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13-025 Agreement for Administrative Services for Phase II Systems, Public Agency Retirement Services (PARS) .�►�"� 5 h��- e p�t25 RESOLUTION NO. 1-3-010 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING THE PUBLIC AGENCY RETIREMENT SYSTEM (PARS) 457 FICA ALTERNATIVE RETIREMENT PLAN FOR PART-TIME, SEASONAL AND TEMPORARY EMPLOYEES WHEREAS, the City of Cupertino (the "Erriployer") has previously adopted the City o Cupertino C ertino PARS 457 FICA Alternative Retirement Plan, effective September 10, 2012 (the "Plan); and WHEREAS, the Employer has reserved the right to amend the Plan in accordance with Section 5.2 of the Plan; and WHEREAS, the Employer desires to amend the contribution rates under Article II of the Plan effective as of February 5, 2013, in coordination with the expiration of the Y orar tem p rate reduction for Social Security taxed under the Tax Relief Act of 2010. NOW THEREFORE, BE IT FURTHER RESOLVED, that Article II of the Plan is hereby amended as follows: 1. Article II, Section 2.1, Employer Contributions, is hereby amended and restated effective February 5, 2013, to read as follows: 2.1 Employer Contributions For each day that an Eligible Employee remains a Participant under this Plan, the Employer shall contributE� one and three-tenths percent (1.30%) of his or her Compensation to his or her Account. The Employer shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion, but no less frequently than annually. restated 2. Article II, Section 2.2, Employee Contributions, is hereby amended and effective February 5, 2013, to read as follows: 2.2 Employee Contributions mployee remains a Participant under For each day that an Eligible E this Plan, the Employee shall contribute six. and two-tenths percent (6.20%) of his or her Compensation to his or her Account. Such contributions shall be pre-tax contributions accomplished by means of compensation reduction and shall be credited to his or her Account. The Employee shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion, but no less frequently than annually. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 5th day of February, 2013 by the following vote: Vote Members of the City Council AYES: Mahoney, Wong, Chang, Santoro, Sinks NOES: None ABSENT: None ABSTAIN: None ATTEST: APPROVED: Grace Schmidt, City Clerk- Orrin Mahoney, Ma r, City of Cupertino I � 't L THE CITY OF CUJL)ERTINO PUBLIC AGENCY RETIREMENT SYSTEM SECTION 4157 FICA ALTERNATIVE RErr IREMENT PLAN Effective September 10, 2012 NB 1:564577.3 s . TABLE OF CONTENTS Page Introduction........................................................................................................... 1 ArticleI Participation........................................................................................................2 1.1 Eligibility for Benefits.................... 1.2 Participation................................................................................................2 1.3 Reemployment as an Eligible Employee....................................................2 1.4 Qualified Military Ser vice........................... 1.5 Designation of Beneficiary.........................................................................3 ArticleII Contributions.....................................................................................................6 2.1 Employer Contributions.............................................................................6 2.2 Employee Contributions............................ 2.3 Limitations on Contributions......................................................................6 2.4 No Other Contributions.................................................................:............7 2.5 Coordination With Other Plans..................................................................7 ArticleIII Vesting.............................................................................................................9 3.1 Vesting........................................................................................................9 ArticleIV Distributions.................................................................................................. 10 4.1 Distribution of Benefits............................................................................ 10 4.2 In Service Distributions........................................................................... 10 4.3 Qualified Domestic Relations Ordei ........................................................ 11 4.4 Direct Rollovers ....................................................................................... 12 4.5 Purchase of Service Credit........................................................................ 14 Article V Administration,Amendment And Termination.............................................. 15 5.1 Rules and Regulations.............................................................................. 15 5.2 Amendment and Termination................................................................... 16 ArticleVI Miscellaneous................................................................................................ 17 6.1 Participant's Right Not Subject to Execution............................................ 17 6.2 Investment................................................................................................ 17 NB1:564577.3 1 TABLE OF CONTENTS (continued) Page 6.3 Valuation.............................................. ................................................... 17 6.4 Unclaimed Benefits.................................................................................. 18 ArticleVII Definitions..................................................................................................... 19 7.1 Definitions................................................................................................ 19 Appendix A Minimum Distribution Requirements ..................A-1 NR 1:501577.3 -Ll- INTRODUCTION The City of Cupertino (the "Employer") has adopted this deferred compensation plan for the benefit of its eligible employees. It is intended that this plan and the trust established to hold the assets of the plan shall be an eligible deferred compensation plan under Section 457 of the Internal Revenue Code of 1986, together with any amendments thereto (the"Code"). It is further intended that the plan shall meet all of the requirements of a government alternative retirement system under Code Section 3121(b)(7)(F). It is also intended that this plan and the trust established hereunder shall meet the requirements of a pension trust under California Government Code sections 53215 —53224, or their successor sections. At any time prior to the satisfaction of all liabilities with respect to participants 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 participants or their beneficiaries, as prescribed in Section 457(g)(1) of the Code. NB1:564577.3 1 x ARTICLE I PARTICIPATION 1.1 Eligibility for Benefits. An Eligible Employee shall become a Participant on the first day the Employee is not accruing a benefit under another Retirement System provided by the Employer. 1.2 Participation. Participation of a Participant shall-commence as of the date specified in Section I. and shall continue during the Participant's employment with the Employer and until the occurrence of a Break in Employment or until the Participant is no longer an Eligible Employee or commences benefit accruals under another Retirement System provided by the Employer. An Employee who becomes an Eligible Employee while on an Approved Absence shall not become a Participant until the end of his or her Approved Absence; but a Participant who is on Approved Absence shall continue as a-Participant during the period of his or her Approved Absence. 1.3 Reemployment as an Eligible Employee. An Eligible Employee who has become a Participant in accordance with Section 1.1, but who ceases to be a Participant in accordance with Section 1.2, will again become a Participant immediately upon meeting the requirements of Section l.I.. 1.4 Qualified Military Service. Notwithstanding any provision of the 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. In the case of a Participant who dies while performing qualified military .service, the survivors of the Participant are entitled to any NBI:5Gh577.3 2 additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan had the Participant resumed and then terminated employment on account of death. 1.5 Designation of Beneficiary. (a) Each Participant shall designate in writing the Beneficiary or Beneficiaries whom such Participant desires to receive the benefits (if any) that are payable under this Plan in the event of the Participant's death. Such designation must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Participant. (b) Except as set forth in subsection (c), the Beneficiary of a married Participant shall be the Participant's spouse at the date of death, unless the written consent of such spouse is provided upon a form acceptable to the Employer. If no valid designation of Beneficiary, along with a valid spousal consent, is on file with the Employer at the time of the death of the Participant, or if for any reason at the sole discretion of the Employer, such designation is defective, then (except as set forth in subsection (c)) the spouse of such Participant shall be conclusively deemed to be the Beneficiary designated to receive such benefit. (c) The spousal consent required under subsection (b) shall not be required if Participant declares in writing that one of the following conditions exists: (i) The Participant is not married; (ii) The Participant does not know, and has taken all reasonable steps to determine, the whereabouts of the spouse; (iii) The spouse is incapable of executing the acknowledgment because of an incapacitating mental or physical condition; NR l:564577.3 3 1 I (iv) The Participant and spouse have executed a marriage settlement agreement that makes the community property laws inapplicable to the marriage; or (v) The current spouse has no identifiable community property interest in the benefits. (d) Upon the Employer being provided with written notice of the dissolution of marriage of a Participant, any earlier designation of the Participant's former spouse as a Beneficiary shall be treated as though the Particip�int's former spouse had predeceased the Participant, unless prior to payment of benefits on behalf of the Participant (i) the Participant executes and delivers another Beneficiary designation that complies with this Section 1.5 and that clearly names such former spouse as a Beneficiary, or (ii) there is delivered to the Plan a domestic relations order providing that the former spouse is to be treated as the Beneficiary. In any case in which the!Participant's former spouse is treated under the-Participant's Beneficiary designation as having predeceased the Participant, no heirs or other beneficiaries of the former spouse shall receive benefits from the Plan as a Beneficiary of the Participant except as provided otherwise in the Participant's Beneficiary designation. (e) For purposes of this Section 1.5 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 NO 1:564577.3 4 t Secretary of State as such in accordance with Section 298.5 of the California Family. Code. NR1:564577.3 5 f I 1 ' ARTICLE II CONTRIBUTIONS 2.1 Employer Contributions. For each day that an Eligible Employee remains a Participant wider this Plan, the Employer shall contribute three and three-tenths percent (3.30%) of his or her Compensation to his or her Account. The Employer shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion, but no less frequently than annually. 2.2 Employee Contributions. For each day that an Eligible Employee remains a Participant under this Plan, the Employee shall contribute four and two-tenths percent (4.20°/x) of his or her Compensation to his or her Account. Such contributions shall be pre-tax contributions accomplished by means of compensation reduction and shall be credited to his or her Account. The Employee shall contribute such-amounts to the Trust at such times as are determined by the Employer in its discretion, but no 11ess frequently than annually. 2.3 Limitations on Contributions. (a) Normal Limitation. Except as provided in Subsection (b) below, the maximum amount which may be contributed on behalf of a Participant for any taxable year of the Participant (the "Normal Limitation") shall not exceed the lesser of (i) the Applicable Dollar Amount or (ii) one hundred percent (100%) of the Participant's Compensation. (b) Catch-Up Limitation. For each. of a Participant's last three (3) taxable years ending before the Participant attains Normal R(,tirement Age, the maximum amount which may be contributed on behalf of that Particip�ult for that taxable year (the "Catch- N131:564577-3 6 Up Limitation") shall be the lesser of(i) twice the Applicable Dollar Amount or (ii) the amount determined under the immediately following sentence, The amount referred to in Section 23(b)(h) is the sum of (i) the Normal Limitation for the taxable year as determined under Subsection (a) above, plus (ii) so much of the Normal Limitation for prior taxable years in which the Participant was eligible to participate under the Plan, beginning after 1978, as has not been previously used for contributions under Subsection (a) or this Subsection (b). The Catch-Up Limitation is available to a Participant during one three-year period only. If the Participant uses the Catch-Up Limitation and then postpones retirement or returns to work after retirement, the Catch-Up Limitation shall not be available again. The provisions of this Subsection (b) shall be interpreted and administered in accordance with Regulations issued under Code Section 457 including, without limitation, special rules concerning application of the coordination limits in effect under Code Section 457 (c)(2) prior to 2002 for purposes of determining the amounts referred to in Section 2.3(b)(ii)for years prior to 2002. 2.4 No Other Contributions. No contributions other than as provided in Section 2.1 and Section 2.2 shall be made to this Plan. This Plan shall not accept rollover contributions or transfers from other plans. 2.5 Coordination With Other Plans. If a Participant participates in more than one eligible deferred compensation plan (as defined in Section 457(b) of the Code) other than a plan that is a qualified governmental excess benefit arrangement (as defined in Section 415(m)(3) of the Code), the maximum deferral under all such eligible deferred compensation plans shall not N131:564577.3 7 1 I ' exceed the Normal Limitation described in Section 2.3(a) (as modified by any adjustment provided under Section 2.3(b)). 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 admvli.stratively 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. N131:564577.3 g ARTICLE III VESTING 3.1 Vesting. Each Participant will be one hundred percent(100%)vested in his or her Account at all times. NB 1;564577.3 9 ARTICLE IV DISTRIBUTIONS 4.1 Distribution of Benefits. (a) Benefits shall become distributable to a'Participant (or the Participant's Beneficiary in case of the Participant's death) upon the Participant's Break in Employment. The amount of the benefits distributable to a Participant shall be the vested amount credited to such Participant's Account as of the most recent Valuation Date. Notwithstanding any other provision of this Plan, all distributions shall be in the form of a single cash lump sum paid as soon as administrativE;ly practicable after the date benefits become distributable. (b) In the event of the death of a Participant prior to distribution, distribution of the Participant's vested Account shall be made to his or her Beneficiary in a cash lump sum as soon as practicable after the Participant's dea h, but in no event later than the last day of the calendar year following the calendar year in which the death occurs. (c) This Plan is subject to the minimum distribution requirements contained in Code Section 457(4)(2) and 401(a)(9) and the regulations thereunder. These requirements are set forth in Appendix A of this Plan. 4.2 In Service.Disti-ibutions In accordance with Section 457(c)(9)(A), a Participant who is no longer eligible to participate because he is no longer in the class of f?ligible Employees, but who has not 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 NB 1:564577.3 10 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. 4.3 Qualified Domestic Relations Order. (a) Subject to procedures established by the Employer, benefits may be paid from the balance of a Participant's Account in accordance with a Qualified Domestic Relations Order. This Section 4.3 is included in the Plan to comply with Section 414(p) of the Code, the regulations thereunder, and such regulations as the Secretary of the Treasury may publish under Code Sections 414(p)(11) and 414(p)(12). (b) Procedure. (i) Upon receipt of a Qualified Domestic Relations Order, the Employer will establish an Account for the benefit of the Alternate Payee specified in such order. The Employer will then transfer balances in accordance with the terms 'of such order from the Participant's Account to the Alternate Payee's Account. The Alternate Payee's Account, except as otherwise provided herein, will remain subject to all the rules of the Plan. (ii) An Alternate Payee under a Qualified Domestic Relations Order may designate the investment vehicles in which the balances in the Alternate Payee's Account will be invested, limited to the investment alternatives provided by the Plan. (iii) An Alternate Payee under a Qualified Domestic Relations Order may designate beneficiaries to receive any amount to which the Alternate Payee may be entitled to receive in the event of his or her death. (iv) All amounts credited to an Alternate Payee's Account will be payable to the Alternate Payee or the Alternate Payee's beneficiary in accordance Nr31:564577.3 11 r i with the terms 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. 4.4 Direct Rollovers. (a) Availability. 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 Employer, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the distributee in a Direct Rollover. (b) Definitions. For purposes of this Section 4.4, the following terms shall have the meanings set forth below. (i) 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 Section 401(a)(9) of the Code, any hardship distribution, and the portion of any distribution that is not includible in gross income. (ii) Eligible Retirement Plan. An Eligible Retirement Plan is an individual retirement account described ire. Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, a qualified NB 1:564577.3 12 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 de-fined 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)(11) of the Code. (iii) Direct Rollover. A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the distributee. NB1:564577.3 13 i 4.5 Purchase of Service Credit. If a Participant is also a participant in a de fined benefit governmental plan (as defined in Code Section 414(d)), such Participant may request that the Employer transfer amounts from his or her Account for (a) the purchase of permissive service credit (as defined in Code Section 415(n)(3)(A)) under such plan, or (b) a repayment to which Code Section 415 does not apply by reason of Code Section 415(k)(3). Such transfer requests shall be granted in the sole discretion of thy° Employer, and if granted, shall be made directly to the defined benefit governmental PIM. N131:564577.3 14 ARTICLE V ADMINISTRATION,AMENDMENT AND TERMINATION 5.1 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 in its discretion determine any questions arising in connection with the interpretation, application or administration of the Plan (including any question of fact) and its decisions or actions in respect thereof shall be conclusive and binding upon all persons and parties. The Employer shall have all discretionary powers necessary to accomplish its purposes, including,but not by way of limitation,the following: (a) To determine all questions relating to an Employee's eligibility; (b) To construe and interpret the terms and provisions of the Plan and to determine any question of fact; (c) To compute, certify to, and direct the Trustee with regard to the amount and kind of benefits payable to the Participants 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 (f) 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. NB 1:564577,3 15 I f 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. Expenses and fees in connection with the administration of the Plan and the Trust shall be paid from the Trust assets to the Rillest extent permitted by law, unless the Employer determines otherwise. In accordance with Section 53217 of the California Government Code, the Employer may elect to make contributions to the Trust sufficient to defray the expenses of administering the Plan or may pay such expenses directly. 5.2 Amendment and Termination. The Employer shall have the right to amend, modify or terminate this Plan at any tune. The Employer shall not be liable for the payment of any benefits under this Plan and all benefits hereunder shall be payable solely froin the assets of the Trust. ND 1:564577.3 16 ARTICLE VI MISCELLANEOUS 6.1 Participant's Right Not Subject to Execution. The right of a Participant 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 Participant must not alter the form or amount of benefits hereunder except to the extent provided in a Qualified Domestic Relations Order (as defined in Code Section 414(p)) prior to the Participant's Break in Employment. 6.2 Investment. All contributions, interest earned, and any assets of the Plan shall at all times be invested and managed in accordance with the requirements of the California Government Code. 6.3 Valuation. The value of the Trust under the Plan shall be established periodically as determined by the Employer in its discretion (but no less frequently than annually) and investment gains and losses thereon shall be allocated to the Participants' Accounts. Notwithstanding anything to the contrary herein, if the Employer determines that Accounts should be valued on a more frequent basis or that an alternative method of allocating earnings and losses would better serve the interests of the Participants or their Beneficiaries or could more readily be implemented, the Employer may make such changes; provided that any alternative method must result in Plan earnings being allocated on the general basis of Account balances. NB 1:5645773 17 r i 6.4 Unclaimed Benefits. Each Participant and Beneficiary of a deceased Participant shall file with the Employer from time to time in writing, his or her home address and each change of home address. Any communication addressed to the Participant or the Beneficiary at his or her last home address filed with the Employer, or if no such address was filed, then at his or her last home address as shown on the Emptoyer"s records, shall be binding on the Participant or Beneficiary for all purposes of the Plan. The Employer shall not be obligated to search for or ascertain the whereabouts of any Participant or Beneficiary, and the Participant's Account balance shall be subject to the abandoned property law of the applicable jurisdiction. NB 1:564577.3 ]$ ARTICLE VII DEFINITIONS 7.1 Definitions. "Account" means the account maintained by the Employer for each Participant that is credited with the amounts provided herein. "Alternate Payee" means any spouse, former spouse, child or other dependent of a Participant who -is recognized by a Domestic Relations Order (as defined under "Qualified Domestic Relations Order" below) as having a right to receive all, or a portion of,the benefits payable under this Plan with respect to such Participant. "Applicable Dollar Amount" means the "applicable dollar amount" as defined in Code Section 457(e)(15) (as adjusted from time-to-time as set forth in Code Section 457(e)(15)). "Approved Absence" means a leave of absence (without pay) granted to an Employee under the Employer's established leave policy. "Beneficiary" means the person, persons, trust or trusts designated by a Participant, 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 Participant dies and means the Participant's executor or administrator if no other beneficiary is designated and able to act under the circumstances. "Break in Employment" means any termination of employment by reason of .resignation, discharge, retirement, disability, death, or other event constituting a `'severance from employment" as defined under Code Section 457(d)(1)(A)(ii), "Code" means the Internal Revenue Code of 1986, as amended from time to time. NB 1:564577.3 19 r i ' "Compensation" means all compensation paid to a Participant that is attributable to services performed for the Employer and is includible in the Participant's gross income for the Plan Year. Notwithstanding the foregoing, Compensation shall have the meaning of"includible compensation" as defined in Code Section 457(e). "Effective Date"means September 10, 2012. "Eligible Employee" means all of those Employees of the Employer whose participation in this Plan is not prohibited or restricted by the provisions of a collective bargaining agreement or another plan or retirement system maintained by the Employer. Additionally, Employees who are exempt from coverage under Social Security by federal law or regulation shall not be Eligible Employees. "Employee" means an employee of the Empl,ayer. "Employer"means the City of Cupertino that has adopted this Plan. - "Normal Retirement Age" means the range of ages from 55 through and including 70 1/2 as designated by the Participant. Any Participant who works beyond age 70 1/2 may designate a Normal Retirement Age greater than 70 1/2; provided, however that Normal Retirement Age may not be later than the date or age at which the Participant terminates employment with the Employer. "Participant" means a Participant under Article I hereof. "Plan" means the City of Cupertino Public Agency Retirement System Section 457 FICA Alternative Retirement Plan. "Plan Year" means the consecutive twelve-month period beginning on July 1 and ending on June 30. "Qualified Domestic Relations Order" means a Domestic Relations Order (as defined herein) which(a) creates or recognizes the e-xistence of an Alternate Payee's right NB 1:564577.3 20 . E to, or assigns to an Alternate Payee the right to, receive all or.a portion of the benefits payable to a Participant under this Plan; (b) clearly specifies (i) the name and the last known mailing address of the Participant and the name and mailing address of each Alternate Payee covered by the order, (ii) the amount or percentage of the Participant's benefits to be paid-by this Plan to each such Alternate Payee, or the manner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies and (iv) that it applies to this Plan; and (c) does not (i) require this Plan to provide any type or form'of benefit, or/any option, not otherwise provided under the Plan, (ii) require this Plan to provide increased benefits (determined on the basis of actuarial value), or (iii) require the payment of benefits to an Alternate Payee which are required to be paid to another Alternate Payee under another order previously determined to be a Qualified Domestic Relations Order. For purposes of this Plan, a "Domestic Relations Order" means any judgment, decree, or order (including approval of a property settlement agreement) which (a) relates to the provisions of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a Participant and (b) is made pursuant to a State domestic relations law (including a community property law). "Retirement System" means any plan that meets the requirements for a retirement system under Section 3121(b)(7)(F) of the Code and the final Regulations thereunder. "Social Security" means the Social Security program as set forth in Title 42 of the United States Code, section 301 et seq. "Trust" means the .trust established as part of the Public Agency Retirement Trust to hold the assets of the Plan. NR 1:5G4577.3 21 i � , "Trustee"means the trustee of the Trust. "Valuation Date"means the last day of the Plan Year or such other day on which the assets of the Trust are valued and the value of each Participant's Account is determined. Nsi;564577.3 22 ADOPTION OF THE CITY OF CUPERTINO PUBLIC AGENCY RETIREMENT SYSTEM SECTION 457 FICA ALTERNATIVE RETIREMENT PLAN 1 The City of Cupertino Public Agency Retirement System Section 457 FICA Alternative Retirement Plan is hereby adopted effective September 10,2012. BY: TITLE: Director of Administrative Services DATE: f 1 APPENDIX A Minimum Distribution Requirements A.1 General Rules. (a) Effective Date. The provisions of this Appendix A will apply for purposes of determining required minimum distributions :Ior.calendar years beginning with the 2003 calendar year. (b) Precedence. The requirements of this Appendix A will take precedence over any inconsistent provisions of the Plan provides( that this Appendix A shall not be considered to allow a Participant or Beneficiary to delay a distribution or elect an optional form of benefit not otherwise provided in the Plan. (c) Requirements of Treasury Regulations Inco;r op rated. All distributions required under this Appendix A will be determined and made in accordance with the Treasury regulations under Section 401(a)(9) of the Internal Revenue Code. A.2 Time and Manner of Distribution. (a) Required Beginning pate. The Participant's entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant's Required Beginning Date. (b) Death of Participant Before Distributions Bq in. If the Participant dies before distributions begin, the Participant's entire interest will be distributed, or begin to .be distributed, no later than as follows; (1) If the Participant's surviving spouse is the Participant's sole Designated Beneficiary, then, except as provided elsewhere in this Appendix A, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 701/2, if later. (2) If the Participant's surviving spouse is not the Participant's sole Designated Beneficiary, then, except as provided elsewhere in this Appendix A, distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died. (3) If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant's death, the Participant's entire interest will be distributed by Decemb+-Ir 31 of the calendar year containing the fifth anniversary of the Participant's death. (4) If the Participant's surviving spouse is the Participant's sole Designated Beneficiary and the surviving spouse dies after the Participant but before NB 1:564577.3 A-1 distributions to the surviving spouse begin, this Section A.2(b), other than Section A.2(b)(1), will apply as if the surviving spouse were the Participant. For purposes of this Section A.2(b) and Section A.4, unless Section A.2(b)(4) applies, distributions are considered to begin on the Participant's Required Beginning Date. If Section A.2(b)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section A..2(b)(1). (c) Forms of Distribution. Unless the Participant's interest is distributed in the form of 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 A.3 and A.4 of this Appendix A. A.3 Required Minimum Distributions During Participant's Lifetime. (a) Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the Participant's lifetime, the minimum amount that will be distributed for each Distribution Calendar Year is the lesser of: (1) the quotient obtained by dividing the Participant's Account Balance by the distribution period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant's age as of the Participant's birthday in the Distribution Calendar Year; or (2) if the Participant's sole Designated Beneficiary for the Distribution Calendar. Year is the Participant's spouse, the quotient obtained by dividing the Participant's Account Balance by the nl-unber in the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant's and spouse's attained ages as of the Participant's and spouse's birthdays in the Distribution Calendar Year. (b) Lifetime Required Minimum Distributions Continue Through Year of Participant's Death. Required minimum distributions will be determined under this Section A.3 beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes the Participant's date of death. AA Required Minimum Distributions After Participant's Death. (a) Death On or After Date Distributions Begin. (1) Participant Survived by Designated Benef ciaa. If the Participant dies on or after the date distributions begin and there is a Designated Beneficiary, the minimum amount that will . be distributed for each Distribution Calendar Year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account Balance by the longer of the remaining Life Expectancy of the Participant or the remaining Life N131:56,1577.3 A-2 Expectancy of the Participant's Designated Beneficiary, determined as follows: (A) The Participant's remaining Life Expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. (B) If the Participant's surviving spouse is the Participant's sole Designated Beneficiary, the remaining Life Expectancy of the surviving spouse is calculated for each Distribution Calendar Year after the year of the Participant's death using the surviving spouse's age as of the spouse's birthday in that year. For Distribution Calendar Years after the year of the surviving spouse's death, the remaining; Life Expectancy of the surviving spouse is calculated using the .age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse'-s death, reduced by one for each subsequent calendar year. (C) If the Participant's surviving spouse is not the Participant's sole Designated Beneficiary, the Designated Beneficiary's remaining Life Expectancy is calculated using the age of the beneficiary in the year following the year of the Participant's death, reduced by one for each subsequent year. (2) No Designated Beneficiary. If the .Participant dies on or after the date distributions begin and there is no Designated Beneficiary as of September 30 of the year after the year of the: Participant's death, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account Balance by the Participant's remaining Life Expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. (b) Death Before Date Distributions Be in. (1) Participant Survived by Designated Beneficiary. Except as provided elsewhere in this Appendix A, if the Participant dies before the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account Balance by the .remaining Life Expectancy of the Participant's Designated Beneficiary, determined as provided in Section AA(a). (2) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Desiignated Beneficiary as of September 30 of the year following the ye,-u•of the Participant's death, distribution of the Participant's entire interest will be: completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. NBl:564577.3 A-3 (3) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant's surviving spouse is the Participant's sole Designated Beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section A.2(b)(1), this Section A.4(b)will apply as if the surviving spouse were the Participant. A.5 Definitions. For purposes of this Appendix A, the following terms shall have the meanings set forth below: (a) Designated Beneficiary. The individual who is designated as the beneficiary under Section 1.5 of the Plan is the designated beneficiary under Section 401(a)(9) of the Internal Revenue 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 Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's Required Beginning Date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin under Section A.2(b) The required minimum distribution for the participant's first distribution calendar year will be made on or before the Participant's Required Beginning Date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant's Required Beginning Date occurs, will be made on or before December 31 of that distribution calendar year. (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) Participant's Account Balance. The account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year. (e) Required Beginning Date. The Required Beginning Date means April I of the calendar year following the later of(a) the calendar year in which the Participant attains age seventy and a half (70 '/2), or (b) the calendar year in which the Employee has a Break in Employment. NB1:564577.3 A-4 1 4 � A.6 Effective Date of Plan Amendment for Section 401(a)(9) Final and Temporary Ti•e,asury Regulations. Appendix A applies for purposes of determining required minimum distributions for Distribution Calendar Years beginning with the 2003 calendar year. NB 1:564577.3 A-5 AGREEMENT FOR ADMINISTRATIVE SERVICES This Agreement for Administrative Services ("Agreement" is m e this /G day of , 2012, 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 Cupertino (",Agency"). WHEREAS, Agency has adopted the City of Cupertino PARS Section 457 FICA Alternative Retirement Plan (the "Plan") effective September 10, 2012 in conjunction with the PARS Trust Document ("PARS Trust"), and is desirous of retaining ARS Tr to the PARS-Trust, to provide administrative services; g as Trust Administrator WHEREAS, by written resolution and pursuant to Sections 1.1 and 2.1 of the PARS Trust the Agency's governing body has appointed by position or title a Plan Administrator on Its behalf in all matters relating to the Plan and PARS Trust ("Plan Administrator"); to act WHEREAS, pursuant to Section 3.3 of the PARS Trust, the Agency has the power to delegate certain duties related to the Plan, and PARS accepts those duties pursuant to the terms contained in the Agreement, and that this Agreement represents the entire dele ation of duties to PARS from the Agency with regards to the Plan; g WHEREAS, PARS accepts the terms of this Agreement with the understanding the Agency and Plan Administrator that PARS does not hold custody of an as g y and does not have any independent authority or discretion for the investment assets Plan, escheatment of Plan assets without the express consent of, and direction from the Plan Administrator. 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 "E:�,,hibit 113". 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 b y PARS and delivered to the Agency. If payment is not received by PARS within thirt (30) days of the invoice delivery date, the balance due shall bear interest at y t 1.5% per month. If payment is not received. from the Agency within-sixt ate of of the invoice deliver Y (60) days Y date, payment plus accrued i nterest 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. Page I 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 obtain prior Agency authorization and provide the Agency with written notice of the subject services, terms, and ara estimate of the fees therefore. 5. Information Furnished to PARS. PARS; will provide the Services contingent upon the Agency providing PARS the information specified in the exhibit attached hereto as "Exhibit IC" ("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 mariner 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 Plain, or to determine or inquire whether contributions made to the 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 IC, PARS reserves the right, notwithstanding he further g provisions of this Agreement, to terminate this Agreement upon no less than ninety (90) days written notice to the Agency. 6. Suspension of Contributions. In the event contributions are suspended, either temporarily or permanently, prior to the complete discharge of PARS obligations under this Agreement, PARS reserves the right to bill the Agency for Services under this Agreement at the rates indicated in PARS' 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, PARS will provide the Agency with written notice of the subject services, terms, and an estimate of the fees therefore. 7. Plan Distributions. The Plan Administrator is responsible for notifying PARS of any .Participant's eligibility for a distribution, and PARS accepts the Plan Administrator's contractual delegation of distribution processing and certain escheatment responsibilities. PARS is ent:itled to rely on, and is under no duty whatsoever to audit the efficacy of the Agency's procedures for identifying an employee's change-in-status or eligibility for a distribution. 8. Non-Contribution Reports. PARS prepares and submits a periodic Non- Contribution report to the Plan Administrator which includes all Participants who have received no new contributions for a period of time, as specified by the Plan Administrator. PARS is not obligated by law or otherwise to provide a Non- Contribution report and this report in no way obligates PARS to generate distributions Page 2 without specific instruction from the Agency's Plan Administrator as outlined in Section 7. 9. Escheatment of Unclaimed Accounts. PARS will administer the escheatment of Participant accounts which are deemed unclaimed pursuant to applicable state and federal laws, under the conditions further described in the provisions of this Agreement. It is acknowledged by the Agency and Plan Administrator that any escheatment duties that PARS has arise only as a result of contractual, not statutory, obligations that PARS accepts as a delega.tee of the Plan Administrator, as contained in this Agreement. For the purposes of determining the timing of distributability under any unclaimed property law, a J''articipant account becomes "payable or distributable" as of the date on which the Plan Administrator notifies PARS, in an acceptable form of notification, of a change-in-status together with the proper authorization to commence the distribution process. 10. 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. 11. Confidentiality. Without the Agency', 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. 12. 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. 13. Indemnification. PARS and Agency herel►y 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. Page 3 14. 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 admi'trilistrative services provided under this Agreement. 15. 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. 16. 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. 17. 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. 18. 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 f_iOrth in this Agreement. 19. 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; 4350 Von Karmen Avenue, Suite 100, Newport Beach, CA 92660; Attention: President (B) To Agency: City of Cupertino; 101100 Torre Avenue, Cupertino, CA 95014; Attention: Director of Administrative Services Notices shall be deemed given on the date:received by the addressee. 20. Term of Agreement. This Agreement shall remain in effect for the period beginning June 4, 2012 and ending June 30, 2015 ("Term"). This Agreement will continue unchanged for successive twelve month periods following the Term unless either Page 4 party gives written notice to the other party of the intent to terminate prior to ninety (90) days before the end of the Term. 21. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the parties hereto. 22. 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. 23. 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. 24. 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. 25. Headings. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 26. Effective Date. This Agreement shall be effective and control the obligations and duties of the parties hereto as of the date first above written. AGENCY: BY: TITLE: Director of Administrative Services DATE: PARS: TITLE: DATE: / % 2-,Ot Page 5 EXHIBIT[' 1 A SERVICES PARS will provide the following services for the City of Cupertino PARS 457 FICA Alternative Retirement Plan: 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 the documentation needed to establish the Plan for review by Agency legal counsel, which must be reviewed and approved by the Agency, as demonstrated by the execution of this Agreement prior to the commencement of PARS services. 2. Plan Administration Services: (A)Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust ("Trustee"), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, including the allocation of employer and employee contributions, distributions, investment activity and expenses (if applicable) to individual Participant accounts, based upon information received from the Agency and/or Trustee; (C)Acting as ongoing 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 PARS; (D)Coordinating the processing of Participant distribution payments pursuant to authorized written Agency certification of distribution eligibility, authorized direction by the Agency, the provisions further contained in this Agreement, and the provisions of the Plan; (E) Directing Trustee to make Participant distribution payments, pursuant to the Agency authorization provisions in this Agreement, and producing required tax filings regarding said distribution payments; (F) 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; (G)Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; (H)Preparing and submitting twice annually .a periodic Non-Contribution report which includes all Participants who have received no new contributions for a six (6) month period of time as specified by the Plan Administrator, unless directed by the Agency Page 6 otherwise. PARS is not obligated by law or otherwise to provide a Non-Contribution report and this report in no way obligates PARS to generate distributions without specific instruction from the Agency Plan Administrator as outlined in Section 7 of this Agreement; (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 repor�t of Plan activity to the Agency; (K)Preparing individual annual statements and mailing in bulk to the Agency, unless directed by the Agency otherwise. y 3. Plan Compliance Services: Coordinating and preparing amendments to the Trust, Plan and other associated legal documents required by federal and/or state agencies to maintain the Plan in compliance, for review by Agency legal counsel. 4. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. Page 7 EXHIBIT 1B FEES FOR SERVICES 1. PARS will be compensated for performance of Services, as described in Exhibit IA based upon the following schedule: (A) A distribution fee equal to $20.00 per terminated Participant ("Distribution Fee") which shall be deducted solely from the terminating Participant's account or paid by the Agency. Distribution Fee Payment Option (Please select one option below): C1 Distribution Fee shall be paid solely from the terminating Participant's account. Cl Distribution Fee shall be paid by the Agency. (B) An annual asset fee paid by the Agency or from Plan Assets based on the following schedule ("Asset Fee"): For Plan Assets from: Annual Rate: $1 to $500,000 2.00% $50001 to $21500,()00 1.50% $2,500,001 to $5,0001000 1.25% $5,000,001 to $10,000,000 1.00% $10100001 and above 0.75% Annual rates are prorated and paid n:tonthly. 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 thy, end of the month within each asset range). Asset based fees are subject to a $400.00 monthly minimum. If the Asset Fee is taken from Plan Assets, the total Asset Fees due in a given month shall be allocated proportionately among Participants of the Agency's Plan in that month, based on account balance. Trustee and Investment: Management Fees are not included. The monthly minimum is subject to an automatic cost-of-living increase of 2% per year commencing the 1St of the month follow4g the Term as defined in Section 20 above. Annual Asset Fee Payment Option (Please select one option below): Q Annual Asset Fee shall be invoiced and paid by the Agency during the first two (2) years of the Agreement. Commencing September 1, 2014, the Annual Asset Fee shall be paid from Plan Assets. 0 Annual Asset Fee shall be paid from Plan Assets. (C) 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 Page 8 rT contribution data received by PARS from the Agency is not on readable magnetic media ("Data Processing Fee"). EXHIBIT IC DATA REQUIREMENTS PARS will provide the Services under this Agreement contingent upon receiving the following information: 1. Contribution Data — transmitted to PARS by email or on an IBM formatted disk (360K, 1.2 MB or 1.44 MB) in ASCII code or Exaell formats containing the following items of employee information related to the covered payroll period: (A) Agency name (B) Employee's legal name (C) Employee's social security number (D) Payroll date (E) Employer contribution amount (F) Employee contribution amount 2. Distribution Data — written Plan Administrator's (or authorized Designee's) direction to commence distribution processing, which contains the following items of Participant information: (A) Agency name (B) Participant's legal name (C) Participant's social security number (D) Participant's address (E) Participant's phone number (F) Participant's birthdate (G) Participant's condition of eligibility (H) Participant's effective date of eligibility (1) Signed certification of distribution eligibility from the Plan Administrator, or authorized Designee 3. Executed Legal Documents: (A) Certified Resolution (B) Plan Document (C) Trust Agreement (D) Trustee Investment Forms 4. Other information pertinent to the Services as reasonably requested by PARS. Page 9 AGREEMENT FOR ADMINISTRATIVE SERVICES This Agreement for Administrative Services ("Agreement") is made this /G r" day of l-h t f c►s T , 2012, 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 Cupertino ("Agency"). WHEREAS, Agency has adopted the City of Cupertino PARS Section 457 FICA Alternative Retirement Plan (the "Plan") effective September 10, 2012 in conjunction with the PARS Trust Document ("PARS Trust"), and is desirous of retaining PARS, as Trust Administrator to the PARS Trust, to provide administrative services; WHEREAS, by written resolution and pursuant to Sections 1.1 and 2.1 of the PARS Trust, the Agency's governing body has appointed by position or title a Plan Administrator to act on its behalf in all matters relating to the Plan and PARS Trust ("Plan Administrator"); WHEREAS, pursuant to Section 3.3 of the PARS Trust, the Agency has the power to delegate certain duties related to the Plan, and PARS accepts those duties pursuant to the terms contained in the Agreement, and that this Agreement represents the entire delegation of duties to PARS from the Agency with regards to the Plan; WHEREAS, PARS accepts the terms of this Agreement with the understanding by the Agency and Plan Administrator that PARS does not hold custody of any assets of the Plan, and does not have any independent authority or discretion for the investment, distribution or escheatment of Plan assets without the express consent of, and direction from the Plan Administrator. 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 1A" ("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. Page 1 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 obtain prior Agency authorization and 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 providing PARS the information specified in the exhibit attached hereto as "Exhibit 1 C" ("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 tl-e Plan, or to determine or inquire whether contributions made to the 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 I C, 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. Suspension of Contributions. In the event contributions are suspended, either temporarily or permanently, prior to the complete discharge of PARS' obligations under this Agreement, PARS reserves the right to bill the Agency for Services under this Agreement at the rates indicated in PARS' 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, PARS will provide the Agency with written notice of the subject services, terms, and an estimate of the fees therefore. 7. Plan Distributions. The Plan Administrator is responsible for notifying PARS of any Participant's eligibility for a distribution, and PARS accepts the Plan Administrator's contractual delegation of distribution processing and certain escheatment responsibilities. PARS is entitled to rely on, and is under no duty whatsoever to audit the efficacy of the Agency's procedures for identifying an employee's change-in-status or eligibility for a distribution. 8. Non-Contribution Reports. PARS prepares and submits a periodic Non- Contribution report to the Plan Administrator which includes all Participants who have received no new contributions for a period of time, as specified by the Plan Administrator. PARS is not obligated by law or otherwise to provide a Non- Contribution report and this report in no way obligates PARS to generate distributions Page 2 without specific instruction from the Agency's Plan Administrator as outlined in Section 7. 9. Escheatment of Unclaimed Accounts. PARS will administer the escheatment of Participant accounts which are deemed unclaimed pursuant to applicable state and federal laws, under the conditions further described in the provisions of this Agreement. It is acknowledged by the Agency and Plan Administrator that any escheatment duties that PARS has arise only as a result of contractual, not statutory, obligations that PARS accepts as a delegatee of the Plan Administrator, as contained in this Agreement. For the purposes of determining the timing of distributability under any unclaimed property law, a Participant account becomes "payable or distributable" as of the date on which the Plan Administrator notifies PARS, in an acceptable form of notification, cf a change-in-status together with the proper authorization to commence the distribution process. 10. 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. 11. 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. 12. 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. 13. 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. Page 3 14. 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. 15. 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. 16. 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. 17. 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. 18. 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 a set forth in this Agreement. 19. 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; 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660; Attention: President (B) To Agency: City of Cupertino; 10300 Torre Avenue, Cupertino, CA 95014; Attention: Director of Administrative Services Notices shall be deemed given on the date received by the addressee. 20. Term of Agreement. This Agreement shall remain in effect for the period beginning June 4, 2012 and ending June 30, 2015 ("Term"). This Agreement will continue unchanged for successive twelve month periods following the Term unless either Page 4 party gives written notice to the other party of the intent to terminate prior to ninety (90) days before the end of the Term. 21. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the parties hereto. 22. 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. 23. 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. 24. 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. 25. Headings. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 26. Effective Date. This Agreement shall be effective and control the obligations and duties of the parties hereto as of the date first above written. AGENCY: BY: )ZA-t l_Z ->`r� TITLE: Director of Administrative Services DATE: P‘7, : J L PARS: BY: 17 A► TITLE: C DATE: g 2 / 2_40( Page 5 EXHIBIT 1 A SERVICES PARS will provide the following services for the City of Cupertino PARS 457 FICA Alternative Retirement Plan: 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 the documentation needed to establish the Plan for review by Agency legal counsel, which must be reviewed and approved by the Agency, as demonstrated by the execution of this Agreement prior to the commencement of PARS services. 2. Plan Administration Services: (A)Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust ("Trustee"), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, including the allocation of employer and employee contributions, distributions, investment activity and expenses (if applicable) to individual Participant accounts, based upon information received from the Agency and/or Trustee; (C) Acting as ongoing 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 PARS; (D)Coordinating the processing of Participant distribution payments pursuant to authorized written Agency certification of distribution eligibility, authorized direction by the Agency, the provisions further contained in this Agreement, and the provisions of the Plan; (E) Directing Trustee to make Participant distribution payments, pursuant to the Agency authorization provisions in this Agreement, and producing required tax filings regarding said distribution payments; (F) 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; (G)Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; (H)Preparing and submitting twice annually a periodic Non-Contribution report which includes all Participants who have received no new contributions for a six (6) month period of time as specified by the Plan Administrator, unless directed by the Agency Page 6 otherwise. PARS is not obligated by law or otherwise to provide a Non-Contribution report and this report in no way obligates PARS to generate distributions without specific instruction from the Agency Plan Administrator as outlined in Section 7 of this Agreement; (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 the Agency; (K)Preparing individual annual statements and mailing in bulk to the Agency, unless directed by the Agency otherwise. 3. Plan Compliance Services: Coordinating and preparing amendments to the Trust, Plan and other associated legal documents required by federal and/or state agencies to maintain the Plan in compliance, for review by Agency legal counsel. 4. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. Page 7 EXHIBIT 1B FEES FOR SERVICES 1. PARS will be compensated for performance of Services, as described in Exhibit 1 A based upon the following schedule: (A) A distribution fee equal to $20.00 per terminated Participant ("Distribution Fee"), which shall be deducted solely from the terminating Participant's account or paid by the Agency. Distribution Fee Payment Option (Please select one option below): Er Fee shall be paid solely from the terminating Participant's account. ❑! Distribution Fee shall be paid by the Agency. (B) An annual asset fee paid by the Agency or from Plan Assets based on the following schedule ("Asset Fee"): For Plan Assets from: Annual Rate: $1 to $500,000 2.00% $500,001 to $2.500,000 1.50% $2,500,001 to $5.000,000 1.25% $5,000,001 to $10.000,000 1.00% $10,000,001 and above 0.75% 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 within each asset range]. Asset based fees are subject to a $400.00 monthly minimum. If the Asset Fee is taken from Plan Assets, the total Asset Fees due in a given month shall be allocated proportionately among Participants of the Agency's Plan in that month, based on account balance. Trustee and Investment Management Fees are not included. The monthly minimum is subject to an automatic cost-of-living increase of 2% per year commencing the 1st of the month following the Term as defined in Section 20 above. Annual Asset Fee Payment Option (Please select one option below): L? Annual Asset Fee shall be invoiced and paid by the Agency during the first two (2) years of the Agreement. Commencing September 1, 2014, the Annual Asset Fee shall be paid from Plan Assets. d'' Annual Asset Fee shall be paid from Plan Assets. (C) 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 Page 8 contribution data received by PARS from the Agency is not on readable magnetic media ("Data Processing Fee"). EXHIBIT 1C DATA REQUIREMENTS PARS will provide the Services under this Agreement contingent upon receiving the following information: 1. Contribution Data — transmitted to PARS by email or on an IBM formatted disk (360K, 1.2 MB or 1.44 MB) in ASCII code or Excel formats containing the following items of employee information related to the covered payroll period: (A) Agency name (B) Employee's legal name (C) Employee's social security number (D) Payroll date (E) Employer contribution amount (F) Employee contribution amount 2. Distribution Data — written Plan Administrator's (or authorized Designee's) direction to commence distribution processing, which contains the following items of Participant information: (A) Agency name (B) Participant's legal name (C) Participant's social security number (D) Participant's address (E) Participant's phone number (F) Participant's birthdate (G) Participant's condition of eligibility (H) Participant's effective date of eligibility (I) Signed certification of distribution eligibility from the Plan Administrator, or authorized Designee 3. Executed Legal Documents: (A) Certified Resolution (B) Plan Document (C) Trust Agreement (D) Trustee Investment Forms 4. Other information pertinent to the Services as reasonably requested by PARS. Page 9 PARS BENEFIT TRUST FBO CITY OF CUPERTINO PARS SECTION 457 FICA ALTERNATIVE RETIREMENT PLAN Effective September 10, 2012 TRUST DOCUMENT ACCOUNT IS ENTERED INTO BY CLIENT AND U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE AND/OR CUSTODIAN. This agreement is entered into between Client and U.S.Bank National Association("U.S.Bank"),as trustee and/or custodian. U.S.Bank has authorized the Union Bank signatory on the adoption page of this Trust Document to execute trustee and/or custody services agreements and all account related documents on behalf of U.S. Bank, as Trustee and/or Custodian, with full authority to bind U.S. Bank for all services and duties and fee schedules hereunder. With respect to this agreement,Union Bank is acting as servicer on behalf of U.S. Bank pursuant to an Interim Services Agreement dated February 1, 2012. All references in the account agreements and documents to Union Bank are replaced with U.S. Bank, and this agreement is by and between Client and U.S. Bank, as Trustee and/or Custodian. 1 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 PARS Benefit Trust FBO City of Cupertino PARS Section 457 FICA Alternative Retirement Plan Effective September 10,2012 This Trust Agreement(the"Trust Agreement"or"Trust")is made by and among City of Cupertino (the "Agency")as the sponsor of the PARS Benefit Trust FBO City of Cupertino PARS Section 457 FICA Alternative Retirement Plan Effective September 10, 2012 (the "Plan"), the Plan Administrator or the Plan's administrative committee(the"Plan Administrator"),Union Bank,N.A., a national banking association as Trustee("Union Bank,N.A."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 Cupertino PARS Section 457 FICA Alternative Retirement Plan Effective September 10, 2012 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 Investment Fiduciary shall mean the fiduciary with the authority and duty to direct the investment and management (including the power to direct the acquisition and disposition)of some or all of the assets of the Trust("Investment Fiduciary"). 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. ART ECLE 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 3 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 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 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 UNION BANK as Trustee shall fine 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 4 management, disposition, and investment of the Trust Assets, and the Trustee shall comply with proper written 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 1:o 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 5 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 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 Union Bank Voice Response Unit("VRU")or internet 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, 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 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 Trust Administrator and the Trust Administrator 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 6 contrary to the provisions of the Plan and Trust or the Internal Revenue Code and shall have no liability for such refusal. (b) Participant Directed Account within Plan Administrator Selected Investment Options ("Directed Accounts"): If the Agency so elects,and directs the Trustee to execute appropriate legal agreements, the Participant's Account Balance shall be segregated into a Participant Directed Account("Directed 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 Directed Account. To the extent allowed by law, neither the Agency,the Plan Administrator,the Trust Administrator,nor the Trustee shall have any responsibility for monitoring the directions of the Participant nor shall the 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 Directed Accounts 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 Trust Administrator. 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 arty 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; (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; (j) 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 in accordance with the Permissible Investment Guidelines, the Trustee in any and all events is authorized and empowered: 8 (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,N.A.,or any mutual fund or short term investment fund("Fund"),whether sponsored or advised by Union Bank,N.A.or any affiliate thereof;Union Bank,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 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 j 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; 9 (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 by the 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). ]_0 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 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 (i) make distributions from the Trust, as directed and authorized by the Plan Administrator pursuant to the Agreement for Administrative Services, to Participants pursuant to the provisions of the Agency's Plan and,(ii)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 11 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. 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. 12 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 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(ii)file an action seeking declaratory relief,or(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 interpleaded 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). 13 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 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 any time, 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. 14 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, i n 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 ti me,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 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 15 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 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. (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 by Agency. (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 by Trustee. 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. 8.6 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, demand, loss, costs, expense or 16 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 Agreement. 8.7 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,demand,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 Agreement. 8.8 Indemnification of Agency by Trust Administrator. The Agency shall not be liable for, and Trust Administrator shall indemnify and hold the Agency (including its officers, agents, employees and attorneys) harmless from and against any claims, demand, 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 Agreement. 8.9 Indemnification of Trust Administrator by Agency. The Trust Administrator shall not be liable for, and Agency shall indemnify and hold the Trust Administrator (including its officers, agents,employees and attorneys)harmless from and against any claims,demand,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 Agency's active or passive negligent act or omission or willful misconduct in the execution or performance of its duties under this Agreement. 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. As a 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 17 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. 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. 18 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). Any judgment, 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. 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 a 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. 19 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. ***Signature Page Follows*** 20 ADOPTION IA Executed this 6—day of , g j,(,, , 2012. City of Cupertino,Sponsor of:PARS Benefit Trust FBO City of Cupertino PARS Section 457 FICA Alternative Retirement Plan Effective September 10,2012. By: -4 ' . //LL (Signature) Carol Atwood (typed or printed name) Director of Administrative Services (title) UNION BANK,N.A. TRUSTEE Acce ted tt 1 day of aU 012. Accepted this day of IVA J f , 2012. By: - , Ci-veelle--eA:24 By: 014r)fit/k LOGIAA '6Ik-- (:1..;ature) ,/ (Signature) 6-'04 a'eon 6 d l'qjl r) O r• c.,_(typed or ' ted name) (typed or printed name) V V (title) (title) PUBLIC AGENCY RETIREMENT SERVICES TR UST ADMINISTRATOR Accepted this a"day of 111-4414-5-7-u-5T , 2012. BY: � 1• (Sig IFF) Daniel Johnson (typed or printed name) President (title) TRUSTEE U. S. a Nationa Association L , __ , B Y /h. th it Y--- By: Title: Via Title: A orney In Fact One of the authorized employees of Union Bank is signing this Agreement on behalf of U.S. Bank Pursuant to Power of Attorney Dated February 1., 2012. 21