which the Member had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the term and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987. Plan. "Employer" means the Employer and any Affiliated Company that adopts this "Limitation Year" means a twelve- consecutive month period ending on the Anniversary Date. If the Limitation Year is amended to a different 12- consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. "Related Plan" means any other defined benefit plan (as defined in Section 415(k) of the Code) maintained by the Employer. "Section 415 Compensation" means a Member's earned income, wages, salaries, fees for professional service and other amounts received (without regard to whether an amount is paid in cash) for personal services actually rendered in the course of employment with an FMANCBV S_ME GE CMSVmmead efinMBeneft Plan D ment(Vmim 4)dm A -3 Employer maintaining the Plan to the extent that the amounts are includable in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements, and expense allowances) and excluding the following: (a) Employer contributions to a plan of deferred compensation to the extent contributions are not included in gross income of the Employee for the taxable year in which contributed, or on behalf of an Employee to a simplified employee pension plan to the extent such contributions are deductible under Section 219(b)(2) of the Code, and any distributions from a plan of deferred compensation whether or not includable in the gross income of the Employee when distributed; (b) amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by an Employee becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (c) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (d) other amounts which receive special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of a 403(b) annuity contract under Section 403(b) of the Code (whether or not the contributions are excludable from the gross income of the Employee), contributions made by the Employer for medical benefits (within the meaning of Section 401(h) or 419A(f)(2) of the Code) which is otherwise treated as an annual addition, or any amount otherwise treated as an annual addition under Section 415(1)(1) or 419A(d)(2) of the Code. Section 415 Compensation for any Limitation Year is the Section 415 Compensation actually paid or includable in gross income during such Limitation Year. "Social Security Retirement Age" shall mean the age used as the retirement age for the Member under Section 216(1) of the Social Security Act, except that such section shall be F:U. CWABS_B MGE CMS S=ea flnW Bmfit PlanD mmt(Vmion 4),d A-4 0 applied without regard to the age increase factor and as if the early retirement age under Section 216(1)(2) of such Act were 62. "Year of Participation" means the Member shall be credited with a Year of Participation (computed to fractional parts of a year) for each accrual computation period for which the following conditions are met: (a) the Member is credited with at least the number of Hours of Service (or period of service if the elapsed time method is used) for benefit accrual purposes, required under the terms of the Plan in order to accrue a benefit for the accrual computation period, and (b) the Member is included as a Member under the eligibility provisions of the Plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a Year of Participation credited to the Member shall equal the amount of benefit accrual service credited to the Member for such accrual computation period. A Member who is permanently and totally disabled within the meaning of Section 415(c)(3)(C)(i) of the Code for an accrual computation period shall receive a Year of Participation with respect to that period. In addition, for a Member to receive a Year of Participation (or part thereof) for an accrual computation period, the Plan must be established no later than the last day of such accrual computation period. In no event will more than one Year of Participation be credited for any 12 -month period. A.2 Limitation on Benefits. Notwithstanding any other provision of the Plan: (a) the Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed an amount equal to the lesser of: (i) $90,000, (or, such other dollar limitation determined for the Limitation Year by automatically adjusting the $90,000 limitation by the cost of living adjustment factor prescribed by the Secretary of the Treasury F: UANCEPABS _BEPWGENCBSSUosemea&)efined Benefit Plan DO ment(Venion 4).doc A-5 0 0 under Section 415(d) of the Code in such manner as the Secretary shall prescribe); or (ii) only for Limitation Years commencing on or before December 31, 1994, 100% of the Member's Average Section 415 Compensation. The new dollar limitation shall apply to Limitation Years ending within the calendar year of the date of the adjustment. (b) If the Member has less than ten Years of Participation with the Employer, the dollar limitation in Section A.2(a) shall be reduced by multiplying it by a fraction, the numerator of which is the Member's full and partial Years of Participation, and the denominator of which is ten. To the extent provided in regulations or in other guidance issued by the Internal Revenue Service, the preceding sentence shall be applied separately with respect to each change in the benefit structure of the Plan. If the Member has less than ten years of service with the Employer, the compensation limitation in Section A.2(a) shall be reduced by it by a fraction, the numerator of which is the Member's full and partial years of service. For Limitation Years commencing after December 31, 1994, the reductions provided in this paragraph do not apply to payments made to the Member if his payments commence after he has become disabled (within the meaning of Code Section 415(b)(2)(I)), and do not apply to payments made on account of the Member's death. (c) If the Annual Benefit of a Member commences prior to age 62, the dollar limitation in Section A.2(a) shall not apply and the dollar limitation shall be the actuarial equivalent of an Annual Benefit beginning at age 62, reduced for each month by which benefits commence before the month in which the Member attains age 62. To determine actuarial equivalence, subject to Revenue Ruling 98 -1, the adjustment is the greater of (x) an adjustment based on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) the early retirement factors specified in the Plan that are applicable to the Member's benefit. Any F:TANCETARS REPUGENC1ESUCwemead\Defined Benefit Plan D mment(Vesion 4) dm A -6 I 0 0 decrease in the dollar limit determined in accordance with this Section A -2(c) shall not reflect the mortality decrement to the extent that benefits will not be forfeited upon the death of the Member. The reduction provided in this Subsection A.2(c) shall not reduce the limitation of Subsection A.2(a) below (x) $75,000 if benefits begin after age 55, or (y) if the benefit begins before age 55, the equivalent of the $75,000 limit at age 55. Furthermore, the reduction in this Subsection A.2(c) shall not apply for a Member who is a "qualified participant," as defined in Code Section 415(b)(2)(H). (d) If the Annual Benefit of a Member commences after age 65, the dollar limitation in Section A.2(a) as reduced in Section A.2(b), if necessary, shall be increased so that it is the actuarial equivalent of an Annual Benefit of such dollar limitation beginning at age 65. To determine actuarial equivalence, subject to Revenue Ruling 98 -1, the adjustment is the lesser of (x) an adjustment based on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) the late retirement factors specified in the Plan that are applicable to the Member's benefit. Any increase in the dollar limit determined in accordance with this Section A -2(d) shall not reflect the mortality decrement to the extent that benefits will not be forfeited upon the death of the Member. (e) If the benefit the Member would otherwise accrue in a Limitation Year would produce an Annual Benefit in excess of the limitation under Section A.2(a), the rate of accrual will be reduced so that the Annual Benefit will equal the limitation under Section A.2(a). (f) The limitation in Section A.2(a) is deemed satisfied if the Annual Benefit payable to a Member is not more than $1,000 multiplied by the Member's number of years of service or parts thereof (not to exceed ten) with the Employer, and the Employer has not at any time maintained a defined contribution plan, a welfare benefit plan as defined in Section 419(e) FBI CEPAES R GENCMS\R.,.eWMt fined Benefit Plan Bocument(W.ion 4) d.. A -7 of the Code, or an individual medical account as defined in Section 415(1)(2) of the Code in which such Member participated. (g) If the Employer maintains, or has ever maintained, one or more defined contribution plans covering an Employee who is also a Member in this Plan, a welfare benefit fund as defined in Section 419(e) of the Code, or an individual medical account as defined in Section 415(1)(2) of the Code, the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction, cannot exceed 1.0 for any Limitation Year commencing before January 1, 2000. For the purpose of this Section A.2(h), Employee contributions to a qualified defined benefit plan are treated as a separate defined contribution plan. In addition, all defined contribution plans of the Employer are to be treated as one defined contribution plan and all defined benefit plans of the Employer are to be treated as one defined benefit plan, whether or not such plans have been terminated. If the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction exceeds 1.0, the sum of the fractions will be reduced to 1.0 as follows: (i) voluntary nondeductible Employee contributions made by a Member to this Plan which constitute an Annual Addition to a defined contribution plan, to the extent they would reduce the sum of the fractions to 1.0, will be returned to the Member; (ii) if additional reductions are required for the sum of the fractions to equal 1.0, voluntary nondeductible Employee contributions made by a Member to the defined contribution plans which constitute an Annual Addition to a defined contribution plan, to the extent they would reduce the sum of the fractions to 1.0, will be returned to the Member; (iii) if additional reductions are required for the sum of the fractions to equal 1.0, the Annual Benefit of a Member under this Plan will be reduced (but not below zero and not F:LL. CEN S__RE GENCWS\to.eed\D6.MBendnP1anD mem(Vmion4).don A -° 0 • below the amount of the Member's Accrued Benefit to date) to the extent necessary to prevent the sum of the fractions, computed as of the close of the Limitation Year from exceeding 1.0; and (iv) if additional reductions are required for the sum of the fractions to equal 1.0, the reductions will then be made to the Annual Additions of the defined contribution plans. If the Employer maintains one or more defined benefit plans, in addition to this Plan, covering an Employee who is also a Member in this Plan, the sum of the Annual Benefits of all the plans will be treated as a single benefit for the purposes of applying the limitations of Section A.2(a). If these benefits exceed, in the aggregate, the limitations of Section A.2(a), the Normal Retirement Benefits under this Plan will be reduced (but not below zero) until the sum of the benefits of the Related Plan(s) satisfy the limitations. In the case of an individual who was a Member in one or more defined benefit plans of the Employer as of the first day of the first Limitation Year beginning after December 31, 1986, the application of the limitations of this Section A.2 shall not cause the Limitation under Section A.2(a) for such individual under all such defined benefit plans to be less than the individual's Current Accrued Benefit. The preceding sentence applies only if such defined benefit plans met the requirements of Section 415 of the Code, for all Limitation Years beginning before May 6, 1986. For purposes of this Section A.2(k), an individual's Current Accrued Benefit means a Member's Accrued Benefit under the Plan, determined as if the Member had separated from service as of the close of the last Limitation Year beginning before January 1, 1987, when expressed as an annual benefit within the meaning of Section 415(b)(2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (i) any change in the terms and conditions of the Plan after May 5, 1986; and (ii) any cost of living adjustments occurring after May 5, 1986. F:LLL NCEIPA S_M]PAGE CBiSaoum.dlDefinN Benefit Plen Wwment(Vemion 4) doc A-9 ADOPTION OF THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The City of Rosemead PARS Retirement Enhancement Plan is hereby adopted effective July 1, 2000. BY: Title: Date: MANCEtP BEP�GENCMSV.,sme.d,fined Benefit Plan D ... t(V.ion4).d. 0 0 I PUBLIC AGENCY RETIREMENT SYSTEM (PARS) TRUST AGREEMENT PREAMBLE The Huntington Beach City School District and State Center Community College District formed and adopted the Public Agency Retirement System Trust ( "PARS Trust") on July 1,1991 ( "Effective Date "). Subsequent to the Effective Date other California public agencies adopted the PARS Trust as the funding vehicle for tax qualified retirement plans for employees. Subsequent to the Effective Date the PARS Trust was amended. Effective as of July 1, 1999 ( "Amended Effective Date ") the PARS Trust was amended and restated in its entirety as contained herein. This amended and restated Trust shall supersede all prior versions of the PARS Trust as of the Amended Effective Date. TABLE OF CONTENTS ARTICLE ARTICLE I DEFINITIONS ARTICLE II THE PARS TRUST PROGRAM ARTICLE III ADMINISTRATIVE MATTERS ARTICLE IV THE TRUSTEE ARTICLE V INVESTMENTS ARTICLE VI FIDUCIARY RESPONSIBILITIES ARTICLE VII AMENDMENT, TERMINATION AND MERGER ARTICLE VIII MISCELLANEOUS PROVISIONS ARTICLE IX ACKNOWLEDGMENT AND ACCEPTANCE F 256712 PEL PAGE 3 4 7 12 18 25 28 30 32 Article I DEFINITIONS 1.1 "Act" shall mean California Government Code Sections 53215 - 53224, or their successor sections. 1.2 "Agreement for Administrative Services" shall mean the agreement executed between the Member Agency and the Trust Administrator which authorizes the Trust Administrator to perform specific duties of administering the Member Agency Plan and related Agency Trust. 1.3 "Amended Effective Date shall mean July 1, 1999, the date the PARS Trust Agreement was amended and restated in its entirety. 1.4 "Assets" shall mean all contributions and transfers of assets received by an Agency Trust on behalf of a Member Agency's Plan, together with the income and earnings from such contributions and transfers and any increments accruing to them. 1.5 "Agency Trust shall mean the legally separate and individual trust, whose provisions are identical to those of the PARS Trust Agreement, that is established by a Member Agency when it adopts the PARS Trust by executing an Adoption Agreement. 1.6 "Alternate Trustee" shall mean a trustee, other than the Trustee of the PARS Trust Program, appointed by a Member Agency to serve as a trustee of a portion of such Agency Trust's assets as to which the Trustee serves as custodian. 1.7 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to time. 1.8 "Custodian" shall mean Union Bank of California, N.A. whose duties are limited to those specified in Section 4.3. 1.9 "Delegatee" shall mean an individual or entity, appointed by the Plan Administrator or Member Agency to act in such matters as are specified in the appointment. 1.10 "Effective Date" shall mean July 1, 1991, the date the PARS Trust Program was established. 1.11 "Investment Fiduciary" shall mean the fiduciary with the authority and duty to direct the investment and management (including the power to direct the 3 2567_12 PEI. acquisition and disposition) of some or all of the Assets of the Agency Trust appointed by a Member Agency for its Agency Trust. 1.12 "Omnibus Account" shall mean an account, established for record keeping purposes only, to commingle the Assets of the Agency Trust. 1.13 "Member Agency" shall mean a California public agency that adopts the provisions of the PARS Trust Agreement. 1.14 "Plan" shall mean the tax qualified plan whose assets the Agency Trust holds. 1.15 "Plan Administrator" shall mean the individual designated by position of employment at the Member Agency to act on its behalf in all matters relating to the Member Agency's participation in the PARS Trust Program and Agency Trust. 1.16 "PARS Trust Agreement" or "Trust Agreement" shall mean the pro forma Public Agency Retirement System trust document adopted by each Member Agency upon execution of an Adoption Agreement, as amended from time to time. 1.17 "PARS Trust Program" shall mean the Public Agency Retirement System trust arrangement. 1.18 "Participant" shall mean individual participating in a Member Agency Plan or that individual's beneficiary. 1.19 "Trust Administrator" shall mean Phase II Systems. 1.20 Trustee shall mean the entity appointed as trustee of the PARS Trust that shall also serve as trustee of each Agency Trust established pursuant to the provisions of this trust agreement except where an Alternate Trustee has been appointed. Article II THE PARS TRUST PROGRAM 2.1 Multiple Employer Trust The PARS Trust Program is a multiple employer trust arrangement established to provide economies of scale and efficiency of administration to public agencies that adopt it to hold the assets of their Member Agency Plans maintained for the benefit of their employees. The PARS Trust Program consists of the Agency Trusts adopted and not terminated. by Member Agencies. 4 256712 PEI. 2.2 Qualified Governmental Retirement Trust The PARS Trust Program is established pursuant to the provisions of Section 501 of the Internal Revenue Code of 1986, as amended (the "Code "), and California Government Code Sections 53215 through 53224 providing for pension trusts established by public agencies. 2.3 Date of Adoption The date as of which each Member Agency adopts the PARS Trust Program shall be the "Effective Date" of the PARS Trust Agreement and the Agency Trust, as defined in Section 2.5, as to that Member Agency. 2.4 Member Agencies Any California public agency may, by action of its governing body in a writing accepted by the Trustee, adopt the provisions of the PARS Trust Agreement as the trust portion of a qualified governmental retirement plan established for the benefit of its employees. Executing an adoption instrument for the PARS Trust Program ( "Adoption. Agreement "), attached hereto as Exhibit "A ", shall constitute such adoption, unless the Trustee requires additional evidence of adoption. In order for such adoption to be effective, the public agency must also execute an Agreement for Administrative Services with Phase II Systems, the Trust Administrator, pursuant to section 3.6 of this PARS Trust Agreement. Such adopting employer shall then become a Member Agency of the PARS Trust Program. Each such Member Agency shall, at a minimum, furnish the Trust Administrator with the following documents to support its adoption of the PARS Trust Program: (a) a certified copy of the Member Agency governing body resolution authorizing the adoption of the PARS Trust Agreement and the appointment of an individual designated by position of employment at the Member Agency to act on its behalf in all matters relating to the Member Agency's participation in the PARS Trust Program and Agency Trust ( "Plan Administrator "); (b) an original of the Adoption Agreement executed by the Plan Administrator or other duly authorized Member Agency employee; (c) an original of the Agreement for Administrative Services with Phase II . Systems executed by the Plan Administrator or other duly authorized Member Agency employee and Phase II Systems; (d) an address notice; and 5 2567 12 PEL (e) such other documents as the Trustee may reasonably request. 2.5 Agency Trust By adopting the PARS Trust Agreement, as provided in Section 2.4, a Member Agency shall be deemed to have adopted a legally separate and individual Agency Trust whose provisions are identical to those of the PARS Trust Agreement. The Assets of an Agency Trust shall be available only to pay benefits pursuant to the provisions of the Plan to participants and beneficiaries of the Member Agency entitled to receive benefits under the provisions of the Plan. The Agency Trust is created for the purpose of receiving contributions made to fund the Member Agency's Plan; accumulating, managing and investing those contributions; and providing benefits to active or retired participants of the Plan, their joint annuitants, or their beneficiaries. Each Agency Trust shall be used to fund only a single Plan maintained by the Member Agency. A Member Agency may establish additional Agency Trusts to fund the assets of additional Plans by executing one or more additional Adoption Agreement(s). 2.6 Assets of Agency Trust The assets of the Agency Trust shall consist of all contributions and transfers received by the Agency Trust on behalf of the Member Agency's Plan, together with the income and earnings from such contributions and transfers, and any increments accruing to them ( "Assets "). All contributions or transfers shall be received by the Trustee in cash or in other property acceptable to the Trustee. The Trustee shall manage and administer the Assets of the Agency Trust without distinction between principal and income. The Trustee and the Trust Administrator shall have no duty to compute any amount to be transferred or paid to the Agency Trust by the Member Agency and the Trustee and the Trust Administrator shall not be responsible for the collection of any contributions or transfers to the Agency Trust. 2.7 Commingling for Investment and Administration The Assets of more than one Agency Trust may be commingled by the Trustee or Investment Fiduciary in one or more Omnibus Accounts for investment and administrative purposes, to provide economies of scale and efficiency of administration to the Agency Trusts. The responsibility for Plan level accounting within this Omnibus Account(s) shall be that of the Trust Administrator. 2.8 Trustee Accounting The Trustee shall be responsible only for maintaining records and maintaining accounts for the aggregate assets of the PARS Trust Program. The [.9 2567_12 PEL s responsibility for Plan level accounting for each Agency Trust, based upon the Omnibus Account(s), shall be that of the Trust Administrator. 2.9 No Diversion of Assets The Assets in each Agency Trust shall be held in trust for the exclusive purpose of providing benefits to the Participants of the Plan for which the Agency Trust is holding assets and defraying the reasonable expenses of such Plan. The Assets shall not be used for or diverted to, any other purpose. 2.10 Type and Nature of Trust Neither the full faith and credit nor the taxing power of each Member Agency, the State of California or any political subdivision thereof other than each Member Agency is pledged to the distribution of benefits hereunder. Except for contributions and other amounts hereunder, no other amounts are pledged to the distribution of benefits hereunder. Distributions of benefits are neither general nor special obligations of any Member Agency, but are payable solely from the Assets of each Agency Trust, as more fully described herein. No employee of any Member Agency or beneficiary may compel the exercise of the taxing power by any Member Agency. Distributions of Assets under any Agency Trust are not debts of any Member Agency, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. Such distributions are not legal or equitable pledges, charges, liens or encumbrances, upon any of a Member Agency's property, or upon any of its income, receipts, or revenues, except amounts in the accounts which are, under the terms of each Plan, Agency Trust and the Act, set aside for distributions. Neither the members of the legislative body of any Member Agency nor its officers, employees, agents or volunteers are liable hereunder. Article III ADMINISTRATIVE MATTERS 3.1 Appointment of Trustee Two thirds or more of the Member Agencies acting jointly, may by a two- thirds or greater vote, act to appoint a bank, trust company, retirement board, insurer, committee or such other entity as permitted by California law, to serve as the trustee of the PARS Trust Program ( "Trustee "). Such action must be in writing. Upon the written acceptance of such entity it shall become the Trustee of the PARS Trust Program and, subject to the provisions of Section 3. 10, the trustee of each Agency Trust. By executing an Adoption Agreement, the adopting Member 2567 12 PEL r • Agency hereby appoints the Union Bank of California, N.A. as the Trustee as of the Amended Effective Date. 3.2 Removal of Trustee Two thirds or more of the Member Agencies acting jointly, may by a vote of two - thirds or greater, act to remove the Trustee. Such action must be in writing and delivered to the Trustee and the Trust Administrator. Upon such removal from the PARS Trust the Trustee shall also be removed as trustee of each of the Agency Trusts. The Plan Administrator may remove the Trustee as trustee of an Agency Trust by giving at least ninety (90) days prior written notice to the Trustee and the Trust Administrator and withdrawing from the PARS Trust Program. 3.3 Resignation of Trustee The Trustee may resign as trustee of the PARS Trust Program at any time by giving at least ninety (90) days prior written notice to the Trust Administrator and to each Plan Administrator of each Member Agency that has adopted the PARS Trust Agreement and not terminated its participation in the PARS Trust Program. Such resignation shall also be deemed a resignation as trustee of each of the Agency Trusts. The Trustee may resign as trustee of an Agency Trust by giving at least ninety (90) written notice to the Plan Administrator of such Agency Trust and to the Trust Administrator. The Member Agency's appointment of a successor trustee to the Agency Trust will vest the successor trustee with title to the Assets of its Agency Trust upon the successor trustee's acceptance of such appointment. 3.4 The Plan Administrator The governing body of each Member Agency shall have plenary authority for the administration and investment of the Agency Trust pursuant to the laws and Constitution of the State of California and applicable - federal laws and regulations. Each Member Agency shall by resolution designate a Plan Administrator. Unless otherwise specified in the instrument the Plan Administrator shall be deemed to have authority to act on behalf of the Member Agency in all matters pertaining to the Member Agency's participation in the PARS Trust Program and in regard to the Agency Trust of the Member Agency. Such appointment of a Plan Administrator shall be effective upon receipt and acknowledgment by the Trustee and the Trust Administrator and shall, be effective until the Trustee and Trust Administrator are furnished with a resolution of the Member Agency that the appointment has been modified or terminated. 3.5 Failure to Appoint Plan Administrator If a Plan Administrator is not appointed, or such appointment lapses, the Member Agency shall be deemed to be the Plan Administrator. As used in this document 0 256712 PEL Plan Administrator shall be deemed to mean Member Agency when a Plan Administrator has not been appointed. 3.6 Delegatee The Plan Administrator, acting on behalf of the Member Agency, may delegate certain authority, powers and duties to an entity to act in those matters specified in the delegation ( "Delegatee "). Any such delegation must be in a writing that names and identifies the Delegatee, states the effective date of the delegation, specifies the authority and duties delegated, is executed by the Plan Administrator and is acknowledged in writing by the Delegatee, the Trust Administrator (if not the Delegatee) and the Trustee. Such delegation shall be effective until the Trustee and the Trust Administrator are directed in writing by the Plan Administrator that the delegation has been rescinded or modified. 3.7 Certification to Trustee The governing body of each Member Agency, or other duly authorized official, shall certify in writing to the Trustee and the Trust Administrator the names and specimen signatures of the Plan Administrator and Delegatee, if any, and all others authorized to act on behalf of the Member Agency whose names and specimen signatures shall be kept accurate by the Member Agency acting through a duly authorized official or governing body of the Member Agency. The Trustee and the Trust Administrator shall have no liability if it acts upon the direction of a Plan Administrator or Delegatee that has been duly authorized, as provided in Section 3.6, if that Plan Administrator or Delegatee is no longer authorized to act, unless the Member Agency has informed the Trustee and the Trust Administrator of such change. 3.8 Directions to Trustee Except as provided in Section 5.18 of this Trust Agreement, all directions to the Trustee from the Plan Administrator or Delegatee must be in writing and must be signed by the Plan Administrator or Delegatee, as the case may be. For all purposes of this Trust Agreement, direction shall include any certification, notice, authorization, application or instruction of the Plan Administrator, Delegatee or Trustee appropriately communicated. The above notwithstanding direction may be implied if the Plan Administrator or Delegatee has knowledge of the Trustee's intentions and fails to file written objection. The Trustee shall have the power and duty to comply promptly with all proper direction of the Plan Administrator, or Delegatee, appointed in accordance with the provisions of this PARS Trust Agreement. In the case of any direction deemed by the Trustee to be unclear or ambiguous the Trustee may seek written instructions from the Plan Administrator, the Agency or the Delegatee on such E 2567_12 PEL matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the Delegatee should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of the PARS Trust Program and /or any Agency Trust which may include not taking any action. The Trustee may request directions or clarification of directions received and may delay acting until clarification is received. In the absence of timely direction or clarification, or if the Trustee considers any direction to be a violation of the PARS Trust Agreement or any applicable law, the Trustee shall in its sole discretion take appropriate action, or refuse to act upon a direction. 3.9 Alternate Trustee A Member Agency may appoint a trustee, other than the Trustee, as to a portion .of the assets in the Agency Trust by designating such person or entity as an Alternate Trustee on the Adoption Agreement and by specifying which assets shall be subject to the fiduciary management of the Alternate Trustee. Such appointment shall not be effective unless it is in writing, specifies clearly the assets as to which the Alternate Trustee is to have trustee powers, is acknowledged in writing by the Alternate Trustee, is delivered to and acknowledged by the Trustee and the Trust Administrator. Only a bank, trust .company, retirement board, insurer, the Member Agency or such entity as permitted by California law to be a trustee may be appointed an Alternate Trustee. Such appointment will become effective upon acceptance by the Alternate Trustee. 3.10 Powers Of Alternate Trustee The Alternate Trustee shall be deemed to have all of the powers and duties and responsibilities specified in the PARS Trust Agreement for the PARS Trustee in Article IV unless otherwise specified in the Adoption Agreement. 3.11 Responsibility of Trustee Upon Appointment of Alternate Trustee Upon the appointment of an Alternate Trustee, the Trustee shall have no liability or responsibility for any matters relating to the management, investment or administration of those assets as to which the Alternate Trustee has been appointed and shall only have the duties set forth in Section 4.3. 3.12 Trust Administrator The Member Agencies have appointed Phase II Systems as the Trust Administrator. The Trust Administrator has accepted its appointment subject to each Member Agency's delegation of authority, to act as such, pursuant to Section 3.6 of this PARS Trust Agreement. The Trust Administrator's duties io 256712 PEI. involve the performance of the following services pursuant to the provisions of this trust agreement and the Agreement for Administrative Services: (a) Performing periodic accounting of the Agency Trust; (b) Directing the. Trustee to make distributions from the Agency Trust to Participants pursuant to the provisions of the Member Agency's Plan and liquidate assets in order to make such distributions; (c) Notifying the Investment Fiduciary of the amount of Assets in the Agency Trust available for further investment and management by the Investment Fiduciary; (d) Allocating contributions, earnings and expenses to each Agency Trust; (e) Directing the Trustee to pay insurance premiums, to pay the fees of the Trust Administrator and to do such other acts as shall be appropriate to carry out the intent of the Agency Trusts. (f) Such other services as the Member Agency and the Trust Administrator may agree in the Agreement for Administrative Services pursuant to Section 2.4. 3.13 The Trust Administrator shall be entitled to rely on, and shall be under no duty to question, direction and /or data received from the Plan Administrator, or other duly authorized entity, in order to perform its authorized duties under this trust agreement. The Trust Administrator shall not have any duty to compute contributions made to the Agency Trust, determine or inquire whether contributions made to the Agency Trust by the Plan Administrator or other duly authorized entity are adequate to meet and discharge liabilities under the Plan; or determine or inquire whether contributions made to the Agency Trust are in compliance with the Plan; The Trust Administrator shall not be liable for non performance of duties if such non performance is directly caused by erroneous, and /or late delivery of, directions or data from the Plan Administrator, or other duly authorized entity. 3.14 Additional Trust Administrator Services The Plan Administrator may at any time retain the Trust Administrator as its agent to perform any act, keep any records or accounts and make any computations which are required of the Member Agency or the Plan Administrator by this PARS Trust Agreement or by the Member Agency's Plan. The Trust Administrator shall be separately compensated for such service and such services shall not be deemed to be contrary to the PARS Trust Agreement. 11 256712 PEL 3.15 Trust Administrator's Compensation As may be agreed upon from time to time by the Member Agency and Trust Administrator, the Trust Administrator will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the Agency Trust and to the PARS Trust Program in accordance with Section 53217 of the Act. 3.16 Resignation or Removal of Trust Administrator The Trust Administrator may resign at any time by giving at least one hundred twenty (120) days written notice to each Member Agency of the PARS Trust Program and the Trustee. The Member Agencies, by a two- thirds or greater vote, may remove the Trust Administrator by delivering, at least one hundred twenty (120) days prior to the effective date of such removal, written notice to the Trust Administrator and to the Trustee. Article IV THE TRUSTEE 4.1 Powers and Duties of the Trustee Except as otherwise provided in Article V and subject to Article VI, the Trustee shall have full power and authority with respect to property held in the Agency Trust to do all such acts, take all proceedings, and exercise all such rights and privileges, whether specifically referred to or not in this document, as could be done, taken or exercised by the absolute owner, including, without limitation, the following: (a) To invest and reinvest the Assets or any part hereof in any one or more kind, type, class, item or parcel of property, real, personal or mixed, tangible or intangible; or in any one or more kind, type, class, item or issue of investment or security; or in any one or more kind, type, class or item of obligation, secured or unsecured; or in any combination of them. To retain the property for the period of time that the Trustee deems appropriate; (b) To acquire and sell options to buy securities ( "call" options) and to acquire and sell option's to sell securities ( "put" options); (c) To buy, sell, assign, transfer, acquire, loan,. lease (for any purpose, including mineral leases), exchange and in any other manner to acquire, manage., deal.with. and dispose of all or any part of the Agency Trust 12 256712 PEL • • property, for cash or credit and upon any reasonable terms and conditions; (d) To make deposits, with any bank or savings and loan institution, including any such facility of the Trustee or an affiliate thereof provided that the deposit bears a reasonable rate of interest; (e) To invest and reinvest the Assets, or any part thereof in any one or more collective investment trust funds, including common and group trust funds that consist exclusively of assets of exempt pension and profit sharing trusts and individual retirement accounts qualified and tax exempt under the Code, that are maintained by the Trustee or an affiliate thereof. The declaration of trust or plan of operations for any such common or collective fund is hereby incorporated herein and adopted into this PARS Trust Agreement by this reference. The combining of money and other assets of the Agency Trust with money and other assets of other qualified trusts in such fund or funds is specifically authorized. Notwithstanding anything to the contrary in this trust agreement, the Trustee shall have full investment responsibility over assets of the trust invested in such commingled funds. If the plan and trust for any reason lose their tax exempt status, and the Assets have been commingled with assets of other tax exempt trusts in Trustee's collective investment funds, the Trustee shall within 30 days of notice of such loss of tax exempt status, liquidate the Agency Trust's units of the collective investment fund(s) and invest the proceeds in a money market fund pending investment or other instructions from the Plan Administrator. The Trustee shall not be liable for any loss or gain or taxes, if any, resulting from said liquidation; (f) To place uninvested cash and cash awaiting distribution in one or more mutual funds and /or commingled investment funds maintained by or made available by the Trustee, and to receive compensation from the sponsor of such fund(s) for services rendered, separate and apart from any Trustee's fees hereunder. Trustee or Trustee's affiliate may also be compensated for providing investment advisory services to any mutual fund or commingled investment funds; (g) To borrow money for the purposes of the Agency Trust from any source with or without giving security; to pay interest; to issue promissory notes and to secure the repayment thereof by pledging all or any part of the Assets; (h) To take all of the following actions as directed by the Investment Fiduciary or other person with investment discretion over the trust assets: to vote proxies of any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, 13 256712 PEL 0 0 and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property held in the Agency Trust; (i) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; Q) To raze or move existing buildings; to make ordinary or extraordinary repairs, alterations or additions in and to buildings; to construct buildings and other structures and to install fixtures and equipment therein; (k) To pay or cause to be paid from the Agency Trust any and all real or personal property taxes, income taxes or other taxes or assessments of any or all kinds levied or assessed upon or with respect to the Agency Trust or the Plan; (1) As directed by the Trust Administrator, to hold term or ordinary life insurance contracts on the lives of Participants (but in the case of conflict between any such contract and the Plan, the terms of the Plan shall prevail); to pay from the Agency Trust the premiums on such contracts; to distribute, surrender or otherwise dispose of such contracts; to pay the proceeds, if any, of such contracts to the proper persons in the event of the death of the insured Participant; to enter into, modify, renew and terminate annuity contracts of deposit administration of immediate participation or other group or individual type with one or more insurance companies and to pay or deposit all or any part of the Agency Trust Assets thereunder; to provide in any such contract for.the investment of all or any part of funds so deposited with the insurance company in securities under separate accounts; to exercise and claim all rights and benefits granted to the contract holder by any such contracts; (m) To exercise all the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under applicable federal or California laws, as amended from time to time, it being intended that, except as herein otherwise provided, the powers conferred upon the Trustee herein shall not be construed as being in limitation of any authority conferred by law, but shall be construed as consistent or, in addition thereto. 2567_12 PEL 14 4.2 0 Additional Trustee Powers In addition to the other powers enumerated above, and whether or not the Member Agency has retained investment authority or delegated it to an Investment Fiduciary or Participants in Participant Directed Accounts, the Trustee in any and all events is authorized and empowered: (a) To invest funds pending required directions in any type of interest - bearing account including without limitation, time certificates of deposit or interest - bearing accounts issued by Union Bank of California N.A., or any mutual fund or short term investment fund ( "Fund "), whether sponsored or advised by Union Bank of California or any affiliate thereof; Union Bank of California, N.A. or its affiliate may be compensated for providing such investment advice and providing other services to such Fund, in addition to any Trustee's fees received pursuant to this Trust Agreement; (b) To cause all or any part of the Agency Trust to be held in the name of the Trustee (which in such instance need not disclose its fiduciary capacity) or, as permitted by law, in the name of any nominee, and to acquire for the Agency Trust any investment in bearer form, but the books and records of the Agency Trust shall at all times show that all such investments are a part of the Agency Trust and the Trustee shall hold evidences of title to all such investments; (c) To serve as sole custodian with respect to the Agency Trust Assets; (d) To employ such agents and counsel as may be reasonably necessary in managing and protecting the Assets and to pay them reasonable compensation; to employ any broker - dealer, including a broker - dealer affiliated with the Trustee, and pay to such broker - dealer at the expense of the Agency Trust, its standard commissions; to settle, compromise or abandon all claims and demands in favor of or against the Agency Trust; and to charge any premium on bonds purchased at par value to the principal of the Agency Trust without amortization from the Agency Trust, regardless of any law relating thereto; (e) In addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration of the Agency Trust, as though the absolute owner thereof; (f) To abandon, compromise, contest, arbitrate . or settle claims or demands; to prosecute, compromise and defend lawsuits, but without obligation to do so, all at the risk and expense of the Agency Trust; (g) To exercise and perform any and all of the other powers and duties specified in this Trust Agreement or the Plan; 15 2567_12 PEI. 0 � (h) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by United States agency; (i) To comply with all requirements imposed by applicable provisions of law; (j) To seek written instructions from the Plan Administrator or other fiduciary on any matter and await their written instructions without incurring any liability. If at any time the Plan Administrator or the fiduciary should fail to give directions to the Trustee, the Trustee may act in the manner that in its discretion seems advisable under the circumstances for carrying out the purposes of this Agency Trust; (k) As directed by the Plan Administrator or Delegatee if duly authorized, to cause the benefits provided under the Plan to be paid directly to the persons entitled thereto under the Plan, and in the amounts and in the manner specified, and to charge such payments against the Agency Trust with respect to which such benefits are payable; (1) To compensate such executive, consultant, actuarial, accounting, investment, appraisal, administrative, clerical, secretarial, medical, custodial, depository and legal firms, personnel and other employees or assistants as are engaged by the Plan Administrator in connection with the administration of the Plan and to pay from the Agency Trust the necessary expenses of such firms, personnel and assistants, to the extent not paid by the Plan Administrator; (m) To act upon proper written directions of the Plan Administrator or Delegatee, including directions given by photostatic transmissions using facsimile signature; (n) To pay from the Agency Trust the expenses reasonably incurred in the administration of the Agency Trust as provided in the Plan; (o) To maintain insurance for such purposes, in such amounts and with such companies as the Plan Administrator shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries but only if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary. W. 2567_12 PEL • • 4.3 Custodial Powers If an Alternate Trustee has been appointed pursuant to Section 3.9, Union Bank of California, N.A., ( "Bank ") as Custodian, shall only have the following responsibilities: (a) Keep records of all transactions entered into for the Agency Trust and furnish to Alternate Trustee statements no less frequently than quarterly showing all principal and income transactions and Agency Trust Assets, which shall be deemed ratified and approved by Alternate Trustee unless Custodian is advised to the contrary within ninety (90) days of Custodian's mailing thereof by first class mail to Alternate Trustee; (b) Receive payments of income and principal on Agency Trust Assets, and retain or remit in accordance with Alternate Trustee's written instructions; (c) Hold Agency Trust Assets in Bank's name as Custodian for ,Alternate Trustee or in Bank's nominee name, or, as to securities eligible to be held by the depository trust company or other depository, in its nominee name; (d) Purchase and sell securities, attend to the exchange of securities, deposit or exchange securities of companies in reorganization, and tender securities on redemption or tender offer solely upon direction of Alternate Trustee; (e) Sign the name of Alternate Trustee to stock and bond powers and any other instruments required for the proper exercise of Bank's duties, and Bank is appointed Alternate Trustee's attorney -in -fact for these purposes; (f) Forward all proxies and accompanying materials to Alternate Trustee to be voted unless directed in writing to the contrary. Disclose Alternate Trustee's name and address in response to requests from issuers of securities and others to facilitate' direct communication for proxy and tender offer response; (g) Sell all fractional shares of stock received as a result of stock dividends or other corporate action; (h) Notify Alternate Trustee of any inability to collect income or principal if the securities or other property constituting Assets upon which such amount is payable is in default, or if payment .is refused after due demand. Bank shall be under no obligation or duty to take any action to effect collection of defaulted payments, or to file or pursue any bankruptcy or class action claims with respect to Agency Trust. n 2567_12 PEL 0 0 (i) Perform a telephonic verification to Alternate Trustee or Alternate Trustee's authorized representative or such other security procedure selected by Alternate Trustee prior to wiring funds or following facsimile directions as Bank may require. Alternate Trustee assumes all risk of delay of transfer if Bank is unable to reach Alternate Trustee or Alternate Trustee's authorized representative, or in the event of delay as a result of attempts to comply with any other security procedure selected by Alternate Trustee. Article V INVESTMENTS 5.1 Investment Fiduciary Except as herein provided, the Plan Administrator shall be the Investment Fiduciary. 5.2 Appointment of Trustee or an Investment Manager as Investment Fiduciary The Plan Administrator may appoint the Trustee or an investment manager as the Investment Fiduciary, with the authority and duty to direct the investment and management of all or any portion of the Assets of the Agency Trust. 5.3 Appointment of Investment Fiduciary No action of the Plan Administrator pursuant to 5.2 shall be effective until a certified copy of the revised Adoption Agreement and, if.-required, any such resolution of the governing body of the Member Agency or Plan Administrator action is delivered to the Trustee. Upon receipt and acceptance, the Trustee or investment manager, as the case may be, shall assume fiduciary responsibility with respect to the investment and management of such assets of the Agency Trust as are specified in the resolution or action. Any transfer of investment authority to the Trustee or to an investment manager may be revoked by delivering to the Trustee or the investment manager a written notice from either the Member Agency governing body or the Plan Administrator, as the case may be. 5.4 Reliance by Trustee on Investment Fiduciary The appointment, selection and retention of an Investment Fiduciary shall be solely the responsibility of the Member Agency acting through its governing body or the Plan. Administrator.. The Trustee may rely upon the fact that the is 256712 PEL 5.5 5.6 0 • Investment Fiduciary is authorized to direct the investment and management of the Assets of the Agency Trust until such time as the Plan Administrator shall notify the Trustee in writing that another Investment Fiduciary has been appointed to replace the Investment Fiduciary named, or, in the alternative, that the Investment Fiduciary named has been removed. When Trustee is not Investment Fiduciary The Trustee shall not be the Investment Fiduciary and shall have no responsibility or authority for the investment and management of assets unless specifically designated as the Investment Fiduciary as to some or all of the assets in the Agency Trust and accepts such designation. (a) During such period or periods of time, if any, as the Plan Administrator or an Investment Fiduciary is authorized to direct the investment and management of the Assets of the Agency Trust, the Trustee shall (subject to the overriding limitations hereinafter set forth) effect and change investment of the Assets of the Agency Trust as directed in writing by the Plan Administrator, or Investment Fiduciary, as the case may be, and shall neither effect nor change any such investments without such direction and shall have no right, duty or responsibility to recommend investments or investment changes. The following provisions shall govern the Trustee during such period or periods of time, if any, during which the Plan Administrator or an Investment Fiduciary is authorized to direct the investment and management of the Assets of any Agency Trust: (b) So long as the Plan Administrator retains or reacquires full power and responsibility to direct the Trustee with respect to the investment and management of all or any portion of the Assets of the Agency Trust, the Trustee shall not be liable nor responsible for losses or unfavorable results arising from the Trustee's compliance with proper directions of the Plan Administrator which are made in accordance with the terms of this Trust Agreement and which are not contrary to.the provisions of any applicable federal or state statute regulating such investment. (c) In the event an Investment Fiduciary is given authority and responsibility with respect to the investment and management of the Assets of the Agency Trust, neither the Trustee nor the Plan Administrator shall be liable or responsible in any way for any losses or other unfavorable results arising from the Trustee's compliance with investment or management directions received by the Trustee from the Investment Fiduciary. . Investment Directions Must be in Writing Subject to the provisions of Section 5.18, concerning investments made by the Plan is 2567_12 PEL in order to be valid all directions Administrator, or the Investment • • Fiduciary, or PARS Trustee must be signed by the authorized person or persons acting on behalf of the Plan Administrator, Investment Fiduciary or Trustee, as the case may be. 5.7 Trustee Reliance On Directions (a) The Trustee shall be entitled to rely upon directions which the Trustee receives. The Trustee shall be under no duty to question any directions of the Investment Fiduciary or Plan Administrator nor to review any securities or other property of the PARS Trust or Agency Trust constituting assets thereof with respect to which an Investment Fiduciary or the Plan Administrator has investment responsibility, nor to make any suggestions to the Investment Fiduciary or Plan Administrator in.connection therewith. The Trustee shall, as promptly as possible, comply with any written directions given by the Plan Administrator or an Investment Fiduciary hereunder. The Trustee shall not be liable, in any manner nor for any reason, for the making or retention of any investment pursuant to such directions, nor shall the Trustee be liable for its failure to invest any or all of the Assets of the Agency Trust in the absence of such written directions. The Trustee shall be under no obligation to seek written clarification in the event of ambiguity. (b) During such period of time, if any, as the Plan Administrator, or an Investment Fiduciary, is authorized to direct the Trustee, the Trustee shall have no obligation to determine the existence of any conversion, redemption, exchange, subscription or other right relating to any securities purchased of which notice was given prior to the purchase of such securities, and shall have no obligation to exercise any such right unless the Trustee is informed of the existence of the right and is instructed to exercise such right, in writing, by the Plan Administrator or the Investment Fiduciary, as the case may be, within a reasonable .time prior to the expiration of such right. (c) In any event, neither the Plan Administrator nor any Investment Fiduciary referred to above shall direct the purchase, sale or retention of any Assets of the Agency Trust if such directions are not in compliance with applicable law. 5.8 Trustee Fees As may be agreed upon, in writing, between the Plan Administrator and Trustee, the Trustee will be paid reasonable compensation for services rendered or reimbursed for expenses properly and actually incurred in the performance of duties with respect to the Agency Trust or the PARS Trust. 20 2567_12 PEL 0 5.9 Contributions The Plan Administrator shall make all of its contributions to the Trustee, and shall also transmit all contributions of Plan participants, as may be required or allowed by the Plan, to the Trustee. Such contributions shall be in cash unless the Trustee agrees to accept a contribution that is not in cash. All contributions shall be paid to the Trustee for investment and reinvestment pursuant to the terms of this Trust Agreement. The Trustee shall not have any duty to determine or inquire whether any contributions to the Agency Trust made to the Trustee by any Plan Administrator are in compliance with the Plan; nor shall the Trustee have any duty or authority to compute any amount to be paid to the Trustee by any Plan Administrator; nor shall the Trustee be responsible for the collection or adequacy of the contributions to meet and discharge liabilities under the Plan. The contributions received by the Trustee from each Member Agency shall be held and administered pursuant to the terms hereof without distinction between income and principal. 5.10 Money Market Fund Pending any investment directions, such cash in the Agency Trust in an amount as is reasonable in the discretion of the Trustee, may be deposited in a money market fund selected by the Trustee or the Member Agency. 5.11 Purchase of Contracts The Trustee shall have the authority to purchase individual or group insurance, annuity, preliminary term, group pension, and variable annuity contracts in accordance with the directions of the Plan Administrator or other insurance contracts at the direction of the Plan Administrator or Investment Fiduciary if such contracts are acceptable to the Trustee. The Trustee shall act as custodian of such contracts if an Alternate Trustee is appointed as to such contracts. 5.12 Records (a) The Trustee shall maintain accurate records and detailed accounts of all investments, receipts, disbursements and other transactions hereunder at the PARS Trust level. Such records shall be available at all reasonable times for inspection by the Trust Administrator. The Trustee shall, at the direction of the Trust Administrator, submit such valuations, reports or other information as the Trust Administrator may reasonably require. (b) Valuation. The assets of the Agency Trust shall be valued at their fair market value on the date of valuation, as determined by the Trustee based upon such sources of information as it may deem reliable; provided, however; that the Plan Administrator shall instruct the Trustee as to valuation of assets which are not readily determinable on an established 21 2567 12 PEL 0 market. The Trustee may rely conclusively on such valuations provided by the Plan Administrator and shall be indemnified and held harmless by the Plan Administrator with respect to such reliance. If the Plan Administrator fails to provide such values, the Trustee may take whatever action it deems reasonable, including employment of attorneys, appraisers or other professionals, the expense of which will be an expense of administration of the Agency Trust. Transactions in the account involving such hard to value assets may be postponed until appropriate valuations have been received and Trustee shall have no liability therefore. 5.13 Statements (a) Periodically as specified, and within sixty days after June 30, or the end of the PARS Trust's fiscal year if different, Trustee shall render to the Trust Administrator as directed, a written account showing in reasonable summary the investments, receipts, disbursements and other transactions engaged in by the Trustee during the preceding fiscal year or period with respect to the PARS Trust. Such account shall set forth the assets and liabilities of the PARS Trust valued as of the end of the accounting period. (b) The Trust Administrator may approve such statements either by written notice or by failure to express objections to such statements by written notice delivered to the Trustee within 90 days from the date the statement is delivered to the Trust Administrator. Upon approval, the Trustee shall be released and discharged as to all matters and items set forth in such statement as if such account had been settled and allowed by a decree from a court of competent jurisdiction. 5.14 Wire Transfers The Trustee shall follow the Plan Administrator's, Delegatee's, or Trust Administrator's wire transfer instructions in compliance with the written security procedures provided by the party providing the wire. transfers. The Trustee shall perform a telephonic verification to the Plan Administrator, Trust Administrator, or Delegatee, of such other security procedure, as selected by the party providing wire transfer directions, prior to wiring funds or following facsimile directions as Trustee may require. The Plan Administrator assumes the risk of delay of transfer if Trustee is unable to reach the Plan Administrator, or in the event of delay as a result of attempts to comply with any other security procedure selected by the directing party. 5.15 Exclusive Benefit The Assets of the Agency Trust shall be held in trust for the exclusive purpose of providing benefits to the participants and their beneficiaries of the Member Agency Plan, and defraying reasonable expenses of the Plan, and shall not be 22 256712 PEL 0 0 used for or diverted to any other purpose. No party shall have authority to use or divert such Plan's Assets for the payment of benefits or expenses of any other Member Agency's Plan. 5.16 Delegation of Duties The Plan Administrator, Delegatee, or Trust Administrator, may at any time retain the Trustee as its agent to perform any act, keep any records or accounts and make any computations that are required of the Plan Administrator, Delegatee or Trust Administrator by this Trust Agreement or by the Plan. The Trustee may be compensated for such retention and such retention shall not be deemed to be contrary to this Trust Agreement. 5.17 Distributions All benefits payable pursuant to the Plan shall be paid out of the Assets of the Agency Trust by the Trustee pursuant to the direction of the Plan Administrator or Delegatee. The Trustee shall, from time to time, upon the written direction of the Plan Administrator or Delegatee, make distributions from the Assets of the Agency Trust to or for the benefit of such persons, in such manner in such form(s), in such amounts and for such purposes as may be specified in such directions. The Trustee at the direction of the Plan Administrator or Delegatee may make any distribution required to be made by it hereunder by delivering to the Plan Administrator or Delegatee: Its check payable to the person to whom such distribution is to be made, for delivery to such person; or Its check payable to an insurer for the benefit of such person, for delivery by such insurer; or insurance contracts held on the life of the Participant to whom or with respect to whom the distribution is being made, for redelivery to the person to whom such distribution is to be made; provided that any contract distributed shall be endorsed as non - transferable. In directing the Trustee to make distributions, the Plan Administrator or Delegatee shall follow the provisions of the Plan and shall not direct that any distribution be made either during the existence or upon discontinuance of the Plan, which would cause any part of the Assets of the Agency Trust to be used for or diverted to purposes other than as provided in the Plan and this PARS Trust. In no event shall the Trustee have any responsibility respecting the application of such distributions, nor for determining or inquiring into whether such distributions are in accordance with the Plan. 23 256712 PGL 0 0 5.18 Participant Directed Accounts The Member Agency may, by written resolution and execution of the Adoption Agreement, terminate the Plan Administrator's right to direct the investment and management of all or any portion of the Assets of the Agency Trust and allow Participants to direct their own account balances ( "Participant Directed Accounts "). Notwithstanding any other provision of this Trust Agreement, for Participant Directed Accounts, the Trustee shall be entitled to act upon proper directions of the Plan Administrator, Trust Administrator, and Participants including directions in writing, or oral instructions which Trustee in its discretion may follow without receipt of written instructions, instruction given by photostatic teletransmission using facsimile signature, or those instructions which are digitally recorded on the UBOC Voice Response Unit ( "VRU '.) or internet website. Trustee is hereby authorized to record conversations and transmissions made in connection with the Agency Trust. Trustee's recording or lack of recording of any such oral, internet or digital instructions, and /or receipt or lack of receipt of facsimile transmissions, as reflected in the Trustee's records maintained in the ordinary course of business shall constitute conclusive proof of Trustee's receipt or non - receipt of such instructions. The Trustee and /or Trust Administrator shall not be liable in any manner for investment or other losses or other liability attributable to Participant's directions, or lack thereof, or exercise of control over the investments of their Participant Directed Accounts. Likewise, the Trustee and /or Trust Administrator shall have no duty or responsibility to review, monitor or make recommendations regarding investments made at the direction of the Participants or the Plan Administrator. In order for Member Agency to be relieved of investment fiduciary liability, the requirements of California law including Section 53213.5 of the California Government Code must be met. The Plan Administrator shall establish uniform and nondiscriminatory rules for the operation of the Participant Directed Accounts, including whether the Participant shall direct the Trustee or direct the Plan Administrator who directs the Trust. Administrator who forwards such directions to the Trustee. Member Agency shall designate whether Participant Directed Accounts are to be established pursuant to the provisions of section 5.18(a) or 5.18(b), below: (a) Participant Direction in Individually Directed Accounts. If the Member Agency has so elected, Participants may have. investment direction power over their own segregated account balances ( "Individually Directed Account" or "IDA "). Investments may be directed by Participants into assets administratively acceptable to Trustee, as .limited by guidelines developed by the Plan Administrator (the "Permissible Investment Guidelines ").. Plan Administrator shall notify Participants of the Plan's Permissible Investment Guidelines as in effect from time to time. In the absence of directions from a Participant, the Plan Administrator may direct the investment of the IDA. The Trustee may refuse to comply with the 24 256712 PEL 6.1 • directions of the Participant to invest in Permissible Investments Guidelines or deems to be improper or contrary to the 0 assets other than those listed in its with directions which the Trustee provisions of the Plan and Agency Trust or the Internal Revenue Code and shall have no liability for such refusal. (b) Participant Directed Account within Plan Administrator Selected Investment Options ( "SelectBENEFIT Accounts "): If the Member Agency so elects, the Participant's Account Balance shall be segregated into a Participant Directed Account ( "SelectBENEFIT Account "), over which the Participant may direct investment into one or more investment alternatives ( "Investment Options"). The Plan Administrator or its appointed Investment Fiduciary shall have full responsibility for designating the Investment Options under the Plan and for selecting the underlying investment vehicle(s) for each designated Investment Option into which a Participant may direct investment of his or her SelectBENEFIT Account. To the extent allowed by law, neither the Member Agency, the Plan Administrator, the Trust Administrator nor the Trustee shall have any responsibility for monitoring the directions of the Participant nor shall the Member Agency, the Plan Administrator, the Trust Administrator or the Trustee be liable in any manner for investment or other losses or other liability for following directions of a Participant. (c) If SelectBENEFIT Accounts are established, notwithstanding any other provision of this Trust Agreement, the Member Agency may appoint the Trustee to provide ministerial services as recordkeeper for such accounts by so indicating in the Member Agency's Adoption Agreement, provided that an acceptable service agreement has been executed by and between the Member Agency, the Plan Administrator, the Trustee and the Trust Administrator. Article VI FIDUCIARY RESPONSIBILITIES More Than One Fiduciary Capacity Any one or more of the fiduciaries with respect to the PARS Trust Agreement or the Agency Trust may, to the extent required thereby or as directed by the Plan Administrator pursuant to this PARS Trust Agreement and the Plan, serve in more than one fiduciary, capacity with respect to the PARS Trust Agreement, the Agency Trust and the Plan. 25 256712 PEI. 0 0 6.2 Fiduciary Discharge of Duties Except as otherwise provided in the Code and applicable law each fiduciary shall discharge such fiduciary's duties with respect to the PARS Trust Agreement and the Plan: Solely in the interest of the Participants and for the exclusive purpose of providing benefits to Participants, and defraying reasonable expenses of administering the Plan. With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. By diversifying the investments of the Plan and the Agency Trust so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so. 6.3 Limitations on Fiduciary Responsibility To the extent permitted by applicable law: No fiduciary shall be liable with respect to a breach of fiduciary duty by any other fiduciary if such breach was committed before such party became a fiduciary or after such party ceased to be a fiduciary. No fiduciary shall be liable for a breach by another fiduciary unless the non - breaching fiduciary knowingly participates in such a breach, knowingly undertakes to conceal such breach, or has actual knowledge of such breach and fails to take reasonable steps to remedy such breach. No fiduciary shall be liable for carrying out a proper direction from another fiduciary, including refraining from taking an action in the absence of a proper direction from the other fiduciary possessing the authority:and responsibility to make such a direction, which direction the fiduciary in good faith believes to be authorized and appropriate. 6.4 Indemnification of Trustee by Member Agency The Trustee shall not be liable for, and Member Agency shall indemnify, defend (as set out in 6.8 of this Trust Agreement), and hold the Trustee (including its officers, agents, employees and attorneys) and other Member Agencies and Alternate Trustees, harmless from and against any claims,. demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Member Agency's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 9• 2567 12 PEL 0 0 6.5 Indemnification of Member Agency by Trustee The Member Agency shall not be liable for, and Trustee shall indemnify, defend (as set out in 6.8 of this Trust Agreement), and hold the Member Agency (including its officers, agents, employees and attorneys) and other Member Agencies and Alternate Trustees, harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.6 Indemnification of Trustee by Trust Administrator The Trustee shall not be liable for, and Trust Administrator shall indemnify and hold the Trustee (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified parry, including reasonable attorneys' fees and costs incurred by the indemnified parry, arising as a result of Trust Administrator's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Trust Agreement. 6.7 Indemnification of Trust Administrator by Trustee The Trust Administrator shall not be liable for, and Trustee shall indemnify and hold the Trust Administrator (including its officers, agents, employees and attorneys) harmless from and against any claims, demands, loss, costs, expense or liability imposed on the indemnified party, including reasonable attorneys' fees and costs incurred by the indemnified party, arising as a result of Trustee's active or passive negligent act or omission or willful misconduct in. the execution or performance of its duties under this Trust Agreement. 6.8 Indemnification Procedures Promptly after receipt by an indemnified party of notice or receipt of a claim or the commencement of any action for which indemnification may be sought, the indemnified party will notify the indemnifying party in writing of the receipt or commencement thereof. When the indemnifying party has agreed to provide a defense as set out above that party shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to such indemnitee) and the payment of expenses, insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the indemnifying party. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the 27 2567_12 PEL 0 • indemnifying party unless (i) the employment of such counsel has been specifically authorized by the indemnifying party or (ii) the named parties to any such action (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. The indemnifying party shall not be liable to indemnify any person for any settlement of any such action effected without the indemnifying party's consent. 6.9 No Joint and Several Liability This document is not intended to and does not create any joint powers agreement or any joint and several liability. No Member Agency shall be responsible for any contributions, costs or distributions of any other Member Agency. Article VII AMENDMENT, TERMINATION AND MERGER 7.1 No Obligation to Continue Plan and Trust Continuance of the Agency Trust, participation in the PARS Trust Program and continuation of the Plan are not assumed as a contractual obligation of the Member Agency. 7.2 Amendments (a) The PARS Trust Agreement may only be amended or terminated as provided herein. A two- thirds majority or greater of the Member Agencies shall have the right to amend this Trust Agreement from time to time, and to similarly amend or cancel any amendments. A copy of all amendments shall be delivered to the Trustee, the Trust Administrator and Plan Administrators promptly as each is made. (b) Such amendments shall be set forth in an instrument in writing executed by the amending party, the Trust Administrator and the Trustee. Any amendment may be current, retroactive or prospective, provided, however, that no amendment shall: (1) Cause the Assets of any Agency Trust to be used for or diverted to purposes other than for the exclusive benefit of Participants who have an interest in such Agency Trust or for the purpose of defraying the reasonable expenses. of administering such Agency Trust. 2e 256712 P[l. (2) Have any retroactive effect so as to reduce the benefits of any Participant having an interest in the Agency Trust as of the date the amendment is adopted, except that such changes may be made as may be required to permit this PARS Trust Agreement to meet the requirements of applicable law. (3) Change or modify the duties, powers or liabilities of the Trustee or the Trust Administrator hereunder without its consent. (4) Permit the Assets of any Agency Trust to be used for the benefit of any other Plan of the Member Agency unless the Member Agency agrees to such use. 7.3 Termination of Plan A termination of the Plan for which the Agency Trust was established shall not, in itself, effect a termination of an Agency Trust. Upon any termination of the Plan, the Assets of the Agency Trust shall be distributed by the Trustee as and when directed by the Plan Administrator. From and after the date of such termination of the Plan and until final distribution of the Assets the Trustee shall continue to have all the powers provided herein as are necessary or expedient for the orderly liquidation and distribution of such assets and the Agency Trust shall continue until the interests of all Participants have been completely distributed to or for the benefit of the Participants in accordance with the Plan. 7.4 Reversion In the event a Member Agency's Plan is terminated, the vested interest of any Participant shall not be diminished or adversely affected. Except as may be provided in this Trust Agreement or the Plan, such termination shall not vest in the Member Agency any corpus or income under the Agency Trust, nor permit the Plan to discriminate as to coverage, or as to allocation of contributions or earnings, in favor of employees who are officers, shareholders, or highly compensated, nor cause the Agency Trust to lose its exemption pursuant to 501(a) of the Code. No modification, amendment or termination of the Plan shall be construed to be a termination of the Agency Trust so as to require the Trustee to make a distribution of any of the Assets of the Agency Trust to any Participant. In order to make such distribution the Trustee must receive written instructions from the Plan Administrator or Delegatee in a form acceptable to the Trustee. If any Member Agency adopts a Plan whose assets are maintained in an Agency Trust and makes application to the Internal Revenue Service, within one year from the date of adoption of such Plan, for a determination that such Plan is a qualified plan under Section 401 (a) of the Code, and if such Plan is determined by the Internal Revenue Service not to be a qualified Plan, then all contributions �.7 2567_12 PEI. and investment income attributable to such Plan shall be returned to the Member Agency upon application to the Trustee. 7.5 Fund Recovery Based on Mistake of Fact Except as hereinafter provided, the Assets of the Agency Trust shall never inure to the benefit of the Member Agency. The Assets shall be held for the exclusive purposes of providing benefits to Participants having an interest in the Plan and defraying reasonable expenses of administering the Agency Trust. The sole exception to the foregoing is as follows: Mistake of Fact. In the case of a contribution which is made by the Plan Administrator because of a mistake of fact; that portion of the contribution relating to the mistake of fact (exclusive of any earnings or losses .attributable thereto) may be returned to the Plan Administrator, provided such .return occurs within one (1) year after discovery by the Plan Administrator of the mistake. If any repayment is payable to the Plan Administrator, then, as a condition to such repayment, and only if requested by Trustee, the Plan Administrator shall execute, acknowledge and deliver to the Trustee its written undertaking, in a form satisfactory to the Trustee, to indemnify, defend and hold the Trustee harmless from all claims, actions, demands or liabilities arising in connection with such repayment. 7.6 Transfers from Other Qualified Plans Notwithstanding any other provision hereof, there may be transferred to the Trustee, upon direction of the Plan Administrator, all or any of the assets held (whether by a trustee, custodian or otherwise) on behalf of any other plan which satisfies the applicable requirements of Section 401 of the Code, and which is maintained for the benefit of any persons who are or will become Participants in the Plan. 7.7 Termination The PARS Trust Agreement may be terminated only by a unanimous agreement of all Member Agencies. Such action must be in writing and delivered to the Trustee and Trust Administrator. Article VIII MISCELLANEOUS PROVISIONS 8.1 Nonalienation To the maximum extent permitted by law, a Participant's interest in the. Agency Trust shall. not in any way be liable to attachment, garnishment, assignment or 30 2567_12 PEL 0 • other process, or be seized, taken, appropriated or applied by any legal or equitable process, to pay any debt or liability of the Participant or any other party. Agency Trust Assets shall not be subject to the claims of the Member Agency or the claims of its creditors. 8.2 Saving Clause In the event any provision of this PARS Trust Agreement and each Agency Trust is held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the PARS Trust and /or Agency Trust, but this instrument shall be construed and enforced as if said provision had never been included. 8.3 Applicable Law This PARS Trust Agreement and each Agency Trust shall be construed, administered and governed under the Code and the applicable provisions of California law. To the extent any of the provisions of this Trust Agreement or the Plan are inconsistent with the Code or applicable California law, the provisions of the Code or California law shall control. In the event, however, that any provision is susceptible to more than one interpretation, such interpretation shall be given thereto as is consistent with the Trust Agreement and the Plan being a qualified governmental retirement trust and plan within the meaning of the Code. 8.4 Joinder of Parties In any action or other judicial proceedings affecting this Trust Agreement, it shall be necessary to join as parties only the Trustee, the Plan Administrator or Delegatee. No participant or other persons having an interest in any Agency Trust shall be entitled to any notice or service of process unless otherwise required by law. Any judgment entered in such a proceeding or action shall be binding on all persons claiming under this Trust Agreement, provided, however, that nothing,in this Trust Agreement shall be construed as to. deprive a participant of such participant's right to seek adjudication of such •participant's rights under applicable law. 8.5 Employment of Counsel The Trustee may consult with legal counsel (who may be counsel for the Trustee or-Member Agency Plan Administrator) and charge the Agency Trust. 8.6 Gender and Number Words used in the masculine, feminine or neuter gender shall each be deemed to refer to the other whenever the context so requires; and words used in the singular or plural number shall each be deemed to refer to the. other whenever the context so requires. 31 2567_12 PEL 0 • THE CITY OF ROSEMEAD PUBLIC AGENCY RETIREMENT SYSTEM (PARS) RETIREMENT ENHANCEMENT PLAN EFFECTIVE JULY 1, 2000 DEFINED BENEFIT PLAN FU.ANCEIPARS REPWGENCIESVi emead efine Benefit Plan U ument (Vemion 4) do -1' i u TABLE OF CONTENTS Page INTRODUCTION......................................................................................... ............................... 3 ARTICLE I - PARTICIPATION 1.1 Eligibility for Benefits ........................................................................ ............................... 4 1.2 Commencement of Benefits ................................................................ ............................... 5 ARTICLE II - BENEFITS 2.1 Retirement Benefits ............................................................................ ............................... 6 2.2 Survivor Continuance Benefit ............................................................. ............................... 7 2.3 Pre - Retirement Death Benefits ........................................................... ............................... 7 2.4 Designation of Beneficiary ................................................................. ............................... 7 ARTICLE III - VESTING 3.1 Vesting ................................................................................................. ..............................9 3.2 Full or Partial Termination .................................................................. ............................... 9 3.3 Attainment of Normal Retirement Age ............................................... ............................... 9 3.4 Affect of Vesting ................................................................................. ............................... 9 ARTICLE IV - DISTRIBUTIONS 4.1 Normal Form of Benefit .................................................................... ............................... 10 4.2 Optional Forms of Benefit ................................................................ ............................... 10 4.3 Cash Out of Small Benefits ............................................................... ............................... 11 4.4 Actuarial Equivalence ....................................................................... ............................... 11 4.5 Direct Rol lovers ................................................................................ ............................... 11 ARTICLE V - ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights not Subject to Execution ...................................... ............................... 13 5.2 Rules and Regulations ....................................................................... ............................... 13 5.3 Military Service ................................................................................ ............................... 13 ARTICLE VII - DEFINITIONS 6.1 Definitions ........................................................................................... .............................14 APPENDIX A - ANNUAL ADDITIONAL LIMITS F\LANCE ABS BEP GENCIEABOUna fie BwaA PW W [(VU n4)dw -2- Q INTRODUCTION The City of Rosemead ( "Employer ") has adopted this tax- qualified governmental defined benefit plan for the benefit of its eligible employees to provide supplemental retirement benefits to eligible employees of the Employer in addition to the benefits employees will receive from the Public Employees' Retirement System ( "PERS "). It is intended that this plan and the trust established to hold the assets of the plan shall be qualified under section 401(a) and tax- exempt under Section 501 (a) of the Internal Revenue Code of 1986, together with any amendments thereto ( "Code "). It is further intended that this plan and the trust established hereunder shall meet the requirements of a pension trust under California Government Code ( "Act ") sections 53215 - 53224, or their successor sections (the "Act "). This document, together with Appendix A — Annual Additional Limits, constitutes the City of Rosemead Public Agency Retirement System Retirement Enhancement Plan. F %I,ANCEPAR$R[NAGENCIEAROfOna6l fi Rmtll Plan Ox 1lVVM41M —3— i ARTICLE I PARTICIPATION 1.1 Eligibility for Benefits. 0 a) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1 Tier 1 if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract city attorney on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twenty (20) or more years of full -time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City Attorney for at least twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. b) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1 Tier II if he /she: (1) is a full -time Miscellaneous Employee of the Employer or a contract city attorney on or after July 1, 2000; (2) is at least sixty (60) years of age; (3) has completed at least ten (10) but not more than twenty (20) years of full- .time continuous employment with the Employer as of the last day of employment with the Employer or has been retained continuously as City F:XANC ARS_ EP GENGIESROS ,O B=ntF � (V"tl 4).O -4- A Attorney for at least ten (10) but not more than twenty (20) years immediately prior to termination of duties; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. C) An Employee shall be eligible to receive Retirement Benefits described under Section 2.1 Tier III if he /she: (1) is a City Council member of the Employer on or after July 1, 2000; (2) is at least fifty -five (55) years of age; (3) has completed twelve (12) or more years of service as a City Council member with the Employer as of the last day of employment with the Employer; (4) has terminated employment with the Employer; (5) has applied for benefits under this Plan; and (6) has retired under PERS. 1.2 Commencement of Benefits. Benefits shall commence as of the first day of the month after an Employee meets the eligibility requirements of section 1.1. F:I LANCE \PARSRMAGCNCIMRoscmmd \DrfnW B—fil PUn Docmmt(V=on it doc —5— ARTICLE II BENEFITS 2.1 Retirement Benefits. Tier 1: The benefit shall be paid in the Normal Form of Benefit and shall be equal to an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Benefit Factor. Tier IL• The benefit shall be paid in the Normal Form of Benefit and shall be equal to an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times two - and -one half percent (2.50 %). FALANMPARSREMGENCIESUto ,v Rxm PW OOt+ 1(Vn n4)E -6- i s (2) The number of full and partial years of full -time continuous employment with the Employer and the number of full and partial years retained as city attorney completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Benefit Factor. Tier III: The benefit shall be paid in the Normal Form of Benefit and shall be equal to an amount equal to one - twelfth of the difference between (1) and (2) described below: (1) The number of full and partial years of employment as a City Council member with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times three percent (3 %). (2) The number of full and partial years of full -time continuous employment with the Employer completed as of the Member's retirement (treating each month in which the Member was at any time employed on a full -time basis as one - twelfth of a year), times the Member's Final Pay, times the PERS Benefit Factor. 2.2 Survivor Continuance Benefit. No Survivor Continuance Benefit shall be provided unless the Member elects to have the benefit paid in an Optional Form of Benefit. 2.3 Pre - Retirement Death Benefits. No Pre- Retirement Death Benefits shall be provided. 2.4 Designation of Beneficiary. Each Member shall have the right to designate a Beneficiary to receive the death benefits, if any, that are payable to a Beneficiary from this Plan. Such designation does not permit the F.LLANCEIPAASUE GENCIESl0.os 3n Bme Mn Ba (Vmon 4) b -7- Member to change a person identified under another provision of the Plan as being eligible to receive a benefit. Such designation must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. The Beneficiary for a married Member shall be the Member's spouse at the date of death, unless the written consent of such spouse is provided upon a form acceptable to the Employer. Each such designation for death benefits must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Member. If no such designation is on file with the Employer at the time of the death of the Member, or if for any reason at the sole discretion of the Employer, such designation is defective, then the spouse of such Member shall be conclusively deemed to be the Beneficiary designated to receive such benefit. The signature of the Member's spouse shall be required on a designation of beneficiary form or an application for a benefit under the Plan if the spouse is not the beneficiary, unless the Member declares in writing that one of the following conditions exists: (1) The Member is not married; (2) The Member does not know, and has taken all reasonable steps to determine, the whereabouts of the spouse; (3) The spouse is incapable of executing the acknowledgment because of an incapacitating mental or physical condition; (4) The Member and spouse have executed a marriage settlement agreement that makes the community property laws inapplicable to the marriage; or (5) The current spouse has no identifiable community proprietary interest in the benefits. FALANC ARS KE GENCIBARO�,v B.41 PW Dxung1(Va -4) E -8- ARTICLE III VESTING 3.1 Vesting. A Member will be fully vested in his Retirement Benefit upon meeting the requirements of Section 1.1. 3.2 Full or Partial Termination. Notwithstanding the vesting schedule, upon the complete discontinuance of Employer contributions to the Plan or upon any full or partial termination of the Plan, the Member's Retirement Benefit shall become one hundred percent (100 %) Vested. 3.3 Attainment of Normal Retirement Age. A Member shall be fully vested in his Retirement Benefit upon attainment of Normal Retirement Age and fulfilling all requirements established in Section 1.1. 3.4 Affect of Vesting. Vesting shall entitle a Member to payment during his lifetime of the Retirement Benefit at the times and upon the conditions specified herein, and shall entitle the Member's survivor or Beneficiary to any death benefits provided herein. Any unpaid Retirement Benefits are forfeited upon the Member's death. F ILANCE\PARSRF. AGENCI.". —a fi. BmeN PW OO—,(VW.n A) &o '9— 0 ARTICLE IV DISTRIBUTIONS 4.1 Normal Form of Benefit. 0 Unless the member elects an optional form of benefit under Section 4.2, payments to a Member of a Retirement Benefit shall be made in the form of monthly payments commencing with the first day of the month following the Member's retirement on or after Normal Retirement Age and ending on the first day of the month in which the Member's death occurs, in the amount specified in Section 2.1. The Retirement Benefit shall be subject to an annual 2% compounding cost -of- living adjustment effective on the anniversary date of commencement of the Retirement Benefit. This form of payment shall be the "Normal Form of Benefit." 4.2 Optional Forms of Benefit. In lieu of the Normal Form of Benefit, a Member may elect a form of benefit payment of Actuarial Equivalent value to the Normal Form of Benefit in one of the following forms: a) Survivor Continuance. Under this form of payment: (1) The Member receives a reduced monthly benefit, and if the Member predeceases the Beneficiary, the Beneficiary will receive a monthly payment for the life of the Beneficiary equal to 100% of such reduced monthly benefit. (2) If the beneficiary predeceases the Member, the Member's reduced monthly payment will not increase. (3) The Member's designation of a Beneficiary shall become irrevocable upon the Member's retirement if electing this form of payment. F\LANC ARSREPAGENCIESl0.ownmtl Le BmernPhnBOmmm[(V don J)E -10- • r 4.3 Cash Out of Small Benefits. If the Actuarial Equivalent of a Member's Normal Retirement Benefit is less than $5,000 at the time of termination of employment, such benefit shall be paid as a single cash lump sum in lieu of any other benefits hereunder. 4.4 Actuarial Equivalence. For the purpose of establishing Actuarial Equivalence between the Normal and an Optional Form of Benefit, the mortality assumption shall be the 1983 Group Annual Mortality Table with 6% interest per annum and 6% load and the interest assumption shall be 6% per annum. 4.5 Direct Rollovers. This section applies to all distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this plan, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. Definitions (1) Eligible rollover distribution An eligible rollover 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 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 F LANCE S_ E GENCIESJImanoEl fl. BrnclnPlan OOnxa t(Vp on1) � —I I- • • Section 410(a)(9) of the Internal Revenue Code, any hardship distribution, and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer 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, or a qualified trust described in Section 401(a) of the Code that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement plan, individual retirement account, or an individual retirement annuity. 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. (3) Direct Rollover A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. FV.ANC ARS ME GENCIFSRwonc rle BmdllP 0 I(V0 4) E -12- • • ARTICLE V ADMINISTRATION AND AMENDMENT OF PLAN 5.1 Member's Rights Not Subject To Execution. The right of a Member to a benefit under this Plan is not assignable and is not subject to execution or any other process whatsoever, except to the extent permitted by the Code of Civil Procedure and the Family Code of the State of California. Any payment hereunder required under the California Family Code to a person other than the Member must not alter the form or amount of benefits hereunder, except that to the extent provided in a valid court order, an Actuarial Equivalent payment may be made to the spouse or child of a beneficiary pursuant to a qualified domestic relations order (as defined in Code Section 414(p) prior to the Member's retirement. 5.2 Rules and Regulations. The Employer has full discretionary authority to supervise and control the operation of this Plan in accordance with its terms and may make rules and regulations for the administration of this Plan that are not inconsistent with the terms and provisions hereof. The Employer shall determine any questions arising in connection with the interpretation, application or administration of the Plan (including any question of fact relating to age, employment, compensation or eligibility of Employees) and its decisions or actions in respect thereof shall be conclusive and binding upon any and all persons and parties. 5.3 Military Service. 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 with section 414(u) of the Code. FLANCEVAASM1ENAGENCIESROwnmTDRimB— filPWGO—l(Vmtlon0 -13- 0 6.1 Definitions. ARTICLE VI DEFINITIONS 40 Whenever the following terms are used in the Plan, with the first letter capitalized, they shall have the meanings specified below. "Act" means California Government Code. "Anniversary Date" means July 1. "Beneficiary" means any person or persons, other than the Employer or the Trustee, designated by a Participant to receive any benefits, which may be due upon the Participant's death. The Beneficiary of a married Participant shall be the Spouse of the Participant and may not be changed unless Spousal Consent is obtained. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Compensation" means all compensation for that portion of the Plan Year during which the Employee was a Member, paid in cash by the Employer to the Member for personal services. Compensation in excess of $150,000 shall be disregarded. Such amount shall be adjusted for increases in the cost of living in accordance with Code Section 401(a)(17), except that the dollar increase in effect on January 1 of any calendar year shall be effective for the Plan Year beginning with or within such calendar year. For any short Plan Year the Compensation limit shall be an amount equal to the Compensation limit for the calendar year in which the Plan Year begins multiplied by a ratio obtained by dividing the number of full months in the short Plan Year by twelve (12). "Effective Date" means July 1, 2000. F:LLANCfl ARSREMCENCIESIROVmo nIX Bmtlu PW Po[ ((VC A4)E -14- 0 0 "Eligible Employee" is an employees who meets the requirements of one of the three tiers as described in Section 1.1 and is eligible to receive Retirement Benefits. "Employee" means a full -time miscellaneous employee of the Employer or the contract city attorney of the Employer. "Employer" means the City of Rosemead that has adopted this Plan. "Final Pay" means the highest average annual compensation paid to an Employee during any twelve consecutive months of employment with the Employer. "Member" means an Employee eligible to receive benefits under this Plan. "Normal Form of Benefit" is the form of benefit described in Section 4.1. "Normal Retirement Age" means fifty -five (55) years of age. "Normal Retirement Date" means the first day of the month coincident with or next following the date on which the Member attains Normal Retirement Age. "PERS" means the California Public Employees' Retirement System. "PERS Benefit Factor" means the age factor used by the PERS Local Miscellaneous 2% at 55 plan, which is determined at the Member's age at retirement. "Plan" means the City of Rosemead PARS Retirement Enhancement Plan. "Plan Year" means the consecutive twelve -month period beginning on July 1 and ending on June 30. "Plan Administrator" means the individual or position designated by the Employer to act on behalf of the Employer in matters relating to this Plan. If no designation is made, the Employer shall be the Plan Administrator. If a Plan Administrator has been appointed the word "Employer" as used in this Plan shall mean Plan Administrator unless the context indicates a different meaning is intended. FLLANMPARS R GENCIESRO�Gn . —RIPWPo I(VC RR)d -15 • "Public Agency" means an employer authorized under California Government Code Article 1.5, sections 53215 through 53224 to establish a pension trust. "Retirement Benefits" means the benefits payable to the Member following retirement, as described in Article II. "Regulations" means the regulations adopted or proposed by the Department of Treasury from time to time pursuant to the Code. "Trust" means the trust established as part of the Public Agency Retirement Trust to hold the assets of the Plan. "Trustee" means the trustee of the Trust. "Vested" means the nonforfeitable portion of any account maintained on behalf of a Member. F V.ANMPABS BENAGENCIESROweod rte Bm Fpt PW Ga t(VV on 4) J -16- A.1 Definitions. APPENDIX A ANNUAL ADDITIONAL LIMITS As used in this Appendix A, the following terns shall have the meanings specified below. "Affiliated Company" means a company required to be aggregated with the Employer for Purposes of Code Sections 414(b) and (c), provided, however, the determination under Section 414 (b) and (c) of the Code shall be made as if the phrase "more than 50 percent" were substituted for the phrase "at least 80 percent' each place it is incorporated into Section 414 (b) and (c) of the Code. "Annual Benefit" means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which Employees do not contribute and under which no rollover contributions are made, or to which assets have been transferred from a qualified plan that was not maintained by the Employer. If the benefit is payable in a form other than a straight life annuity, such form must be adjusted actuarial to the equivalent of a straight life annuity before applying the limitations of Section A.2(a). No actuarial adjustment is required for the following: qualified joint and survivor annuity benefits, pre- retirement disability benefits, preretirement death benefits, post- retirement medical benefits, and the value of post - retirement cost -of- living increases made in accordance with the Code and Treas. Reg. Section 1.415- 3(c)(2)(iii). Subject to Revenue Ruling 98 -1, the adjusted benefit shall be equal to the greater of (x) an adjustment based on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) an adjustment based on the factors specified in the Plan to adjust the applicable form of benefits. F TANCI: -P S_ REPUGENCIESV.,s . ndtDefincd Dc fll P1.D .nt(VCrsion 4)d. A -1 0 E "Average 415 Compensation" means the average Section 415 Compensation during a Member's high three years of service, which period is the actual number of consecutive calendar years (or, the actual number of consecutive years of employment for those Employees who are employed for less than three consecutive years with the Employer) during which the Employee had the greatest aggregate Section 415 Compensation from the Employer. "Defined Contribution Fraction" means for any Limitation Year: (a) the sum of the annual additions to the Member's account under the defined contribution plans maintained by the Employer as of the close of the Limitation Year, divided by: (b) the sum of the lesser of the following amounts determined for the Limitation Year and for each prior year of his service for the Employer: (i) the product of 1.25, multiplied by the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code for the Limitation Year (determined without regard to Section 415(c)(6) of the Code) , or (ii) the product of 1.4, multiplied by an amount equal to 25% of the Member's Section 415 Compensation for the Limitation Year. Notwithstanding the foregoing, the numerator of the Defined Contribution Plan Fraction shall be adjusted pursuant to Treas. Reg. Section 1.415- 7(d)(1), Questions T -6 and T -7 of Internal Revenue Service Notice 83 -10, and Questions Q -3 and Q -14 of Internal Revenue Service Notice 87 -21. "Defined Benefit Fraction" means for any Limitation Year: The Projected Annual Benefit of the Member under this Plan and any Related Plan determined as of the close of the Limitation Year, divided by the lesser of: (a) the product of 1.25, multiplied by the dollar limitation determined for the Limitation Year under Sections 415(b) and (d) of the Code and in accordance with Section A.2(b) in effect under FVANCLVP SREPIGENCIESIAocmead fined Benefit Plan D nnenn(Venion 4) dm A -2 9 L , Section 415(b)(1)(A) of the Code for the Limitation Year, or (b) the product of 1.4, multiplied by 100% of the Member's Average Section 415 Compensation, including any adjustments under Section 415(b) of the Code. If the Employee was a Member as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the Annual Benefits under such plans which the Member had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the term and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987. [or 131 "Employer" means the Employer and any Affiliated Company that adopts this "Limitation Year' means a twelve - consecutive month period ending on the Anniversary Date. If the Limitation Year is amended to a different 12- consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. "Related Plan" means any other defined benefit plan (as defined in Section 415(k) of the Code) maintained by the Employer. "Section 415 Compensation" means a Member's earned income, wages, salaries, fees for professional service and other amounts received (without regard to whether an amount is paid in cash) for personal services actually rendered in the course of employment with an F.LL ANCETARS REPUGENCIESV osemwdOefined Benefit Plan Docvmem (Venion 4) dm A-3 Employer maintaining the Plan to the extent that the amounts are includable in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements, and expense allowances) and excluding the following: (a) Employer contributions to a plan of deferred compensation to the extent contributions are not included in gross income of the Employee for the taxable year in which contributed, or on behalf of an Employee to a simplified employee pension plan to the extent such contributions are deductible under Section 219(b)(2) of the Code, and any distributions from a plan of deferred compensation whether or not includable in the gross income of the Employee when distributed; (b) amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by an Employee becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (c) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (d) other amounts which receive special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of a 403(b) annuity contract under Section 403(b) of the Code (whether or not the contributions are excludable from the gross income of the Employee), contributions made by the Employer for medical benefits (within the meaning of Section 401(h) or 419A(f)(2) of the Code) which is otherwise treated as an annual addition, or any amount otherwise treated as an annual addition under Section 415(1)(1) or 419A(d)(2) of the Code. Section 415 Compensation for any Limitation Year is the Section 415 Compensation actually paid or includable in gross income during such Limitation Year. "Social Security Retirement Age" shall mean the age used as the retirement age for the Member under Section 216(1) of the Social Security Act, except that such section shall be F�ANCIWP RS_REPWGENCIES ,rnread(Defned 9enerit Plan Document (Version a) doc A-4 0 0 applied without regard to the age increase factor and as if the early retirement age under Section 216(1)(2) of such Act were 62. "Year of Participation" means the Member shall be credited with a Year of Participation (computed to fractional parts of a year) for each accrual computation period for which the following conditions are met: (a) the Member is credited with at least the number of Hours of Service (or period of service if the elapsed time method is used) for benefit accrual purposes, required under the terms of the Plan in order to accrue a benefit for the accrual computation period, and (b) the Member is included as a Member under the eligibility provisions of the Plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a Year of Participation credited to the Member shall equal the amount of benefit accrual service credited to the Member for such accrual computation period. A Member who is permanently and totally disabled within the meaning of Section 415(c)(3)(C)(i) of the Code for an accrual computation period shall receive a Year of Participation with respect to that period. In addition, for a Member to receive a Year of Participation (or part thereof) for an accrual computation period, the Plan must be established no later than the last day of such accrual computation period. In no event will more than one Year of Participation be credited for any 12 -month period. A.2 Limitation on Benefits. Notwithstanding any other provision of the Plan: (a) the Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed an amount equal to the lesser of: (i) $90,000, (or, such other dollar limitation determined for the Limitation Year by automatically adjusting the $90,000 limitation by the cost of living adjustment factor prescribed by the Secretary of the Treasury IF UANCI9PARS RBP�Gi- .NCIBSUoacmcadl efined Benefit Plan D rncnt(Vanion 4) doe A -5 0 under Section 415(d) of the Code in such manner as the Secretary shall prescribe); or (ii) only for Limitation Years commencing on or before December 31, 1994, 100% of the Member's Average Section 415 Compensation. The new dollar limitation shall apply to Limitation Years ending within the calendar year of the date of the adjustment. (b) If the Member has less than ten Years of Participation with the Employer, the dollar limitation in Section A.2(a) shall be reduced by multiplying it by a fraction, the numerator of which is the Member's full and partial Years of Participation, and the denominator of which is ten. To the extent provided in regulations or in other guidance issued by the Internal Revenue Service, the preceding sentence shall be applied separately with respect to each change in the benefit structure of the Plan. If the Member has less than ten years of service with the Employer, the compensation limitation in Section A.2(a) shall be reduced by it by a fraction, the numerator of which is the Member's full and partial years of service. For Limitation Years commencing after December 31, 1994, the reductions provided in this paragraph do not apply to payments made to the Member if his payments commence after he has become disabled (within the meaning of Code Section 415(b)(2)(I)), and do not apply to payments made on account of the Member's death. (c) If the Annual Benefit of a Member commences prior to age 62, the dollar limitation in Section A.2(a) shall not apply and the dollar limitation shall be the actuarial equivalent of an Annual Benefit beginning at age 62, reduced for each month by which benefits commence before the month in which the Member attains age 62. To determine actuarial equivalence, subject to Revenue Ruling 98 -1, the adjustment is the greater of (x) an adjustment based on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) the early retirement factors specified in the Plan that are applicable to the Member's benefit. Any F..ANCEWARS REPNGENCIES�oscmeadOefined Benefit Plan Dacumcnt (Vmmiun 4)doc A-6 • • decrease in the dollar limit determined in accordance with this Section A -2(c) shall not reflect the mortality decrement to the extent that benefits will not be forfeited upon the death of the Member. The reduction provided in this Subsection A.2(c) shall not reduce the limitation of Subsection A.2(a) below (x) $75,000 if benefits begin after age 55, or (y) if the benefit begins before age 55, the equivalent of the $75,000 limit at age 55. Furthermore, the reduction in this Subsection A.2(c) shall not apply for a Member who is a "qualified participant," as defined in Code Section 415(b)(2)(H). (d) If the Annual Benefit of a Member commences after age 65, the dollar limitation in Section A.2(a) as reduced in Section A.2(b), if necessary, shall be increased so that it is the actuarial equivalent of an Annual Benefit of such dollar limitation beginning at age 65. To determine actuarial equivalence, subject to Revenue Ruling 98 -1, the adjustment is the lesser of (x) an adjustment based on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) the late retirement factors specified in the Plan that are applicable to the Member's benefit. Any increase in the dollar limit determined in accordance with this Section A -2(d) shall not reflect the mortality decrement to the extent that benefits will not be forfeited upon the death of the Member. (e) If the benefit the Member would otherwise accrue in a Limitation Year would produce an Annual Benefit in excess of the limitation under Section A.2(a), the rate of accrual will be reduced so that the Annual Benefit will equal the limitation under Section A.2(a). (f) The limitation in Section A.2(a) is deemed satisfied if the Annual Benefit payable to a Member is not more than $1,000 multiplied by the Member's number of years of service or parts thereof (not to exceed ten) with the Employer, and the Employer has not at any time maintained a defined contribution plan, a welfare benefit plan as defined in Section 419(e) F'.V.ANCEARS REP GENCIESV semmd finWBneft Plan DOa ,(Venion 4) dm A-7 0 0 of the Code, or an individual medical account as defined in Section 415(1)(2) of the Code in which such Member participated. (g) If the Employer maintains, or has ever maintained, one or more defined contribution plans covering an Employee who is also a Member in this Plan, a welfare benefit fund as defined in Section 419(e) of the Code, or an individual medical account as defined in Section 415(1)(2) of the Code, the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction, cannot exceed 1.0 for any Limitation Year commencing before January 1, 2000. For the purpose of this Section A.2(h), Employee contributions to a qualified defined benefit plan are treated as a separate defined contribution plan. In addition, all defined contribution plans of the Employer are to be treated as one defined contribution plan and all defined benefit plans of the Employer are to be treated as one defined benefit plan, whether or not such plans have been terminated. If the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction exceeds 1.0, the sum of the fractions will be reduced to 1.0 as follows: (i) voluntary nondeductible Employee contributions made by a Member to this Plan which constitute an Annual Addition to a defined contribution plan, to the extent they would reduce the sum of the fractions to 1.0, will be returned to the Member; (ii) if additional reductions are required for the sum of the fractions to equal 1.0, voluntary nondeductible Employee contributions made by a Member to the defined contribution plans which constitute an Annual Addition to a defined contribution plan, to the extent they would reduce the sum of the fractions to 1.0, will be returned to the Member; (iii) if additional reductions are required for the sum of the fractions to equal 1.0, the Annual Benefit of a Member under this Plan will be reduced (but not below zero and not F. U. ANCEWARS _REPWGENCIESVtmemadDefined RC.cfil Plan OOCUmmi(Versi.n 4).doc A-8 0 0 below the amount of the Member's Accrued Benefit to date) to the extent necessary to prevent the sum of the fractions, computed as of the close of the Limitation Year from exceeding 1.0; and (iv) if additional reductions are required for the sum of the fractions to equal 1.0, the reductions will then be made to the Annual Additions of the defined contribution plans. If the Employer maintains one or more defined benefit plans, in addition to this Plan, covering an Employee who is also a Member in this Plan, the sum of the Annual Benefits of all the plans will be treated as a single benefit for the purposes of applying the limitations of Section A.2(a). If these benefits exceed, in the aggregate, the limitations of Section A.2(a), the Normal Retirement Benefits under this Plan will be reduced (but not below zero) until the sum of the benefits of the Related Plan(s) satisfy the limitations. In the case of an individual who was a Member in one or more defined benefit plans of the Employer as of the first day of the first Limitation Year beginning after December 31, 1986, the application of the limitations of this Section A.2 shall not cause the Limitation under Section A.2(a) for such individual under all such defined benefit plans to be less than the individual's Current Accrued Benefit. The preceding sentence applies only if such defined benefit plans met the requirements of Section 415 of the Code, for all Limitation Years beginning before May 6, 1986. For purposes of this Section A.2(k), an individual's Current Accrued Benefit means a Member's Accrued Benefit under the Plan, determined as if the Member had separated from service as of the close of the last Limitation Year beginning before January 1, 1987, when expressed as an annual benefit within the meaning of Section 415(b)(2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (i) any change in the terms and conditions of the Plan after May 5, 1986; and (ii) any cost of living adjustments occurring after May 5, 1986. F..ANCETARS REPV.GENCIESV .,s .adVhfined Beneffi Plan DOCUmcm (Ve,6.. E). doc A-9 • 0 ADOPTION OF THE CITY OF ROSEMEAD PARS RETIREMENT ENHANCEMENT PLAN The City of Rosemead PARS Retirement Enhancement Plan is hereby adopted effective July 1, 2000. i BY: Title: Date: —00 F.LANCE ARS REPNGENC@SU ,a m.a .f,ne H.4, P1. (Vmi.. 4) d. 0 0 rI RESOLUTION NO. 00 -28 0 f A RESOLUTION OF THE CITY COUNCIL OF THE %CITY OF ROSEMEAD APPROVING A SUPPLEMENTAL RETIREMENT BENEFIT AND AUTHORIZING STAFF TO TAKE THE NECESSARY STEPS TO CONTRACT FOR THE BENEFIT AND'ITS ADMINISTRATION The City Council of the City of Rosemead resolves as follows: Section 1. The City Council finds, determines and declares: 1. That it is in the City's best interests to attract and retain employees of the highest quality and that to attract and retain such employees it is necessary to provide a competitive retirement plan, and 2. The City is eligible to be a member of the Public Agency Retirement System (PARS) to provide its employees a supplemental retirement plan. Section 2. The City of Rosemead hereby declares its intention to become a member of PARS and adopt the PARS Supplementary Retirement Plan for Rosemead City employees and officials who are enrolled in the PERS system, effective July 1, 2000 at an anticipated initial annual cost of $158,000. Section 3. Staff is directed to negotiate, and bring to the Council for final approval, the legal documents to implement the PARS plan as a supplement to CALPERS, said plan to be effective July 1, 2000: Section 4. Staff is further directed to negotiate and-bring to the Council for approval a service agreement with Phase II Systems to provide legally required administrative and actuarial reports. Section 5. The City Clerk shall certify to the adoption of this Resolution. M garet Clark, Mayor ATTEST: WV�lde te(/Nanc rrama, CMC City Clerk i STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF ROSEMEAD I, Nancy Valderrama, City Clerk of the City of Rosemead, do hereby certify that the foregoing Resolution No. 2000 -28 being: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD, APPROVING A SUPPLEMENTAL RETIREMENT BENEFIT AND AUTHORIZING STAFF TO TAKE THE NECESSARY STEPS TO CONTRACT FOR THE BENEFIT AND ITS ADMINISTRATION was duly adopted at a Special Meeting of the City Council on the 6's of June, 2000, by the following vote to wit: YES: COUNCILNIEM13ERS: VASQUEZ, BRUESCH, CLARK, IMPERIAL, NO: COUNCILME MBERS: NONE ABSTAIN: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: TAYLOR NANCY VALDERRAiAA, CITY CLERK AGENDA: CERTIFY 0 0