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Home My WebLink About001-2014RESOLUTION NO. 1-2014 ADOPTING THE TOWN OF DANVILLE MONEY PURCHASE PENSION PLAN AND TRUST AGREEMENT, AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2014 WHEREAS, the Town of Danville adopted its Money Purchase Pension Plan and Trust Agreement (the "Plan') in July 1996, which Plan was amended and restated effective July 1, 2010; and WHEREAS, the Internal Revenue Service ( "IRS ") requires that all such pension plans are periodically reviewed and approved by the IRS to ensure conformity with federal tax laws; and WHEREAS, the Town is now required to submit the Plan for IRS review and in order to do so, must adopt the Plan as amended and restated, effective January 1, 2014; now, therefore, be it RESOLVED, that the Danville Town Council adopts the Town of Danville Money Purchase Pension Plan and Trust Agreement, as amended and restated effective January 1, 2014, as set forth in Exhibit 1 to this resolution, which is hereby incorporated herein. APPROVED by the Danville Town Council at a regular meeting on January 14, 2014 by the following vote: AYES Storer, Doyle, Arnerich, Morgan, Stepper NOES: None ABSTAINED: None ABSENT: None MAYOR APPROVED AS TO FORM: ATTEST: �w CITY ATTORNEY CITY CL THE TOWN OF DANVILLE MONEY PURCHASE PENSION PLAN AND TRUST AGREEMENT (As Amended and Restated Effective January 1, 2014) #1392821 TABLE OF CONTENTS INTRODUCTION............................................................................................. ..............................1 ARTICLE I DEFINITIONS .............................................................................. ..............................2 SECTION 1.01 "Account" ................................................................ ..............................2 SECTION 1.02 "Beneficiary ........................................................... ..............................2 SECTION 1.03 "City Attorney" ........................................................ ..............................2 SECTION 1.04 "Code" ..................................................................... ..............................2 SECTION 1.05 "Committee" ............................................................ ..............................2 SECTION 1.06 " Compensation" ....................................................... ..............................2 SECTION 1.07 "Deferred. Compensation" ........................................ ..............................2 SECTION 1.08 "Deferred Compensation Plan" ............................... ..............................2 SECTION 1.09 "Eligible Employee" ................................................ ..............................2 SECTION 1.10 " Employee" .............................................................. ............................ ...3 SECTION 1.11 "Employer" .............................................................. ..............................3 SECTION 1.12 "Entry Date" ............................................................ ..............................3 SECTION 1.13 "Hour of Service" .................................................... ..............................3 SECTION 1.14 "Initial Effective Date" ............................................ ..............................4 SECTION 1.15 "Investment Manager" ............................................. ..............................4 SECTION 1.16 "Joint and Survivor Annuity" .................................. ..............................5 SECTION 1.17 "Normal Retirement Age" ...................................:... ..............................5 SECTION 1.18 "One -Year Break in Service" .................................. ..............................5 SECTION 1.19 " Participant ............................................................ ..............................5 SECTION 1.20 "Participant's Rollover Account" ............................ ..............................5 SECTION1.21 " Plan" ....................................................................... ..............................5 SECTION 1.22 "Plan Administrator" ............................................... ..............:...............5 SECTION 1.23 "Plan Year" .............................................................. ..............................5 SECTION 1.24 "Restatement Date" ................................................. ..............................5 SECTION 1.25 " Service" .................................................................. ..............................5 SECTION 1.26 "Spouse" .................................................................. ..............................5 SECTION 1.27 "Total and Permanent Disability" ............................ ..............................6 SECTION1.28 "Town Manager" ..................................................... ..............................6 SECTION 1.29 "Town Council" ..............................................:........ ..............................6 SECTION 1.30 "Trust" ..................................................................... ..............................6 SECTION 1.31 "Trust Agreement" .................................::................ ..............................6 SECTION 1.32 "Trust Fund" ............................................................ .:............................6 SECTION1.33 "Trustee" .................................................................. ..............................6 SECTION 1.34 "Valuation Date" ..................................................... ..............................6 SECTION1.35 " Vested" ................................................................... ..............................6 SECTION 1.36 "Vesting Year of Service" ....................................... ..............................6 SECTION 1.37 "Year of Service" ..................................................... ..............................7 ARTICLE II PARTICIPATION OF EMPLOYEES ......................................... ..............................8 SECTION 2.01 Eligibility . ............................................................................................... 8 SECTION 2.02 Change in Status ...................................................... ..............................8 SECTION 2.03 Cessation of Participation ........................................ ..............................8 1 #1392821 ARTICLE III EMPLOY SECTION 3.01 SECTION 3.02 SECTION 3.03 SECTION 3.04 SECTION 3.05 ER'S CONTRIBUTIONS AND FORFEITURES ..... ..............................9 Determination Of Contribution ................................ ..............................9 Time and Manner of Contribution ........................... ..............................9 Impossibility of Reversion ....................................... ..............................9 Forfeitures............................................................... .............................10 Qualified Military. Service ....................................... .............................11 ARTICLE IV ALLOCATION OF EMPLOYER'S CONTRIBUTIONS AND INCOME ........... 12 SECTION 4.01 Establishment of.Participant Accounts ................... .............................12 SECTION 4.02 Allocation of Employer Contributions ................... .............................12 SECTION 4.03 Allocation of Earnings, Losses and Changes in Fair Market Value of theTrust Fund ......................................................... .............................12 ARTICLE V LIMITATIONS ON ALLOCATIONS ............. :.............................. ..................13 SECTION 5.01 Limitation of Annual Additions .............................. .............................13 SECTION 5.02 Estimated Annual Section 415 Compensation ....... .............................13 SECTION 5.03 Determination of Actual Section 415 Compensation ..........................13 SECTION 5.04 Reduction of Excess Amount ................................. .............................13 SECTION 5.05 Excess Amount From Other Plans ...........:.............. .............................14 SECTION 5.06 Allocation of Excess Amount ................................. .............................14 SECTION 5.07 Correction of Excess Amount ................................. .............................14 SECTION5.08 Definitions .............................................................. .............................14 ARTICLE VI ROLLOVER CONTRIBUTIONS AND TRANSFERS ........... .............................17 ARTICLE VII VESTING OF PARTICIPANT ACCOUNTS ......................... .............................18 SECTION 7.01 Participant's Account .............................................. .............................18 SECTION 7.02 Participant's Rollover Account ............................... .............................18 ARTICLE VIII DISTRIBUTIONS TO PARTICIPANTS ............................... .............................19 SECTION 8.01 Attainment of Normal Retirement Age or Termination of Employment............................................................ .............................19 SECTION 8.02 Election of Form of Distribution ............................ .............................19 SECTION 8.03 Failure to Elect a Form of Distribution ................... .............................19 SECTION 8.04 Time of Distribution ............................................... .............................19 SECTION 8.05 Required Distributions Before Death of Participant ............................20 SECTION 8.06 Effect of Death of Participant ................................. .............................20 SECTION 8.07 Required Distributions After Death of Participant . .............................20 SECTION 8.08 Limitation on Time and Form of Distribution ........ .............................21 SECTION 8.09 Distributions to Minors and Legally Disabled Persons ....................... 21 SECTION 8.10 Involuntary Cash Outs ............................................ .............................22 SECTION 8.11 Participant Cannot Be Found at Normal Retirement Age ................... 22 SECTION 8.12 Direct Rollover ....................................................... .............................23 SECTION 8.13 Loans to Participants ............................................... .............................24 ARTICLE IX INVESTMENT OF TRUST FUND .......................................... .............................27 SECTION 9.01 Investment Power..... .................... ......................27 . .. ............................... SECTION 9.02 Investment Duties ................................................... .............................27 SECTION 9.03 Investment Direction by Participants ...................... .............................27 2 #1392821 ARTICLEX FIDUCIARIES ............................................................................ .............................29 SECTION 10.01 Allocation of Authority ........................................... .............................29 SECTION10.02 Town Council Authority ......................................... .............................29 SECTION 10.03 Plan Administrator Authority ................................. .............................29 SECTION10.04 Trustee Authority .................................................... .............................29 SECTION 10.05 Discharge of Fiduciary Duties . .................................................... ........ 30 SECTION10.06 Investment Manager ............................................... .............................30 SECTION 10.07 Miscellaneous ......................................................... .............................30 SECTION10.08 Liability ................................................................... .............................31 ARTICLE XI PLAN ADMINISTRATOR ....................................................... .............................32 SECTION13.01 SECTION 11.01 .............................36 Powers and Duties .................................................. .............................32 Trustee's Powers ..................................................... SECTION 11.02 SECTION 13.03 Funding Policy ........................................................ .............................32 ...........................:.36 SECTION11.03 Accounting of Trustee ............................................ Communications ..................................................... ........:....................32 SECTION 13.05 SECTION11.04 .............................37 Services .................................................................... .............................32 Successor Trustee ........ ..............................: SECTION 11.05 SECTION 13.07 Claims Procedures .................................................. .............................33 .............................38 SECTION 11.06 Reporting and Agent of Legal Process ................... .............................34 ARTICLE XII ADMINISTRATIVE COMMITTEE ....................................... .............................35 SECTION12.01 Selection .................................................................. .............................35 SECTION12.02 Organization .....................................:...:................. .............................35 SECTION12.03 Indemnity ................................................................ .............................35 ARTICLEXIH TRUSTEE ............................................................................... .............................36 SECTION13.01 Control of Assets ........................................:........... .............................36 SECTION13.02 Trustee's Powers ..................................................... .............................36 SECTION 13.03 Trustee's Fee ........................................................... ...........................:.36 SECTION13.04 Accounting of Trustee ............................................ .........:...................37 SECTION 13.05 Vacancies in Trusteeship ........................................ .............................37 SECTION 13.06 Successor Trustee ........ ..............................: .. ............................... ........37 SECTION 13.07 Powers and Duties .................................................. .............................38 ARTICLE XIV ASSIGNMENT AND ALIENATION OF BENEFITS .......... .............................39 ARTICLE XV AMEND SECTION 15.01 SECTION 15.02 SECTION 15.03 SECTION 15.04 SECTION 15.05 MENT AND TERMINATION OF THE PLAN ....... .............................40 Amendment by the Employer ................................. .............................40 Limitations on Power, to Amend ............................. .............................40 Termination of Plan ................................................ .............................40 Disposition of Trust Fund Upon Termination ........ .............................40 Dissolution, Merger, or Consolidation of Employer ...........................41 ARTICLE XVI MISCELLANEOUS PROVISIONS ...................................... .............................42 SECTION 16.01 Adoption of the Plan is Not an Employment Contract ........................42 SECTION 16.02 Plan is Established Under the Laws of the State of California ............ 42 SECTION 16.03 Gender and Plurals ................................................ .................I............. 42 SECTION 16.04 Severability of Provisions ....................................... .............................42 SECTION 16.05 Context to Control .................................................. .............................42 #1392821 3 THE TOWN OF DANVILLE MONEY PURCHASE PENSION PLAN (As Amended and Restated Effective January 1, 2014) INTRODUCTION THE TOWN OF DANVILLE established this Money Purchase Pension Plan effective as of July 1, 1984, to provide for its Employees retirement benefits and benefits as part of an accident and health plan upon the termination of employment due to permanent disability. This Plan is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended. It is also intended that any disability payments received by Employees under this Plan will qualify for the exclusion, to the extent available; under Section 105 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, as amended and restated as set forth herein, are effective as of January 1, 2014, unless a different effective date is set forth herein. In no event shall any part of the principal or income of the Trust created hereby be paid to or revert to the Employer, or be used for any purpose whatsoever other than for the exclusive benefit of the Employees of the Employer or their beneficiaries. #1392821 ARTICLE I DEFINITIONS When used herein and capitalized, the following words shall have the following meanings unless the context clearly indicates otherwise: SECTION 1.01 " Account " shall include the term "Participant Account" and shall mean the individual account of a Participant to which are credited Employer contributions and the allocation of earnings, gains, losses and changes in fair market value of the assets of the Trust Fund as of the last Valuation Date. Wherever the context requires, 'Account" shall also include a Participant's Rollover Account. SECTION 1.02 ` Beneficiary " shall mean the person or persons who, upon. a Participant's death, is or are entitled to receive his or her interest under the provisions of Section 8.06 of the Plan. SECTION 1.03 " City Attorney shall mean the City Attorney of the Employer. SECTION 1.04 " Code " shall mean the Internal Revenue Code of 1986, as amended from time to time. SECTION 1.05 " Committee " shall mean the Plan Administrator if designated by the Town Council, otherwise the Employer shall be the Plan Administrator. SECTION 1.06 " Compensation " shall mean all of each Participant's wages (as defined in Code Section 3401(a) for purposes of income tax withholding but determined without regard to any rules that limit remuneration included. in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)) received from the Employer, excluding amounts received from the Employer as an auto allowance. Compensation shall include only that compensation which is actually paid to the Participant during the Plan Year. SECTION 1.07 " Deferred Compensation shall have the same meaning as provided under the Deferred Compensation Plan of the Employer. SECTION 1.08 " Deferred Compensation Plan shall mean the Deferred Compensation Plan of Town of Danville. SECTION 1.09 ` Eligible Employ shall mean all Employees of the Employer; provided, however, that: 2 #1133391 (1) He or she is not included in a unit of Employees covered by a collective bargaining agreement between Employee representatives and the Employer if retirement benefits were the subject of good faith bargaining between the Employee representatives and the Employer, unless such agreement provides for participation in the Plan; (2) He or she is not an Employee who is a nonresident alien and who receives no earned income (within the meaning of Code Section 911(d)(2)) from the Employer .which constitutes income from sources outside the United States (within the meaning of Code Section 861(a)(3)); (3) He or she is not a Leased Employee within the meaning of Code Section 414(n)(2); (4) He or she is not an Employee hired to perform less than 1000 Hours of Service for the Employer during the Plan Year. SECTION 1.10 " Employee ' shall mean any individual who performs services for the Employer as a common -law employee of the Employer. SECTION 1. l l ` Employer " shall mean The Town of Danville or any successor to such Employer which adopts the Plan under the provisions of Section 16.03. SECTION 1.12 ` Entry Date shall mean the first day of each month. SECTION 1.13 " Hour of Service shall mean: (1) each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer. These hours shall be credited to the Employee for the computation period in which the duties are performed; and (2) each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.. No more than 501 Hours of Service shall be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period). Hours under this paragraph shall be calculated and credited pursuant to Section 2530.200b -2 of the Department of Labor Regulations which is incorporated herein by this reference; and (3) each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service shall not be credited both under paragraph (1) or paragraph (2), as the case may be, and under this paragraph (3). 3 #1133391 These hours shall be credited to the Employee for the computation period or periods in which the award or agreement pertains rather than the computation period in which the award, agreement, or payment is made. Hours of Service shall be credited for employment with other members of an Affiliated Service Group (under Section 414(m)), a Controlled Group of Corporations (under Section 414(b)), or a group of trades or businesses under common control (under Section 414(c)), of which the adopting Employer is a member, and any other entity required to be aggregated with the Employer pursuant to Section 414(0) and regulations thereunder. Solely for purposes of determining whether a Break in Service, as defined in Section 1. 18, for vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, eight (8) hours of service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence: (1) by reason of the pregnancy of the individual; or (2) by reason of a birth of a child of the individual; or (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual; or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited: (i) in the computation period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period; or (ii) in all other cases, in the following computation period. Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment. SECTION 1.14 " Initial Effective Date shall mean July 1, 1984. SECTION 1.15 " Investment Manager shall mean a person who is (i) registered as an investment adviser under the Investment Advisers Act of 1940; (ii) a bank, or (iii) an insurance company qualified to perform services with respect to the management, acquisition and disposition of assets of employee benefit plans under the laws of more than one state. 4 #1133391 SECTION 1. 16 " Joint and Survivor Annuity shall mean an annuity for the life of the Participant with a survivor annuity for the life of his or her Spouse, which is not less than one- half nor greater than the amount of the annuity payable during the joint lives of the Participant and his or her Spouse and which is the actuarial equivalent of a single life annuity for the life of the Participant. The percentage of survivor annuity shall be elected by the Participant; provided, however, that if no election has been made, the percentage shall be fifty percent (50 %). SECTION 1.17 " Normal Retirement Age shall mean the attainment of age 55. SECTION 1.18 " One -Year Break in Service shall mean a 12 consecutive month period during which the Employee has not completed more than 500 Hours of Service. The 12 consecutive month period shall be the same computation period as used in computing Vesting Years of Service. For the purpose of determining the number of consecutive One -Year Breaks in Service any Plan Year (computation period) of less than 12 months shall be disregarded. A Break in Service shall occur whenever an Employee has one or more consecutive One- Year Breaks in Service. Any leave of absence authorized by the Employer shall be granted under uniform rules established by the Employer. SECTION 1.19 " Participant " shall mean any Eligible Employee who has satisfied the requirements of Article H of this Plan and whose Account has not been entirely distributed. SECTION 1.20 " Participant's Rollover Account shall mean a separate account maintained for any rollover contributions permitted pursuant to Article VI of the Plan. SECTION 1.21 " Plan " shall mean The Town Of Danville Money Purchase Pension Plan set forth in this Trust Agreement. SECTION 1.22 " Plan Administrator shall mean the Employer unless the Town Council designates a Committee to be the Plan Administrator. SECTION 1.23 " Plan Year shall mean the twelve consecutive month period ending on the last day of December of each year. SECTION 1.24 " Restatement Date shall mean January 1, 2014. SECTION 1.25 " Service " shall mean employment of an Employee with the Employer. SECTION 1.26 " Spouse " shall mean the person to whom the Participant is married as of the first day of the first period for which benefits are payable as an annuity, or in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the Participant to such benefit. 5 #1133391 SECTION 1.27 " Total and Permanent Disability shall mean any medically determinable physical or mental impairment which may be expected to result in death or to be of long, continued and indefinite duration and which, in the sole judgment of the Plan Administrator, and on the basis of competent medical opinion, renders the Employee incapable of performing his or her duties in the job classification in which he or she was employed when he or she'became Totally and Permanently Disabled. SECTION 1.28 " Town Manager shall mean the Town Manager of the Employer. SECTION 1.29 " Town Council shall mean the Town Council of the Town of Danville. SECTION 1.30 " Trust " shall mean the trust established under the Plan. SECTION 1.31 " Trust Agreement shall mean The Town Of Danville Money Purchase Pension Plan and Trust Agreement. SECTION 1.32 " Trust Fund shall mean the sum of the contributions (adjusted for income and losses, payments and reasonable expenses) made by the Employer hereunder and any rollover contributions made by a Participant (adjusted for income and losses, payments and - reasonable expenses) and held in accordance with the terms of the related Trust established by the Employer for the purpose of holding and managing the assets of this Plan. SECTION 1.33 " Trustee " shall mean the Town Manager and the Finance Director of the Employer, their successors and assigns or any duly appointed successor. from time to time acting hereunder. SECTION 1.34 " Valuation Date shall mean (to the extent possible) each day of the Plan Year. SECTION 1.35 " Vested " shall mean that portion of a Participant's Account which shall not be forfeitable for any reason. SECTION 1.36 " Vesting Year of Service shall be mean any 12 consecutive month period (which may include periods prior to the Initial Effective Date) corresponding to the Plan Year in which the Employee has completed at least 1,000 Hours of Service. If there is a change in the Plan Year and Vesting Years of Service are based on such Plan Year, a Participant shall be credited with a Vesting Year of Service for both the Plan Year as it was prior to the amendment (as if there was no change) and the first Plan Year after the amendment if the Participant has at least 1,000 Hours of Service in each of those Plan Years. 6 #1133391 In the case of a Participant who has five or more consecutive One -Year Breaks in Service, all Service after such Breaks in Service shall be disregarded for the purpose of vesting the Employer- derived Account balance that accrued before such breaks in service. Such Participant's pre -break service will count in vesting the post -break employer- derived Account balance only if either: (a) such Participant has any nonforfeitable interest in the Account balance attributable to Employer contributions at the time of separation from service; or (b) upon returning to Service the number of consecutive One -Year Breaks in Service is less than the number of Years of Service. Separate accounts shall be maintained for the Participant's pre -break and post -break Employer- derived Account balance. Both Accounts shall share in the earnings and losses of the Trust Fund. SECTION 1.37 " Year of Service shall be mean any Plan Year during which an Employee has completed at least 1,000 Hours of Service. Any Plan Year where an Employee has less than 1,000 Hours of Service shall not be counted as a Year of Service. If there is a change in the Plan Year, a Participant shall be credited with a Year of Service for both the Plan Year as it was prior to the amendment (as if there was no change) and the first Plan Year after the amendment if the Participant has at least 1,000 Hours of Service in each of those Plan Years. Year of Service for purposes of vesting shall be further defined in Section 1.36. 7 #1133391 ARTICLE II PARTICIPATION OF EMPLOYEES SECTION 2.01 Eligibility Each Eligible Employee who is a Participant in the Plan on the Restatement Date shall continue to be a Participant as of the Restatement Date. Each other Eligible Employee shall become a Participant on the first Entry Date following completion of one Hour of Service. The Plan Administrator shall have discretionary authority to determine eligibility of Employees to participate in the Plan. SECTION 2.02 Change. in Status Any individual who is employed by the Employer but who is not eligible to participate in the Plan because he or she is not an Eligible Employee as defined in Section 1.09 shall be eligible to participate in the Plan on the first date he or she becomes an Eligible Employee. SECTION 2.03 Cessation of Participation A Participant's participation in the Plan ceases when he or she has received the entire balance of his or her Participant Account and Participant's Rollover Account. 8 #1133391 ARTICLE III EMPLOYER'S CONTRIBUTIONS AND FORFEITURES SECTION 3.01 Determination Of Contribution With respect to each Plan Year the Employer shall pay to the Trustee as its contribution to the Plan an amount determined as follows: Participant's Deferred Compensation under Employer's contribution the Employer's Deferred Compensation Plan to be made to this Plan Less than 5% 10% 5% or more 15% Notwithstanding the above, Employer contributions shall be made to this Plan on behalf of the Town Manager and on behalf of the City Attorney in accordance with the terms of their respective employment contracts with the Employer. The Trustee shall not be responsible for the collection of any contributions to the Trust Fund. SECTION 3.02 Time .and Manner of Contribution The Employer shall deliver to the Trustee its contribution to Participants .as soon as reasonably practicable following the close of the payroll period for which such contribution is made. SECTION 3.03 Impossibility of Reversion No contribution by the Employer to the Trust Fund nor any income therefrom shall revert to the Employer except: (a) If a contribution is conditioned on the initial qualification of the Plan and if upon an application for initial qualification which is filed by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan was adopted or such later date as the Secretary of the Treasury may prescribe, the Internal Revenue Service issues an adverse determination with respect to the Plan's qualification, the Employer shall be permitted to recover any contributions which would have been made prior to any such determination that the Plan is not qualified within one year after the date of denial of qualification; or (b) If a contribution is made by the Employer under a good faith mistake of fact as indicated by the facts and circumstances surrounding such mistake, this Section shall not prohibit the return to the Employer, within one year after the payment of the contribution, of an amount equal to the excess of the amount contributed over the amount that would have been contributed had there not occurred a mistake of fact. Earnings attributable to such excess amount 9 #1133391 shall not be returned but losses attributable to such amount shall be used to reduce the amount to be returned. SECTION 3.04 Forfeitures (a) Severance from Service Subject to subparagraph (b) below, if a Participant severs from service with the Employer, the nonvested portion of such Participant's Account, if any, shall be forfeited as of the last day of the Plan Year during which the Participant incurs five (5) consecutive one -year Breaks in Service.. If the Participant is reemployed and resumes covered service under the Plan prior to incurring five (5) consecutive one -year Breaks in Service, no forfeiture shall occur. (b) Distribution (1) If a Participant severs from service with the Employer and receives a distribution of less than his or her entire Account, the nonvested portion of such Account, if any, shall be forfeited immediately. If the Participant elects to receive less than the entire Vested Account balance, the part of the nonvested portion forfeited shall be the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to Employer contributions and the denominator of which is the total value of the Account attributable to Employer contributions. (2) If a Participant severs from service with the Employer when the value of his or her vested Account balance is zero, the Participant shall be deemed to have received an immediate distribution of his or her entire vested Account balance. The nonvested portion of such Account shall be forfeited immediately. (c) Reinstatement (1) If a Participant receives a distribution pursuant to subparagraph (b)(1) above, and such Participant is subsequently reemployed and resumes covered service under the Plan, the forfeited portion of his or her pre -break Account shall be reinstated, unadjusted for gains or losses, if the Participant repays the full amount of such distribution on or before the earlier of: (A) five (5) years after the first date on which the Participant is subsequently reemployed by the Employer; or (B) the close of the first period of five (5) consecutive one -year Breaks in Service commencing after the distribution. (2) In the case of a Participant whose vested Account balance is zero upon termination and who is reemployed and resumes covered service under the Plan prior to incurring five (5) consecutive Breaks in Service, his or her entire pre -break Account, unadjusted 10 #1133391 for gains or losses, shall be reinstated without regard to the repayment requirement of subparagraph (1) above. (3) The Employer shall make an additional contribution in such amount as is necessary for any reinstatement pursuant to this paragraph. (d) Allocation of Forfeitures Amounts forfeited may be allocated as Employer contributions for the Plan Year of the forfeiture, in accordance with Section 4.02 or may. be applied to reinstate Participant accounts in accordance with paragraph (c) above. SECTION 3.05 Qualified Military Service Notwithstanding any provision in this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. Effective January 1, 2007, if a Participant dies on or after January 1, 2007, while performing qualified military service, the Beneficiary of that Participant is entitled, to the extent required by Section 401(a)(37) of the Code or any treasury regulations or other guidance promulgated thereunder, to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the Participant had resumed employment on the day immediately before the Participant's death and then terminated employment on account of death. 11 #1133391 ARTICLE IV ALLOCATION OF EMPLOYER'S CONTRIBUTIONS AND INCOME SECTION 4.01 Establishment of Participant Accounts The Plan Administrator shall establish and maintain a separate Account for each Participant, and shall establish and maintain records reflecting the value and interest of each Participant in the Trust Fund. SECTION 4.02 Allocation of Employer Contributions The Employer contribution on behalf of each Participant shall be allocated to such Participant's Account no less frequently than as of the last day of the Plan Year with respect to which such contribution is made. The Employer contribution for a Plan Year shall be reduced by any forfeitures allocated to Participants in such Plan Year. SECTION 4.03 Allocation of Earnings Losses and Changes in Fair Market Value of the Trust Fund The net earnings, gains, losses and expenses as well as appreciation and depreciation in market value of the assets of the Trust Fund, as reported by the Trustee, shall be allocated to each Participant's Account at the end of each Valuation Date on a pro -rata basis based on each Participant's share of each particular investment of the Trust Fund. 12 #1133391 ARTICLE V LIMITATIONS ON ALLOCATIONS SECTION 5.01 Limitation of Annual Additions If the Employer does not maintain any other qualified plan, the amount'of Annual Additions which may be allocated under this Plan on a Participant's behalf for a Limitation Year shall not exceed the Maximum Permissible Amount. If, in addition to this Plan, the Employer maintains any other qualified defined contribution plan the amount of Annual Additions which may be allocated under this Plan on a Participant's behalf for a Limitation Year shall not exceed the Maximum Permissible Amount, reduced by the sum of any Annual Additions allocated to the Participant's Accounts for the same Limitation Year under this Plan and such other defined contribution plan. Effective for Limitation Years beginning on or before December 31, 1999, if, in addition to this Plan, a Participant in this Plan participates in a qualified defined benefit plan maintained by the Employer, the sum of the Participant's Defined Contribution Fraction, as defined in Section 415(e)(3) of the Code, and Defined Benefit. Fraction, as defined in Section 415(e)(2) of the Code, shall not exceed 1.0 in any Limitation Year. SECTION 5.02 Estimated Annual Section 415 Compensation Prior to the determination of the Participant's' actual Section 415 Compensation for a Limitation Year, the Maximum Permissible Amount may be determined on the basis of the Participant's estimated annual Section 415 Compensation for such Limitation Year. Such estimated annual Section 415 Compensation shall be determined on a reasonable basis and shall be uniformly determined for all Participants similarly situated. Any Employer contributions based on estimated annual Section 415 compensation shall be reduced by any Excess Amounts carried over from prior years. SECTION 5.03 Determination of Actual Section 415 Compensation As soon as administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for such Limitation Year shall be determined on the basis of the Participant's actual Section 415 Compensation for such Limitation Year. SECTION 5.04 Reduction of Excess Amount If as a result of a reasonable error in estimating a Participant's actual Section 415 Compensation or under such other limited facts and circumstances as the Commissioner of Internal Revenue finds to be applicable there is an Excess Amount with respect to a Participant for a Limitation Year, such Excess Amount shall be disposed of as follows: 13 #1133391 (a) In the event that the Participant is in the service of the Employer which is covered by the Plan at the end of the Limitation Year, then such Excess Amount must not be distributed to the Participant, but shall be reapplied to reduce future Employer contributions under this Plan for the next Limitation Year (and for each succeeding year, as necessary) for such Participant, so that in each such year the sum of actual Employer contributions plus the reapplied amount shall equal the amount of Employer contributions which would otherwise be allocated to each Participant's Account. (b) In the event that the Participant is not in the service of the Employer which is covered by the Plan at the end of the Limitation Year, then such Excess Amount must not be distributed to the Participant, but shall be reapplied to reduce future Employer contributions for all remaining Participants.: SECTION 5.05 Excess Amount From Other Plans If a Participant's Annual Additions under this Plan and all other qualified defined contribution plans result in an Excess Amount, such Excess Amount shall be deemed to consist of the amounts last allocated. SECTION 5.06 Allocation of Excess Amount If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of: (a) The total Excess Amount allocated as of such date (including any amount which would have been allocated but for the limitations of Section 415 of the Code), multiplied by (b) The ratio. of (i) the amount allocated to the Participant as of such date under this Plan, divided by (ii) the total amount allocated as of such date under all qualified defined contribution plans (determined without regard to the limitations of Section 415 of the Code). SECTION 5.07 Correction of Excess Amount Notwithstanding any other provision of the Plan to the contrary,- effective for Limitation Years beginning on or after January 1, 2009, if the Annual Additions allocated under the Plan on a Participants' behalf exceed the. Maximum Permissible Amount, the Employer shall use any reasonable method to correct the Excess Amount including, but not limited to, the methods approved by the Internal Revenue Service in Revenue Procedure 2008 -50 or in any subsequent guidance. SECTION 5.08 Definitions For purposes of this Article, the following terms shall be defined as follows: 14 #1133391 (a) " Annual Additions — Effective January 1, 1987, is the sum for any year of (1) the Participant's portion of the Employer's contributions allocated to his or her Account under all defined contribution plans maintained by the Employer; (2) his or her Participant's contributions to such plans, if any, (3) forfeitures allocated to his or her Accounts, if any, and (4) contributions allocated to the Participant's individual medical benefit account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Employer. (b) " Excess Amount ". The excess of the Participant's Annual Additions for the Limitation Year over the Maximum Permissible Amount, less loading and other administrative charges allocable to such excess. (c) " Limitation Year ". A calendar year (or any other 12 consecutive month period adopted for all plans of the Employer pursuant to a written resolution adopted by the Employer). (d) " Maximum Permissible Amount ". For a Limitation Year, the Maximum Permissible Amount with respect to any Participant shall be the lesser of (1) the dollar limit set forth in Code Section 415(c)(1)(a), as adjusted, or (2) 100 percent (25 percent, immediately prior to January 1, 2002) of the Participant's Section 415 Compensation for the Limitation Year. (e) " Section 415 Compensation ". For purposes of this Section, Section 415 Compensation shall mean a Participant's wages, salaries, and other amounts received for personal services actually rendered in the course of employment with the Employer, and excluding the following: (i) Employer contributions to a plan of deferred compensation which before the application of the Section 415 limitations to the Plan are not included in the Employee's gross income for the taxable year in which contributed; and (ii) Any distribution from a plan of deferred compensation provided, however, that any amounts distributed from the Employer's Deferred Compensation Plan shall be considered Section 415 compensation in the year such amounts are includable in the gross income of the Employee. (iii) Effective for Limitation Years beginning on or after January 1, 2009, compensation paid after severance from employment (including severance pay and distributions from a nonqualified deferred compensation plan) is excluded from the definition of Section 415 Compensation for all purposes unless such compensation is paid within the later of 2 -1/2 months after the severance from employment date or the last day of the calendar year in which severance from employment occurs and such compensation meets the following rules: 15 #1133391 (A) Such payment is regular compensation for services during the Participant's regular working hours, or compensation for services outside the Participant's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments and such payment would have been paid to the Participant in the absence of a severance from employment; or (B) Such compensation is payment of accrued bona fide sick, vacation or other leave, but only if the Participant would have been able to use the leave if his employment had continued. (iv) Effective July 1, 2009, and in accordance with Section 414(u)(12)(A)(ii) of the Code, and any treasury regulations and other guidance promulgated thereunder, Section 415 Compensation also includes differential pay that .1) is made by the Employer to a Participant with respect to any period during which the Participant is performing service in the uniformed services while on active duty for a period of more than 30 days and 2) represents all or a portion of the wages the Participant would have received from the Employer if the Participant had remained actively employed. Notwithstanding the above, effective January 1 1998, Section 415 Compensation shall include amounts described in Code Section 415(c)(3)(D). A Participant's Section 415 Compensation taken into account for purposes of this Section shall not exceed the limit set forth in Code Section 401(a)(17), as adjusted by the Secretary of Treasury at the same time and in the same manner as under Section 415(d) of the Code. Effective for Plan Years beginning before December 31, 1996, in determining the Section 415 Compensation of a Participant for purposes of this limitation, an Employee who is a family member of (i) a five - percent owner as defined in Section 414(q)(3) of the Code, or (ii) one or more of the ten most highly compensated employees during the year as defined in Section 414(q) of the Code, shall be treated along with the Participant described in (i) or (ii) above as one Employee. The term "family member" means the Spouse of the Participant and any lineal descendants of the Participant who have not attained age nineteen (19) before the close of the year. If as a result of these rules, the Code Section 401(a)(17) limit is exceeded, the limitation shall be prorated among the Participant and his or her family members in proportion to each one's Section 415 Compensation as determined prior to the application of this limitation. #1133391 16 ARTICLE VI ROLLOVER CONTRIBUTIONS AND TRANSFERS The Plan, at the direction of and in the discretion of the Plan Administrator, shall accept from a.Participant any assets which qualify as an Eligible Rollover Distribution (as defined in Section 8.12 of the Plan) or a "rollover contribution" within the meaning of Sections 403(a)(4) or 408(d)(3) of the Code. If accepted into this Plan, those assets shall be held in the Participant's Rollover Account. The Participant shall provide the Plan Administrator with any information it deems necessary to determine that the contribution satisfies the requirements of such Sections of the Code. If at any time it is determined that any assets contributed under this Section do not meet the requirements set forth herein, then the Trustee shall promptly distribute such assets to the Participant. If the Plan Administrator determines to accept rollover contributions, the Plan Administrator may require that rollover contributions be made in cash only. Effective January 1, 2002, the Plan, at the direction of and in the discretion of the Plan Administrator, shall accept the following types of rollovers: (a) Direct Rollovers A direct rollover of an Eligible Rollover Distribution from: (1) a qualified plan described in Section 401(a) or'403(a) of the Code; (2) an annuity contract described in Section 403(b) of the Code; or (3) an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. (b) Participant Rollover Contributions from Other Plans A Participant contribution of an Eligible Rollover Distribution from: (1) a qualified plan described in Section 401(a) or 403(a) of the Code; (2) an annuity contract described in Section 403(b) of the Code; or (3) an eligible plan under Section 457(b) of the Code which is maintained.by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. 17 #1133391 ARTICLE VII VESTING OF PARTICIPANT ACCOUNTS SECTION 7.01 Participant's Account The vesting schedule for benefits (derived from the Employer contributions pursuant to Article III) upon termination of employment shall be determined according to the following schedule: 20% Vested after 1 Vesting Years of Service 40% Vested after 2 Vesting Years of Service 60% Vested after 3 Vesting Years of Service 80% Vested after 4 Vesting Years of Service 100% Vested after 5 Vesting Years of Service Notwithstanding the above, in the event of a Participant's. attainment of Normal Retirement Age while employed by the Employer, or the Total and Permanent Disability of a Participant, such Participant shall become 100% Vested. SECTION 7.02 Participant's Rollover Account The Participant shall have at all times a 100% Vested and nonforfeitable interest in any Participant's Rollover Account which may be established pursuant to Article VI hereof. 18 #1133391 ARTICLE VIII DISTRIBUTIONS TO PARTICIPANTS SECTION 8.01 Attainment of Normal Retirement Age or Termination of Employment Upon the attainment of Normal Retirement Age or termination of a Participant's employment for any reason (including retirement on or after the Participant's Normal Retirement Age, death, Total and Permanent Disability, resignation or discharge), the Plan Administrator shall direct the Trustee to distribute the Vested Percentage of the Participant's Account (including the Participant's Rollover Account, if any) at such time and in such form as may be determined pursuant to this Article. SECTION 8.02 Election of Form of Distribution A Participant may elect to have his or her benefit under the Plan distributed in a lump sum, a series of substantially equal installments, a straight life annuity contract (with or without a period certain of 10, 15 or 20 years) or a Joint and Survivor Annuity contract. A Participant may make an election as to the form of his or her distribution under the Plan at any time prior to the date distribution of the Participant's benefits is scheduled to commence. SECTION 8.03 Failure to Elect a Form of Distribution If a Participant has failed to elect a form of distribution under Section 8.02, distribution shall be made in the form of a lump SUM. Effective March 28, 2005, if a Participant has failed to elect a form of distribution under Section 8,02 or Section 8.12 and the present value of the Participant's entire nonforfeitable interest in his or her Account at the time of his or her termination of employment equals or exceeds $1,000 and does not exceed $5,000, the Plan Administrator shall direct the Trustee to distribute such benefit into an individual retirement account described in Section 408(a) of the Code designated by the Plan Administrator pursuant to the requirements of Section 401 (a)(3 1)(B) of the Code. SECTION 8.04 Time of Distribution A Participant's benefits under the Plan shall be distributed (or distribution shall commence) at such time or times as the Participant shall elect. If the Participant has not made an election, distribution shall commence on the later of the date the Participant's employment with the Employer terminates or the April 1 following the date the Participant attains age 70 1 /z. In no event shall distribution commence prior to the earliest of the Participant's termination of employment, attainment of Normal Retirement Age or termination of the Plan. 19 #1133391 SECTION 8.05 Required Distributions Before Death of Participant Notwithstanding any other provision of this Article, a Participant's benefits under the Plan shall be distributed (or distribution shall commence) no later than the April 1 of the calendar year following the calendar year in which (i) the Participant attains age 70 /2 or (ii) the Participant retires, whichever is later. Effective January 1, 2003, notwithstanding any provision in the Plan to the contrary, distributions upon the death of a Participant shall be made in accordance with the following requirements and shall otherwise comply with Code Section 401(a)(9), including Section 1.401(a)(9) -2 (as modified by the Section 401(a)(9) Final and Temporary Regulations published in the Federal Register on April 17, 2002). SECTION 8.06 Effect of Death of Participant Each Participant shall name a person or persons to be his or her Beneficiary to receive any distributions under the Plan distributable in the event of the death of the Participant on forms provided by the Plan Administrator. Such Beneficiary designation shall be effective when and as received by the Plan Administrator. If there is . no named Beneficiary living at the time payment is to be made, payment shall be made to the Participant's estate. A Participant may change the Beneficiary from time to time in accordance with procedures established by the Plan Administrator. SECTION 8.07 Required Distributions After Death of Participant (a) If a Participant dies before his or her entire interest has been distributed to him or her, subject to the provisions of the following Sections 8.07(b) and 8.07(c), the remaining interest shall be distributed to the Participant's Beneficiary in a lump sum; provided, however, that if the designated Beneficiary is the Participant's Spouse, the Participant's remaining interest shall be distributed to the Participant's spousal Beneficiary. in the time and manner elected by the Participant. .If the Participant has made no election of the time or manner of distribution as to a spousal Beneficiary, subject to the provisions of the following Sections 8.07(b) and 8.07(c), such Beneficiary shall have the right to designate within a reasonable time after the Participant's death the time and manner of distribution to himself or herself. If neither the Participant nor the spousal Beneficiary has made an election of the time or manner of distribution, payment to the spousal Beneficiary shall be made in a lump sum. Effective January 1, 2003, if a Participant dies before his or her entire interest has been distributed to him or her, subject to the provisions of the following Sections 8.07(b) and 8.07(c), the remaining interest shall be distributed to the Participant's Beneficiary in a lump sum; provided, , however, that if the designated Beneficiary is the Participant's Spouse, the Participant's remaining interest shall be distributed to the Participant's spousal Beneficiary in the 20 #1133391 time and manner elected by the Participant. If the Participant has made no election of the time or manner of distribution as to a spousal Beneficiary, subject to the provisions of the following Sections 8.07(b) and 8.07(c), such Beneficiary shall have the right to designate within a reasonable time after the Participant's death the time and manner of distribution to himself or herself. An election by a spousal Beneficiary must be made no later than the earlier of. (i) September 30 of the calendar year in which the distribution would be required to begin under Section 8.07(b); or (ii) September 30 of the calendar year which contains the fifth anniversary of the Participant's death. If neither the Participant nor the spousal Beneficiary has made an election of the time or manner of distribution, payment to the spousal Beneficiary shall be made in a lump sum. (b) If the Participant dies before his or her benefit payments have begun, all benefits shall be paid to the Participant's Beneficiary no later than December 31 of the calendar year which contains the fifth anniversary .of the Participant's death; provided, however, that if the designated Beneficiary is the Participant's Spouse, distributions are not required to begin earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant dies or (ii) December 31 of the calendar year in which the Participant would have attained age seventy and one -half (70 -1/2). Should the Participant's Spouse die before distributions begin to the Spouse who is the designated Beneficiary, the benefit commencement period shall be applied as if the Spouse were the Participant. (c) If the Participant dies after benefit payments have begun, all remaining payments shall be distributed to his or her Beneficiary at least as rapidly as the method of payment in effect prior to the Participant's death. SECTION 8.08 Limitation on Time and Form of Distribution Distributions made pursuant to this Article VIII, if not made in a single sum, shall be payable over a period not to exceed the life or life expectancy of the Participant or the joint life or life expectancy of the Participant and his or her designated beneficiary, and the method of distribution selected must assure that more than fifty (50%) of the present value of a Participant's benefits is paid within the life expectancy of the Participant unless the designated Beneficiary is the Participant's spouse. SECTION 8.09 Distributions to Minors and Legally Disabled Persons In case of any distribution to a minor or a legally incompetent person, the Plan Administrator may direct the Trustee that the same be made for the benefit of such person directly to such person or to his or her legal representative, to a custodian for such Beneficiary under the Uniform Gift or Transfers 21 #1133391 to Minors Act, as adopted by the state having jurisdiction with respect to the custodianship, or to some near relative of such person or that the Trustee shall use the same directly for the support, maintenance or education of such person. The Trustee shall not be required to see to the application by any third party of any distributions made pursuant to this Section 8.09. SECTION 8.10 Involuntary Cash Outs Notwithstanding any other provision of this Article, if the present value of a Participant's entire nonforfeitable interest in his or her Account at the time of his or her termination of employment does not exceed $5,000, the Plan Administrator shall direct the Trustee to distribute such benefit to the Participant or his or her designated Beneficiary in a lump sum. Effective January 1, 2002, the value of a Participant's entire nonforfeitable interest in his or her Account shall be determined without regard to that portion of the Account that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Section 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code. Effective March 28, 2005, notwithstanding any other provision of this Article, if the present value of a Participant's entire nonforfeitable interest in his or her Account at the time of his or her termination of employment does not exceed $1,000, the Plan Administrator shall direct the Trustee to distribute such benefit to the Participant or his or her designated Beneficiary in a lump sum. Effective from January 1, 2002 to March 28, 2005 only, the value of a Participant's entire nonforfeitable interest in his or her Account shall be determined without regard to that portion of the Account that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Section 402(c), 203(a)(4), 403(b) (8), 408(d)(3)(A)(ii), and 457 (e)(16) of the Code. SECTION 8.11 Participant Cannot Be Found at Normal Retirement Age If a Participant or Beneficiary has not made application for the benefit to which he or she is entitled under the terms of this Plan, and within five (5) years after his or her Normal Retirement Age (or in the case of a Beneficiary, five (5) years after the death of the Participant)` such Participant or Beneficiary cannot be located after a reasonable search, including mailing at least one registered letter to his or her last known mailing address, the benefit of such Participant or Beneficiary, as the case may be, may be forfeited on the last day of the Plan Year in which occurs the fifth anniversary of the Participant's Normal Retirement Age, or, in the case of a Beneficiary, the December 31 of the calendar year following the fifth anniversary of the Participant's death. Any such forfeited amounts may be allocated as an Employer contribution for and in the year following forfeiture, and may either constitute an additional Employer contribution or reduce the Employer's required contribution as described in Section 3.01. If, however, the Participant or Beneficiary, as the case may be, subsequently makes a valid claim for benefits, the amount 22 #1133391 forfeited (unadjusted for earnings) under this Section 8.11 shall be restored from forfeitures which would otherwise.have been allocated in the Plan Year of restoration, and if none, from additional Employer contributions. SECTION 8.12 Direct Rollover Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement plan specified by the Distributee in a Direct Rollover. The Plan Administrator may require that a Distributee requesting a Direct Rollover provide adequate information in a timely manner that the account, annuity or plan to which the Direct Rollover is to be made is an Eligible Retirement Plan, and neither the Plan Administrator nor the Trustee shall have any liability if their reliance on such information is reasonable. For purposes of this Section: (a) " Eligible Rollover Distribution shall mean 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 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(x)(9) of the Code; the portion of any distribution that is not includable in gross income, and effective July 1, 2000, a hardship distribution from the Plan, if applicable. (b) " Eligible Retirement Plan shall mean an individual retirement account described in Section 408(a) of the Code an individual retirement annuity described. in Section 408(b) of the Code, a Roth individual retirement account described in Section 408A of the Code (effective January 1, 2008), an annuity plan described in Section 403(a) of the Code, an annuity contract described in Section 403(b) of the Code (effective January 1, 2002), a government plan described in Section 457 of the Plan (effective January 1, 2002), or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. Provided, in the case of an Eligible Rollover Distribution to the surviving Spouse made prior to January 1, 2002, an Eligible Retirement Plan shall mean an individual retirement account or individual retirement annuity. Further provided, effective January 1, 2009, in the case of an eligible rollover distribution to a nonspouse Beneficiary, an eligible retirement plan shall mean an individual retirement account described in Section 408(a) of the Code or an individual retirement annuity described in Section 408(b) of the Code established for the purpose of 23 #1133391 receiving a distribution on behalf of the nonspouse Beneficiary of the Participant in accordance with Section 401(c)(11) of the Code. (c) " Distributee " shall mean a Participant, a Participant's surviving Spouse, or the Participant's Spouse or former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, as applicable and, effective January 1, 2009, the Participant's nonspouse Beneficiary. A Spouse or former Spouse is a Distributee with respect to the interest of such Spouse or former Spouse. (d) " Direct Rollover shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. SECTION 8.13 Loans to Participants (a) Loan Availability (i) After receiving .a Participant's application, the Plan Administrator may direct the Trustee to make a loan to such Participant in accordance with the requirements set forth in this Section. Loans shall be made available to all Participants on a reasonably equivalent basis. (ii) Notwithstanding any provision in the Plan to the contrary, for purposes of this Section, the term "Participant" shall not include former Employees. (b) Loan Limitation (i) The maximum amount of the loan shall be $50,000 reduced by the excess, if any, of: (1) the highest outstanding loan balance during the preceding one -year period ending on the day before the date on which the loan is made, over (2) the outstanding balance of such loans on the date on which the loan is made. (ii) In no event may a Participant borrow more than fifty percent (50 %) of his or her Vested Account balance in the Plan. (iii) All plans providing for retirement benefits which are sponsored by the Employer shall be aggregated only for purposes of determining a Participant's Account balance and loan limit under Section 72(p) of the Code. (c) Loan Minimum The minimum amount of a loan shall be $1,000.00. 24 #1133391 (d). Security. By accepting a Plan loan, the Participant automatically assigns as security for the loan his or her right, title and interest in the Trust Fund equal to the amount of the loan plus interest as security for the loan. (e) Interest All loans, including any renewal or modification of outstanding loans, shall bear a reasonable rate of interest. (f) Amortization All loans shall be evidenced by negotiable promissory notes which shall provide for repayment in equal periodic installment payments. (not less frequently than quarterly) over no more than a five -year period, except that loans which are used within a reasonable period after the loan is made for the acquisition of the Participant's primary residence shall be repaid in equal periodic installments (not less frequently than quarterly) over no more than a fifteen -year period. Notwithstanding the foregoing, equal periodic payments shall not be required for a period, not to exceed one (1) year, if the Participant is on a leave of absence without pay. (g) Repayment Repayment of loans shall be made by payroll deduction. Upon termination of employment, all remaining loan payments shall continue to be required in accordance with the terms of the loan. (h) Segregation Any loan made to a Participant shall be accounted for as .a segregated loan account in the Trust and shall be considered a self - directed investment of the Participant. Repayments of the principal amount of the loan shall reduce the total amount of principal due in the Participant's segregated loan account by the amount of such payments and shall increase by an equal amount the restored value of the Participant's segregated loan account. Payments of interest on such loan shall reduce the total amount of interest due in the Participant's loan account and such payments shall be credited directly to the Participant's segregated loan account. Expenses attributable to the loan shall be allocated to the Participant's segregated loan account and shall be treated accordingly. (i) Disclosure All loan applicants shall receive a statement of the charges involved in each loan transaction. This statement shall include the dollar amount and annual interest rate of the finance charge and such other information as may be required under any federal or state disclosure law. The loan applicant is responsible for the administrative charges incurred by the Trustee for setting up the loan for processing loan payments. All loan applicants shall be advised of these administrative charges. 0) Default All loans shall be repaid in accordance with this Plan, the promissory note and the security agreement. If the Participant fails to make payment when due, the Plan Administrator, in its discretion, may declare the Participant to be in default and #1133391 25 accelerate the remaining loan payments. The Plan Administrator may foreclose on the security posted; provided, however, that foreclosure on the Participant's Account as collateral shall not occur until the happening of an event permitting distribution of the Participant's interest under the Plan (k) Separate Document Additional provisions describing the loan program may be contained in a separate document which shall form part of the Plan. 0 26 #1133391 ARTICLE IX INVESTMENT OF TRUST FUND SECTION 9.01 Investment Power (a) Subject to Section 9.03, the Trustee is granted full power and authority in the investment and reinvestment of the Trust Fund, or any part thereof, in any manner that it deems advisable and in accordance with this Trust Agreement. Without limiting the foregoing, the Trustee may invest in bonds, common and preferred stocks, shares of management type investment companies as defined in the Investment Company Act of 1940, annuity contracts or other contracts issued by life insurance companies, money market funds, savings accounts or certificates of deposit in a bank or a savings and loan association, or in other property whether real or personal. (b) In the event that the Plan Administrator shall have designated an Investment Manager as provided in Section 10.06, with respect to all or a portion of the Trust Fund, the Trustee shall invest such .portion of the Trust Fund as directed by the Investment Manager. The Trustee shall have no duty or obligation to provide investment advice or recommendations with respect to investments directed by an Investment Manager. (c) The assets of the Trust may be invested in any trust established and maintained as a medium for the collective investment of funds of employee benefit trusts, including any such collective trusts established and maintained by a Trustee, with respect to which the Trust is an eligible participant. The governing instrument of any such trust, as amended from time to time, is hereby incorporated and made a part hereof as if set forth herein. SECTION 9.02 Investment Duties In the investment and reinvestment of all or any part of the Trust Fund, the Trustee and an Investment Manager shall discharge their duties in accordance with Section 10.05. SECTION 9.03 Investment Direction by Participants (a) The Plan Administrator may establish, reasonable rules and procedures allowing for Participant's to direct the investment of some or all of the assets in the Participant's Accounts. All directions of Participants provided in accordance with such rules and procedures shall be transmitted by the Plan Administrator, or if applicable, directly by the Participant, to the Trustee and shall be followed by the Trustee in the investment of the Trust Fund, provided, however, that the Plan Administrator shall not transmit the directions and the Trustee shall not r 27 #1133391 follow any such direction if the Plan Administrator or the Trustee, as the case may be, determines that implementation of such direction: (1) Would not be in accordance with the terms of the Plan; (2) Would jeopardize the Plan's qualified status under Code Section 401(a); (3) Could result in a loss in excess of the Participant's or Beneficiary's account balance; (4) Would generate income that would be taxable to the Plan; or (b) The Plan Administrator and the Trustee shall have no obligation to question any direction of Participants with respect to investments, to review any securities or other property held in the Trust Fund accounts as a result of the directions of Participants or to make suggestions or to provide advice to Participants with respect to the investment or the retention or disposition of any assets held in the Trust Fund accounts. (c) A Participant or Beneficiary shall not be - deemed to be a fiduciary by reason of his or her exercise of control over assets in his or her Accounts under this Section and no person who is otherwise a fiduciary shall be liable for and-- loss -or by reason of any breach, which results from such exercise of control. (d) No portion of a Participant's Accounts which is subject to a Participant's exercise of control may be invested in any works of art, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages, or any other tangible personal property specified by the Secretary of the Treasury as a collectible. (e) The Plan Administrator may charge the Accounts of a Participant or Beneficiary for the reasonable expenses of carrying out his or her investment directions under this Section. The Plan Administrator shall establish reasonable procedures to inform Participants that such charges are made and to periodically inform each Participant of the actual expenses incurred with respect to his or her Accounts. 28 #1133391 ARTICLE X FIDUCIARIES SECTION 10.01 Allocation of Authority The authority to control and manage the operation and administration of the Plan shall be allocated between the Town Council, the Plan Administrator, and the Trustee, as provided in this Trust Agreement. In addition, procedures for the appointment of an additional fiduciary, an Investment Manager, are set forth in Section 10.06. SECTION 10.02 Town Council Authority The Town Council shall have discretionary authority to employ advisors and counsel (Section 10.07), to appoint and remove members of the Committee, if any (Section 12.01), to appoint and remove a Trustee or Successor Trustee (Sections 13.05 and 13.06), and to amend and terminate the Plan (Article XV). SECTION 10.03 Plan Administrator Authority The Plan Administrator shall have discretionary authority to determine eligibility to participate in the Plan (Section 2.01), to establish separate Accounts for Participants (Section 4.01), to allocate Employer's contributions (Section 4.02), to determine and allocate the amount of net income or loss of the Trust (Section 4.03), to adopt rules and procedures governing investment elections and the exercise of control by Participants (Section 9.03); to employ advisers and counsel (Section 10.07), to furnish statements of account (Section 11.03), to construe and interpret the Trust Agreement and determine questions thereunder (Section 11.01), to establish a funding policy for the Trust Fund (Section 11.02), to determine the rights of Participants and Beneficiaries under the Plan (Section. 11.05), to appoint an Investment Manager or Managers to manage any portion of the assets of the Trust Fund and to delegate duties to such an Investment Manager (Sections 10.06 and 11.04), and to perform any and all acts and functions as provided in Article XI. SECTION 10.04 Trustee Authority The Trustee shall have discretionary authority to establish the fair market value and net income or loss of the Trust Fund (Section 4.03), to distribute assets to Participants (Article VIII), to invest and reinvest the principal and income of the Trust, including as directed by an Investment Manager (Section 9.01), to invest and reinvest the principal and income of the Trust in accordance with the directions of Participants and Beneficiaries (Section 9.03), to employ advisers and counsel (Section 10.07), to manage and control the Trust assets (Section 13.01), and to render accounts of the administration of the Trust, (Section 13.04). 29 #1133391 SECTION 10.05 Discharge of Fiduciary Duties Except as provided in Section 9.03, each fiduciary shall discharge his or her or its duties with respect to the Plan solely in the interest of the Participants and Beneficiaries and (a) for the exclusive purpose of providing benefits to Participants and their Beneficiaries; (b) with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (c) by diversifying the investments of the Plan, except as provided in Section 9.03, so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (d) in accordance with this Trust Agreement. SECTION 10.06 Investment Manager (a) The power of the Trustee to direct, control or manage the investment of Trust assets, or any portion thereof, may be delegated to an Investment Manager appointed by the Plan Administrator. Such an Investment Manager shall have the power to manage, acquire, or dispose of any asset or the portion of the Trust Fund with respect to which it has been appointed and it must acknowledge in writing that it is a fiduciary with respect to the Trust Fund. (b) If an Investment Manager has been appointed, no other fiduciary shall be liable for acts or omissions of such Investment Manager, except as provided in Section 10.08, or be under an obligation to invest or otherwise manage any asset of the Trust Fund, or the portion thereof, which is subject to the investment authority of such an Investment Manager. SECTION 10.07 Miscellaneous (a) Any person or group of persons may serve in more than one fiduciary capacity with regard to the Plan. (b) A fiduciary may employ one or more persons, including counsel, who need not be counsel for the Employer, to render advice with regard to any responsibility such fiduciary has under the Plan. The opinion of such" counsel shall be full and complete protection in respect to any action taken or suffered by the fiduciaries hereunder in good faith and in accordance with the opinion of such counsel, to the extent permitted under applicable law. 30 #1133391 SECTION 10.08 Liability (a) A fiduciary shall be liable for his or her own breach of fiduciary responsibility as provided Section 10.05. (b) A fiduciary shall be liable for a breach of fiduciary responsibility by another fiduciary under the following circumstances: (1) if he or she knowingly participates in, or knowingly undertakes to conceal, an act or omission of another fiduciary knowing such act or omission is a breach; (2) if, by his or her failure to comply with Section 10.05 in the administration of the specific responsibilities which give rise to his or her status as fiduciary, he or she has. enabled another fiduciary to commit a breach; or (3) if he or she has knowledge of a breach by another fiduciary, unless he or she makes reasonable efforts under the circumstances to remedy the breach. (c) If an Investment Manager is designated under Section 10.06, the Plan Administrator and the Trustee shall not be liable for any act or omission of the Investment Manager in carrying out its responsibilities, except to the extent that the Plan Administrator violates Section 10.05: (1) with respect to such designation; (2) with respect to the establishment or implementation of the procedures for the designation of an Investment Manager; or (3) in continuing the designation. 31 #1133391 ARTICLE XI PLAN ADMINISTRATOR SECTION 11.01 Powers and Duties (a) The Plan Administrator shall have the powers and duties specified in this Trust Agreement, and without limiting the foregoing, shall have discretionary authority to construe and interpret this Trust Agreement and to determine all questions that shall arise hereunder, including questions submitted by the Trustee on all matters necessary for it properly to discharge its duties and powers. (b) Subject to Section 11.05, the decisions of the Plan Administrator made in good faith upon any matter within the scope of its authority shall be final and binding upon the Employer, Participants, Beneficiaries and all others. (c) The Plan Administrator at all times in making its decisions shall act in a uniform and nondiscriminatory manner and may from time to time set down or modify uniform rules of interpretation and administration. SECTION 11.02 Funding Policy The Plan Administrator may establish a funding policy for the Trust Fund. Following a consideration of anticipated contributions, income and distributions over a future period chosen by the Plan Administrator and such other matters as the Plan Administrator may deem relevant, the Plan Administrator shall determine a funding policy for the Trust Fund bearing in mind both the short run and long run needs and goals of the Plan Such a funding policy shall be communicated to the Trustee, or to the Investment Manager if one shall have been appointed, so that investment policy can be coordinated with the needs of the Plan. SECTION 11.03 Communications (a) The Plan Administrator shall keep on file a copy of this Trust Agreement and any amendments thereto which the Plan Administrator will permit a Participant to examine during reasonable hours, together with other records pertaining to said Participant. (b) The Plan Administrator shall furnish each Participant with a statement of his or her interest in the Plan as soon as administratively possible following each Plan Year and such other information from time to time as may be deemed necessary by the Plan Administrator. SECTION 11.04 Services The Plan Administrator may employ such investment advisers, accountants, counsel, administrative assistants, consultants and such clerical and other services as it may require in carrying out the provisions of the Plan and their administration, 32 #1133391 subject to the approval of the Employer. The reasonable fees and charges for, and costs of, such services may be paid by the Employer, provided, however, that if they are not paid by the Employer, they shall be paid by the Trustee from the assets of the Trust Fund as an expense of the Plan and shall be charged proportionately to the accounts of all Participants. and Beneficiaries. The reasonable expenses and costs of Plan administration that are incurred solely with respect to the Accounts of an individual Participant or Beneficiary may, in the discretion of the Plan Administrator, be charged directly to such Accounts. SECTION 11.05 Claims Procedures (a) The Plan Administrator in its discretion shall determine the rights of Participants and Beneficiaries to benefits under the Plan. In the event of a dispute over benefits, a Participant or Beneficiary may file a written claim for benefits with the Plan Administrator, provided that such claim is filed within 60 days of the date the Participant or Beneficiary receives notification of the Plan Administrator's determination. (b) If a claim is wholly or partially denied, the Plan Administrator shall provide the claimant with a notice of denial, written in a manner calculated to be understood by the claimant and setting forth: (1) The specific reason(s) for such denial; (2) Specific references to the pertinent Plan provisions on which the denial is based; (3) A description of any additional material or information necessary for the claimant to perfect the claim with an explanation of why such material or information is necessary; and (4) . Appropriate information as to the steps to be taken if the claimant wishes to submit his or her claim for review. The notice of denial shall be given within a reasonable time period but no later than 90 days after the claim is filed, unless special circumstances require an extension of time for processing the claim. If such extension is required, written notice shall be furnished to the claimant within 90 days of the date the claim was filed stating the special circumstances requiring an extension of time and the date by which a decision on the claim can be expected, which shall be no more than 180 days from the date the claim was filed. If no notice of denial is provided as herein described, the claimant may appeal the claim as though the claim had been denied. (c) The claimant and/or his or her representative may appeal the denied claim and may: 33 #1133391 (1) Request a review upon written application to the Plan Administrator which shall thereupon appoint a review committee to hear the claim, whose members may be members of the Committee; (2) Review pertinent documents; and (3) Submit issues and comments in writing to the review committee; provided that such appeal is made within 60 days of the date the claimant receives notification of the denied claim. (d) Upon receipt of a request for review, the review committee shall within a reasonable time period but no later than 60 days after receiving the request, provide written notification of its decision to the claimant stating the specific reasons and referencing specific plan provisions on which its decision is based, unless special circumstances require an extension of time for processing the review. If such an extension is required, the special review committee shall notify the claimant of such special circumstances and of the date, no later than 120 days after the original date the review was requested, on which the review committee will notify the claimant of its decision. SECTION 11.06 Reporting and Agent of Legal Process The Plan Administrator shall have the duty and authority to comply with the reporting and disclosure requirements of applicable law and shall serve as agent of legal process in any dispute which may arise with respect to the rights of the Employer, Employees, Participants or Beneficiaries under the Plan and Trust. 34 #1133391 ARTICLE XII ADMINISTRATIVE COMMITTEE SECTION 12.01 Selection (a) The Town Council may appoint a Committee consisting of at least two members to be the Plan Administrator. The Committee members shall serve for such term as the Town Council may designate or until a successor has been appointed or until removed by the Town Council. The Employer shall notify the Trustee of the Committee members and of any changes in the members. (b) Committee members shall serve without compensation. All reasonable expenses of the Committee may be paid by the Employer, provided, however, that if they are not paid by the Employer, they shall be paid by the Trustee from the assets of the Trust Fund as an expense of the Plans. and shall be charged proportionately to the accounts of all Participants and Beneficiaries. SECTION 12.02 Organization (a) The action of the Committee. shall be determined by the vote of a majority of its members. (b) The Committee may authorize one or more of its members to execute documents on its behalf, including directions to the Trustee with respect to the performance of the Trustee's duties hereunder, and the Trustee, upon written notification of such authorization, shall accept and rely upon such documents until notified in writing that the authorization has been revoked by the Committee. The Trustee shall not be deemed to be on notice of any change in the membership of the Committee unless notified of such change in writing by the Employer. (c) A member of the Committee who is also a Participant shall not vote on any matter relating solely to such member. SECTION 12.03 Indemnitv To the extent permitted under applicable law, the Employer shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his or her membership on the Committee, excepting only expenses and liabilities arising out of the member's own willful misconduct. 35 #1133391 ARTICLE XIII SECTION 13.01 Control of Assets TRUSTEE (a) All assets of the Trust shall be held by the Trustee in trust. (b) Subject to Section 9.03, the Trustee shall have exclusive authority and discretion to manage and control the assets of the Plan, except to the extent that authority has been delegated to an Investment Manager under Section 10.06, in which case the Trustee shall be subject to the proper directions of the Investment manager which are made in accordance with the Plan. SECTION 13.02 Trustee's Powers In the discharge of its duties, the Trustee shall have all the powers, authority, rights, and privileges of an absolute owner of the Trust assets, and, without limiting the foregoing, may receive, hold, manage, invest and reinvest, sell, exchange, dispose of, encumber, hypothecate, pledge, purchase property subject to an encumbrance, incur an indebtedness as part of the purchase price of real or personal property which may be encumbered to secure the payment of such indebtedness, mortgage, lease, grant options respecting, repair, alter, insure or distribute any and all such property of the Trust Fund; may borrow money, participate in reorganizations, pay calls and assessments, vote or execute proxies, exercise subscription or conversion privileges and register in the name of a nominee any securities of the Trust Fund; may renew, extend the due. date, compromise, arbitrate, adjust, settle, enforce or foreclose by judicial proceedings or otherwise or defend against the same, any obligations or claims in favor of or against the Trust Fund; may exercise options, employ agents; and, whether herein specifically referred to or not, may do all such acts, take all such actions and proceedings and exercise all such rights and privileges as if the Trustee were the absolute owner of any and all such property. SECTION 13.03 Trustee's Fee The Trustee's fee for its services as Trustee shall be such as may be mutually agreed upon from time to time by the Employer and the Trustee, provided that no Trustee who already receives full -time pay from the Employer shall receive compensation for his or her services as Trustee, except for reimbursement for expenses properly and actually incurred. The Trustee's fees and expenses shall be paid by the Employer, provided that if they are not paid by the Employer, they shall be paid . by the Trustee from the assets of the Trust Fund as an expense of the Plan and shall be charged proportionately to the Accounts of all Participants and Beneficiaries. 36 #1133391 SECTION 13.04 Accounting of Trustee (a) Within a reasonable period following the close of each Plan Year, the Trustee shall render to the Employer an account of its administration of the Trust Fund during the preceding year. (b) The written approval of the Trustee's account by the Employer shall be final as to all matters and transactions stated or shown therein, and binding upon the Employer, the Plan Administrator and all persons who then shall be or thereafter shall become interested in the Trust, to the extent permitted under applicable law. Failure of the Employer to notify, the Trustee within ninety days after receipt of any account of its disapproval of such account shall be the equivalent of written approval. SECTION 13.05 Vacancies in Trusteeship (a) The Trustee may resign at any time upon ninety days written notice to the Employer; provided, that upon receipt of instructions or directions from the Employer with which the Trustee is unable or unwilling to comply, the Trustee may resign upon written notice to the Employer given within a reasonable time, under the circumstances then prevailing, after receipt of such instructions or directions. (b) The Town Council may remove the Trustee without cause at any time upon thirty days written notice. (c) In case of resignation or removal of the Trustee, the Trustee shall have the right to a settlement of accounts which may be made, at the option of the Trustee, either by judicial settlement in an action in a court of competent jurisdiction or by agreement of settlement between the Trustee and the Employer. The Trustee shall not be requested to transfer assets of the Trust Fund to a successor Trustee, or otherwise, until his or her accounts have been settled. SECTION 13.06 Successor Trustee (a) Resignation or removal of the Trustee shall not terminate the Trust. In the event of vacancy in the trusteeship of this Trust occurring at any time, the Employer, shall appoint a successor Trustee or Trustees. (b) Any successor Trustee shall have all the powers and duties herein conferred upon the Trustee in this Trust Agreement. (c) The title to all Trust property shall automatically vest in a successor Trustee or Trustees without the execution or filing of any instrument or the doing of any act, but 37 #1133391 the resigning or removed Trustee shall execute all instruments and do all acts which would otherwise be necessary to vest such title in any successor. (d) A successor Trustee may be appointed either by amendment to this Trust Agreement or by resolution of the Town Council without such amendment and the successor Trustee shall agree to act as such by executing such amendment or by consenting to a copy of such resolution. SECTION 13.07 Powers and Duties (a) The Trustee shall have the power and duty to do all things necessary or convenient to effect the intent and purpose of this Plan and not inconsistent with any of the provisions hereof, whether or not such powers and duties are specifically set forth herein and, without limiting the foregoing, shall have the discretionary power to construe and interpret the Trust Agreement and to determine all questions that shall arise hereunder on all matters necessary for it properly to discharge its powers and duties. (b) Decisions of the Trustee made in good faith upon any matters within the scope of its authority shall be final and binding upon the Employer, the Plan Administrator, Participants, Beneficiaries and all others, except as applicable law may otherwise provide. (c) The Trustee in making and carrying out its decisions and directions shall, at all times, act in a uniform and nondiscriminatory manner and may from time to time prescribe and modify .uniform rules of interpretation and administration. 38 #1133391 ARTICLE XIV ASSIGNMENT AND ALIENATION OF BENEFITS No benefit or interest provided to any Participant or Beneficiary under this Plan shall be subject to assignment or alienation, either in whole or in part, whether by means of attachment, garnishment, constructive trust, levy, execution or by any other legal or equitable process. All benefits payable under this Plan shall be paid by the Trustee only to the Participant, or the designated Beneficiary. Notwithstanding the foregoing, if any part of a Participant's benefits under the Plan is assigned or determined to be the property of or otherwise payable to a Participant's Spouse, former Spouse, child or other dependent of the Participant (herein referred to as the "Alternate Payee ") pursuant to a Domestic Relations Order, as defined in Section 414(p)(1)(B) of the Code, an assignment to the Alternate Payee of such property pursuant to such Domestic Relations Order (whether or not such Domestic Relations Order provides for direct payment from the Plan to the Alternate Payee) shall not constitute a violation of this Article XIV, provided that no payment is required to be made in a form not permitted by the Plan. The Employer may establish and maintain a separate account for the Alternate Payee and shall initially credit thereto an amount equal to the amount assigned to the Alternate Payee under the Domestic Relations Order. Any such account shall be subject to all provisions of this Plan except that: (a) Distributions from the account may commence at any time permitted by the Domestic Relations Order, but in no event later than as required under Section 8.07; and (b) The amount payable under Section 8.07 upon the death of the Alternate Payee shall be in the form of a lump sum to the Alternate Payee's Beneficiary, or if there is none, to the Alternate Payee's estate, as soon as is practicable. 39 #1133391 ARTICLE XV AMENDMENT AND TERMINATION OF THE PLAN SECTION 15.01 Amendment by the Employer The Employer may amend the Plan by action of the Town Council as evidenced by an instrument in writing duly executed by the Employer. SECTION 15.02 Limitations on Power to Amend The Employer shall not have the power to amend the Plan in such manner that would cause or permit any part of the assets of the Trust Fund to be diverted to purposes other than for the exclusive benefit of Participants or their Beneficiaries, or that would cause or permit any portion of assets to revert to or become the property of the Employer. The Employer shall not have the right to modify or amend the Plan retroactively in such manner as to deprive any Participant or, Beneficiary of the benefit to which he or she was entitled under the Plan by reason of contributions made prior to the date of adoption of such modification or amendment, unless such modification or amendment is necessary.to conform the Plan to, or to satisfy the conditions of, any law, or governmental regulations or rulings. SECTION 15.03 Termination of Plan The Employer has adopted this retirement plan with the intent and expectation that it will continue indefinitely. However, it expressly reserves the right to terminate this Plan at any time by action of the Town Council. Except as provided in Section 3.03, however, in no event shall any assets of the Trust Fund ever revert or inure to the benefit of the Employer. In the event of termination or partial termination, a Participant's benefits accrued to the date of such termination or partial termination, to the extent funded as of such date, or the amounts credited to the Participant's account, are nonforfeitable. SECTION 15.04 Disposition of Trust Fund Upon Termination If the Employer terminates this Plan, the Employer may request the Internal Revenue Service to issue a determination as to the effect the termination may have on the continuing tax qualification of the Plan: Upon termination, or upon notification by the Internal Revenue Service of a favorable determination if requested, the Employer shall authorize (a) the immediate distribution of the interest of each Participant in his or her Accounts, or (b) the continuation of the Trust forming a part of this Plan with distributions from the Trust to occur thereafter in accordance with Article VIII. If the Employer does not specify the disposition of the assets of the Trust Fund within a reasonable time following receipt of a favorable determination letter, then the Trustee is authorized to immediately distribute the interest of each Participant. 40 #1133391 SECTION 15.05 Dissolution, Merger, or Consolidation of Employer In the event of the dissolution, merger, consolidation, or the sale of substantially all of the assets of the Employer, this Plan shall be considered terminated as of the effective date of such occurrence. The interest of each Participant in his or her Account shall be disposed of in accordance with the terms of Section 15.04. However, the resulting or successor person, persons, firm, corporation or other entity to the Employer, by reason of the dissolution, consolidation, merger, or sale of assets, may continue the Plan by appropriate action within 90 days after the effective date of such occurrence. In such a case, this Plan shall not be considered terminated, but shall continue uninterrupted 41 #1133391 ARTICLE XVI MISCELLANEOUS PROVISIONS SECTION 16.01 Adoption of the Plan is Not an Employment Contract The adoption and maintenance of this Plan and the extension of participation hereunder shall not be deemed to constitute a contract between the Employer and Employee nor consideration for, the inducement of, or a condition of the employment of any person. Nothing herein contained shall be deemed to give an Employee the right to be retained by the Employer or to interfere with the right of the Employer to discharge any Employee at any time nor shall be deemed to give the Employer the right to require an Employee to remain in its employ nor shall it interfere with an Employee's right to terminate his or her employment at any time. SECTION 16.02 Plan is Established Under the Laws of the State of California . This Plan has been established under the laws of the State of California and, to the extent such laws have not been preempted by Federal statutes, any questions, issues, disputes or controversies arising under this Plan and Trust Agreement shall be decided according to the laws, regulations and decisions in the State of California. SECTION 16.03 Gender and Plurals The masculine gender includes the feminine and neuter gender; the masculine pronoun shall include the feminine and neuter; the singular number the plural; and conversely, whenever appropriate. SECTION 16.04 Severability of Provisions In the event that any provision of this Plan shall be held illegal or invalid for any reason, such illegality or validity shall not affect the remaining provisions of this Plan, which shall be fully severable and this Plan shall be construed and enforced as if such illegal or invalid provision had not been inserted. SECTION 16.05 Context to Control The headings of Articles and Sections are included solely for convenience of reference, and if there be any conflict between such headings and the text of this Plan, the text shall control. 42 #1133391 SIGNATURE PAGE TOWN OF DANVILLE By: DATE EMPLOYER TRUSTEES: DATE DATE #1133391 TOWN MANAGER FINANCE DIRECTOR 43