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HomeMy WebLinkAboutReso 8-2003RESOLUTION NO. 8-2003 CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION AUTHORIZING A VEBA (VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION) FOR USE BY EMPLOYEES AFTER RETIREMENT TO PAY MEDICAL EXPENSES WHEREAS, staff recommends the adoption of the California Government VEBA Trust for the benefit of Executive Management and Mid-Management employees wishing to participate through Compensation Plans and/or Memorandums of Understanding; and WHEREAS, the costs to establish this program will be approximately $2,000; and WHEREAS, thereafter, all costs will be incurred by the employee/retiree members; and WHEREAS, it is prudent to establish an investment policy for the assets set forth in the VEBA Plan Document attached hereto as Exhibit A. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San Francisco that the City Council hereby approves a VEBA (Voluntary Beneficiary Association) for use by employees after retirement to pay medical expenses. BE IT FURTHER RESOLVED that the City Manager is hereby authorized to execute necessary documents to adopt the Master Trust as attached hereto as Exhibit B. BE IT FURTHER RESOLVED that the City Council establishes the follow investment policy for the VEBA Plan: Plan assets shall be invested in accordance with Section 53216.6 (a), (b) and (c) of the California Government Code, as they now exist or may be amended, in a prudent manner and though the trust fund assets are those of a pension trust. Investment contracts shall be limited to those that provide a guarantee of principal, and must be issued by an insurance company with a minimum rating of "A" from Standard and Poors (or similar rating agency). The Trust Administrator shall advise the City at any time that the insurance company rating drops below an "A" rating. 3. Any change to this investment policy shall be subject to prior review and approval by the City Council. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held on the 8th day of January 2003 by the following vote: AYES: Councilmembers Joseph A. Femekes, Richard A. Garbarino, Sr. and Raymond L. Green, Mayor Pro Tem Karyl Matsumoto and Mayor Pedro Gonzalez NOES: None. ABSTAIN: None. ABSENT: None. ATTEST: /City Clerk EXHIBIT A CALIFORNIA GOVERNMENT VOLUNTARY EMPLOYEE BENEFITS TRUST PLAN DOCUMENT CITY OF SOUTH SAN FRANCISCO This Plan is adopted by the City of South San Francisco, (the "Plan Sponsor") and, together with the trust established to hold the assets of the Plan, evidences the voluntary employees' beneficiary association established by the Plan Sponsor for the benefit of its eligible employees. RECITALS WHEREAS, the Plan Sponsor wishes to establish a comprehensive integrated program under which the Plan Sponsor, other Plan Sponsors, and collective bargaining units can negotiate for a variety of health and welfare benefits for its employees: and, WHEREAS, such comprehensive program, known as the California Govermnent Voluntary Employee Benefits Association was implemented to effect economies of scale through the commingling of assets for investment purposes and centralizing of administrative services to provide the Plan Sponsors with a cost effective vehicle through which to offer benefits to their employees; and, WHEREAS, it is the intent of the Plan Sponsor to establish a voluntary Employees' Beneficiary Association ("VEBA") Plan as an integral part of California Government Voluntary _Employees' Beneficiary Association Trust; and, WHEREAS, the Plan Sponsor will provide for a Trust to hold the funds of the VEBA for the benefits specified in this Plan under and in accordance with this Plan and, WHEREAS, the Plan Sponsor intends that the Plan hereby established, when taken together with the Trust, shall constitute a voluntary employees' beneficiary association under Section 501(c)(9) of the Internal Revenue Code of 1986, as amended (the "Code"), NOW, THEREFORE, in consideration of the foregoing, the Plan Sponsor adopts the following Plan: California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 2 Article I. Name & Documents 1.I. Name. The name of this Plan shall be the City of South San Francisco California Government VEBA Plan (the "Plan"). It is established pursuant to the provisions of Code section 501(c)(9), and together with the Trust adopted to fund the benefits evidences the Plan Sponsor's intent to form a VEBA. 1.2. Plan Documents. This Plan, together with the Trust Agreement, shall constitute the entire Plan. Article II. Definitions 2.1. "Beneficiary". A person or persons who are entitled to receive benefits under the Plan following the death of the Member and who are identified in a form prescribed by the Trust Administrator. 2.2. "Contributions". Amounts deposited in the Trust pursuant to the terms of this Plan. 2.3. "Effective Date". The Effective Date shall be the date the Plan and Trust are adopted by the Plan Sponsor. 2.4. "Employee". Any employee of the Plan Sponsor or instrumentality thereof. 2.5. "Plan Sponsor". The City of South San Francisco as employer. 2.6. "Individual Account". An account as established in Article VI. 2.7. "Adopting Plan Sponsor". Any public agency or political subdivision thereof which has adopted and not terminated a Plan and Trust as part of the Northern California VEBA. 2,8. "Member". Any of the following persons who meet the eligibility requirements provided in the Plan: 2.8.1. Actively employed Employee. 2.8.2. An inactive Employee. 2.8.3. A retired former Employee. 2.8.4. A dependent of an active, inactive, or retired Employee who is a Member. California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 3 2.8.5. "Dependent" means: The Employee's spouse; a minor child residing with the Employee; a child of the Employee who is a student (within the meaning of Code Section 151(e)(4)); and any other person who is a dependent of the Employee within the meaning of Code Section 152(a). A beneficiary of an active, inactive, or retired Employee who is or was a Member. 2.9. 2.10. 2.11. 2.8.6. "Beneficiary" means a person who is entitled to receive benefits under the Plan following the death of the Member. 2.8.7. "Inactive Employee". An Employee who, although not Actively employed by the Plan Sponsor, retains eligibility for benefits. "Plan Administrator". The individual or position designated by the Plan Sponsor designated to act for the Plan Sponsor in matters relating to the Plan Documents. If such an individual or position is named, then "Plan Sponsor" as it appears shall mean the Plan Administrator. "Trust Administrator". The consulting firm of Public Agency Retirement Planning, Inc. "Trustee". Allfil'St Trust Company, N.A. or such other individual or entity as determined pursuant to the Northern California Voluntary Employee Benefits Association Trust Agreement. Article IH. Participation 3.1. Eligibility. 3.1.1. In General. Subject to the limitations of Section 3.1.2, every employee shall be eligible to become a Member under this Plan at the time of the first Plan Sponsor contribution to this Plan on the Employee' s behalf. The Plan sponsor may contribute to the Plan on behalf of its employees on terms pursuant to the Plan Sponsor's sick leave conversion program, fiat rate contribution program, or any other Plan Sponsor sponsored program permitting contributions to the Plan and Trust. 3.1.2. Limitations. 3.1.2.1 Participation shall be limited to those employees by or on behalf of whom a contribution is made to the Trust. California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 4 3.2. 3.3. 3.4. 3.1.2.2 This Plan does not permit any condition for eligibility which would limit participation or benefits to officers or highly compensated employees. Procedure. After satisfying all eliqlbility requirements, an Employee shall participate in this Plan when the Trustee receives the initial contribution for the Member. Duration of Participation. Once an employee becomes a Member in the Plan, his participation shall continue as long as funds remain or are required to be deposited in his or her Member's Individual Account. Voluntary Participation. The participation by an Employee shall be voluntary, notwithstanding the exceptions provided by law or regulations. Article IV. Plan Benefits 4.1. 4.2. 4.4. 4.5. Description. The purpose of the Plan is to provide welfare benefits and similar benefits permitted under section 501(c)(9) of the Internal Revenue Code, for use during periods of employment, layoff or retirement. Health Benefits include benefits as defined by Code Section 213 and excludable from income under Code Sections 105 am 106 as amended from time to time. Such benefits may be provided through reimbursement or through the payment of premiums to a medical benefit or health insurance program. Benefits may include payment for services or benefits designed to safeguard or improve the health of Members or clinical care services by visiting nurses, nursing homes and transportation for medical care. Welfare benefits may include, but are not limited to health, severance, unemployment or education benefits. Commencement of Benefits. Benefits after the date an Employee becomes a Member in the Plan. Beneficiaries. Benefits are payable for covered expenses incurred by the Member, Member's dependents or the Members Beneficiaries. Desimaation of Beneficiaries. The Member shall have the sole right to designate the Beneficiary or Beneficiaries eligible to receive any benefit under the Plan payable by reason of the death of any Member. Such designation must be on a form or forms supplied by the Plan Administrator and shall be effective when delivered to the Plan Administrator in accordance with established procedures. Termination of Benefits. Benefits shall terminate when the Member's Individual Account is exhausted and the Member is no longer entitled to additional contributions. If the Plan is maintained on the basis of Section 4.6 and individual accounts are not established, the California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 5 4.6 Member's benefits will terminate when there are no longer any assets allocable to the Plan. If an Individual Account is established, in the event of the Member's death, funds then remaining in the Member's Individual Account shall be used for medical expenses of the Member's spouse and qualified dependents. In the event funds remain in the Member's Individual Account following the death of the Member and his or her spouse, the funds shall be paid as medical benefits to the heirs of the Member. Unallocated Benefits. The Plan Sponsor may participate in this Plan without establishing Individual Accounts for Members. The Plan Sponsor shall specify the employees to whom benefits are to be paid, and the amount and type of benefits. The assets contributed for such employees and earnings thereon shall be accounted for in a separate sub-account of the Trust. Benefits shall then be paid to Member as prescribed by the provisions of this Plan and any other instrument which is deemed a part of this Plan for the purposes of determining benefits to be paid. When the assets in such sub-account are exhausted, no further benefits shall be paid. 5.1. 5,2, 5,3, Article V. Funding of Benefits Plan Sponsor's Contributions. Plan Sponsor contributions made to this Plan and Trust for medical benefits shall be specifically allocated to an Individual Account for each Member for the pm'pose of providing payment of the benefits described herein unless the Plan Sponsor is providing for Unallocated Benefits pursuant to Section 4.6. Determination of Benefits. Unless the benefits are being provided on an Unallocated basis pursuant to Section 4.6, amounts contributed on behalf of each Member shal 1 be determined pursuant to the provisions of the collective bargaining agreement and Plan Sponsor personnel practices under which the benefits and compensation to be provided to the Employee under this Plan are determined. If benefits are being provided on an Unallocated Basis, benefits shall be determined on the same basis. Termination of Plan Sponsor Contributions. Contributions shall cease when the applicable bargaining agreements or Plan sponsor policies no longer provide for contributions. The Plan Sponsor shall be responsible for informing the Plan Administrator when Plan Sponsor Contributions for any employee or employees will cease. 6.1 Article VI. Allocation to Member's Accounts Members' Individual Accounts. A separate account shall be maintained by the Plan Administrator for each Member to account for the income, gains, losses, and expenses or benefit payments attributable to his or her account unless benefits are being provided on an Unallocated Basis. California Govemment Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 6 6.2. Receipt of Contributions. Contributions will be credited when received by the Trustee. Accounting. The Plan Administrator shall develop such accounting procedures as are deemed appropriate for accurate reflection of the Members' Individual AccoSnt balance of the assets contributed, earnings thereon and benefits paid if benefits are being provided on an Unallocated Basis. 7.1. 7.2. Article VII. General Provisions Source of Benefits. The Plan and Trust's liability to any Member for benefits under the Plan shall be limited to the sum of the account balance of each Member Individual Account or the amount of Plan Sponsor Contributions and interest thereon if benefits are being provided on an Unallocated Basis. Mechanics of Payment. reasonable procedures Administrator: The Member shall, with respect to any benefit, and subject to the established by the Plan Administrator, direct the Trust 7.2.1. To pay benefits directly to an insurance company for qualified insurance premiums; or 7.2.2. To pay benefits to a Plan Sponsor for qualified Medical premium payments; or 7.3. 7.2.3. To pay benefits to the Member for reimbursement of qualified medical expenses; or 7.2.4. Any combination of 7.2.1., 7.2.2., or 7.2.3., as allowed under the procedures adopted by the Plan Administrator. Claims Procedure. At such time when a Member believes he/she is entitled to receive a benefit under the Plan, such Member shall deliver a request for such benefit in writing to the Trust Administrator. The Trust Administrator shall review the claimant's request for a Plan benefit and shall, within a reasonable time thereafter, notify the claimant of its decision as follows: 7.3.1. If the claimant's request for a Plan benefit is approved by the Plan Administrator, proceed with the distribution of such Plan benefit pursuant to the claimant's request. California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 7 7.3.2. If the claimant's request for a Plan benefit is denied, in whole or in part, by the Plan Administrator, the Trust Administrator shall notify the claimant of such denial and shah provide the claimant with a reasonable procedure for review. 7.3.3. Any claimant whose request for Plan benefits has been denied, in whole or in part, or such claimant's authorized representative, may appeal said denial of Plan benefits by submitting to the Trust Administrator a written request for review of such denied claim. Such request for review must be delivered to the Trust Administrator within a reasonable time after the date the claimant received written notification of the Plan Administrator's initial denial of the claimant's request for Plan benefits. 7.3.4. The Trust Administrator shall permit the claimant to review pertinent documents and submit written issues and comments concerning the denial of claimant's request for Plan benefits. Article VIII. Administration 8.1. Trust Administrator. The Trust Administrator of the California Government Voluntary Employees' Beneficiary Association Master ("Trust") shall enforce this Plan in accordance with its terms and those of the Trust and shall be charged with the general administration of the Plan. 8.2. Trust Administrator Duties. The Trust Administrator shall have responsibility for maintaining records of the balances, claims, and contributions to the Individual Accounts as well as such records as are needed to maintain the Plan if contributions are made on an Unalloeated Basis. In addition, the Trust Administrator, or its delegatee, shall have the following duties: 8.2.1. To determine all questions relating to the eligibility of Employees to participate. 8.2.2. To compute and certify to the Trustee the amount and kind of benefits payable to the Members, their dependants and Beneficiaries. 8.2.3. To maintain all the necessary records for the Administration of this Plan other than those maintained by the Trustee. 8.2.4. To account for the investments made by the Trustee in a manner consistent with the objectives of the Plan and authorized by the Trust. 8.2.5. To make and publish such rules for the regulation of this Plan as are not inconsistent with the terms hereofi California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 8 8.3. 8.4. 8.5. 8.6. Information. To enable the Trust Administrator to perform its functions, the Plan Sponsor shall supply it with full and timely information on all matters relating to the compensation of all Employees, their services, their retirements, deaths or the causes for terminations of employment and such other pertinent facts as the Trust Administrator may require. Expenses. All expenses shall be paid from the earnings on the assets held in the 'Trust, unless otherwise authorized by the Plan Administrator. Consultants, Advisors. & Managers. The Trust Administrator may employ such consultants, advisors and investment managers as it deems necessary or useful in carrying out its duties hereunder, with the cost thereof to be paid from the Trust assets. Funding Policy & Procedures. The Trustee, Trust Administrator and Plan Sponsor shall formulate polices, practices and procedures for contributions to, payments from, and funding of the Plan, which shall be consistent with the Plan objectives and the provisions of applicable law. Without; limiting the generality of the foregoing, the Trust Administrator shall, from time to time, accomplish the following: 8.6.1. Establish a regular and convenient schedule of planning meetings, not less often than annually; 8.6.2. 8.6.3. 8.6.4. Review short-term, intermediate and long range investment goals; Determine and project benefit liabilities; Make plans to satisfy the liquidity needs of the Plan; and 8.6.5 Consult with such other advisors as may be necessary to assure the efficient payment of Plan benefits. 9.1. 9.2, Article IX. Investment Policy Plan assets shall be invested in accordance with Section 53216~a), (t~) and (c) of the California Government Code, as they now exist or may, be amende, d,.ja a prudent manner and though the Trust fund assets are those of a pension ~ Investment contracts shall be limited to those that provide a guarantee of principal, and must be issued by an insurance company with a minimum rating of "A" fi.om Standard or Poors (or similar rating agency). The Trust Administrator shall advise the City at any time that the insurance company rating drops below an "A" rating. California Government Voluntary Employee Benefits Trust Plan Document City of South San Francisco Page 9 9.3. Any change to this investment policy shall be subject to prior review and approval by the City Council. 10.1. 10.2. 10.3. Article X. Liability No Rights. Neither the establishment of this Plan, nor any modification or amendment thereof, nor the payment of any benefits, shall be construed as giving any Member, or any person whomsoever, any legal or equitable right against the Trustee, Trust Administrator, Plan Sponsor, or the assets of the Plan. Obligations of Plan Sponsor. Only assets in the Trust shall be available to pay the benefits and claims which arise under this Plan. No obligation of the Plan shall constitute an obligation of the Plan Sponsor, except as such Plan Sponsor is obligated to make contributions under the Plan. Liability Limitation. Neither the Trustee, Plan Sponsor or the Trust Administrator shall be liable for the acts or omission of any Investment Manager or other person appointed to manage the assets of the Plan and trust if the Trustee or Trust Administrator in appointing such person acted with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent nmu would use in the conduct of an enterprise of a like character and with like aim,q. Adopted by City of South San Francisco By: Date: EXHIBIT B CALIFORNIA GOVER2qMENT VOLUNTARY EMPLOYEES BENEFICIARY ASSOCIATION Master Trust TRUST made as the 8t~ day of January 2003 by and between the City of South San Francisco in the State of California (hereinafter referred to as the" "participating Agency"), and ALLFIRST TRUST COMPNAY, N.A., a national banking association (hereinafter referred to as the "Trustee""). WHEREAS, the Participating Agency maintains the Plan, (hereinafter referred to separately as the "Plan", and WHEREAS, the Plan is one of the plans constituting the California Government Voluntary Employees Beneficiary Association ("California Government VEBA"); and WHEREAS, under the Plan, funds will from time be contributed to the Trustee, which funds, as and when received by the Trustee will constitute a trust fund to be held for the benefit of the Members and retirees of the Plan of the Participating Agency, having a right to benefits, pursuant to the provisions of the Plan, and such funds will be invested by the Trustee pursuant to directions by the Participating Agency and/or Investment Manager, as provided herein; and WHEREAS other Participating Agencies may adopt this Trust as a master trust, subject to the provisions of this Trust to hold assets for the purpose of funding plans that are a part of the California Government VEBA; and WHEREAS, the Participating Agency now desires to enter into this master trust with the Trustee for the purpose of holding the assets under the Master Trust attributable to the Plan and other amounts contributed there under; and WHEREAS, the assets and funds to be held in the master trust established hereby, as and when received by the Trustee will constitute a trust fund to be held for the benefit of the members of the Plan and their beneficiaries: and WHEREAS, the Participating Agency desires the Trustee to hold such assets and funds and the Trustee is willing to hold such assets and funds pursuant to the terms to this trust; and WHEREAS, the master trust is intended to qualify as a "Voluntary Employees Beneficiary Association" within the meaning of Section 501(c) (9) of the Internal Revenue Code, and WHEREAS, the master trust is intended for the purpose of: creating a fund to provide for the payment of benefits that qualify under Section 501(c) (9) of the Intemal Revenue Code to participating members, including their dependents, and their designated beneficiaries. NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Participating Agency the e do hereby agree as follows: California Government Employees Beneficiary Association, Master Trust Page 2 o The Participating Agency hereby adopts the California Government Voluntary Employees Beneficiary Association Trust (the "Master Trust") as a trust to fund the benefits provided by the Plan. All such money and property, all investments made therewith and proceeds thereof and all earnings and profits thereon, less the payments or other distributions which, at the time of reference, shall have been made by the Trustee, as authorized! herein, are referred to herein as the "Fund" and shall be held by the Trustee, in trust, and dealt with in accordance with provisions of this Trust. Any other California public agency may become a Participating Agency and adopt the Master Trust to fund a plan or plans from the Master Trust it the Participating Agency adopts the Master Trust, the participating Agency's plan or plans provide benefits that are funded from the Master Trust and the Trustee agrees to such adoption. The assets of each Participating Agency and the investment earnings thereon shall be available only to pay benefits to employees of that Participating Agency. It is intended that the Master Trust shall meet the requirements of Internal Revenue Code section 501(c) (9). All contributions hereunder and all assets and earnings of the Master Trust are solely and irrevocably dedicated to the payment of benefits that qualify under section 501(0)(9) of the Internal. Revenue Code. Participating Agency appoints Public Agency Retirement Planning, Inc. as the Trust Administrator and directs that Public Agency Retirement Planning, Inc. shall have the authority to act for the Participating Agency in all matters relating to the establishment and maintenance of the Plan and Trust, except those relating to the investment and management of the assets of the Trust and such other matters as are reserved to the Participating Agency under the provisions of the Trust. Without limiting the generality of the foregoing, Public Agency Retirement Planning, Inc. shall have the following specific powers: A. To self-administer, or to contract for and delegate the administration of the Plan to one or more administrators. B. To determine from time to time the benefits to be provided for participants under the Plan. C. To retain professional advisors, including auditors and legal advisors to provide services to the Trust. D. To prepare necessary filing with the state and, federal government. Responsibility for the management and control of the assets of the Plans that are held under the Master Trust as a funding medium (including the power to acquire or dispose of such assets) is vested in the Participating Agency, and/or in such one or more investment managers as described in Article 13, who are appointed by the Participating Agency. That; portion of the fund for which the Participating Agency shall have such responsibility is hereinafter referred to as the "Participating Agency-Directed Fund." Any portion of the Fund over which an Investment Manager shall have such responsibility is hereinafter referred to as an "Investment Manager-Directed Fund." Allocations of assets of the Fund between or among any Participating Agency-Directed or Investment-Manager Directed Funds shall be determined by the Participating Agency. For efficiency or convenience of investment or California Government Employees Beneficiary Association, Master Trust Page 3 administration, the Fund or any such Participating Agency-Directed or Investment Manager- Directed Fund may be divided into such one or more sub-funds as the Participating Agency or the Trustee may deem advisable. 6. The Participating Agency or its designee shall maintain a separate account reflecting the equitable share in the Fund of each participating Plan. For this purpose, the Trustee shall determine the value of the assets of the Fund as of the last day of each calendar quarter and as of such other dates as the Trustee may deem appropriate or on which the Participating Agency and the Trustee may agree. Assets shall be valued at their market values at the close of business on the date of valuation, or, in absence of readily accessible market values, as such values as the Trustee shall determine in accordance with methods consistently followed and uniformly applied. Anything herein to the contrary notwithstanding, with respect to assets constituting part of a Directed Fund hereunder, the Trustee may rely, for all purposes of this Trust, including for the purpose of determining the value of such assets as of any quarterly or other valuation date, on any certified appraisal or other form of valuation submitted to it by the Investment Manager(s). The Trustee may also rely on Assets reported by an Insurer in conjunction with contracts issued by that Insurer. Any amount paid from the Master Trust which is specifically allocable to a particular participating Plan shall be charged by the Participating Agency or it's designee against the equitable share of such participating Plan, any amount paid from the Master Trust which is allocable to all of the participating Plans shall be charged against the Fund as a whole. The Trustee shall not be required to maintain any separate records or accounts with respect to any participating plan or any participant in (or beneficiary of) any participating Plan, and any such records or accounts required to be maintained pursuant to the terms of any such Plan shall be maintained by the Participating Agency or by the appropriate committee directly charged with such responsibility. By entering into this Trust, the Trustee does not assume any responsibility or undertake any duty to enforce payment of any contribution under any participating Plan, any responsibility for the adequacy of the Fund or the funding standards adopted: by the sponsor of any participating Plan to meet or discharge any liabilities under such Plan, or any responsibility under the terms of this Trust for the management or control of any Discretionary or Directed Funds. Except as may otherwise be required by law, no duties or obligations shall be imposed upon the Trustee unless they have been specifically undertaken by the express terms of this Trust. The Trustee shall receive any contributions: to it in cash or in other property acceptable to it. All contributions so received, together with the income there from and any other increment thereon, shall be held by the Trustee pursuant to the terms of this Trust without distinction between principal and income. The Trustee shall not be responsible for the collection of any contributions to the Plans. 10. The Trustee may from time to time consult with counsel, who may be counsel to the participating Agency, with respect to any question arising as to the construction of this Trust California Government Employees Beneficiary Association, Master Trust Page 4 or any' action to be taken hereunder and the Trustee shall be fully protected, to the extent permitted by law, in acting in good faith upon the advice of counsel. 11. Subject to the provisions of Article 11 hereof, the Trustee from time to time at the written direction of the Trust Administrator may make payments out of the Trust Fund to such persons, in such manner, in such amounts, and for such purposes, including the payment of expenses of the Plan and the purchase of hfe insurance and/or annuity contracts, as may be specified in the directions of the Trust Administrator. Except as may otherwise be required by law, the Trustee shall be under no liability for any payment made by it pursuant to a written direction of the Trust Administrator and shall be under no duty to make inquiries as to whether any payment directed by the Trust Administrator is made pursuant to the provisions of the Plan. 12. Notwithstanding anything to the contrary contained in this Trust or in any amendment thereto, it shall be impossible, at any time prior to the satisfaction of all liabilities with respect to the members under the Plans or their beneficiaries, for any part of the Fund, other than such part as is required, to pay taxes and expenses of administration, to be used for or diverted to purposes other than for the exclusive benefit of the members under the Plans or their beneficiaries. 13. Unless otherwise proh/bited by law or otherwise specified herein, the Trustee shall have the following powers and authority with respect to the Trust Plan. (a) To invest and reinvest, as directed by the participating Agency and/or the Investment Manager, the principal and income of the Fund and keep the Fund invested without distinction between principal and income, in such securities or in such property, real or personal (whether or not income producing), wherever situated, including, but not limited to, life insurance, contracts, stocks, common or preferred; any mutual or. other funds maintained or established by the Trustee or any affiliate thereof; bonds and mortgages and other evidence of indebtedness or ownership in any common, collective, or commingled trust fund maintained by the Trustee, as the same may be amended from time to time, and during any period when such funds are used, the instrument establishing such fund shall constitute a part of this Trust. In making such directed investments, the Trustee shall not be restricted to securities or other property of the character authorized or required by applicable law from time to time for trust investments. The Participating Agency and/or Investment Manager shall direct the Trustee in writing as to the asset allocation or percentage mix of types of investments to be used by the Trustee for the investment of the Trust Fund, and as to specific investment to be made by the Trustee of amounts in the Trust Fund. To the extent permitted by the law, the Trustee shall not be liable and shall be held harmless and indemnified by the Participating Agency for losses incurred in connection with the Trust Fund caused by its reliance thereon. Such losses may be either actual realized losses or losses in the nature of "lost investment opportunity." (b) To settle, compromise, or submit to arbitration any claims, debts, or damages, due or owing to or from the Master Trust, to commence or defend suits or Legal proceedings California Government Employees Beneficiary Association, Master Trust Page 5 and to represent the Master Trust in all suits or legal proceedings in any court of law or before any other body or tribunal. (c) To exercise any conversion privilege and/or subscription right available in connection with any securities or other property at any time held by it; to oppose or to consent to the reorganization, consolidation, merger, or readjustment of the finances of any corporation, company, or association, or to the sale, mortgage, pledge, or lease of the property of any corporation, company, or association any of the securities of which may from time to time be held by it and do any act with reference thereto, including the exercise of options, the making of trusts or subscriptions, and the payment of expenses, assessments, or subscriptions, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so require. (d) To exercise, personally or by general or by limited power of attorney, any right, including the right to vote, appurtenant to any securities or other property held by it at any time. (e) To hold part or all of the Fund uninvested. (f) To employ suitable agents and counsel and to pay from the Trust Fund their reasonable expenses and compensation. (g) To register any securities held by it hereunder in its own name or in the name of a nominee without the addition of words indicating that such securities are held in a fiduciary capacity and to hold any securities in bearer form. (h) To make, execute, and deliver, as Trustee, any and all deeds, leases, mortgages, conveyances, waivers, releases, or other instruments in writing necessary or desirable for the accomplis, hment of any of the foregoing powers. (i) To deposit any part of the Fund in interest bearing account deposits maintained by or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affliated with the Trustee. (j) Generally to do all acts, whether or not expressly authorized, which the Trustee may deem necessary or desirable for the protection of the Trust Fund. 14. The Participating Agency reserves the right to retain the services of one or more persons or fro-ns for the management of (including the power to acquire and dispose of) all or any part of the Fund, provided that each of such persons or firms is registered as an investment advisor under the Investment Advisors Act of 1940, is a bank (as defined in that Act), or is an insurance company qualified to manage, acquire, or dispose of trust assets under the laws of more than one state, and provided that each of such persons or firms has acknowledged in writing that he is a fiduciary with respect to the Plan; in such event, the investment manager or managers so retained (the "Investment Manger[s]") shall have the same investment powers and duties as the Trustee, and the Trustee shall not be liable for the acts or omissions of such Investment Manager(s), nor shall it be under any obligation to invest or otherwise manage any Trust Fund assets which are subject to the management of such Investment: Manager(s). 15. In the event that any investment is made by an Investment Manager in real property, then the Trustee shall have the right to request aw a condition precedent to its executing any documents or paying over any trust assets in connection with such transaction, that it receive a certified appraisal that the property has a value at least equal to the transaction price and that the property is in the form and condition described in such documents, and further, that it California Government Employees Beneficiary Association, Master Trust Page 6 receive an opinion of counsel (who may be counsel to the Investment Manager) that such documents are in proper form for execution by the Trustee, that such deed or document has been or will be properly recorded under all applicable Recording Acts, and that appropriate policies adequately insuring the trust against loss for any reason (including a defect in rifle) have been procured in the name of the Trustee. In addition, the Investment Manager shall provide the Trustee, upon request, with current appraisals of such property which shall be relied upon by the Trustee for all valuation and accounting purposes this Trust. Prior to investment in real property, any Investment Manager shall notify the Trustee of the intended investment and the Trustee shall have the right to perform or engage an environmental assessment or aud/t. Dependent upon its findings, the Trustee shall have the right to withhold acceptance of the investment, to condition its acceptance of the investment on a hold harmless basis, or to condition acceptance of the investment on such other terms as in the discretion of the Trustee may be necessary to protect the assets of the Fund. The Investment Manager shall immediately notify the Trustee of any proposed, intended, or actual change in use(s), operation(s), or tenant(s) of any real property that is currently, has become, or is intended to become an asset of the Fund if such change could materially affect the environmental compliance obligations or hability exposure of the property owner (e.g., a change from retail to industrial use). Upon such information, the Trustee shall have the right to withhold acceptance of the investment if it is not yet an asset of the Fund, to forbid any change it's use(s), .operation(s), or tenant(s), or divest the Fund of any interest in real property that has become the subject of such a change, or to condition its acceptance of any such change on a hold harmless basis. The Trustee may require at any time that any interest in real property that is or is intended to become an asset of the Fund be held as an interest in a corporation, limited partnership, or in any other form which the Trustee concludes may be necessary to protect the assets of the Fund. However, no right enumerated in this paragraph obligates the Trustee to reject or place conditions upon the acceptance of, d/vest the Fund of, or otherwise act-upon the rights enumerated herein that pertain to the holding of real property interests, unless any such failure to act is the result of bad faith. 16. The Trustee shall pay out of the Fund all personal property taxes, income taxes, and other taxes of any and all kinds levied or assessed under existing or future laws against the Trust Fund. 17. The Trustee shall be paid reasonable compensation as shall from rime to time be agreed upon by the Trust Administrator and the Trustee. Such compensation and all reasonable expenses of administration of the Trust, including reasonable counsel fees, and including property appraisals, environmental assessments or audits, and related costs incurred from time to time in connection with investments or potential investments in real property, shall be withdrawn by the Trustee out of the Trust Fund unless paid by the Trust Administrator. 18. The Trustee shall, within 90 days after the close of each calendar year, and within 90 days after the removal or resignation of the Trustee or the termination of the Trust or any participating Plan, render accounts of its transactions to the Trust Administrator and the Trust Administrator may make exceptions to such accounts by an instrument in writing delivered California Government Employees Beneficiary Association, Master Trust Page 7 to the Trustee. In the absence of the filing in writing with the Trustee by the Trust Administrator of exceptions or objections to any such account within 90 days of the rendering, the Trust Administrator shall be deemed to have approved such account, the Trustee shall be released, reheved, and discharged with respect to all matters and things set forth in such account as though such account had been settled by the decree of a court of competent jurisdiction. The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions hereuntler for the Fund (including any Discretionary or Directed Fund) and all accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any persons designated by the Trust Administrator. Except as the Retirement Security Act of 1974, as amended ("ERISA"), provides otherwise, no person other than the Participating Agency may bring any action against the Trustee with respect to the Trust or its actions as Trustee. The Trustee shall from time to time permit an independent public accountant selected by the Plan Administrator (except one to whom the Trustee has reasonable objection) to have access during ordinary business hours to such records as may be necessary to audit the Trustee's accounts. 19. The Trustee shall be fully protected in relying upon notice from the Trust Administrator with respect to any instruction, direction, or approval of the Trust Administrator, and protected also in relying upon a notice from the Trust Administrator as to the person or persons who are authorized to direct payments from the Trust Fund and in continuing to rely upon such notice until a subsequent notice is filed with the Trustee. The Trustee shall fully protected in acting upon any instrument, certificates, or paper believed by it to be genuine and to be signed or presented by the proper person or persons, and the Trustee shall be under no duty to make any investigation or inquiry as to any statement contained in writing, but may accept the same as conclusive evidence of the troth and accuracy of the statements therein contained. The Trustee shall not be liable for the application of any part of the Fund if payments are made in accordance with the written directions of the Trust Administrator as herein provided, nor shall the Trustee be responsible for the adequacy of the Fund to meet and discharge any and all payment and liabilities under the Plan. All persons dealing with the Trustee are released from inquiry into the decision or authority of the Trustee and from seeing to the application of any moneys, securities, or other property paid or delivered to the Trustee. The Trust Administrator and Participating Agency hereby agree to hold the Trustee harmless from and against all taxes, expenses (including counsel fees), liabilities, claims, damages, actions, suits, or other charges incurred by or assessed against it as a Successor Trustee, as a direct or indirect result of any act or omission of a predecessor Trustee or any other persons charged under any trust affecting Fund assets for investment responsibilities with respect to such assets. The Participating Agency agrees to hold harmless and indemnify the Trustee, to the fullest extent permitted under applicable law, for any and all liabilities of any kind incurred by the California Government Employees Beneficiary Association, Master Trust Page 8 Trustee in connection with the Plans and the Trust (a) relating to periods of time prior to the Trust becoming Trustee, or Co) relating to periods of time while the Trustee if such liability is not due to the Trustee' s gross negligence, willful misconduct, or breach of its fiduciary duties 20. The Trustee may resign at any time by giving 60 days written notice to the Trust Administrator. The Trust Administrator may remove the Trustee upon 60 days written notice, and in the case of the resignation or removal of the Trustee, the Trust Administrator immectiately shall appoint a successor Trustee. If for any reason the Trust Administrator' cannot or does not act in the event of the resignation or removal of the Trustee, as hereinabove provided, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee. Any expenses incurred by the Trustee in connection therewith shall be paid from the Fund as an expense of administration. Any successor Trustee shall have the same powers and duties as those conferred upon the Trustee named in this Trust. The removal of the Trustee and to appointment of a new Trustee shall be by written instrument delivered to the Trust. 21. This Trust, subject to the provisions of Article 11 may be amended by the Participating Agency at any time or from time to time in any manner and the provisions of any such amendment may be made applicable to the Fund as constituted at the time of the amendment as well as to the part of Fund subsequently acquired; provided, however, that no such amendment shall increase the duties or change the compensation of the Trustee without its consent. Any amendment shall be by a written instrument delivered to the Trustee. 22. This Trust and the trust created hereby may be terminated at any time 'by the Trust Administrator, and upon termination the Fund shall be paid out by the Trustee as and when directed by the Trust Administrator in accordance with the provisions of Article 10 hereof. 23. The Trust Administrator shall provide the Trustee with copies of all documents constituting the participating plan at the time the Trust is executed by the Participating Agency or adopted under any other plan, as provided in Article 2, and all other documents amending or supplementing the participating plans promptly upon their adoption. The Trustee shall be entitled to a rely upon the Trust Administrator's attention to this obligation and shall be under no duty to inquire of the Trust Administrator as to the existence of any documents not provided by the Trust Administrator hereunder. The Trustee is bound and acknowledges that it is a fiduciary with re8respect to the Master Trust and the participating Plans and by the fiduciary responsibility provisions of ERISA. The provisions or ERISA are expressly made applicable to the provisions of this Master Trust in order to ensure that the Master Trust meets the control requirements for a VEBA under the provisions of 501(c){ 9) of the Internal Revenue Code. 24. To the extent consistent with the provisions of ERISA, this Agreement and the trust created hereby shall be construe, regulated, and administered under the laws of the State of California, and the Trustee shall be liable to account only in the courts of the State. All contributions of the Trustee shall be deemed to take place in the State of California. Unless the provisions of ERISA provide otherwise, the Trustee may at any time initiate an action or California Government Employees Beneficiary Association, Master Trust Page 9 proceeding for the settlement of its accounts or for instructions, and the only necessary party defendant to such action or proceeding shall be the Employer except that the Trustee may, if it so elects, bring in as parties defendant any person or persons. IN WITNESS WHEREOF, this instrument has been execut~l as of the day and year first above written. Attest: Sponsor Secretary By: Name Title Date: Attest: Trustee A1 J JFIRST TRUST COMPANY, N.A. Secretary By: Name Title Date: S:~en~fim\l~ PlathVEBA\VF_~AMas~rTrusLd~ imsm3