2.3 Compliance. Lessor warrants that to the best or its knowledge the Improvements on the Premises comply with the bui ding codes, applicable laws, covenants or restrictions of record, regulations, and ordinances ("Applicable Requirements") that were In ellect at the time that each improvement, or portion thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a resun of Lessee's use (see Paragraph 49), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee Is responsfble for determining whether or not the Applicable Requirements and especially the zoning are appropriate for Lessee's Intended use, and acknowledges that past uses of the Premises may no longer be allowed. It the Premises do not comply with said warranty, Lessor shalt, except as otherwise provided, promptly after receipt of wrillen notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectily the same at Lessor's expense. If Lessee does not give Lessor wrillen notice of a non-compliance with this warranty within 6 months following the Start Date, correction ol lhat non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense. If lhe Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Uni!, Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Unit, Premises and/or Bu0ding ("Capita! Expenditure"), Lessor and Lessee shall allocate the cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, ii such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however that if such Capital Expenditure is required during the las! 2 years of this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may Instead terminate this Lease unless Lessor notifies Lessee, In wrtting, wtthln 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. II Lessee elects termination, Lessee shall Immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specilying a termination date al least 90 days thereafter. Such termination date shall, however, n no event be earlier than the las! day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, govemmenlally mandated seismic modifications), !hen Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 11144th of the portion of such costs reasonably attributable lo Iha Premises. Lessee shall pay Interest on the balance but may prepay ils obligation at any time. If, however, such Capital Expenditure Is required during the last 2 years of this Lease or if Lesso, reasonably determines that it is not economically feasible to pay its share thereof, Lessor shalt have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, wilhin 10 days after receipt of Lessor's termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elecl to terminate, and fails lo tender its share ol any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessofs share of such costs have been fully paid. If Lessee is unable to finance Lessor's share, or if the balance of the Rent due and payable for the remainder of this Lease Is not sufficient to fully reimburse Lessee on an offset basis, Lessee shalt have the right to terminate this Lease upon 30 days wrilten notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall etther: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement lor such Capita! Expenditure, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not have any right to terminate this Lease.
2.4 Acknowledgements. Lessee acknowledges that: (a) It has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor ancilor Brokers to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Ammicans with Disabiities Act), and their suilabNlty for Lessee's Intended use, (c) Lessee has made such investigation as It deems necessary with reference to such matters aod assumes all responsibility therefor as the same relate lo its occupancy of the Premises, (d) it is not retying on any representation as lo the sli or Premises made by Brokers or Lessor, (e) the squ::::a:: :f:he Premises was not material to Lessee's decision to leas:1ises C1999
~ • AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-20-11/14E ~ and pay the Rent slated herein, and (I) neither Lessor, Lessor's agents, nor Brokers have made any oral or wrilten representations or warranties with respect lo said mallers other lhan as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessee's ability 10 honor the Lease or suitability to occupy the Premises, and (ii) ii is Lessor's sole responsibility to investigate the financial capabiftly and/or suitability of all proposed tenants.
2.5 Lessee as Prior Owner/0:cupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect ii immedalely prior to the Start Dale Lessee was the owner or occupant of the Prell'ises. In such event, Lessee shall be responsible for any necessary corrective work.
2.6 Vehicle Parking. Lessee shall be entitled to use the number of parking spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from lime to lime by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permllled Size Vehicles." Lessor may regulate the loadng and unloadng of veticles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior writlen permission of Lessor. In addition:
(a) Lessee shall nol perll'it or allow any veticles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shippers, customers, contractors or invitees 10 be loaded, unloaded, or parked in areas other than those designated by Lessor for such aclivilies.
(b) Lessee shall nol service or store any vehicles in the Common Areas. (c) II Lessee perll'ils or allows any of the prohibited aclivilies described in this Paragraph 2.6, !hen Lessor shall have lhe right, wlhoul notice, In addition lo such other rights and remedies Iha! II may have, lo remove or tow away the vehicle Involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.7 Common Areas - Deflnlllon. The term "Common Areas" Is defined as all areas and facilities outside the Prell'ises and within the exterior boundary line of the Project and Interior utility raceways and installations wlttin the Uni! that are provided and designated by the Lessor from lime lo lime for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respecllveemployees, suppliers, stippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.
2.8 Common Areas • Leaaee's Rights. Lessor grants lo Lessee, for the benelll of Lessee and Its employees, suppliers, shippers, contractors, customers and Invitees, during the term of this Lease, the non-exclusive right to use, In common with others enlllled lo such use, the Common Areas as they exist from time to lime, subject 10 any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right 10 store any properly, temporarily or permanently, In lhe Common Areas. Any such storage shall be permilled only by the prior wrillen consent of Lessor or Lessor's designated agent, wtich consent may be revoked al any lime. In the event that any unauthorized storage shall occur then Lessor shall have the right, without notice, In addtlon to such other rights and remades that ii may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.9 Common Areas • Rules and Regulallons. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from lime lo time, to establish, modify, amend and enforce reasonable rules and regulations ("Rules and Regulallons") for the management, safely, care, and cleanliness of the grounds, the parking and unloading of veticles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Bulldng and the Project and their invitees. Lessee agrees 10 abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, stippers, customers, contractors and Invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulallons by other tenants of the Project.
2.10 Common Areas - Changes. Lessor shall have the right, In Lessofs sole discretion, from time to lime:
(a) To make changes 10 the Common Areas, including, without lill'itation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, Ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;
remains available;
portion thereof; and
(bl To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Prell'ises (c)
(d)
(8)
(I)
To designate other land outside the boundaries of the Project 10 be a part of the Common Areas; To add additional buildings and improvements to the Common Areas; To use the Common Areas while engaged In making additional improvements, repairs or alterations lo the Project, or any To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, In the exercise of sound business judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Explralion Dale and Original Term of this Lease are as specified In Paragraph 1.3.
3.2 Early Possession. Any provision herein granting Lessee Eariy Possession of the Premises Is subject to and condtioned upon the Premises being available for such possession prior to the Commencement Date. Any grant ol Eariy Possession only conveys a non-exclusive right to occupy the Premises. II Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such Eariy Possession. AU other terms of this Lease (Including but not limited to the obligations to pay Lessee's Share of Common Area Operating Expenses, Real Property Taxes and Insurance premiums and to maintain the Prell'ises) shall be in etfecl during such period.
Any such Early Possession shall not affect the Expiration Date.
3.3 Delay In Possession. Lessor agrees 10 use its best commercially reasonable efforts 10 deliver possession of the Premises lo Lessee by the Commencement Dale. II, despite said etforls, Lessor is unable lo deliver possession by such dale, Lessor shall nol be subject lo any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform ils other obligations until Lessor delivers possession of the Premises and any period of rent abatement !hat Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered wlttin 60 days after the Commencement Dale, as the same may be extended under the terms of any Work Leller executed by Parties, Lessee may, al its option, by notice In writing wittin 10 days after the end of such 60 day period, cancel this Lease, In wtich event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 1 O day period, Lessee's right to cancel shall terll'inate. If possession of the Premises is not delvered wittin 120 days after the Commencement Dale, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, In writing.
1t;' ~ R COMMERCIAL REAL ESTATE ASSOCIATION
Lessee Complfance Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with rts PAGE 3 OF 17
FORM MTN-2G-11/14E
obligation lo provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required lo perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessofs election to withhold possession pending receipt of such evidence of insurance. Further, H Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.
4. Rent.
4.1 Rent Dellned. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent ("Rent").
4.2 Common Area Operating Expenses. Lessee shall pay lo Lessor during the term hereof, in addition lo the Base Rent, Lessee's Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions:
(a) "Common Area Operating Expenses" are defined, for purposes of this Lease, as all costs relating to the ownership and operation of the Project, including, but not limited lo, the following:
(i) The operation, repair and maintenance, in neat, clean, good order and condition , and ii necessary the replacement, of the following:
(aa) The Common Areas and Common Area improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, exterior walls of the buildings, building systems and roof drainage systems. (bb) Exterior signs and any tenant directories.
(cc) Any fire sprinkler systems.
(dd) All other areas and Improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any other space occupied by a tenant. (II) The cost of water, gas, electriclty and telephone lo service the Common Areas and any utilities not separately metered.
(Ill) The cost of trash disposal, pest control services, property management, security services, owners' association dues and fees, the cost to repaint the exterior of any structures and the cost of any environmental inspections. (Iv) Reserves set aside for maintenance, repair and/or replacement of Common Area improvements and equipment.
(v) Real Property Taxes (as defined In Paragraph 10).
(vi) The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8. (vii) Any deductible portion of an Insured loss concerning the Building or the Common Areas. (viii) Auditors', accountants' and attorneys' fees and costs related to the operation, maintenance, repair and replacement of the Project.
(Ix) The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such capital Improvement over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of 11144th of the cost of such capital improvement in any given month. (x) The cost of any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense.
(b) Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Unit, the Building or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other building. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically altrlbutable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project. (c) The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Project already has the same, Lessor already provides the services, or Lessor has agreed elsewhere In this Lease to provide the same or some of them. (d) Lessee's Share of Common Area Operating Expenses Is payable monthly on the same day as the Base Rent Is due hereunder. The amount of such payments shall be based on Lesso(s estimate of the annual Common Area Operating Expenses. Within 60 days after written request (but not more than once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses for the preceding year. If Lessee's payments during such year exceed Lessee's Share, Lessor shall credit the amount of such over-payment against Lessee's future payments. If Lessee's payments during such year were less than Lessee's Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement. (e) Common Area Operating Expenses shall not Include any expenses paid by any tenant directly to third parties, or as to which Lessor is otherwise reimbursed by any third party, other tenant, or insurance proceeds.
4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without ollset or deduction (except as specifically permitted In this Lease), on or before the day on which It Is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any Invoice prepared by Lessor Is Inaccurate such Inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth In this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate In writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of$ 25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to acc,ued late charges and altorney's fees, second to accrued Interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful perf ormance of Its obligations under this Lease. If Lessee falls to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount already due Lessor, for Rents which will be due In the future, and/ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or Incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days alter written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. U-fh& 8ase-ReAt iA8rease6 dtffifQ.fh& 1&1111 el t~is leaee,l.eseee·Sllall;-wpeA·Wflllefl·reqwesH,_ ~flool~i-ffl&Aies-with-lcesse,. se-l11aHh&-IGI~ el t~e See11rity-,Q9fl8Slt-~l-al-all ff!le$·eeaf flle-58-·flHllll)MIA·fe·llle ioofea&efl-8-ase·~as-~ initial See11fil11·1:lepeeil·beF&-l&-flle-iRiliaHla5e·Jlelll,-Should fhe Agreed Uie be amended to accommodate a material e in the l>usiness of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the PAGE 4 OF 17
(C)1999 • AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN•20·11/14E extent necessary, in Lessofs reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessofs reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 90 days after the expiration or termination of this Lease, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of 0t causes damage to neighboring premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the Building or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Project. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessofs objections to the change in the Agreed Use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, Is either: (I) potentially Injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (Ill) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited lo, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage In any activity In or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior wrillen consent of Less0t and timely compliance (al Lessee's expense) with all Applicable Requirements. "Reportable Use" shall mean (I) the Installation or use of any above or below ground storage tank, (II) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect lo which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (Ill) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used In the normal course of the Agreed Use, 0tdlnary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use Is In compliance with all Applicable Requirements, Is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition Its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary lo protect Itself, the public, the Premises and/or the environment against damage, contamination, Injury and/or liability, Including, but not limited to, the Installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or Increasing the Security Deposit. (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located In. on, under or about the Premises, other than as previously consented to by Lessor, Lessee shali Immediately give wrilten notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which II has concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released In, on, under, or about the Premises (Including through the plumbing or sanitary sewer system) and shall promptly, al Lessee's expense, comply wllh all Applicable Requirements and take all Investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monllorlng of the Premises or neighboring properties, thal was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or lor Lessee, or any third party.
(d) Lessee lndemnlllcallon. Lessee shall Indemnify, defend and hold Lessor, Its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabllllles, judgments, claims, expenses, penalties, and allorneys' and consultants· fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed lo by Lessee). Lessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of Investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered Into by Lessor and Lessee shall release Lessee from Its obligallons under this Lease wllh respect lo Hazardous Substances, unless specifically so agreed by Lessor In writing at the time of such agreement. (e) Lessor lndemnlflcaflon. Except as otherwise provided In paragraph 8.7, Lessor and Its successors and assigns shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which are suffered as a direct result of Hazardous Subslances on the Premises prior 10 Lessee taking possession or which are caused by the gross negligence or willful misconduct of Lessor, Its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease.
(I) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entitles having jurisdiction with respect 10 the existence ol Hazardous Substances on the Premises prior to the Lessee laking possession, unless such remediation measure Is required as a result of Lessee's use (Including "Alterations", as defined in paragraph
7.3(a) below) of the Premises, In which event Lessee shall be responsible for such payment. Lessee shall cooperate fully In any such activities at the requesl of Lessor, Including allowing Lessor and Lessofs agents to have reasonable access to the Premises al reasonable times In order to carry out Lessofs Investigative and remedial responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1 (el) occurs during the term of this Lease, unless Lessee Is legally responsible therefor (In which case Lessee shall make the Investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue In full force and effect, but subject to Lessofs rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessofs option, ellher (I) Investigate and remedlate such Hazardous Substance Condition, If required, as soon as reasonably possible al Lessofs expense, In which event this Lease shall continue In full force and effect, or (ii) If the estimated cost to remedlate such condllion exceeds 12 times the then monthly Base Rent or $100,000, whichever Is greater, give written notice Io Lessee, within 3 O days after receipt by Lessor o I knowledge e of such Hazardous Substance Condlllon, of Lessor's desire to tenninate this Lease as of the date 60 days following the date of such PAGE 5 OF 17
01999 • AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-20·11/14E notice. In lhe evenl Lessor elects lo give a lerminalion notice, Lessee may, wilhin 10 days !hereafter, give wrillen notice lo Lesso, of Lessee's commitment lo pay lhe amount by which lhe cost or lhe remediation of such Hazardous Substance Condilion exceeds an amounl equal lo 12 times the then monlhly Base Renl or S 100,000, whichever Is grealer. Lessee shall provide Lessor wilh said funds or salisfaclory assurance thereof wilhin 30 days folowlng such commitment. In such event, lhis Lease shall conllnue in full force and effect, and Lessor shall proceed 10 make such remedlallon as soon as reasonably possible alter lhe required funds are available. II Lessee does nol give such notice and provide the required funds or assurance !hereof within lhe lime provided, this Lease shall lerminale as of lhe dale specilied in Lesso(& nolice of termination.
6.3 Lessee's Compliance wilh Applicable Requiremenls. Except as olherwise provided in this Lease, Lessee shall, al Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and lhe recommendalions of Lessor's engineers and/or consullanls which relate in any manner lo the Premises, without regard lo whelher said Applicable Requiremenls are now in effecl or beco,ne effeclive afler lhe Slart Dale. Lessee shall, wilhin 10 days afler receipl of Lessor's wrlllen request, provide Lessor wilh copies of all permils and olher documenls, and other lnformalion evidencing Lessee's co,npliance wilh any Applicable Requiremenls specified by Lessor, and shall lmmedialely upon receipl, nolify Lessor in writing (with copies of any documenls involved) of any lhrealened or aclual claim, nolice, cilation, warning, complain! or report perlaining lo or involving lhe lailure of Lessee or lhe Premises lo comply wilh any Applicable Requiremenls. Likewse, Lessee shall immediately give wrillen nolice lo Lessor of: (i) any waler damage lo lhe Premises and any suspecled seepage, pooling, dampness or olher condilion conducive lo lhe produclion ol mold; or (ii) any mustiness or olher odors lhal might indicale lhe presence al mold in lhe Premises.
6.4 lnspeclion; Compliance. Lessor and Lesso(s "Lender" (as defined in Paragraph 30) and consullanls shall have lhe righl lo enler inlo Premises al any time, in lhe case of an emergency, and oJherwise al reasonable limes afler reasonable nOlice, for lhe purpose of inspecting lhe condition of lhe Premises and for VBJifying compliance by Lessee wilh lhis Lease. The cosl of any such inspeclions shall be paid by Lesso,, unless a violation of Applicable Requirements, or a Hazardous Subslance Condilion (see Paragraph 9.1) is found to exist or be imminenl, or the inspection is requesled or ordered by a governmenlal aulhorily. In such case, Lessee shall upon requesl reimburse Lessor for the cosl of such inspection, so long as such inspeclion Is reasonably refaled lo lhe violation or conlaminallon. In addllion, Lessee shall provide copies of all relevanl material safely dala sheels (MSDS) lo Lessor wilhin 10 days of lhe receipt of wrlllen requesl lherefor.
7. Malnlenance; Repairs, U!Jlly lnslaUallons; Trade Fixtures and Alterations. 7 .1 Lessee's Obligations.
(a) In General. Subject lo lhe provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lesso(s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Ulilily Installations (intended for Lessee's exclusive use, no maller where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible lo Lessee, and l\tlelher or nol lhe need for such repairs occurs as a resull of Lessee's use, any prior use, the elemenls or the age of such portion of the Premises), Including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, inferior walls, interior Sll"faces of exlerior walls, ceilings, floors, windows, doors, plate glass, and skylights bul excluding any items which are the responsibilily of Lessor pursuanl lo Paragraph 7.2. Lessee, in keeping lhe Premises in good order, condilion and repair, shall exercise and perform good mainlenance practices, specifically including lhe procuremenl and mainlenance of lhe service conlracls required by Paragraph 7.1 (b) below.
Lessee's obligalions shall include reslorations, replacemenls or renewals when necessary lo keep lhe Premises and all improvemenls !hereon or a parl !hereof in good order, condition and slale of repair.
(b) Service Conlracls. Lessee shall, al Lessee's sole expense, procure and mainlain conlracls, wilh copies lo Lessor, in cuslomary form and subslance for, and wilh conlraclors specializing and experienced in lhe mainlenance of lhe following equiprnenl and improvemenls, if any, Hand when inslalled on lhe Premises: (i) HVAC equipmenl, (ii) boiler and pressure vessels, and (iii) clarifiers. However, Lessor reserves the right, upon notice to Lessee, lo procure and mainlain any or all of such service contracts, and Lessee shall reimburse Lessor, upon demand, for lhe cost thereof.
(c) Failure lo Perform. If Lessee fails to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon the Premises alter 10 days' prior wrillen notice to Lessee (except in the case of an emergency, in which case no nOlice shall be required). perform such obligations on Lessee's behall, and put lhe Premises in good order, condilion and repair, and Lessee shall prornplly pay to Lessor a sum equal to 115% of the cosl thereof.
(d) Replacement. Subject lo Lessee's Indemnification of Lessor as sel forth in Paragraph 8.7 below, and wllhoul relieving Lessee of liabilily resulting from Lessee's failure lo exercise and perform good mainlenance practices, if an ilem described in Paragraph 7.1(b) cannol be repaired olher lhan al a cosl which is in excess of 50% of the cost of replacing such item, lhen such item shall be replaced by Lessor, and lhe cosl !hereof shall be proraled belween lhe Parties and Lessee shall only be obligaled lo pay, each monlh during lhe remainder of lhe lerm of this Lease, on the date on which Base Rent is due, an amount equal to the product or multiplying the cos I of such replacement by a fraclion, the numerator of which is one, and the denominator of which is 144 (i.e. 11144th of the cost per monlh). Lessee shall pay Interest on the unamortized balance but may prepay its obligation al any time.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant lo Paragraph 4.2, shall keep In good order, condition and repair the foundations, exterior wal s, slructural condition of interior bearing walls, exterior roof, lire sprinkler system, Common Area fire alarm and/or smoke deleclion systems, fire hydranls, parking lots, walkways, parkways, driveways, landscaping. fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 42. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in eflect to the extent ii is inconsistenl with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations. (a) Definitions. The term "Utility Installations" refers to all lloor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighling fixtures, HV AC equipment, plumbing, and fencing in or or, the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modificalion of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Ulilily Installations" are defined as Alterations and/or Ulilily Installations made by Lessee that are not yel owned by Lessor pursuanl lo Paragraph 7.4(a). (b) Consenl. Lessee shall not make any Allerations or utilily lnslallations lo the Premises withoul Lessor's prio, wriUen consenl. Lessee may, however, make non-structural Alterations or Ulilily Installations to the inlerior of the Premises (excluding the roof) wilhoul such consent but upon notice to Lessor, as long as they are not visible from the outside, do not Involve puncturing, relocating or removing the roof or any existing wal s, will not affect the electrical, plumbing, HVAC, and/a, life safely systems, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month's Base Rent in the aggregate or a sum equal lo one month's Base Rent in any one year. Notwilhslanding lhe In PAGE6OF17 - J
p ~
Cl1999 • AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-20-11/14E foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior writlen approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) lumishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specilications. For work which costs an amount in excess of one month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor. (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished lo or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialman's lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. II Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. II Lessor shall require, Lessee shall lumish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. II Lessor elects to participate in any such action, Lessee shall pay Lessor's atlomeys' lees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or elect ownership as herelnalter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner ol all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination ol this Lease, become the property ol Lessor and be surrendered by Lessee with the Premises.
(b) Removal. By delivery to Lessee of wrltlen notice from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utlllty Installations be removed by the expiration or termination ot this Lease. Lessor may require the removal at any time ol all or any part of any Lessee Owned Alterations or Utility Installations noi • part of thle Leaee or lte Exhll11te made without the required consent. (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, II this Lease Is for 12 months or less, then Lessee shall surrender the Premises In the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the Installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utlllty Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall also remove from the Premises any and all Hazardous Substances brought onto the Premises by or tor Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Project) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7 .4(c) without the express writlen consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment of Premiums. The cost of the premiums for the Insurance policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term ot this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy ot insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Pmmises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an amual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional Insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Lessors of Premises" Endorsement. The policy shall not contain any intra~nsured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hemunder.
Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.
Notwlthetandlng anything to the contrary In thle Leaee, In lleu of maintaining any or all of the lneurance re(\ulred al1ove, Leeeee may elect to eelf·lneure euch rlel:e, provided that euch eelf·lneurance eh.all afford Leeeor all of the protection and coveragee re(\ulred 11y thle paragraph ae If the lneurance were provided 11y an Independent carrier, Including, without !Imitation, the waiver of eul1rogatlon and addition.al lneured rOl\ulremente deecrll1ed al1ove.
(b) Carried by Lessor. Lessor shall maintain liability Insurance as described in Paragraph 8.2(a), In addition to, and not In lieu of, the insurance requlmd to be maintained by Lessee. Lessee shall not be named as an additional Insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value. (a) Bulldlng and Improvements. Lessor shall obtain and keep In force a policy or policies of Insurance In the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the lull insurable replacement cost of the Pmmises, as the same shall exist from time to time, or the amount required by any Lender, but In no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not by Lessor. II the coverage is available and commercially appropriate, such policy or policies shall Insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless requlmd by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction ant of any portion of the Premises as the result of a covered loss. Baid policy or policies shall also contain an agreed valuation provision in coinsurance clause, waiver of subrogation, and inflation guard protection causing an Increase in the annual property Insurance coverage PAGE7 OF17
FORM MTN-3l-11114E
alll!Ull bjl a fllctor al 11111 Ina ltmn Iha adJLmlal U.S. Dapatnanl al Labor Corm- Pll:a lrdm! 1111' All Uoban OolllUTB'a fllr the ell), naanml to wlaa Iha l't8nila •a lacallld. II Lllh in .. arca --a11 11111 11 dllciJCltill dl.LB11, 1h11 dllctlcllta ......,._ 1111111 n:111 amaad 1,5,COO i- OCCLBIIIIICII. [bJ Flenlllll Valla LBB..- Btall BBi llllllaln and kelp In fllrca a pol::)I or palld111 In 1h11 nana al Llluar wlh ball pa,,allle lo Lll8&0r and B11Y I.Jlrdar, hlll'tng ht lo&& al Iha 11• Ran! fllr 1n1 )'11&1' with an nllnlad IB1od ol lndarnnll)l lar an lldllb-al 180 dar• C1k1J111 Ynl'P jOilllDQl"l, Said hluance ahall conlaln an agllllld wal11Blbl pnMBlon In lau al ~ colnmrarar clauaa, and 1h11 alll!UII al CO¥a"aga ahd be ad).aad annual,V 10 nrllllcl the projldad RMI Oltawlla pa)'llblll bV l.altaall, lor 1h11 ,_ 12 momh palod. {Cl .lldJmanl Pramllaa. LlnlBae llhal par lar anr h:raaaa In Iha pr&IIUT'8 1111' Iha proJBt,, m111111011 al 1h11 B~g and fllr Iha C111nmon Areaa Ill' lllhar bul~ In Iha P111jecl If aald IIICfllllllll II cal.Bad Ill' l.aaaaa'a acla, 111nlaalona, uae Ill' OCCIIPlll'CJ' al 1h11 Pranien. {d) Lal-•• npro,-. llrica Llluar II 1h11 Ir.iring Parlr, l..- 1hllll nOI ba raql.hd lo ln118111 ~• Ownlld Alarallonl and Ulav I llll.llona uni- Iha l&m In qualllon hu bacoma 1h11 PIIIJllll'IV al I.Jl11or under 1h11 111nm al lhlB LN1111.
8.4 a.-'I Pr-lY; Bu1lna11 ln._q,llon lna1.1"1nc1; Work•'I COnlp11aa1ron ln•rmnc.. la) Pn!party Damaga. UIIIBII ahd oblui and r,alm ln lllllll'llllllll CCMlr&gll on all al LBllllll'II paraonal proJBt,,, Trade Fbilura■, and LlnlBae Owned Alarallona and Ulllllv 1111111111.._, Su:h N18111rar lhBII ba Iii 1eplaC9fflln! 1X1111 =--.i wlh a mducllbl11 al 11111 to IDIClllld $1,IDI 1B 111E1m1r1C11. The pruceedB kan ~ 1ud! ln ll'llll0II lhBII ba imad IJI, U111111B 1111' 1h11 rapiia:armnl al ialDl8i lftllll'I,', Trllda Fblurn and Lal- Owned Alarallona and uurn,, lfllllllDBllons. (bl Blllll'IIIN I l'llllrrupllon. LlnlBae 1hlll otuln and fflllruln ball al lncorna and aslra apanaa l1111Uranca In ■ a will NllrllbLlrN LBBIN for dlnec:! ar lndhlct laM al 11,11rnlng1 lllltlbl.llllbllll to .1111 .-111 ClllftllOn\' lni11Nd o11ga11111 IJI, pNdllit 111-• In 1h11 bulilnllll& d ~ or alllbllablrl lo~ al IICC8ll8 to Iha Planlll8a Bl a 1'1111~ al u:h pailll. [c) W°""" Compe ... 11111, ll,1111r1nce. LBB- lhBII oblllln and ffllirllul WCllbr'll Corr"8nadon ln1Laanca In 1ud! olllllCIUnl ¥ fllllY bll raiull'llld 11¥ Applic:.t,le Rllq!Mlinenta. Suet, pdlcr shall lnclJde II WIMII al ~ endatl~. LBB- 1111111 p,'IMde Ulllllllr wlh a cqir al audl endlll'llllll'l'lllnl a~ 11111th Iha 081111cala cl lnauranca Dr cqir cl lhll pallcy 111ql.hd 11¥ i-agraph 8.5. (d) 11b 118pfMenllllan at Adaqualll CD¥llll'IQII. Llluar malall na tep1111IWl&llllan 11'1111 Iha 1'111111 or IDnM al --oe al lrw18111rat apeclllad tlBl'llln .,. ldaqlmla lo - LB lae"a prapllllr, bullrwa araaMan& or alllllgldb'l1 under 1h11 l.NN.
8.5 lnslB' naa PDIIIIN. ln uranca rai~ad h-ln ahal be 11¥ C111111181'181 ~ dl tng 1h11 policy tam 1 "General Pallcyhllldani Ratlrlg" al II 111111 A·, YI, • aal b1h In 1h11 moal cull'lllllll laaua cl 'Blllf'll l1111Uranc. Giukla", ar auch othar rdrlg II may be rai....t by a ndar.
L-• 1111111 nat da or plll'l'l'II to be di:11'9 MW!lna whld'I IIMllldlllll Iha reqllll'lld r111u111nca pclclaa. Leaee 1111111, pl'iar 111 1h11 m.rt Dollll!, dBIMlw IO Llluar i=ertllad capiN al pallclllla of such lr'lalrenc:e or Clllll'lllle,IN -.Ith capilll al the Mqllinld end!W-en11 ~illll 1h11 IIIIIIIIIIICII and IIT'IIIBU of Iha l'1lqlUnd nurarca. No 1udl policy 1111111 ba canCllllbla or 1ub;K.1 ICI modlbllon 1ic pl har 30 day, pr1r;w Wlllltl ncll:e to NOr. I.Jla1a 1h11.
II 11111111 .i ■ prtlr to 1h11 mcplralllln al audl polcla, funih lellllllr wllh Mlarlca cl ranlllMIB or 'lrm111111011 i.idall' 8"ldand'lg 19na.J lhlnal, ar LBBlllr fllllY ardlr IUCh lr'lalrenc:e .llnd CHrgll 1h11 CDll lhlll8Clf ID UIIIIIIIII, llllhlch olllllOll'II lhllll 1111 pa~• 11¥ Leaee 10 Llluar upM demllnd. SUdl polcl&& 1111111 be lor a llarm cl al laUil - ,aar, 01 lhll l11nglh al Iha 1911'111lnlng 11nn d NI I.Jlua, wh~r 11 Ina. II allta Pa,ty &hd lal to proc:u,e nd rrmlnlllrl lhll ln1i.ro11rca r1qiaffed to be culiad 11¥ IL 1h11 Dlhlr flllr1r mar. bll ahal nail llll lllqulred to, fXIICl88 .llnd malnlUI lhll llfflll.
8.8 W1W1r ol llubropillon. Wllholllallecllng an~ olll8I llgl1B 1111arnacfaa, LIIBIN and La1&111aach h-11¥ RllalN and NilllMI Iha lllhlll', and "'8"'8 11'111~ anllre right lo rteowr d1UT11Q11 IIQlllllllil Iha lllhal, lor 111&1 ol III dlmaga lo Ill PIIIPllr1Y arlalnQ oLII Cl! OI lncldlll'll lo Iha parll& railllred to Ill ll'IIIUrad agalnll hllratn. The ell'ac1 al aucll fllllallllaa and WIIMll9 II nat ITillld 11¥ 1h11 alll!UII al ll'IIIUl'IIICII CMlad Dr raiulrad, Ill' 11¥ an~ dldllCllbllN llflPICllllll hllrlCG, The PNtillll •a-Ill haltl lh ... rllpee!He pl'!lpll1~ darnllllll NIBll'a centers IIIQM any ligf'II IO &lbag .. li:. 111111 111:lh cx11111p1111laa y haw 1G11lnll ~ or ■-, u Iha caaa 1111ay be, 10 b'lg u 11111 '°'8LBlll'ICII II nlll ""8tldaled lhlll'liby.
8.7 ltld-fty. EXli&pl lor La11110l'l !lf'lllllc:1:ll'e nagllganca or "'llul rnl--....t, 1.a- 1hall lndalmlfy, prlllacl, flnd and hClld hlllllllll81 1h11 Pl911'111181, l.ealll' and Ila .qanla, l.881111'8 IIUlllf Ill' ground ,_, pa,tnera and Landan, flam and 1111alrml IU'IY and all clalllllll, laM of rems o11ndlll' dollmac,as, 11-, Jud!,nrlnia, penllldaa, o11111:Wn¥" o11nd CIINLillollnll' 111111, ~ andlar llllbllllaa ••Ina aul of, ll'Mllvlng, or In canl'lllldlan MDI, Iha Will llldlllr oc:cupanc, al Iha Pl'lllll'lllla by ~ If any aclhin or p,OCIINICfrlg 1B mughl agallUll l.811101' by IWIIOl'1 ol any Cl! Iha lo~ mallara, ~ae llhal upon nalfca dlllend Iha 11rna at Ulllllllll'II 11111enae blf caunael ,_nablr aallafadory ID l.8110r and LBB111r 1111111 coapallB wl1h LIHBll in 1uchda!B11B11. Lea or need nol ha111 llrat paid an11 a uch clal111 In ordlr la be dlllandad or lndarnnlllad.
8.11 Enlllptlan of ~ ll'ld Ha '91nll INIITI Lllbllllf. Nalwllhl\llldlng 1h11 nagllg1rca or D'IIIICh al ltE lMN 11¥ i.-r or 11B aglllllll, l'llltB I.JI- nor It& aglllllll 1hlll ba Nabla under any dn::v'llllarl:I lur. +1~ ........ ...._ ,ara1111 a, 1•lla, waNIII; 11111, .... 1. • elhaf.,..,..,._"-888;-..,___...,_,....._.,~.,..._, • ..,.....,.jllllllllllte,11118Wt11111P1111"'laaa, •11---•1118111• ..,.,115'i ..i""'• -1111 -..MFa;-...., ...,..,., . ..., ... ., . ...,11aa,~-.,,__af!Mld .,,_-. IIINll811, tae111111e, Nlillllllllllll·•elhaf. ........ 11itN .-fR....._.,._,-,1111,Wan&1&1 ,i..111111119,-NVAC w 11111 .. 1 ll•IYF811f9f'--~._. ........ ~ i!M' 1111' llllllllfll -11111 lfll111-IIIII- ... lljlllll Illa PN11111818Fllf111Aelhllf flllll1111 al Illa ~81 llallll lllllllf-8f-flBllllt;"...., ........... --~-•MaleM~lllll•Ml'llllll lll .....,..,Mllll .. lelr.lreel .....,.., 111 ............. ,..ililllM t1111~-- 1w.-~.•fl¼ lnJLBY Ill~ ... t.laln1111 orb any lo&& cl lnc:oma or p'IIAI lharalrum. ~Is~-... INI ..,_.., _ _,. tllllt.-..l......._ ........ lfljllr,-.e-lHlll-&4lllllfll.. ...... ~,...... ..... ~ ... acl II AIIIRIBIII jllllllll8AI 181111 f1No'taian1 al ,.. .....
8.8 Fllul'II ., Pl'IIVlde lill&IIMCII. ~ ldCIIOWdglll ,.. ~ !Iii.re CIII .. ,.,.. to Clbblln ar lllllnblln lhl lnaurn:a rrtqlMld hlll'MI wll lDpOlla ~ lo rWII and palantlBJllf CBI.BIi ~r to h:11' Calllll nol ~ by 1h11 LMN, Iha llllllenl ol wtllch wll be mll'llllllllltlf cllllcdl i,, o111C111111n. Ac,c,:i, dl!V¥, lor an~ ma nth ar par1b'I lhlll'IIIIII 1h11 LlnlBae cma nail mallltaln lhl l'llqllhld lnla:tenc:a o11ndll:lr cma nat pn:llllide LB lar wlh 1h11 ~ blndn or C<llcataa avldanclng Iha m.lalanca ol lhll 111qlllrad l1111uranca, 1h11 Bua Rant ahall be aulolnlllcally lncraaaad, llltlholll any raiulramenl lor IIDllce lo ~. by an an,oll'll aqllBI lo 1ml, al lhl lat 8ldlllng Bua Rlll'II or S100. which- II gl'llllllf. Thi pu1laa agree lhal auch lncraaaa In Bua Alll'II rap,-a lllr and IN8Cllllbl8 ~n allon fllr Iha acdlonal rlalllcoala lhllt ~r 111111 Incur by ,_ Cl! L.euN'a ldura to rn lm ln Iha raiind In...,_. Sum lnc!al8 In Bua R..C ahall in 110 want c:armlilllll • '41181- cl ~lfl Dafull or Blvar:h ..tlh l'8llpK1 la 1h11 W.a ID ll&lrllaln auch lnairanca, pr Vllll\ lh11-.:IIII of any cl Iha olhllr right& and 11111111dlaa grarwd h__.., nor l'llllaw ~ Cl! Ila obllgallcm to l!IUllllin I ha lrmlftrat apecllllld In th la L-.
a. D1m1g11 ar DanuD111111.
9. 1 Datlnllana.
(II) ''Pl'8llllllel P•IIII Dlmage" hall rraan damaga or dlllln.dlon lo 1h11 1,.,.._.n11 on 1h11 Pran,111111, lllh8r than I.ft- Olillrwd AlllllallDM and U:IIIV lrmlalallll'la, wtllch can l8Lllll'llblr ba rapalllld In :S monlha or , ... from 1h11 di.Ila ol 1h11 dalnagll Dr dull'IICIICl'I, nd Iha IXJIII lhal'IIIIII doa not llliiClll8d a 11111'1 ~ lo 6 1111;1nlh'1 Bua Rlll'IL 1.811101' •hall nolll)i UIIIN In wrlllng wllhln 30 daww lro111 1h11 datlll ol lhll damaGe or dlllltrlldlon .. lo llllllalhar Ill' nal lhl dalnag& IB Pmtllll Ill' Talat. [bl "Pl'IIIIII- Tabll Deatr11111ion" shall 111aan damaGe Ill' daalrucllCl'I to 1h11 ln.,-nlll on Iha Pranie81, alflar lat j nlld Alarallona and UIHl!y lnatd&llorlll .llnd Trad& Fllblrea, wtllch canrd 1'811UNIIIV ba rapahd In 8 month& or 1111111 flam 1h11 dale al 1h11 dalllrur:IIDn andll:lr Iha IXJIII u-1 amall a 111'1'1 aqllBI to 6 llllrih'II Bua Rlll'II. l.BBIOr atilll IIDltly UIIIBII In wrllng wfthln :SO day& tram PAGl:8 O/F17 - J ~ 0111199 • AIR COMMEACMIL REAL ESTATE A9SOCIAT'fON FOIIM IIITN•l!IM1'14E Iha deb! ol 11111 dam11119 or daalrucllon aa lo whlllla or not Iha damage II Partlal or Toral. (cl •,n.n11d Lo■.- 1haH _, dllm111111 or dalruc:lion to lmpruV111mlllll1 on Iha Prernlln, olhllr ltW1 lBBaae Owral Allllllllilm Ind utay lnetllllatior"a Ind Tradll FIIIUIII&, which - CBJJlla:l l,r an --raq.Jira:110 be CIMl'lld l,r .. in1UIIIIIC9 daacrla:I ti "-'••
8.3(8). ffllllPIICIMI al any daducllat amlUIIII or CCMlrag& 11111111 IIMIMIII. (di "'Repl.cem_,I Cull'' llhDll ,n-, lhe cOlt lo lepu' or 1.t..ild lhe tll~enll GWral l,r i.-r al lhe 11ffle al lhe OCCU'l&!ICII lo their condllbi ald1llng lmllallllaly prlor llaalD, lrdudr,g dllfflllllllon, dmls lllrnlMII and upgrdig 1a1ulllld l,r .. oplll"llb ol Applicable R19!1UiAiffl911a. end WlhuUI daduclion lor •8Cialiun. (a) "Haurdou1 S illlllnae Condition~ hall ..., Iha ODCISlllnc& or dlllcuwr, ol a cordllon fflllllwilllil Iha lftllBIIC& al, or a conllllllhlllan l,r, a Hazardou, Suti.lllncll, ~ on, or under 1h11 P111,.,._ which ~ rulonlllon.
9.2 PIHflll Damage • lllluracl LOH. II I Pnlllllan Partial D1m1ge 1hBI II an nlll'al I.ma occura, .. n LNaor shall, al UIIIIOfa upine, 1111111k IIUCh dam• (bul nol l8aaN'8 T11m11 Fhdurn or lBBaae Owned Allllrallon1 end Ulliir nstallalmna) BB 1011n BB IIIIIIIOn-. poalllllle and Ihle La■- a~ conlhla In lull lon:e and llllllct p,u¥1ded, i--r, lhlll lBBaae a~, al l.s aa'a -=ilon, make the ,apalr al an,- dll111age or danucllon lhe 11111111 coat ID 1ep,111lr al which la 110.000 or leu, and, In such ewml, Lessor llhllill ffllllllB an~ eppllc:allle hlUIIIIIC& p,uceeda awallalfll lo Lea- on • l'IIBBmllll:E traal1 lor lhlll p111p1111e. fbwllhalandr,g Iha llngolng, I Iha 11111,1k&d hlUIIIIIC& was nlll In lorca or Iha lnamanca PftlC9lldl 11111 not llllllclanl lo al8d ILJCh fllplil', 11111 lnauq Pmtr llhllll prumplly conlrblla .. ahorlllg& In p,uceeda - end lltllll'I ra:iulracl lo compl&la alllld rapan.
In lte l!Wall, '-, 1111cll &horlage - du& ID .. Im:! 111111, by fllllliCln CJI Iha Ul!lcr,,11 mlli.e CJI Iha tllp-11111111&, lull IIIJ&Cem&nl COIi tlluranca CCMlrag& - nat comml!ICIIIW l'IIBBmllll:E and IMIIBbla, l.8aacl 1111111 hlMI ra otaglllon m i-,, lor Iha lfD'Ulgll ti hlurance PftlC9lldl or m 111- ruloN Iha unlQua -.iec.11 ol lhe PNml&n uni_ ls&_ prowld8& 1.-wtlh Iha lunda to - aame, or llidac1,,118 --1hll901, wtlliln 10 day& lrllllwing lacelpl ol llllllftan nallbl ol 111Ch ~• end Mq.J8II llletalar. II'--IIIC8Mll 1Dld lunda cw._. aausa IIWaol _,_ Mid 10 dB~ par1od, lie siart, raaponala lor maldng Iha rapah ahall compl&la lhern u IOCll'I as IIIIIIIOftllbl, poallllla 111d 11111 lNN ahDll 111111.- In llrl ftlrca 111nd Bllllct. II IIUCh IUndl or oUIUrMCII 818 not IIClh.W:I, l.8aacl !MY n-rltll!IMI BIICI l,r 111111111111n nolk:• 10 L&aaa• wlitlin 10 dllya th11r81111Br 111: (i) IIIBIII IUCh ~and,. u la COIIIIIIBl'Clllltr fllaBOllltia 11111111 '-- pllylng any lhtu~a• In proclllll, In 'lllhlr:fl caaa ta l9aaa 1111111 remain In UI laN:e end all9cl, or (II hlMI IIE lMN lllrlllll'IIIII 30 cil¥I lhalllalllr. "-11"81 not bll enlll&d lo ratmbu11amanl ol .. lllndl conllibulatl bl' "- lo IIIP8lr an1 IIUCh dam11119 ar d&&trul:llon, PrwrrEll8 Plltlll 0111111111 dua to IIIIGd ar ~ nil ba aubjec:I to r111111P1 U, rdllllllti&tanrl, hit hn r be IOffllil QI.I- QMll"IQ8, but .. nal PftlC9lldl al 111n, IUch qurn;,a 1hDll bll 1111118 1walh1ble lar .. nipat if nllda l,r ..., riy,
9.3 P• .. 011111111 • u.._,,,.. Loa. II a Praml:&&& Plull I 0811111111 lhal I& not •n lnaullld I.ma OCC\111, unlN& c:aU&lld 1JW Ill nagllg1n1 or wllM ICI ol i-(In whttl -n1 LNaea NII malla Illa ,apa~a • LNaan 1111p1naa), Leam ,nay alllwr. Pl 111p.ir such da11111119 u IOCJn U IIIU~ poa1lbl• 81 i.-"11 pPllfl8B (IUbJIICI lo lllimbur allllllll p&l'IUMI lo PullUl'IPI •Ul, In which -nl 1h11 lNN lftllll conUnue lrl fl.I lorcia and allec::1, or (Ill lllrmlnll& lhbl La- bnlwlng "rllllln naU::e III lulaa _,_ 30 dllyl all9r racalpt l,r LNaar al kna.,.ladgeat 111• ag;u- al aucll d111111111, Suell lllnnlnatlon nil ba afllclMI 60 da,. ~r,g 1h11 dlft o11111m notk:e. In lhe IIWall .__ llacll m IBrmlnlllll IN• '--•· lBBaae 1111111 1'1111111 lhe fi"1 WIU'lln 10 dB~ .-ftlar '~ al tha lillllllhlllan nallbl IO glllll Wlllillll notlca IO Leaaor al Lea--• comm~m- ID p.-y lorlhB Rlp8lr al IIUCh da.11111119 'lllillDlt 1al111bur a11111nl lm111 i.-. LBeaae 1111111 pilMda i.- 11111111 11111d Ill-a or aalalac:lory aa&UIIIIIC& 1hlll'IIO! within 30 day& eller maliirlg auc:11 com~,..,._ In IIUCh -n1 .. lNN nil milrul In 1111 ftlrca 111d alhlct, 111d .__ 1111111 ~ to IIIMII audl IIIPlllr• as 10CJn aa ,_,. l)Gll4lt,le - IN rtq11l111d .... 1111 Illa .... II '--dgw not IIWIIII .. pgq,uhd co11111111•r:nent . .. '--• nil lill"dilllit Ill\ of II-. dalil rrpacllad In Iha tamlrlalbl nollca.
9.-4 Total Dutruc:1101'1. No~t,g 11111 Gia p!VWl&lon hll'l!Ol, If a Pra11111198 Total DIIIINc:lion oc:cura, thl& lNN ai. lllnnlnllle &cl 11¥ lrllllwing sucfl ~ If Iha dlUIIIQII or daa1n1e11Dn - caulla:I l,r Illa grou negllg1nca or willlrll 1111acDIDICI ol Lea-, U11110r NII hava .. right lo ,_ LealOl"I dam11Q1111 lro111 ls&1&e, ucapt II piv¥ldecl In ag,aph u.
9..!i D1111111 NNr End GI' T9ffll. II 81 any !Ima durllllil 1h11 111111 8 rnonllia al lhla lNN 1la8 11 damage for !1111"6:h lhe coat 10 IIIPII~ -d• - mon\11'1 B:1118 Rani, whl!llw or not ;1111 lnau,1111 Lou, '--,nay tamlllldlll ... '--• BIIICIM 50 da~• flllDwlng lhe dale ol OCCUIIN!la al IIUCh da11111• l,r glwlrrg a wrtnl8r1 lllrmlnallon nalllca lo ls&- "lthln 80 dllyl Iller .. da18 CJI ac;c:u111111:e al IIUCh 111111111119, NGllwW-.budng 1h& lo~ II i-at lhat 01118 hu an -illlt:tl opllloll to llldend 11111 LNae or 10 purdlue .. l'Nlllllea, 111111 Leeaae may pramw 11111 l9aaa l,r, (al uerclllrrg &LJCh ~on 111d (bl pl"IMlng l.e&IOr 111191 an1 ahDrtage In l1111ur111nc:e proc:ea (ar adaqullle _,._ thll"IICII) neaded 10 11111M 1h& rwpal11 Cll'I or bllla111 Iha aa,.. ol (II thll deb! wtim Is 1 o da,. altliil l8aaN'8 rapl CJI i.-r'll wrtaen nolli::1t purpca,11ng lo lllnnlnlllll tis laDM, ar (I) Iha day p~cw lo Iha dllB Up!WI whldl IIICh ~on .... 11 Leeaae dut, -Ian IIUCh QflllGrl dllllng Ila! salDcl and pnMIN l.8aacl 11111111 lllnda 1or adllquldll aaaurance lhll"IICII) lo c:ovar any ahorlllga In lnauranca ~ lllaaar shall, at laaeor'll co111mllldall, 111110,..._ pPllflN, ,_ audl dll11111g11 as aoon u ,-onallly poaalbla and this lNN ah.ti conltlua ti 11111 lore& and llflec:t. 11 lllaaN 11111 lo ann:lla al.di option •nd prowtda aLJCh fllndl ar -c:e duitng 1uc11 ~ 111811 11111 lNN nil 11rlllllnlill an the deb! ..-,c:lllld In .. t&lmt11111gn nub 111d '--•'1 opllgn nil ba 8Jdlni,.,lahlld.
9.11 Abll..-il of Ran~ LB-'a AIIIIICIH.
(a) AIIIIIINtll. In lhe Wini CJI Pra11111- PMIIII Oam a• ar Pr-.ffll- Talal Dltlln.r., ar a Hu:atdalll\ a~. can-., few IIIHdl "-II not r111p1nslbla UNllw 1h11 LNae, lhe RMI p-,,al,II by Lea- lar 1h11 partnd ~ lar lh& repal-, Mmadlalbl Cir 1'11&10ratlon ol audl dlllll. NII bll ablllad In propolilon lo Iha dllg191 lo whk:tl '--1111'• 1-99 CJ1 Iha Pre ..... II lmpDllld, ta.ti not lo ur.:Nd .. p,.,._. ,_Mid tram Iha Ren Ill YDlua ln ll'Bl'IC8. Al Gia obllgllllona ol L&aaae hallll&ldllr stlall bll parlorm&d Ill' Lea-, and Leaaor stlall hlMI no lllbllly tor any aucll damaga, dllalM:lbl, ramadlllllon, rapu or re&lorallon ucapt 11 ~ la'all,, (bO Rllmedlaa. I LNaar 11 alllgaled lo IIIP8lr or raloN .. Pra.,.11 111d doa rd commence, lri a aubelllnllDl end 1118illM9'UI WI!)', lllch Rlp8lr or fllllOrBlbl wlhln 110 da1'9 .-ftlar sLJCh cttgation NII _,_., "- maw, Bl any lifflB piior IO 1hB COlllll'WDlmant ol sucfl 11111111r cw fllll!lrdon, ghM wrlllan nallca m L11810r and lo an, l.aNllll'II of whlcfl Leaeae haa &dual nalllce, ol LMNa'I a1ac11an 10 IB'mlnllllll • lllaa& on a dale not 111111 lhlWI 60 di~ kllllawlng Iha glwtng ol 1uch nollc&. II "-glwl IUCh notice end IIICh rapalr or Rllllcnllon 1B naf COlllll'WDld wllHn 30 dllyl lllllrllllllllr, tu lNN nil llmllnlill u CJI lhe dale IIIPldllad In 11111 ncllca. I lhe IIIP8lr or rea!Drallon la co111menced '41111111n IIUCh 3D di,,, thil LaMI d18II o.r,hle In IUI lorce and alhlct. "Cl:IIIIIIIIIICII' shall l'llllln elllltl IN llnCGnltllanaf 11Ulh1111b.11lb1 of Iha p,.ialllkm CJI Iha rtqllin,d plant. GI' Iha blgln ...... al II-. 11:1UII wi;,rti on lhe Pr-.ffllan, ... ~ flrll -
9. 7 Ta""llllllon; Advanae Pa,rnents. 4)Gn rarmlnllllan ol 'Ha lNN puralBII lo Paragraph 6,2tll) or Paragraph ll. an aqlillabll ld;ull111ant llhal ba ma __.n, adwara e- Aarrt and .,, Gia advance payrnanll made l,r LaMle to L.a1110r, ~ llh., In ~Ion. lllturn 10 i-ao mucfl ol LNaan &lcurfly Dapoall aa haa nol been, or 11 not lhan ~ 10 1111, 11119d l,r Leasor. 1 Q. Arlial PrapM1y Tana.
10.1 Dalnlllon. M 1114111d hlraln, Iha te,,n •111111 Prapa11Y Ta DI' shall lncluid• anw form of aas-111an1; 11111111 Mlldlll, 111nara1, spaciDl, ordln ry o, 811traadn ry, ar 111111111 IIWY o, lu (olhllr lhan lnh&rlbua, par&anDl lrico111a o, a&lalll IUN); lmi:ir-,11111 band; lrldlor lc:en&e laa lrnpg&ad irpon OI kMid IClllriat .. IB9 I OI aqullabll lnllll"IIIII al i.-r In IN Pfojac:1, Ul8IIOl"I rlght ID oUl&r tlC01118 lhlllllfmm, elltJ/or '--fl 1u1ri- ~ IBIIIIIIIG, 1,r an1 llllllllll«y hlMlllil .. dlRlcl or lndllld powm ID tax 111d wtae 11111 I.Inda .. ganarallld wHh ralllranc9 lo th& Pfo)acl ~ and wtaa till plOONIII aa QlllnBIIIIIBd are ID bl applld l,r 1h11 ca,,, COll1I)' or Olhar laclll i,mg .,,._.V ol a )Urlrllictlaft l1llltin 'lllhl:h the l'lajllr:I is lal8d. Tha ~-,-...... -........ ,:::~---... , .... ,~--•,--.. ~ Cl11H - All CCIMIIIEIICIAL REAL EST A TE A8IIOCIATl0N FOAM MTM,111).11 /'ME occurring during the term or this Lease, including but not limited lo, a change in the ownership or the Project, (ii) a change in the improvements thereon, and/or (iii) levied or assessed on machinery or equipment provided by Lessor lo Lessee pursuant lo this Lease. In calculating Real Property Taxes for any calendar year, the Real Properly Taxes for any real estate tax year shall be included in the calculation or Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common.
10.2 Payment ol Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the Real Property Taxes applicable to the Project, and said payments shall be included in the calculation or Common Area Operating Expenses in accordance with the provisions or Paragraph
4.2. 10.3 Addltlonal Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessofs records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Lessor lor the exclusive enjoyment ol such other lessees. Notwithstanding Paragraph 10.2 hereol, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes ii assessed solely by reason ol Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request or by reason or any alterations or improvements to the Premises made by Lessor subsequent to the execution or this Lease by the Parties.
10.4 Joint Assessment. II the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion ol the Real Property Taxes for all ol the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor lrom the respective valuations assigned in the assesso(s work sheets or such other information as may be reasonably available. Lesso(s reasonable determination lhereol, in good faith, shall be conclusive.
10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Ullllty Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained In the Premises. When possible, Lessee shall cause Its Lessee Owned Alterations and Ullllty Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said properly shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property.
11 . Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. Notwithstanding the provisions of Paragraph 42, If at any time In Lessor's sole Judgment, Lessor determines that Lessee Is using a disproportionate amount of water, electricity or other commonly metered utilities, or that Lessee is generating such a large volume of trash as to require an Increase In the size of the trash receptacle and/or an Increase In the number of times per month that II Is emptied, then Lessor may Increase Lessee's Base Rent by an amount equal to such increased costs. There shall be no abatement of Rent and Lessor shall not be liable In any respect whatsoever for the Inadequacy, stoppage, Interruption or discontinuance of any utlllty or service due to riot, strike, labor dispute, breakd•Jwn, accident, repair or other cause beyond Lessor's reasonable control or In cooperation with governmental request or directions.
12. Assignment and Sublettlng.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior wrillen consent. Said consent not to l,e unreaeonably withheld.
4Dl--~·besseeis-a-oe111eratieRanGi1&Glookis-~ff8deGoo-a-AalieAalGle6kellGl!aAile,-a-ooaRge+Rlil&-lfef•-el be&e&e-ellafkeRGlillll&·aA as&igRRleRI FOqYFiRg-&8R600trill&-lraA&la-;8R•-&wmlllatiYe-lla&i&; ~&4',,e,--eHl!e-YOllRg-~ &l·b8000&6'1all 6GflSlilllle-iH!llaR9e iR ~ieF-ll1is·i!llfllOS&,
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(d) An assignment or sublelllng without consent shall, al Lessofs option, be a Default curable after notice per Paragraph
13. 1 ( d), or a noncurable Breach without the necessity of any notice and grace period. II Lessor elects to treat such unapproved assignment or sublelling as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (Ii) upon 30 days wrillen notice, Increase the monthly Base Rent lo 110% of the Base Rent then In effect. Further, In the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously In effect, and (II) all I ixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be Increased to 110% of the scheduled adjusted rent. (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.
(f)
consent Is requested.
(g)
Lessor may reasonably withhold consent to a proposed assignment or sublelllng if Lessee is In Default al the lime Notwithstanding the foregoing, allowing a de mlnlmls portion or the Premises, le. 20 square feet or less, to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not conslilule a subletting.
12.2 Terms and Conditions Applicable lo Assignment and Subleltlng. (a) Regardless of Lessor's consent, no assignment or sublelllng shall: (i) be effective without the express wrillen assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (II) release Lessee of any obligations hereunder, or (Iii) alter the primary liability or Lessee for the payment of Rent or ror the performance of any other obligations to be performed by Lessee. (bl Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval or an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall conslilute a waiver or estoppal of Lessofs right to exercise Its remedies for Lessee's Default or Breach. (c) Lessofs consent lo any assignment or subletllng shall not conslilute consent to any subsequent assignment or subletllng.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, Including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or enlily responsible therefore to Lessor, or any security held by Lessor. (e) Each request for consent lo an assignment or subletting shall be in writing, accompanied by information relevant lo rmlnation as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, Including but not e intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessol'11 consi ring PAGE 10OF 17
FORM MTN-20·11/14E
and processing said request. Lessee agrees to prollide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)
(I) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed lo have assumed and agreed lo conform and comply with each and every term, covenant, condition and obligation herein to be obseived or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease lo which Lessor has specifically consented to in writing.
(g) Lesso(s consent to any assignment or sublelting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specilicallyconsented lo by Lessor in writing. (See Paragraph 39.2)
12.3 Addltional Terms and Conditions Applicable to Sublelling. The following terms and conditions shall apply to any sublelling by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee's obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee lo perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a wrilten notice from Lessor stating that a Breach exists In the performance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breach by Lessee, Lessor may, at Its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; prollided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.
(c) Any mailer requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lesso(s prior written consent. (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, If any, specified In such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" Is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A "Breach" Is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph8.3 ls jeopardized as a result thereof, or without prolliding reasonable assurances lo minimize potential vandalism.
(b) The failure of Lessee lo make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or lo a third party, when due, to prollide reasonable ellidence ot insurance or surety bond, a to tullill any obligation under this Lease which endangers or threatens lite or property, where such failure continues for a period of 3 business days I ollowlngwrltten notice to Lessee. THE
ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHTTO RECOVER POSSESSION OF THE PREMISES. (c) The failure of Lessee lo allow Lessor and/or Its agents access lo the Premises or lhe commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice lo Lessee. In the event that Lessee commits waste, a nuisance or an illegal activity a second time then, the Lessor may elect to treat such conduct as a non-<:urable Breach rather than a Default. (d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (II) the service contraciS, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppal Certificate or financial statements, (V) a requested subordination, (vi) ellidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41, (viii) material data safety sheets (MSDS), or (Ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period ol 10 days following written notice lo Lessee. (e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described In subparagraphs 13.1(a), (b), (c) or (d), above, where such Default continues for a period ol 30 days alter written notice; provided, however, that ii the nature of Lessee's Default Is such that more than 30 days are reasonably required for Its cure, then It shall not be deemed to be a Breach ii Lessee commences such cum within said 30 day period and thereafter dlllgently prosecutes such cure to complellon.
(I) The occurrence of any of the following events: (I) the making of any general arrangement or assignment for the benefit of creditors; (II) becoming a "debtor" as defined In 11 U.S.C. § 101 or any successor statute thereto (unless, In the case of a petition filed against Lessee, the same Is dismissed within 60 days); (Ill) the appointment of a trustee or receiver to take possession of substantially alt of Lessee's assets located at the Premises or of Lessee's interest In this Lease, where possession Is not restored to Lessee within 30 days; or (iv) the attachment, execution or other Judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's Interest In this Lease, where such seizure is not discharged within 30 days; provided, however, In the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The discovery that any financial statement of Lessee or of any Guarantor given 10 Lessor was materially false. (h) II the performance of Lessee's obligations under this Lease Is guaranteed: (I) the death of a Guarantor, (II) the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (Iii) a Guarantofs becoming insolvent or the subject of a bankruptcy filing, (Iv) a Guarantor's refusal to honor the guaranty, or (V) a Guaranto(s breach of Its guaranty obligation on an anticipatory basis, and Lessee's failure, within 60 days following written notice of any such event, to provide wrlllen alternative assurance or security, which, when coupled wtth the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed al the time of execution of this Lease.
132 Remedies. II Lessee falls to perform any of its affirmative duties orobllgatlons, within 10 days alter written notice (or in case of an emergency, without notice), Lessor may, at Its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of y required bonds, Insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 11 !Wo of PAGE11 OF17
@1999 · AIRCOMMEACIAL REAL ESTATE ASSOCIATION FOAM MTN·20·11114E the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or without lur1her notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such evenl Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned al the lime of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned alter termination unlil the time of award exceeds the amount of such renlal loss that the Lessee proves could have been reasonably avoided; (iii) the wor1h at the time of award of the amount by which the unpaid rent for the balance of the term alter the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely lo result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of retelling, including necessary renovation and alteration of lhe Premises, reasonable allorneys' lees, and that portion of any leasing commission paid by Lessor in connection wilh this Lease applicable to lhe unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover any damages to which Lessor is otherwise entitled. II termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof In a separate suit. II a notice and grace period required under Paragraph 13.1 was not previously given, a notice lo pay rent or quit, or lo perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13. 1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor lo the remedies provided for In this Lease and/or by said statute. (b) Continue the Lease and Lessee's right to possession and recover the Rent as ii becomes due, In which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relel, and/or the appointment of a receiver to protect the Lessor's Interests, shall not constitute a termination of the Lessee's right to possession. (c) Pursue any other remedy now or hereafter available under the laws or )Jdlclal decisions of the stale wherein the Premises are localed. The expiration or termination of this Lease and/or the termination of Lessee's right lo possession shall not relieve Lessee from llablllty under any Indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, the cost of tenant Improvements for Lessee paid for or performed by Lessor, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which concessions are hereinafter referred to as "Inducement Provisions", shall be deemed conditioned upon Lessee's lull and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, Inducement or consideration theretofore abated, given or paid by lessor under such an Inducement Provision shall be Immediately due and payable by lessee to lessor, notwithstanding any subsequent cure of said Breach by lessee. The acceptance by lessor of rent or the cure of the Breach which Initiated the operation of this parauraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated In writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to Incur costs not contemplated by this Lease, the exact amount of which will be extremely difllcull to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, II any Rent shall not be received by Lessor within 5 days alter such amount shall be due, then, without any requirement for notice to lessee, Lessee shall Immediately pay to lessor a one-time late charge equal to 10'll. of each such overdue amount or $100, whichever Is greater. The parties hereby agree that such late charge represents a lair and reasonable estimate of the costs Lessor will Incur by reason of such late payment. Acceptance of such late charge by Lessor shall In no event conslilute a waiver of lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge Is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease lo the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly In advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day alter ii was due. The Interest ("Interest") charged shall be computed al the rate ol 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable In addition lo the potential late charge provided for In Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice ot Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days alter receipt by Lessor, and any Lender whose name and address shall have been l11nlshed Lessee in writing for such purpose, of written notice specifying wherein such obligation of lessor has not been performed; provided, however, that ii the nature ol lessofs obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be In breach II performance Is commenced within such 30 day period and thereafter diligently pursued to completion.
(b) Performance by lessee on Behalf ol Lessor. In the event that neither lessor nor Lender cums said breach within 30 days alter receipt of said notice, or ii having commenced said cure they do not diligently pursue II lo completion, then lessee may elect to cure said breach at lessee's expense and offset from Rent the actual and reasonable cost to perform such cure, provided however, that such offset shall not exceed an amount equal lo the greater of one month's Base Rent or the Security Deposit, reserving Lessee's right to reimbursement from Lessor for any such expense In excess of such offset. lessee shall document the cost of said cure and supply said documentation lo Lessor.
14. Condemnation. II the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Lease shall terminate as lo the part taken as of the date the condemning authority lakes title or possession, whichever first occurs. II more than 10'll.ol lhe floor area of the Unit, or more than 25% olthe parking spaces Is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days alter Lessor shall have given Lessee wrillen notice of such taking (or in the absence of such notice, within 10 days alter the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. II lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain In lull force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced In proportion to the reduction In utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution In value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be compensation paid by the condemnor for lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard r or not this Lease Is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by PAGE 12 OF 17
Ct 99 • AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN•20·11/14E Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled 10 any and all compensation which is payable therefor. In the event that this Lease is nol terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.
15. Brokerage Fees.
~-~--Addlllenal CemmissleA. --IA aeeltieAIB IRe l'"l'llleAIS 8W99-Jlllf6YilRI le PaFa!jFapll~-~;aR&-les& i.essef aRetlle~e,e ell!efwise ag,ee iR-Wfili!lg,.be&sef ag,ee& tllaH--{a}-i f lessee 011e,asesifflyQJ!lieA,{a¼-il-be&seeeHIAY-alliialeEl-~-l.e&see-aeqllif e&ff8ffl-be&sef aRYf ighl&te-tll&-PFelllises-e• el lier pFB111ises BWREKl-~&FaRe leea!EKl,willliA ¼lleJ:!Fejeel.-¾e) i~bessee-F&FAaiAs iA pessessieR-&~11& J:!F9111ises1-willl tll&-&9AS&Rl-el-bessef,atte,-tll&-ellpfflltieA-el-llti&-bease-,-ef-{ll¼il·~-~ is-i119Feasee;--wllelller-ey.ag,88ffll!A¼e>-~ei.a,i;1sealatieA-elause lleFBiR, llleR.-besseF&Rall-f!BY8FekeF&-a4ee-iAa&GefaaRSeWi!Rtlle4ee~-el¼ll&BFekefsiRelles¼at-tlletillle¼lleloeas&-elffletile&.
15.2 Assumption of Obllgalions. Ar'f buyer or transferee of Lessor's interest in this Lease shall be deemed to have assumed Lesso(s obligation hereunder. Brokers shall be lhird party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails lo pay lo Brokers any amounts due as and for brokerage lees pertaining lo this Lease when due, then such amounts shall accrue Interest. In addition, ii Lessor fails lo pay any amounts lo Lessee's Broker when due, Lessee's Broker may send wrillen notice lo Lessor and Lessee of such failure and ii Lessor fails to pay such amounts within 10 days alter said notice, Lessee shall pay said monies lo ils Broker and offset such amounlsagainsl Rent. In addition, Lessee's Broker shall be deemed lo be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor's Broker for the limited purpose of collecting any brokerage lee owed.
15.3 Representations and Indemnifies of Broker Relallonshlps. Lessee and Lessor each represent and warrant lo the other that ii has had no dealings wilh any person, firm, broker or finder (other than lhe Brokers, II any) In conneclion wilh lhis Lease, and Iha! no one other lhan said named Brokers Is enlllled lo any commission or finder's lee In connection herewith. Lessee and Lessor do each hereby agree lo Indemnify, protect, defend and hold the olher harmless from and againsl liabillly for compensalion or charges which may be claimed by any such unnamed broker, finder or olher similar parly by reason of any dealings or actions of lhe Indemnifying Party, Including any cosls, expenses, allorneys' lees reasonably Incurred with respect thereto.
16. Estoppal Certificates.
(a) Each Party (as "Responding Party") shall within 10 days alter wrlllen notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesling Party a statement In writing in form similar to the then most current "Estoppal Cerliffcate" form published by the AIR Commercial Real Estate Association, plus such additional Information, confirmation and/or slalemenls as may be reasonably requested by the Requesting Party.
(b) 11 lhe Responding Party shall fail lo execute or deliver the Estoppal Certificate within such 1 Oday period, the Requesting Party may execute an Estoppal Certificate slating lhal: (i) lhe Lease is in lull force and effecl wilhoul modification excepl as may be represenled by lhe Requesting Party, (II) there are no uncured defaults In lhe Requesting Party's performance, and (Ill) II Lessor Is lhe Requesting Party, nol more lhan one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon lhe Requesling Party's Estoppal Certificate, and lhe Responding Party shall be eslopped from denying the lrulh of the facls conlalned In said Certificate. In addition, Lessee acknowledges lhal any failure on Its part to provide such an Estoppal Certificate will expose Lessor to risks and potentially cause Lessor to Incur costs not contemplated by this lease, the extent of which will be extremely dllllcult lo ascertain. Accordingly, should the lessee fall lo execute and/or deliver a requested Estoppal Certificate in a timely fashion the monthly Base Rent shall be automatically Increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Ren I or $100, whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will Incur by reason of Lessee's failure to provide the Estoppal Cerllllcale. Such Increase In Base Rent shall In no event conslilule a waiver of Lessee's Default or Breach with respect lo the failure lo provide the Estoppal Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder. (c) II Lessor desires lo finance, refinance, or sell the Premises, or any part thereof, lessee and all Guarantors shall within 1 0 days alter wrlllen notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, Including but nol limlled lo Lessee's financial slalemenls for the pasl 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be usedonlylor the purposes herein set forth.
17. Definition of Leaaor. The term "Leaaor" as used herein shall mean the owner or owners at the lime In question ol the lee tllle to the Premises, or, II this Is a sublease, of the Lessee's Interest In the prior lease. In the event of a transfer of Lessor's tltle or Interest In the Premises or this Lease, Lessor shall deliver to the transferee or assignee (In cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severablllty. The Invalidity of any provision of this lease, as determined by a court of competent jurisdiction, shall In no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used In this Lease shall mean and refer to calendar days.
20. limitation on llablllty. The obligations of lessor under this Lease shall not constitute personal obllgallons of lessor, or Its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the sallslacllon of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lesso(s partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.
21 . Time of Essence. Time Is of the essence with respect to the performance of all obligations lo be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains an agreements between the Parties with respect to any mailer mentioned herein, and no other prior or contemporaneous agreement or understanding shall be efleclive. Lessor and Lessee each represents and warrants to the Brokers that II has made, and is relying solely upon, Its own Investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as 10 the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.
23. Notices.
23.1 Notice Requirements. All notices required or permilled by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mall or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given ii served In a manner specified In this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or malling of notices. Either Party may by wrlllen notice to the other specify a dlllerent address for notice, except thal upon lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for no e. A copy of all notices to Lessor shall be concurrently transmitled to such party or parlies at such addresses as Lessor may from time PAGE13 OF17
FORM MTN
~ ·20·11/14E
23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the dale of delivery shown on the receipt card, or If no delivery dale Is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and malled with postage prepaid. Notices delivered by United States Express Mall or overni!111 courier that guarantees next day delivery shal be deemed given 24 hours after delivery of the same lo the Postal Service or courier. Notices delivered by hand, or transmilled by facsimile transmission or by email shall be deemed delivered upon adual receipt. If notice is received on a Saturday, Sunday or legal holiday, ii shall be deemed received on lhe nexl business day.
24. Waivers.
[a) No waiver by Lessor of lhe Default or Breach of any lerm, covenant or condition hereof by Lessee, shall be deemed a waiver of any olher term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor's consent to, or approval of, any acl shall nol be deemed lo render unnecessary the obtaining of Lesso(s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as lhe basis of an estoppal lo enforce lhe provision or provisions of lhls Lease requiring such consent
[b) The acceptance of Rent by Lessor shall nol be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection !herewith, which such stalemenls and/or conditions shall be of no force or effecl whatsoever unless specifically agreed lo in writing by Lessor al or before the lime of deposil of such payment. [c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO ANO HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUT~E STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
25. Disclosures Regarding The Nature of a Real Estate Agency Refallonshlp. [a) When entering into a discussion with a real eslale agent regarding a real estale transaction, a Lessor or Lessee should from the outset understand what lype of agency relationship or represenlalion ii has with the agenl or agenls in the transaction. Lessor and Lessee acknowledge being advised by the Brokers In this transaction, as follows:
[i) Lessor's Agent. A Lessor's agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lesso(s agent or subagent has the following aflirmative obligations: To lhe Lessor A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings wilh the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent's duties. (b) A duly of honesl and fair dealing and good faith. [c) A duty to disclose all lads known to the agent maleriaUy affecting the value or desirability of the property lhal are not known to, or wtthin the diligent allenlion and observation of, the Parties. An agent is not obligated to reveal lo either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. [ii) L.essae's Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent is not the Lesso(s agent, even if by agreement lhe agent may receive compensation for services rendered, either in full or in part from the Lessor. An agent acting only for a Lessee has the following aflirmative obligations. To the Lessee: A fiduciary duly of utmost care, integrity, honesty, and loyalty In dealings with the Lessee. To lhe Lessee and lhe Lessor: (a) Diigenl exercise of reasonable skills and care in performance of the agent's duties. [b) A duly of honest and fair dealing and good failh. (c) A duty lo disclose all facts known to lhe agenl materially affecting lhe value or desirability of the property that are not known to, or within lhe diligent allention and observation of, the Parties. An agent is nol obligated lo reveal to either Party any confidential information obtained from lhe other Party which does nol involve lhe affirmative duties sel forth above. [iii) Agent Representing Both Lessor and Lessee. A real estate agent, eilher acting directly or through one or more associate licenses, can legally be the agent of bolh the Lessor and the Lessee in a transaction, bul only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. [b) Other duties to the Lessor and the Lessee as stated above in subparagraphs [i) or [ii). In representing bolh Lessor and Lessee, the agent may nol wilhoul lhe express permission of the respective Party, disclose lo the other Party lhat lhe Lessor will accept rent in an amounl less than thal indicated in the listing or that the Lessee is willing to pay a higher rent than thal offered. The above dulies of the agent in a real estate transaction do nol relieve a Lessor or Lessee from lhe responsibility lo protect their own interests. Lessor and Lessee should carefully read all agreements to assure thal they adequately express their understanding of the transaction.
A real estate agent is a person quaNfied to advise about real estate. If legal or tax advice is desired, consult a competent professional. [b) Brokers have no responsibility with rasped to any Default or Breach hereof by either Party. The Parties agree that no lawsuit or olher legal proceeding Involving any breach of duly, error or omission relating lo this Lease may be brought against Broker more than one year after the Start Date and that the liability [including court costs and allorneys' fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant lo this Lease; provided, however, thal lhe foregoing limitation on each Broke(s liabilily shall not be applicable to any gross negligence or willful misconduct of such Broker. (c) Lessor and Lessee agree to identify to Brokers as "Confidential" any communication or information given Brokers that is considered by such Party lo be confidential.
26. No Righi To Holdover. Lessee has no rlghl lo retain possession of the Premises or any parl thereof beyond lhe expiration or termination of lhis Lease. In the event that Lessee holds over, then the Base Renl shall be increased to 150Y. of the Base Rent applicable Immediately preceding lhe expiration or termination. Holdover Base Renl shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.
27. Cumulallve Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative wilh all other remedies at law or in equity.
28. Covenants and Conditions; Construction ol Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, tu rather according lo its fair meaning as a whole, as If both Parties had prepared l .
29. Binding Ellect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of lhe Stale in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.
30. Subordination; AUornment; Non-Disturbance.
30. 1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypolhecation or security device (collectively, "Securlly Device"), now or hereafter placed upon the Premises, to any and all advances made on tre security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (In this Lease together referred to as "Lender") shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender ma eel to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving wrillen notice thereof to Lfisee, 7 ""oo'" "'oo ooO ~• °'""'.,.. Oo ,_,~, .-, • ,..,, """"" ""'°'• ~ .. ,.,_"" ,,.W•;z'" / / PAGE14OF17
~ - I ALS
C1999- AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-20-11I14E docLmenlalion or recordation thereof.
30.2 Allornment. In the event that Lessor transfers title lo the Premises, or the Premises are acquired by another upon the foreclosure or lermnallon of a Security Device lo which this Lease Is subordinated (I) Lessee shal, subject lo the non-disturbance provisions of Paragraph 30.3, allorn lo such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease wil aUlomatlcally become a new lease between Lessee and such new mwier, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new 01M1er shal assume all of Lesso(s obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition ol 01M1ership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month's renl, or (d) be liable for the return of any security deposil paid to any prior lessor which was not paid Cl( crediled to such new 01M1er.
30.3 Non-Dlstll'bance. With respect lo Securily Devices entered into by Lessor alter the execution of this Lease, Lessee's subordination of this Lease shall be subject lo receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is nol in Breach hereof and auorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable eff()(ls to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Norl-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's option, directly contact Lender and auempt to negotiate for the execution and delivery of a Norl-Dislurbance Agreement.
30.4 Sell-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attomment and/or Norl-Disturbance Agreement provided for herein.
31. Attorneys' Fees. II any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or lo declare rights hereunder, the Prevailng Party (as hereafter defined) In any such proceeding. action, Cl( appeal thereon, shall be entltled to reasonable allomeys' fees. Such fees may be awarded in the same suil or recovered In a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limilation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandorvnenl by the other Party or Broker of its claim or defense.
The attomeys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as lo fully reimburse all attomeys' fees reasonably incurred. In addition, Less()( shall be entitled lo att()(neys' fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Def aultir resulting Breach ($200 Is a reasonable minimum per occurrence for such services and consuhatlon).
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lesso(s agents shall have the right lo enler the Premises al any time, in the case ol an emergency, and otherwise al reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessee's use of the Premises. Al such activities shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor's prior written consent.
Lessor shall not be obligated to exercise any standard of reasonableness in determining whether lo permit an auction.
34. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any time and ordinary "For Lease· signs during the last 6 months of the term hereol. Except for ordinary "For Sublease" signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lesso(s prior wrillen consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically slated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor f orBreach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, lhal Lessor may elect lo continue any one or all existing subtenancies. Lessor's failure within 10 days following any such event lo elect lo the contrary by written notice lo the holder of any such lesser interest, shall conslilule Lessofs election lo have such event constitute the termination ol such interest.
36. Consents. Except as otherwise provided herein, wherever in this Lease lhe consent of a Party Is required lo an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lesso(s actual reasonable costs and expenses (including but not limited to architects', allorneys', engineers' and other consuHanls' lees) incurred in the consideration of, or response lo, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence Cl( use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessofs consent lo any act, assignment or sublelling shall not conslilule an acknowledgment that no Default Cl( Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically staled in writing by Lessor al the lime ol such consent. The failure to specify herein any particular condition lo Lesso(s consent shall nol preclude the imposition by Lessor al lhe lime of consent of such furlher or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that e~her Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish Its reasons In writing and in reasonable detail within 1 O business days following such request.
37.~-~-
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----.!3.?-1,2--Delaull;--ll-&llal-eGASlilHle a 9ela11ff-el-ttlel.esseeil-a11yG!laFaAler lail& e, relllses,tip911 flllltl9Sl t9·Pf8Yillw. fatewleAee-eHle lllff!6lffllH,-el41\9-1JY8FaAly, iAel11eiAg Ille alllilerity-el-ll& pllfty sigAiAg--cua.aAl&i'&WJ e ellllgale Glaallle,~aru ill•#le•ease•al -a-89FpaFele Gllar&AI~,- ♦ 98fllied sepy el a reee4YIIBIHll lls eeard el eif&&te11i-;111tR91+llRt-ftl&-fflakiAtt el·51181l·~~-liAaAeial 5lel-ls,W aA ~IGeftiliflale, &fie)WFitleA&eAlimlallllA ll>al Ille 11uaraAlyis-&IIHfl·elleel.
38. Quiet Possession. Subject to payment by Lessee of the Rent ard performance of all of the covenants, conditions ard provisions on Lessee's part to be observed ard performed under this Lease, Lessee shall have quiet possession ard quiet enjoyment of the Premises during lte term hereat.
39. Options. If Lessee is granted any option, as defined below, then the following provisions shall apply.
39.1 Def lnillon. "Option" shall mean: (a) the right to extend or reduce the term of or renew this Lease or to ex1end or reduce the term of or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase, the right of first offer lo purchase or the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Orfglnal Lessee. Arry Option granted lo Lessee in this Lease is personal to the original Lessee, and cannot belNl!l lTI • d" '""""' "'.,,.. ""°' ... ,,;, ,,.,~, c,,..,"" ~•-,. ..,.., """" ,, • ~, ,-~•oo m"" :l;AeiLS~ " PAGE 15 OF17
@1999 • AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-20-11/14E requested by Lessor, with Lessee certifying lhal Lessee has no intention ol lherealter assigning or subletting.
39.3 Multiple Options. In the event that Lessee has any mulliple Options lo extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.
39.4 Effect ol Delaull on Options.
(a) Lessee shall have no right lo exercise an Option: (i) during the period commencing with the giving of any notice of Delaull and continuing until said Delaull is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the lime Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Delaull, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option. (b) The period of lime within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a). (c) An Option shall terminate and be of no further force or ellecl, notwithstanding Lessee's due and timely exercise of the Option, ii, alter such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days alter such Rent becomes due (without any necessity of Lessor lo give notice thereol),or (ii) ii Lessee commits a Breach of this Lease.
40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever lo provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their properly from the acts of third parties. 41 . Reaarvatlona. Lessor reserves the right: (I) to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (II) to cause the recordatlon of parcel maps and restrictions, and (Ill) to create ancVor Install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and ullllty raceways do not unreasonably Interfere with the use of the Premises by Lessee.
Lessee agrees lo sign any documents reasonably requested by Lessor lo ellectuale such rights.
42. Performance Under Protest. . II at any lime a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money Is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to lnslllute suit for recovery of such sum. 1111 shall be adjudged that there was no legal obligation on the part of sald Party 10 pay such sum or any part thereof, said Party shall be enlllled lo recover such sum or so much thereof as II was not legally required to pay. A Party who does not Initiate suit for the recovery of sums paid ·under protest" within 6 months shall be deemed 10 have waived Its right lo protest such payment.
43. Authority; Mufllple Parties; Execution.
(a) II either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behall of such entity represents and warrants that he or she Is duly authorized to execute and deliver this Lease on Its behalf. Each Party shall, within 30 days alter request, deliver lo the other Party satisfactory evidence of such authority. (b) II this Lease Is executed by more than one person or entity as "Lessee", each such person or entity shall be jointly and severally liable hereunder. II is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all ol lhe named Lessees, and Lessor may rely on the same as ii all of the named Lessees had executed such document.
(c) This Lease may be executed by the Parties In counterparts, each of which shall be deemed an original and all ol which together shall constitute one and the same Instrument.
44. Conflict. Any conflict between the printed provisions of this Lease and the typewriflen or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
45. Oller. Preparation of this Lease by either party or their agent and submission of same lo the other Party shall not be deemed an oller to lease to the other Party. This Lease Is not Intended to be binding until executed and delivered by all Parties hereto.
46. Amendments. This Lease may be modified only in writing, signed by the Parties In interest at the lime of the modification. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications 10 this Lease as may be reasonably required by a Lender In connection with the obtaining of normal financing or rellnanclng of the Premises.
47. Waiver ol Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.
48. Arbitration ol Disputes. An Addendum requiring lhe Arbitration ol all disputes between the Parties and/or Brokers arising out of this Lease D Is @ Is not attached lo this Lease.
49. Accesslbllfly: Americans with Dlsabilllles Act.
(a) The Premises: 0 have not undergone an Inspection by a Certified Access Specialist (CASp). D have undergone an inspection by a Certified Access Specialist (CASp) and ii was determined that the Premises met all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. D have undergone an Inspection by a Certified Access Specialist (CASp) and II was detennined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq.
(b) Since compliance with the Americans with Disabilities Act (ADA) Is dependent upon Lessee's specific use of the Premises, Lessor makes no warranty or representation as lo whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee's use of the Premises requires modifications or additions lo the Premises In order lo be in ADA compliance, Lessee agrees lo make any such necessa,y modifications ancVor additions al Lessee's expense.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE
THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE ANO EFFECTUATE THE INTENT ANO PURPOSE OF LESSOR ANO LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY
BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF
THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF ANO OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT ANO THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATEN WHICH THE PREMISES ARE LOCATED. ;{,_
~ R COMMERCIAL REAL ESTATE ASSOCIATION
PAGE 180F17
FORM MTN-21>-11/14E
The parties hereto have execu!ed !his Lease at !he place and on the dates specified above !heir respecllve slgnatLJ'es. w ExecLdedJ.': f5t/f f1 (IJ/j6£ (1,1 Executed at:4 (~~ ~~ ~t. {)/}µ 1 { V On: J)- - ' On: / ]:= S
By LESSOR: By LESSEE:
~G~a~h~r~a~h~mra~t'--'-F~a~m~i~l:..11-...::;,:=c=..:::'l'-..::..:::~ c!.!.::==:J&f:~'-'-~L~P_City Power Telephone:(fil) =9 ... 8 ___ 6_-.c. 0 ... 4... 5 ... 1_____________ Telephone:L_l ________________ _ Facslmile:L_J Facsimile:(_) _________________ _
Email: Email: ___________________ _
Email: Email:- __________________ _
Federal ID No. Federal ID No. _________________ _
BROKER:
Cassidy Turley Commercial Real Estate
Services Inc, dba Cushman & Wakefield
Alln: Dave Geissberqer / Kalil Jenab
Tm~Vice President / Vice Chairman
Address: 300 Santana Row, Fifth Floor
BROKER:
Cassidy Turley Commercial Real Estate
Services Inc., dba Cushman & Wakefield
Attn: Dave Geissberger / Kalil Jenab
litle: Vice President / Vice Chairman
San Jose CA 95128 Address:300 Santana Row, Fifth Floor
Telephone:(408) ~6_1_5_-_3~4_0_0____________ _S_a_n_J_o_s_e~_C_A_9_5_1_2_8 ____________ _ Facslmile:(fil ) _,.6_,,_l-=-5--3"---'--4 4.,_40 ___________ . Telephone: (ill) :,:6..:1-=-5_- :::.3.,_4 0=-0=-----------· Emall:dave. [email protected] / Facsimlle:(fil) ... 6... 1... 5_-~~~4~4~4 ____________ _ kalil. jenab@cushwake, com Email:dave . qe issberqer@cushwake . com / Federal ID No. _ _ _ _______________ kal il. jenab@cushwake. com Bloker/Agent BAE license #: 01401887 / 00848 988 Federal ID No. _ _______ _ ___ _ ___ _ ____________ ___________ Broker/Agan! BAE License #: 01401887 / 00848988 NOTICE: These forms am often modified to mee! changing requirements of law and Industry needs. Always write or call lo make sure you are u!lllzlng lhe mos! current form: AR Commercial Real Eata!e AssoclaUon, 500 N Brand BIVd, Suite 900, Glendale, CA 91203.
Telephone No. (213) 887-Sm. Fax No.: (213) 887-8616.
CCopyrlgh! 1999 By AIR Commerclal Real Es!a!e Association .
All rights reserved. No part of these works may be reproduced In any form without perml1Slon In writing. ~ PMU~•
@1 999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-20-11/14E ' s:
Exhibit A
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Exhibit B
t.321494 SF
ADDENDUM TO STANDARD INDUSTRIAL/COMMECIAL MULTI-TENANT LEASE - NET By and Between
Gahrahmat Family Limited Partnership II, LP ("Lessor")
AND
City of Santa Clara dba Silicon Valley Power ("Lessee") THIS ADDENDUM (this "Addendum"), dated as of August 28, 201S, is made to the Standard Industrial/Commercial Multi-Tenant Office Lease - Net, dated as of even date herewith (as hereby modified and supplemented, the "Lease"), by and between Gahrahmat Family Limited Partnership II, LP, as Lessor, and City of Santa Clara dba Silicon Valley Power, as Lessee, for Premises located at 881 Martin A venue, Santa Clara, California.
NOW, THEREFORE, in consideration of the mutual promises herein, and for good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby modify, amend and/or supplement the Lease as follows, it being agreed that to the extent of any conflict between the Lease and this Addendum, the terms and conditions of this Addendum shall control:
SO. ANNUAL RENT INCREASES. Base Rent is payable in the following amounts and shall be adjusted as provided below:
Months Rent/Month NNN
1-12 $ 3S 743.40
13-24 $ 36.81S.70
2S-36 $37,920.17
27-48 $ 39.0S7.78
49-60 $40 229.51
51. TENANT IMPROVEMENTS. Lessor shall provide and pay for the following:
a. Two (2) 12 ton cooling units for the server room
b. Repair vandalized electrical panels located in the server room c. Deliver the existing Generator in good working order including all of its maintenance and repair documentations in Lessor's possession.
Lessor shall also provide One Hundred and Sixty-Two Thousand Four Hundred and Seventy and 00/ I 00 Dollars ($162,470.00) towards mutually agreed to improvements as described in Exhibit A of this agreement. Tenant agrees to supervise/manage the construction of said improvements and the General Contractor ("Technical Builders").
Tenant, at Tenants sole cost and expense shall be allowed to demo/remove existing Liebert units in the server room without any obligation to restore upon lease Termination. The mutually approved initial tenant improvements referenced in this section shall not be subject to Restoration upon lease Termination.
Lessor shall expend such allowance on the design, construction, and management of the Tenant Improvements, including, without limitation, costs for labor, materials, permits and reasonable project management fees. The purpose of the Tenant Improvement Allowance is for the completion of the Tenant Improvements described in this section of this Lease, Lessee shall assume sole responsibility, without right to reimbursement from Lessor, for all Tenant Improvements costs in excess of One Hundred Sixty Two Thousand For Hundred Seventy Dollars and 00/00 ($162,470,00). Any such excess will be billed to Lessee by Lessor for immediate payment to Lessor within IO days of receipt of an invoice for reimbursement.
52. RIGHT OF FIRST OFFER TO EXPAND PREMISES. In the event that, prior to the Lease Expiration Date or any extensions thereof, Lessor receives a bona-fide offer to lease the adjacent space in the Building or the entire Building from a third party ("Third-Party Bona-Fide Offer"), then Lessor shall provide written notice thereof to Lessee ("Lessor's Notice"). Such Lessor's Notice shall contain a summary of the terms of the Third-Party Bona-Fide Offer. Lessee shall have five (S) business days after receipt of Lessor's Notice to submit a written lease proposal ("Lease Proposal") to Lessor containing the terms upon which Lessee proposes to lease the subject space from Lessor. If Lessor and Lessee are unable to agree on the business terms of the Lease Proposal within five business days of Lessor's receipt of the Lease ProposaL Lessor shall be free to lease the subject space to any other party and Lessor shall have no further obligation to negotiate with Lessee and this provision shall be no longer in effect.
53. LEASE EXTENSION.
53.t Tenant shall be granted one (I) option to extend the lease an additional tenn of five (5) years. Rent for the option term shall be at the then fair market rate for similar type Oftice/R&D space in the surrounding area of Santa Clara. ("Agreement to Extend"). Tenant shall give Lessor nine (9) months prior written notice of exercising its option to extend and they shall reach such mutual agreement ninety (90) days prior to the Lease Expiration Date.
53.2 The Lease shall be extended for a five (S) year term upon all of the terms and conditions of this Lease, provided that the Base Monthly Rent for the extension period shall be the "Fair Market Rent" for the Leased Premises, increased as set forth below. For purposes hereof, "Fair Market Rent" shall mean the Monthly Rent determined pursuant to the process described below for similar type Oftice/R&D space in the surrounding area of Santa Clara. In no event, however, shall any adjustment of Base Monthly Rent pursuant to this paragraph result in a decrease of the Monthly Rent for the Leased Premises below the amount due from Lessee for the preceding portion of the initial Lease Term for which Monthly Rent had been fixed. At the end of the first 12 month period of the extension Period, Monthly Rent shall be increased by 3%, and 3% every anniversary thereafter. No leasing commissions shall be due or payable to any broker retained by Lessee with regard to this Lease for any Extension ~-· o/ 1
53.3 Within thirty (30) days after the parties reach an Agreement to Extend, Lessor shall notify Lessee in writing of Lessor's estimate of the Monthly Rent for the applicable extension period, based on the provisions of Paragraph 53.2 above. Within thirty (30) days after receipt of such notice from Lessor, Lessee shall have the right either to (i) accept Lessor's statement of Monthly Rent as the Monthly Rent for the applicable extension period; or (ii) elect to arbitrate Lessor's estimate of Fair Market Rent, such arbitration to be conducted pursuant to the provisions hereof. Failure on the part of Lessee to require arbitration of Fair Market Rent within such 30-day period shall constitute acceptance of the Monthly Rent for the applicable extension period as calculated by Lessor. If Lessee elects arbitration, the arbitration shall be concluded within 90 days after the date of Lessee's election, subject to extension for an additional 30-day period if a third arbitrator is required and does not act in a timely manner. To the extent that arbitration has not been completed prior to the expiration of any preceding period for which Monthly Rent has been determined, Lessee shall pay Monthly Rent at the rate calculated by Lessor, with the potential for an adjustment to be made once Fair Market Rent is ultimately determined by arbitration.
53.4 In the event of arbitration, the judgment or the award rendered in any such arbitration may be entered in any court having jurisdiction and shall be final and binding between the parties. The arbitration shall be conducted and determined in the County of Santa Clara in accordance with the then prevailing rules of the American Arbitration Association or its successor for arbitration of commercial disputes except to the extent that the procedures mandated by such rules shall be modified as follows:
(a) Lessee shall make demand for arbitration in writing within thirty (30) days after service of Lessor's determination of Fair Market Rent given under Paragraph 53.3 above, specifying therein the name and address of the person to act as the arbitrator on its behalf: The arbitrator shall be qualified as a real estate appraiser familiar with the Fair Market Rent of similar industrial, research and development, or office space in the Santa Clara area who would qualify as an expert witness over objection to give opinion testimony addressed to the issue in a court of competent jurisdiction. Failure on the part of Lessee to make a proper demand in a timely manner for such arbitration shall constitute a waiver of the right thereto. Within fifteen ( I 5) days after the service of the demand for arbitration, Lessor shall give notice to Lessee, specifying the name and address of the person designated by Lessor to act as arbitrator on its behalf who shall be similarly qualified. If Lessor fails to notify Lessee of the appointment of its arbitrator, within or by the time above specified, then the arbitrator appointed by Lessee shall be the arbitrator to determine the issue.
(b) In the event that two arbitrators are chosen pursuant to Paragraph 53.4(a) above, the arbitrators so chosen shall, within fifteen ( I 5) days after the second arbitrator is appointed determine the Fair Market Rent. If the two arbitrators shall be unable to agree upon a determination of Fair Market Rent within such 15-day period, they, themselves, shall appoint a third arbitrator, who shall be a competent and impartial person with qualifications similar to those required of the first two arbitrators pursuant to Paragraph 53.4 (a). In the event they are unable to agree upon such appointment within seven days after expiration of such I 5-day period, the third arbitrator shall be selected by the parties themselves, if they can agree thereon, within a further period of fifteen (IS) days. If the parties do not so agree, then either party, on behalf of both, may request appointment of such a qualified person by the then Presiding Judge of the California Superior Court having jurisdiction over the County of Santa Clara, acting in his or her private and not in his or her official capacity, acting in his private and not in his official capacity, and the other party shall not raise any question as to such Judge's fiJII power and jurisdiction to entertain the application for and make the appointment. The three arbitrators shall decide the dispute if it has not previously been resolved by following the procedure set forth below. (t) Where an issue cannot be resolved by agreement between the two arbitrators selected by Lessor and Lessee or settlement between the parties during the course of arbitration, the issue shall be resolved by the three arbitrators within IS days of the appointment of the third arbitrator in accordance with the following procedure.
The arbitrator selected by each of the parties shall state in writing his determination of the Fair Market Rent supported by the reasons therefor with counterpart copies to each party. The arbitrators shall arrange for a simultaneous exchange of such proposed resolutions. The role of the third arbitrator shall be to select which of the two proposed resolutions most closely approximates his determination of Fair Market Rent. The third arbitrator shall have no right to propose a middle ground or any modification of either of the two proposed resolutions. The resolution he chooses as most closely approximating his determination shall constitute the decision of the arbitrators and be final and binding upon the parties.
(d) In the event of a failure, reli.isal or inability of any arbitrator to act, his successor shall be appointed by him, but in the case of the third arbitrator, his successor shall be appointed in the same manner as provided for appointment of the third arbitrator. The arbitrators shall decide the issue within fifteen ( I 5) days after the appointment of the third arbitrator. Any decision in which the arbitrator appointed by Lessor and the arbitrator appointed by Lessee concur shall be binding and conclusive upon the parties. Each party shall pay the fee and expenses of its respective arbitrator and both shall share the fee and expenses of the third arbitrator, if any, and the attorneys' fees and expenses of counsel for the respective parties and of witnesses shall be paid by the respective party engaging such counsel or calling such witnesses. (e) The arbitrators shall have the right to consult experts and competent authorities to obtain factual information or evidence pertaining to a determination of Fair Market Rent, but any such consultation shall be made in the presence of both parties with full right on their part to cross-examine. The arbitrators shall render their decision and award in writing with counterpart copies to each party. The arbitrators shall have no power to modify the provisions of this Lease.
54. SIGNAGE. Tenant may, at Tenant's sole cost and expense, have building and monument signage, subject to Landlord's approval, which shall not be unreasonably withheld, and approval by the City of Santa Clara
55. CALIFORNIA PUBLIC RESOURCES CODE§ 25402.10. If Lessee (or any party claiming by, through or under Lessee) pays directly to the provider for any energy consumed at the Building, Lessee, promptly upon request, shall deliver to Lessor (or, at Lessor's option, execute and deliver to Lessor an instrument enabling Lessor to obtain fi·om such provider) any data about such consumption that Lessor, in its reasonable judgment, is required o disclose to a prospective buyer, tenant or mortgage lender under California Public Resources Code§ 25402.10 or any similar law. 2 56. WIRING AND CABLING. At any time prior to, or within fifteen ( 15) days after the expiration or sooner termination of this Lease, Lessor may elect by written notice to Lessee to: (i) retain any or all electrical or telecommunications wiring, cables, risers, mounts, and/or similar installations installed by Lessee (the 'Telecommunications Wiring"); or (ii) remove any or all such Telecommunications Wiring and restore the Premises or other areas within the Building Project to their condition prior to the installation of the Telecommunications Wiring (the "Wiring Restoration Work"); and (x) that Lessor shall perform such Wiring Restoration Work at Lessee's sole cost and expense, using available Security Deposit funds (or, if insufficient, Lessee shall pay all costs therefor within ten ( IO) days after Lessor's written demand); or (y) require Lessee to perform the Wiring Restoration Work at Lessee's sole cost and expense. The provisions of this Article 56 shall survive the expiration or sooner termination of this Lease.
57. LESSOR'S CONDITION SUBSEQUENT. This Lease is specifically conditional upon Lessor's obtaining a fully executed Lease signed by Lessee and returned to Lessor on or before Friday, November 20, 2015. In the event that Lessee fails to execute and return a fully signed Lease to Lessor on or before November 20, 2015, this Lease shall automatically become null and void whereupon the parties shall have no further obligation hereunder.
NOW, THEREFORE, the parties hereto have executed this Addendum as of the date first above written.
AGREED AND ACCEP. "ED
Lesser: C1ly of Santa Clara dba Silicon Valley Powu
.,, ~~,.:X::...., ... ,,, ,o/a.1/1-S
ATTEST:
L j2,,,,,.,,a~c2;_ /vZ.e':,,----._ 0 r - City Clerk
CONSULT YOUR PROFESSIONAL ADVISORS: THIS DOCUMENT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY, TAX ACCOUNTANT, GEOLOGIST OR OTHER PROFESSIONAL ADVISOR FOR APPROVAL FROM THE STANDPOINT OF PROTECTION OF YOUR INTERESTS ANO RIGHTS. NO REPRESENTATION OR RECOMMENOA TIONS ARE
MADE BY NAI BT COMMERCIAL, ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS DOCUMENT OR THE TRANSACTION RELATING THERETO. ADDRESS THESE QUESTIONS TO YOUR ATTORNEY ANO/OR OTHER PROFESSIONAL ADVISORS.
3 Ill.. CUSHMAN &
Ill -~ WAKEFIELD
300 Santana Row, Fifth Floor
San Jose, CA 95128
Tel +1408615 3400
Fax +1 408 615 3444
cushmanwakefield.com
CalBRE License #01880493
Attachment A
AGENCY CONFIRMATION
(per California Civil Code Section 2079.17)
Property Address: 881 Martin Avenue Santa Clara California The following agency relationshlp(s) ls/are hereby confirmed for this transaction:
Cushman & Wekefleld Is the agent of (check one):
D the seller / lessor exclusively; or
1:8:l both the lessee and the lessor.
Acknowledged:
Seller / Lessor:
Partnership II, LP
Buyer / Lessee:
Valley Power
Dual Agent: _Ccc..u:;.:s~h'""m=a.;_n..c.&'-'W'--'-'-'ak-'--'e""fi-"-el--'d ____ BRE Lie. No.: 01880493 By: Ve_/< A-- DaveGe#-
.// /
By: "4-~ -:;--e ,.l<alilJenab
BRE Lie. No. 01401887
Date: 10/9/15
BRE Lie. No. 00848988
Date: 10/9/15
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Ill~ CUSHMAN &
Ill 1111 WAKEFIELD
Attachment B
REAL PROPERTY DISCLOSURES
300 Santana Row, Filth Floor
San Jose, CA 95128
Tel +1 408 615 3400
Fax +1 408 615 3444
cushmanwakefield.com
CalBRE License #01880493
CUSHMAN & WAKEFIELD ("Broker") provides this Real Property Disclosure Notice ("Notice") in reference to a proposed transaction by and between Gahrahmat Family Limited Partnership II, LP ("Lessor") and City of Santa Clara dba Silicon Valley Power ("Lessee") regarding real property identified as: 881 Martin Avenue, Santa Clara, Callfornla (the "Property").
Hazardous Mater1a1s
Comprehensive federal, state and local laws, regulations and ordinances ("Laws") control the disclosure, use, storage, handling, removal and disposal of Hazardous Materials. The term "Hazardous Materials" includes, but is not limited to, underground storage tanks. petroleum, paint, solvents, lead, cyanide, DDT, inks, acids, pesticides, ammonium, asbestos, heavy metals, PCBs, and any contaminated, hazardous or toxic substance.
Hazardous Materials may be present at the Property due to current or prior use, or the use of adjacent properties. Except as expressly stated in this paragraph, Broker and Its agents have not made and will not make any analysis, Investigation, representation or warranty with respect to any Hazardous Materials matters, Including without limitation the presence or absence of Hazardous Materials on or impacting the Property.
Broker recommends that you consult your advisors with respect to all Hazardous Materials matters.
Americans with O1sab1Ht1es Act
The Americans with Disabilities Act C'ADA") requires, among other things, that owners of "public accommodations• remove barriers to access by disabled persons, and provide auxlllary aids and services for hearing, vision or speech impaired persons. Any change of use or alterations of the Property may trigger such requirements, even If existing use Is In compliance with the ADA Except as expressly stated In this paragraph, Broker and Its agents have not made and will not make any analysis, investigation, representation or warranty with respect to any ADA matters. Broker recommends that you consult your advisors with respect to all ADA matters.
Natural Hazards - Sale Only Various Laws require a seller and Its broker to disclose the existence of certain natural hazards to a buyer, including whether the property is located in an earthquake fault zone, a seismic hazard zone, a special flood hazard area, an area of potential flooding, a fire hazard severity zone, or a wildland fire area. If Broker represents the Seller, Broker will provide Buyer with a report prepared by an Independent third party regarding such natural hazards during the due diligence period under the purchase contract. commercial property owner's Guide to Earthquake Safety- Sale Only The seller of a precast concrete or reinforced or unreinforced masonry building with wood frame floors or roof which was built before January 1, 1975 must deliver to the buyer a copy of "The Commercial Property Owner's Guide to Earthquake Safety" published by the California Seismic Safety Commission. Buyer acknowledges that Seller and/or Broker have disclosed whether such requirement applies to this Property, and if so, that Broker has delivered to Buyer a copy of that Guide.
water Heater Bracing O1sc1osure and certlflcauon - sa1e Only Seller hereby certifies that all water heaters In or on the Property are braced, anchored or strapped to resist falling or horizontal displacement due to earthquake motions as required by state and applicable local codes.
Lead Based paint pamphlet- Sale or Lease of Residential property The seller or lessor of any residential property built before 1978 rrust provide the buyer or lessee with a lead hazard information pamphlet, disclose the presence of any known lead-based paint and provide a statement to be signed by the buyer or lessee that the buyer or lessee has read the warning statement, has received the pamphlet, and has a 10-day opportunity to inspect before becoming obligated under the contract.
Broker Pl1c1a1mer
Broker has not made and will not make any analysis, investigation, representation or warranty regarding (a) the zoning of the Property or the legality of any present or future use of the Property; (b) the compliance of the Property with any Law: (c) the physical condition of the Property, including without limitation the structural, mechanical, or soils conditions of the Property or the presence or absence of wood-destroying organisms, mold, allergens, fungi, spores, pollens, insects or pests; (d) the financial condition or prospects of the Property or any of Its tenants, Including without limitation the accuracy or completeness of income and expense information and projections, or the intent or ability of any tenant to continue its tenancy; (d) the size, measurements or boundaries of the Property; or (e) pending or future action by any government or other entity or person that might Impact the Property. Broker recommends that you consult your advisors with respect to each of these matters.
Real Properly Disclosures
License #0188049
11111 CUSHMAN & Ill la WAKEFIELD
Legal. Tax and Accounting Matters
Name
Date
Broker and its agents are not qualified to provide legal, tax or accounting advice, and have not made and will not make any analysis, investigation, representation or warranty regarding any legal, tax or accounting matters. Broker recommends that you consult your advisors with respect to all legal, tax and accounting matters.
Broker Multfpl@ Representation Broker and its agents have a wide variety of clients, and may represent other buyers or lessees interested in the Property, or may represent other sellers or lessors with property similar to the Property. Buyer or Lessee understands and agrees that Broker and its agents may present multiple offers on the Property to the Seller or Lessor. Seller or Lessor understands and agrees that Broker and its agents may present multiple properties to the Buyer or Lessee.
Non-Binding proposal, Letter of Intent
If this Disclosure Notice accompanies a proposal or Letter of Intent then it is a statement of the terms upon which the Buyer and Seller or Lessor and Lessee (the "Parties") may be interested in pursuing further negotiations concerning the Property, and is not Intended to be a complete or binding agreement between the Parties. No binding agreements shall be created between the Parties until a full and final written agreement containing all material terms of the transaction is prepared, reviewed and approved by the Parties and their respective counsel, if any, and mutually executed and delivered.
Each Party acknowledges that it has incurred, and will incur, costs and expenses in connection with the transaction contemplated hereby, including but not limited to the costs of investigation and assessment of the economic and other merits of the proposal, as well as legal expenses in connection with the preparation of a final and binding agreement, all of which costs are incurred at such Party's sole cost and risk, and not in reliance upon any act or representations of the other Party or Broker. Either Party may terminate the negotiations at any time for any reason, or for no reason. without liability or obligation whatsoever.
Real Property Disclosures
License 10188049
CITY CLER.r i:-1 LE COP'.
FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is dated as of April 29, 2020, for reference purposes only, and is entered into by and between Gahrahmat Family Limited Partnership I, LP, a California limited partnership ("Landlord", as successor-in-interest to Gahrahmat Family Limited Partnership II, LP), and City of Santa Clara dba Silicon Valley Power ("Tenant"), with reference to the following facts and objectives:
RECITALS
A. WHEREAS, Landlord and Tenant entered into that certain AIR Commercial Real Estate Association Standard Industrial/Commercial Multi-Tenant Lease dated October 9, 2015 (the "Lease") for premises consisting of approximately 32,494 rentable square feet commonly known as 881 Martin Avenue, Santa Clara, California ("Premises");
B. WHEREAS, the current Term of the Lease expires on October 31 , 2020; and C. WHEREAS, the parties have agreed to extend the Term of the Lease through October 31, 2025, pursuant to the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Recitals. Landlord and Tenant agree that the above recitals are true and correct and are hereby incorporated herein as though set forth in full.
2. Term Extension. The Term of the Lease is hereby extended through and including October 31, 2025 (the "Extended Term").
3. Monthly Base Rent. Landlord and Tenant agree that the monthly Base Rent payable during the period of November 1, 2020 through and including October 31, 2025 shall be as follows:
Period
November 1, 2020 - October 31, 2021
November 1, 2021 - October 31, 2022
November 1, 2022 - October 31 , 2023
November 1, 2023 - October 31, 2024
November 1, 2024 - October 31 , 2025
Monthly Base Rent
$53,615.10 ($1.65/SF (NNN))
$55,223.55 ($1.70/SF (NNN))
$56,880.26 ($1.75/SF (NNN))
$58,586.67 ($1 .80/SF (NNN))
$60,344.27 ($1.86/SF (NNN))
4. Condition of Premises. Tenant acknowledges and agrees (i) Tenant is familiar with the condition of the Premises, (ii) Tenant accepts the Premises in their existing condition "AS IS", and (iii) Landlord shall not be obligated to provide or pay for any improvement, remodeling or refurbishment work or services related to the improvement, remodeling or refurbishment of the Premises.
5. Options. Tenant acknowledge that there are no options to further extend or renew the term of the Lease, and any such options are hereby terminated.
6. Brokers. Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment whose commission shall be payable by Landlord. If Tenant has dealt with any person, real estate broker or agent with respect to this Amendment, Tenant shall be solely responsible for the payment of any fee due to said person or firm, and Tenant shall indemnify, defend and hold Landlord free and harmless against any claims, judgments, damages, costs, expenses, and liabilities with respect thereto, including attorneys' fees and costs.
7. Ratification of Lease. Tenant acknowledges that the Lease is in full force and effect, there are currently no defaults nor claims existing under the Lease, and there are no amendments or addenda to the Lease Agreement other than those set forth herein.
8. Effect of Amendment. Except as modified herein, the terms and conditions of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail.
9. Definitions. Unless otherwise defined in this Amendment, all terms not defined 111 this Amendment shall have the meanings assigned to such terms in the Lease.
10. Authority. Subject to the assignment and subletting provisions of the Lease, this Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that the person signing below on such party's behalf is authorized to do so and to bind such party to the terms of this Amendment.
11. Miscellaneous.
a. Counterparts/Electronic Signatures. This Amendment may be signed in two or more counterparts. When at least one such counterpart has been signed by each party, this Amendment shall be deemed to have been fully executed and each counterpart shall be deemed to be an original and all counterparts taken together shall be one and the same Amendment. This Amendment may be signed by faxed, e-mailed or other electronic signatures (e.g., Docusign) and faxed, e-mail, or such other electronic signatures hereon shall be deemed originals for all purposes.
b. Incorporation/ Integration. This Amendment is incorporated into the Lease by reference and all terms and conditions of the Lease (except as expressly modified herein) are incorporated into this Amendment by reference. This Amendment and the Lease comprises the entire agreement between the parties.
c. Neutral Interpretation. This Amendment shall be interpreted neutrally between the parties regardless of which party drafted or caused to be drafted this Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written.
(SIGNATURES APPEAR ON FOLLOWING PAGE]
2 LANDLORD:
Gahrahmat Family Limited Partnership I, LP,
a California limited partnership
By: Gahrahmat Properties I, LLC,
a California limited Ii bi!" company
Its: General Partner
By:_..-++-"---"--""--'-----"'--'.._.__-1--_ _ _ Mahmoud Gahrahmat Its: Managing Member
Dated: t/-f? 2-~ /}
TENANT:
City e{ Santa,Clara dba Silicon Valley Power
By~\!J:lt0'-:xLh~ ~~ac0'-,/
Name: Deanna t/Santana
Its: City Manager
'i It!/ llUi~
Dated, {:..A
~
By:
me: Brian
~ Doyle
Its: City Attorney
Dated: ~ \(i) I u,t.. "t)
3 City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
25-53 Agenda Date: 2/11/2025
REPORT TO COUNCIL
SUBJECT
Action on (1) Delegation of Authority to the City Manager to Negotiate and Execute a Lease Agreement with Gahrahmat Family Limited Partnership I, LP, A California Limited Partnership for the Commercial Space Located at 831 - 851 Martin Avenue, Santa Clara, for SVP Staff, (2) Authorize the City Manager to Negotiate and Execute Amendment(s) to the Lease Agreement at 881 Martin Avenue to Extend the Term, If Needed, and (3) Increase Current Authorization for City Manager to Issue Purchase Orders with Pivot Interiors, Inc. and Other Suppliers/Authorized Dealers for the Purchase of and Installation of Cubicles, Office Furniture and Related Products and Services at City Facilities.
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure..
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), continues to experience significant electric load growth driven by increased demand from customers. SVP has a long-term capital improvement strategy to expand and modernize its electric infrastructure to meet this growth and will need ongoing resources to maintain the expanded system. As previously discussed with the City Council, SVP’s customer demand for electric power is expected to nearly double over the next decade.
On October 27, 2015, the City Council authorized a five-year standard industrial/commercial multitenant lease net agreement with the Gahrahmat Family Limited Partnership II, LP for commercial space at 881 Martin Avenue in Santa Clara (881 Martin Lease) for SVP’s Customer Services Division and its Resources, Power Trading and Marketing Division (RTC 16B.10). Around 2019, staff from other divisions including engineering also relocated to 881 Martin Avenue. On September 1, 2020, the City Council authorized the City Manager to execute an amendment extending the term 5 years until September 30, 2025 (RTC 20-715). The 881 Martin Lease expires on October 1, 2025.
To successfully implement projects and manage growth, SVP has added positions (not all located at Martin Avenue). In FY 21/22 SVP added 16 positions and, in FY 22/23, it added 8 new positions.
Two additional positions were added in FY 23/24 and, on August 20, 2024, 12 additional positions were added. Even with a 23% vacancy rate, SVP already has space constraints at 881 Martin Avenue, as some staff share cubicles and there is insufficient space for planned new hires.
DISCUSSION
To address these challenges, SVP identified a nearby space within the same office complex. This space at 831 - 851 Martin Avenue (851 Martin) has significantly greater square footage than the existing location at 881 Martin Avenue (50,000 square feet versus 32,500 square feet).
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Lease Terms
The proposed lease is a triple-net agreement with the City responsible for paying taxes, maintenance, repairs, utilities, and insurance. Key terms include:
· Base Rent: Approximately $90,000 per month in the first year (abated for first 3 months). · Initial Term: 36 months
· Annual Rent Escalation: 3%, reaching approximately $95,181 monthly in year 3.
The base rent rate may change depending on the start date of the lease and other pending negotiations. It is anticipated that the City will pay property taxes, insurance, utilities, and maintenance costs as reimbursement to the property owner. The owner is also undertaking a number of tenant improvements primarily associated with meeting the technology needs of SVP.
SVP will be responsible for some of those costs. Staff recommends authorization of up to $6 million in payments to the property owner over the three-year lease term, including:
· Estimated lease payments $3.3 million over three years. In comparison at the current 881 Martin location, lease cost is estimated to be $2.2 million over 3 years assuming a 3% annual escalation.
· Estimated tenant improvements $700,000 (primarily technology, security, and backup systems)
· Estimated other costs (property taxes, insurance, utilities, and maintenance costs) $2,000,000.
In comparison at the current 881 Martin location, additional costs are estimated to be $1.3 million over 3 years assuming a 3% annual escalation.
Staff will manage and allocate expenses among these categories to ensure the maximum authorization of $6 million is not exceeded. SVP is currently paying over $1 million per year for the lease including additional costs at the 881 Martin site. When accounting for potential annual escalation, the anticipated increase in cost for the new office space is approximately $600,000 per year.
Extension of Current Lease at 881 Martin
Staff hopes to be moved to the new office building before the expiration of the current lease but there are a number of improvements needed at 851 Martin which may require additional time. Therefore, staff recommends that the City Council authorize the City Manager be to negotiate and execute further amendments to the 881 Martin Lease if needed to extend the term for any transitional period.
Pivot Interiors
On August 27, 2024 (RTC# 24-683), the City Council authorized the City Manager or designee to execute purchase orders with Pivot Interiors, Inc., other suppliers, and/or their authorized dealers for the purchase and installation of office cubicles and furniture under cooperative purchasing agreements. This authorization included a total aggregate maximum compensation of $600,000, subject to Purchasing Division Manager’s determination of compliance with Section 2.105.270(c) of the Santa Clara City Code.
Section 2.105.270(c) allows the City to use cooperative purchasing agreements. This section states that the City may, without observing formal bidding requirements, “contract with a vendor under a City of Santa Clara Page 2 of 4 Printed on 9/2/2025
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25-53 Agenda Date: 2/11/2025
contract awarded using preestablished cooperative purchasing agreements, when such agreement resulted from a competitive bid process that meets or exceeds the City’s competitive bid process.” As part of the relocation and expansion, SVP negotiated for the previous tenant to leave behind cubicles and any other furniture that they were willing to leave for use by SVP. The previous tenant has vacated the facility and left all cubicles in open areas but removed all furniture in offices. As a result, SVP needs to purchase and install furniture for the offices at 851 Martin. Where feasible, SVP will reuse existing furniture from 881 Martin to minimize costs. However, additional purchases will be required to address the needs of the new facility.
To address the current and future needs, staff is requesting an increase to the total aggregate maximum compensation for furniture procurement and installation by $600,000 from $600,000 to $1,200,000. Of the additional $600,000, $400,000 is designated for SVP, and $200,000 is to address expected needs for other City departments. This increase will allow the City to procure and install necessary furniture for SVP offices and provide flexibility for future furniture needs across the City facilities.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the actions being considered are exempt from the California Environmental Quality Act (“CEQA”) pursuant to section 15301 (Class 1 - Existing Facilities) of Title 14 of the California Code of Regulations as the proposed purchases involve interior alterations to existing structures.
FISCAL IMPACT
The annual cost of the property is anticipated to be approximately $2 million (including lease costs and additional costs such as taxes, insurance, maintenance, repair, and utilities). Sufficient funding is available in the Electric Utility Fund for FY 2024/25 if needed for cost of improvements, and the additional cost for the difference between the proposed lease at 851 Martin and the current lease at 881 Martin will be incorporated into the Fiscal Year 2025/26 and 2026/27 Proposed Operating Budget.
For future years, the annual cost will be incorporated into the annual operating budget through the regular process.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected].
RECOMMENDATION
1. Determine that the proposed actions are exempt from CEQA pursuant to Section 15301 of Title 14 of the California Code of Regulations;
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25-53 Agenda Date: 2/11/2025
2. Delegate Authority to the City Manager to Negotiate and Execute a Lease Agreement with Gahrahmat Family Limited Partnership I, LP, A California Limited Partnership for the commercial space located at 831 - 851 Martin Avenue, Santa Clara, for SVP staff for an amount not to exceed $6 million over a 36-month term beginning on or around September 1, 2025, subject to the appropriation of funds and the review and approval as to form by the City Attorney;
3. Authorize the City Manager to negotiate and execute amendment(s) to the lease agreement with Gahrahmat Family Limited Partnership I, LP, A California Limited Partnership for the property at 881 Martin Avenue to extend the term, if needed to facilitate the transition to new premises;
4. Authorize the City Manager to take any actions as necessary to implement and administer the lease agreements;
5. Authorize the City Manager or designee to execute additional Purchase Orders and related documents with Pivot Interiors, Inc., other suppliers, and/or their authorized dealers for the purchase and installation of office cubicles and furniture under cooperative purchasing agreements with a total aggregate maximum compensation of $1,200,000 (increasing previous authorization of $600,000), subject to (1) Purchasing Division Manager’s determination pursuant to Section 2.105.270(c) of the Santa Clara City Code, (2) the appropriation of funds, and (3) the review and approval as to form by the City Attorney; and
6. Authorize the City Manager or designee to take any actions as necessary to implement and administer the Purchase Orders in alignment with the associated cooperative purchase agreements.
Reviewed by: Manuel Pineda, Chief Electric Utility Officer Approved by: Jovan D. Grogan, City Manager
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1 SECOND AMENDMENT TO LEASE
This Second Amendment to Lease ("Amendment") is dated as of September 2, 2025, for reference purposes only, and is entered into by and between Gahrahmat Family Limited Partnership II, LP, a California limited partnership ("Landlord", as successor-in-interest to Gahrahmat Family Limited Partnership I, LP), and City of Santa Clara dba Silicon Valley Power, a Municipal corporation ("Tenant"), with reference to the following facts and objectives:
RECITALS
A. WHEREAS, Landlord and Tenant entered into that certain AIR Commercial Real Estate Association Standard Industrial/Commercial Multi-Tenant Lease dated October 9, 2015, as amended by that certain First Amendment to Lease dated April 29, 2020 (the “Lease”) for premises consisting of approximately 32,494 rentable square feet commonly known as 881 Martin Avenue, Santa Clara, California ("Premises"); B. WHEREAS, the current Term of the Lease expires on October 31, 2025; and C. WHEREAS, the parties have agreed to extend the Term of the Lease through October 31, 2030, pursuant to the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Recitals. Landlord and Tenant agree that the above recitals are true and correct and are hereby incorporated herein as though set forth in full.
2. Term Extension. The Term of the Lease is hereby extended through and including October 31, 2030 (the “Extended Term”).
3. Monthly Base Rent. Landlord and Tenant agree that the monthly Base Rent payable during the period of November 1, 2025 through and including October 31, 2030 shall be as follows:
Period Monthly Base Rent
November 1, 2025 – October 31, 2026 $60,438.84 ($1.86/SF (NNN)) November 1, 2026 – October 31, 2027 $43,866.90 ($1.35/SF (NNN)) November 1, 2027 – October 31, 2028 $45,182.91 ($1.39/SF (NNN)) November 1, 2028 – October 31, 2029 $46,538.39 ($1.43/SF (NNN)) November 1, 2029 – October 31, 2030 $47,934.55 ($1.48/SF (NNN))
4. Condition of Premises. Tenant acknowledges and agrees (i) Tenant is familiar with the condition of the Premises, (ii) Tenant accepts the Premises in their existing condition "AS IS", and (iii) Landlord shall not be obligated to provide or pay for any improvement, remodeling or refurbishment work or services related to the improvement, remodeling or refurbishment of the Premises.
5. Options. Tenant acknowledges that there are no options to further extend or renew the term of the Lease, and any such options are hereby terminated.
6. Brokers. Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment whose commission shall be payable by Landlord. If Tenant has dealt with any person, real estate broker or agent with respect to this Amendment, Tenant shall be solely responsible for the payment of any fee due to said person or firm, and Tenant shall indemnify, defend and hold 2 Landlord free and harmless against any claims, judgments, damages, costs, expenses, and liabilities with respect thereto, including attorneys’ fees and costs.
7. Ratification of Lease. Tenant acknowledges that the Lease is in full force and effect, there are currently no defaults nor claims existing under the Lease, and there are no amendments or addenda to the Lease Agreement other than those set forth herein.
8. Effect of Amendment. Except as modified herein, the terms and conditions of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail.
9. Definitions. Unless otherwise defined in this Amendment, all terms not defined in this Amendment shall have the meanings assigned to such terms in the Lease.
10. Authority. Subject to the assignment and subletting provisions of the Lease, this Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that the person signing below on such party’s behalf is authorized to do so and to bind such party to the terms of this Amendment.
11. Miscellaneous. a. Counterparts/Electronic Signatures. This Amendment may be signed in two or more counterparts. When at least one such counterpart has been signed by each party, this Amendment shall be deemed to have been fully executed, and each counterpart shall be deemed to be an original and all counterparts taken together shall be one and the same Amendment. This Amendment may be signed by faxed, e-mailed or other electronic signatures (e.g., Docusign) and faxed, e-mail, or such other electronic signatures hereon shall be deemed originals for all purposes.
b. Incorporation/ Integration. This Amendment is incorporated into the Lease by reference and all terms and conditions of the Lease (except as expressly modified herein) are incorporated into this Amendment by reference. This Amendment and the Lease comprises the entire agreement between the parties.
c. Neutral Interpretation. This Amendment shall be interpreted neutrally between the parties regardless of which party drafted or caused to be drafted this Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
3 LANDLORD:
Gahrahmat Family Limited Partnership II, LP,
a California limited partnership
By: Gahrahmat Properties II, LLC,
a California limited liability company
Its: General Partner
By: _________________________________
Mahmoud Gahrahmat
Its: Managing Member
Dated: ______________________________
TENANT:
City of Santa Clara dba Silicon Valley Power, a Municipal corporation By: _________________________________
Name: _______________________________
Its: City Manager
Dated: ______________________________
By: _________________________________
Name: _______________________________
Its: City Attorney
Dated: ______________________________
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
25-1028 Agenda Date: 10/7/2025
REPORT TO COUNCIL
SUBJECT
Action on a Resolution Adopting and Approving the Implementation of a Section 401(a) Deferred Compensation Plan and Authorizing Execution of Side Letter Agreements with Bargaining Units for City Contributions Towards Deferred Compensation Pursuant to the 401(a) Plan
BACKGROUND
The City provides retirement benefits through different vehicles for its employees. This includes a defined benefit pension plan with CalPERS, Social Security, and deferred compensation.
The City established a deferred compensation retirement plan (hereafter, “Plan”) and authorized a deferral of a portion of employee compensation to be contributed to the plan and invested in an Internal Revenue Service (IRS) approved plan. The plan was established under Section 457(b) (hereafter, “457(b) plan”) of the Internal Revenue Code of 1986, as amended. Generally speaking, a 457(b) plan is similar to a private sector Section 401(k) plan. Through the labor negotiation process, the City agreed with multiple bargaining units to make contributions towards their represented employees’ deferred compensation retirement accounts. Those City contributions were deposited in the employees’ 457(b) deferred compensation retirement accounts. Recently, there was interest in the creation of a Section 401(a) deferred compensation retirement account (hereafter, “401(a) plan”) in which the City would make employer contributions to certain of its employees’ 401(a) deferred compensation retirement accounts to allow employees to maximize their own contributions to the 457 (b) deferred compensation retirement account.
DISCUSSION
On or about November 21, 2024, the Deferred Compensation Advisory Committee recommended to the City Manager that the City adopt a Section 401(a) deferred compensation retirement plan and authorized the City Manager to execute all required Plan documents upon aligning terms with the City’s existing Section 457(b) deferred compensation retirement plan to the extent possible.
Currently, Nationwide Trust Company, FSB (hereafter, “Nationwide”) serves as Trustee (Plan Administrator) of the City’s Section 457(b) deferred compensation retirement plan. The City has worked with Nationwide, to prepare a 401(a) plan to be available to allow for City contributions toward employees’ deferred compensation. The 401(a) plan has been drafted to align with the City’s existing 457(b) plan as closely as possible and is anticipated to have the same fees.
The City’s decision to adopt and implement the 401(a) plan was in response to concerns received that employees were not able to maximize their annual tax deferred contributions into the 457(b) due to the City contributions. The 401(a) would facilitate the City making tax deferred contributions to City of Santa Clara Page 1 of 3 Printed on 10/3/2025
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eligible employees’ retirement plans, and thus allow employees to maximize amounts they contribute to their individual 457(b) plan. If the City contributes the agreed upon employer deferred compensation contributions to the 401(a) plan, instead of the 457(b) plan, employees will have the option to contribute more total dollars toward their deferred compensation by maximizing employee contributions into their individual section 457(b) deferred compensation retirement accounts up to the annual limit.
Under the IRS rules and regulations, employees are allowed to have both section 457(b) and section 401(a) deferred compensation retirement accounts. A 401(a) account will be created for an employee with an existing 457(b) account, and the City can make its contributions toward the employee’s 401(a) plan account upon agreement with the representative bargaining units, if any.
Otherwise, the City will continue to make any agreed upon employer deferred compensation contributions into the eligible employees’ 457(b) deferred compensation retirement accounts.
Notably, there are some key differences between the 401(a) plan and the 457(b) plan which include:
1. 457(b) has annual contribution limits; for 2025, it is $23,500. The City can separately contribute the agreed upon employer-provided contribution to the 401(a) (which subject to a separate limit).
2. 457(b) account non-Roth funds can be accessed immediately after separation, regardless of age. The 401(a) account non-Roth funds can be accessed immediately after separation with a 10% penalty before age 59 and ½, subject to specific exceptions. After age 59 and ½, there is no penalty.
3. 457(b) contributions are subject to Social Security and Medicare taxes, while 401(a) contributions are not.
Since notice of the City’s intention to implement the 401(a) was provided to bargaining units, bargaining units have communicated a strong interest in expanding the 401(a) to also include employee contributions. The City is not planning on including employee contributions in the 401(a).
Firstly, as noted above, the rules governing employee contributions into the 401(a) are particularly onerous. Employees must make a one-time irrevocable election as to what an employee must contribute into the 401(a), and the employee must contribute the elected amount for the entirety of their employment with the City and regardless of any changes in an individual employee’s situation (unlike the 457(b) where an employee can make changes to their contributions each pay period if they so desired). Secondly, the City’s deferred compensation consultants, including Nationwide, have recommended against employee contributions into the 401(a). In addition, allowing employee contributions into the 401(a) increases the administrative burden on the City in having to track and follow up with employees and new hires with varying elections and contributions when the initial idea of the 401(a) was to allow employees to maximize their annual contributions into the 457(b) while maintaining access to the City’s contributions which would be housed in the 401(a), not to create additional tasks for City staff in administering the City’s deferred compensation.
It should be noted that the City has agreements with several bargaining units to make contributions to deferred compensation on behalf of employees; however, these agreements currently reference only City of Santa Clara Page 2 of 3 Printed on 10/3/2025
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25-1028 Agenda Date: 10/7/2025
the 457(b) plan. Moving forward, the City will enter into Side Letter Agreements with those bargaining units that may be interested in having the City contributions into deferred compensation go into the 401(a) plan.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
There is no anticipated additional costs with the implementation of the 401(a) plan, or having City contributions go into the 401(a) plan versus the current 457(b) plan.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
1. Adopt a Resolution adopting a Section 401(a) Deferred Compensation Plan,
2. Approve the implementation of a Section 401(a) Deferred Compensation Plan;
3. Authorize and delegate to the City Manager the execution of all documents necessary to implement the Section 401(a) Deferred Compensation Plan, and to execute future documents as necessary to continue administration of the Plan; and
4. Execution of Side Letter Agreements with bargaining units reflecting the use of a 401(a) Plan (rather than the 457(b) Plan) for City contributions towards deferred compensation.
Reviewed by: Marco Mercado, Acting Director of Human Resources Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. 401(a) Adoption Agreement
2. 401(a) Administrative Services Agreement
3. Additional 401(a) Plan setup documents from Nationwide
4. Resolution to Adopt 401(a) Plan
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 1 NONSTANDARDIZED GOVERNMENTAL PROFIT SHARING/401(k) PLAN ADOPTION AGREEMENT #001
By executing this Nonstandardized Governmental Profit Sharing/401(k) Plan Adoption Agreement (the "Adoption Agreement" or “AA”), the undersigned Employer agrees to establish or continue a Governmental Profit Sharing/401(k) Plan for its Employees. The Governmental Profit Sharing/401(k) Plan adopted by the Employer consists of the Governmental Defined Contribution Pre-Approved Plan Basic Plan Document #03 (the "BPD") and the elections made under this Adoption Agreement (collectively referred to as the "Plan"). An Employer may jointly co-sponsor the Plan by signing a Participating Employer Adoption Page, which is attached to this Adoption Agreement. This Plan is effective as of the Effective Date identified on the Signature Page of this Adoption Agreement.
SECTION 1
EMPLOYER INFORMATION
1-1 EMPLOYER INFORMATION.
Name: City of Santa Clara
Address: 1500 Warburton Ave.
Santa Clara, CA 95050
Telephone: (408) 615-2080
1-2 EMPLOYER IDENTIFICATION NUMBER (EIN). 94-6000426
1-3 FORM OF BUSINESS.
State or political subdivision of a State
State agency or instrumentality
Indian Tribal Government
Describe other Employer qualified to adopt a Governmental Plan:
1-4 EMPLOYER’S TAX YEAR END. The Employer’s tax year ends June 30 1-5 RELATED EMPLOYERS. Is the Employer part of a group of Related Employers (as defined in Section 1.83 of the Plan)? Yes
No
If yes, Related Employers may be listed below. A Related Employer must execute a Participating Employer Adoption Page for Employees of that Related Employer to participate in this Plan. [Note: This AA §1-5 is for informational purposes and the Employer need not list Related Employers. The failure to identify all Related Employers will not jeopardize the qualified status of the Plan.] SECTION 2
PLAN INFORMATION
2-1 PLAN NAME. City of Santa Clara 401(a) Plan
Original Effective Date: September 23, 2025
Restatement Effective Date:
2-2 PLAN NUMBER. 002
2-3 TYPE OF PLAN.
(a) This Plan is a Profit Sharing Plan. (Note: May also include Matching Contributions under AA §6B.) (b) This Plan is a Grandfathered Profit Sharing/401(k) Plan. [Note: To qualify as a Grandfathered Profit Sharing/401(k) Plan, the Employer must have maintained a 401(k) plan as of May 6, 1986. A Grandfathered Profit Sharing/401(k) Plan may also include a plan of an Indian Tribal Government, as defined in Section 1.58 of the Plan. See Section 1.55 of the Plan for a more detailed description of a Grandfathered Profit Sharing/401(k) Plan.] (c) The Plan is intended to be a FICA Replacement Plan (as described under Section 4.03 of the Plan). [Note: If this subsection (c) is checked, elections under this AA must be consistent with the requirements of a FICA Replacement Plan as described under Section 4.03 of the Plan.]
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 2 2-4 PLAN YEAR.
(a) Calendar year.
(b) The 12-consecutive month period ending on each year. (c) The Plan has a Short Plan Year running from to .
2-5 FROZEN PLAN. Check this AA §2-5 if the Plan is a frozen Plan to which no contributions will be made. This Plan is a frozen Plan effective . (See Section 3.02(a)(2) of the Plan.) [Note: As a frozen Plan, the Employer will not make any contributions with respect to Plan Compensation earned after such date and no Participant will be permitted to make any contributions to the Plan after such date. In addition, no Employee will become a Participant after the date the Plan is frozen.]
2-6 MULTIPLE EMPLOYER PLAN. Is this Plan a Multiple Employer Plan as defined in Section 16.07 of the Plan? (See Section
16.07 of the Plan for special rules applicable to Multiple Employer Plans.) Yes
No
2-7 PLAN ADMINISTRATOR.
(a) The Employer identified in AA §1-1.
(b) Name:
Address:
Telephone:
2-8 DEFINITION OF DISABLED. An individual is considered Disabled for purposes of applying the provisions of this Plan if:
(a) The individual is covered by the Employer’s disability insurance plan and is determined to be disabled under such plan. (b) The individual is determined to be disabled by the Social Security Administration under Section 223(d) of the Social Security Act for purposes of determining eligibility for Social Security benefits. (c) The Plan Administrator determines an individual is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than 12 months. The permanence and degree of such impairment shall be supported by medical evidence. The Plan Administrator may establish reasonable procedures for determining whether a Participant is Disabled.
[Note: An Employer may elect any or all of (a), (b) and (c) above. If more than one of (a), (b) and (c) is selected, the hierarchy for determining whether an individual is considered Disabled is (a), then (b) and then (c), unless described otherwise under separate administrative procedures or under subsection (d) below.] (d) Alternative definition of Disabled:
[Note: Any alternative definition described in this subsection (d) will apply uniformly to all Participants under the Plan and will be applied in a nondiscretionary manner. The Employer may describe different definitions of Disabled for different purposes under the plan.]
SECTION 3
ELIGIBLE EMPLOYEES
3-1 ELIGIBLE EMPLOYEES. In addition to the Employees identified in Section 2.02 of the Plan, the following Employees are excluded from participation under the Plan with respect to the contribution source(s) identified in this AA §3-1. See Sections
2.02(d) and (e) of the Plan for rules regarding the effect on Plan participation if an Employee changes between an eligible and ineligible class of employment.
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(a) No exclusions
(b) Collectively Bargained Employees
(c) Non-resident aliens who receive no compensation from the Employer which constitutes U.S. source income
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(d) Leased Employees
(e) Employees paid on an hourly basis
(f) Employees paid on a salaried basis
(g) Employees in an elected or appointed position.
(h) Part-Time Employees (as defined in Section 1.71 of the Plan) (i) Seasonal Employees (as defined in Section 1.89 of the Plan) (j) Temporary Employees (as defined in Section 1.93 of the Plan) (k) Employees eligible for another qualified plan sponsored by the Employer or a Related Employer
Specify name of other qualified plan (optional):
(l) Other: Non-Represented Employees except for Police Chief, City Manager, and City Attorney
[Note: The elections under the ER column apply to any Pick-Up Contributions and any After-Tax Employee Contributions authorized under AA §6-7, unless elected otherwise under subsection (l) above. The exclusions inserted may not result in a specifically named individual or a finite group (such as employees hired before a certain date) being the only employee or employees participating under the plan in violation of the permanency requirements or Treas. Reg. §1.401-1(b)(2). It is permissible to limit participation under the plan to an employee or employees of a specifically named position or positions.] SECTION 4
MINIMUM AGE AND SERVICE REQUIREMENTS
4-1 ELIGIBILITY REQUIREMENTS – MINIMUM AGE AND SERVICE. An Eligible Employee (as defined in AA §3-1) who satisfies the minimum age and service conditions under this AA §4-1 will be eligible to participate under the Plan as of his/her Entry Date (as defined in AA §4-2 below).
(a) Service Requirement. An Eligible Employee must complete the following minimum service requirements to participate in the Plan.
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(1) There is no minimum service requirement for participation in the Plan. (2) Year(s) of Service (as defined in Section 2.03(a)(1) of the Plan and AA §4-3).
(3) The completion of at least Hours of Service during the first months of employment (or the first days of employment) or the completion of a Year of Service (as defined in AA §4-3), if earlier.
(i) An Employee who completes the required Hours of Service satisfies eligibility at the end of the designated period, regardless if the Employee actually works for the entire period.
(ii) An Employee who completes the required Hours of Service must also be employed continuously during the designated period of employment. See Section 2.03(a)(2) of the Plan for rules regarding the application of this subsection (ii).
(4) The completion of Hours of Service during an Eligibility Computation Period. [Note: An Employee satisfies the service requirement immediately upon completion of the designated Hours of Service rather than at the end of the Eligibility Computation Period.]
(5) Full-time Employees are eligible to participate as set forth in subsection (i) below. Employees who are “part-time” Employees must complete a Year of Service (as defined in AA §4-3). For this purpose, a full-time Employee is any Employee not defined in subsection (ii) below.
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requirements to participate in the Plan:
(A) There is no minimum service requirement for participation in the Plan.
(B) The completion of at least Hours of Service during the first months of employment or the completion of a Year of
Service (as defined in AA §4-3), if earlier.
(C) Under the Elapsed Time method as defined in AA §4-3(c) below. (D) Describe:
[Note: Any conditions provided under this subsection (D) must be definitely determinable.]
(ii) Part-time Employees must complete a Year of Service (as defined in AA §4-3). For this purpose, a part-time Employee is any Employee (including a temporary or seasonal Employee) whose normal work schedule is less than:
(A) For this purpose, a part-time Employee is any Employee (including a temporary or seasonal Employee) whose normal work schedule is less than:
(I) hours per week.
(II) hours per month.
(III) hours per year.
(B) Describe part-time Employees for this purpose:
[Note: A part-time employee must be described as an individual who works less than a specified number of hours (no greater than 40) during a standard work week.]
(6) Under the Elapsed Time method as described in AA §4-3(c) below. (7) Describe eligibility conditions:
(b) Minimum Age Requirement. An Eligible Employee (as defined in AA §3-1) must have attained the following age with respect to the contribution source(s) identified in this AA §4-1(b).
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(1) There is no minimum age for Plan eligibility. (2) Age 21.
(3) Age .
(c) Special eligibility rules. The following special eligibility rules apply with respect to the Plan:
[Note: Any elections under the ER column under this AA §4-1 apply to any Pick-Up Contributions authorized under AA §6-1(d) and any After-Tax Employee Contributions authorized under AA §6-7, unless elected otherwise under subsection (c) above.
Subsection (c) above may be used to apply the eligibility conditions selected under this AA §4-1 separately with respect to different Employee groups or different contribution formulas under the Plan. Any special rules under subsection (c) above must be definitely determinable.]
4-2 ENTRY DATE. An Eligible Employee (as defined in AA §3-1) who satisfies the minimum age and service requirements in AA §4-1 shall be eligible to participate in the Plan as of his/her Entry Date. For this purpose, the Entry Date is the following date with respect to the contribution source(s) identified under this AA §4-2.
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(a) Immediate. The date the minimum age and service requirements are satisfied (or date of hire, if no minimum age and service requirements apply). (b) Semi-annual. The first day of the 1st and 7th month of the Plan Year. (c) Quarterly. The first day of the 1st, 4th, 7th and 10th month of the Plan Year.
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(d) Monthly. The first day of each calendar month. (e) Payroll period. The first day of the payroll period. (f) The first day of the Plan Year.
(g) Describe Entry Date:
[Note: Entry Date under this subsection (g) must be no later than 3 years after the date described under (a).]
An Eligible Employee’s Entry Date (as defined above) is determined based on when the Employee satisfies the minimum age and service requirements in AA §4-1. For this purpose, an Employee’s Entry Date is the Entry Date:
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(h) next following satisfaction of the minimum age and service requirements. (i) coinciding with or next following satisfaction of the minimum age and service requirements.
N/A (j) nearest the satisfaction of the minimum age and service requirements.
N/A (k) preceding the satisfaction of the minimum age and service requirements.
This section may be used to describe any special rules for determining Entry Dates under the Plan. For example, if different Entry Date provisions apply for the same contribution sources with respect to different groups of Employees, such different Entry Date provisions may be described below.
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(l) Describe any special rules that apply with respect to the Entry Dates under this AA §4-2:
[Note: The elections under the ER column under this AA §4-2 apply to any Pick-Up Contributions selected under AA §6-1(d) and any After-Tax Employee Contributions selected under AA §6-7, unless elected otherwise under subsection (l) above. Any special rules under subsection (l) above must be definitely determinable.] 4-3 DEFAULT ELIGIBILITY RULES. In applying the minimum age and service requirements under AA §4-1 above, the following default rules apply with respect to all contribution sources under the Plan:
Year of Service. An Employee earns a Year of Service for eligibility purposes upon completing 1,000 Hours of Service during an Eligibility Computation Period. Hours of Service are calculated based on actual hours worked during the Eligibility Computation Period. (See Section 1.57 of the Plan for the definition of Hour of Service.) Eligibility Computation Period. If one Year of Service is required for eligibility, the Plan will determine subsequent Eligibility Computation Periods on the basis of Plan Years. (See Section 2.03(a)(3)(i) of the Plan). If more than one Year of Service is required for eligibility, the Plan will determine subsequent Eligibility Computation Periods on the basis of Anniversary Years. (See Section 2.03(a)(3)(ii) of the Plan.) To override the default eligibility rules, complete the applicable sections of this AA §4-3. If this AA §4-3 is not completed for a particular contribution source, the default eligibility rules apply.
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(a) Year of Service. Instead of 1,000 Hours of Service, an Employee earns a Year of Service upon the completion of Hours of Service during an Eligibility Computation Period.
(b) Eligibility Computation Period (ECP). The Plan will use Anniversary Years, unless more than one Year of Service is required under AA §4-1(a), in which case the Plan will shift to Plan Years if the Employee does not earn a Year of Service during the first Eligibility Computation Period. (See Section 2.03(a)(3)(ii) of the Plan.)
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(c) Elapsed Time method. Eligibility service will be determined under the Elapsed Time method. An Eligible Employee (as defined in AA §3-1) must complete a period of service, as designated below, to participate in the Plan. (See Section
2.03(a)(6) of the Plan.)
(1) For Deferral, must complete a period of service
(2) For Match, must complete a period of service
(3) For ER, must complete a period of service
[Note: Under the Elapsed Time method, service will be measured from the Employee’s employment commencement date (or reemployment commencement date, if applicable) without regard to the Eligibility Computation Period designated in Section 2.03(a)(3) of the Plan.]
(d) Equivalency Method. For purposes of determining an Employee’s Hours of Service for eligibility, the Plan will use the Equivalency Method (as defined in Section 2.03(a)(5) of the Plan). The Equivalency Method will apply to:
(1) All Employees.
(2) Only Employees for whom the Employer does not maintain hourly records. For Employees for whom the Employer maintains hourly records, eligibility will be determined based on actual hours worked.
Hours of Service for eligibility will be determined under the following Equivalency Method.
(3) Monthly. 190 Hours of Service for each month worked. (4) Weekly. 45 Hours of Service for each week worked. (5) Daily. 10 Hours of Service for each day worked.
(6) Semi-monthly. 95 Hours of Service for each semi-monthly period worked.
(7) Describe Equivalency Method:
[Note: Any description of an Equivalency Method under this subsection (7) must be definitely determinable.]
(e) Special eligibility provisions.
[Note: The elections under the ER column under this AA §4-3 apply to any Pick-Up Contributions authorized under AA §6-1(d) and any After-Tax Employee Contributions selected under AA §6-7, unless elected otherwise under subsection (e) above. Any special rules under subsection (e) above must be definitely determinable.] 4-4 EFFECTIVE DATE OF MINIMUM AGE AND SERVICE REQUIREMENTS. The minimum age and/or service requirements under AA §4-1 apply to all Employees under the Plan. An Employee will participate with respect to all contribution sources under the Plan as of his/her Entry Date, taking into account all service with the Employer, including service earned prior to the Effective Date.
To allow Employees employed on a specified date to enter the Plan without regard to the minimum age and/or service conditions, complete this AA §4-4.
Deferral Match ER
An Eligible Employee who is employed by the Employer on the following designated date will enter the Plan on the designated date without regard to minimum age and/or service requirements (as designated below):
(a) the Effective Date of this Plan (as designated in the Employer Signature Page). (b) the date the Plan is executed by the Employer (as indicated on the Employer Signature Page).
(c) [insert date no earlier than the Effective Date of this Plan] An Eligible Employee who is employed on the designated date will enter the Plan on the designated date without regard to the minimum age and service requirements under AA §4-1. If both minimum age and service conditions are not waived, select subsection (d) or (e) below to designate which condition is waived under this AA §4-4. (d) This AA §4-4 only applies to the minimum service condition. (e) This AA §4-4 only applies to the minimum age condition.
The provisions of this AA §4-4 apply to all Eligible Employees employed on the Nonstandardized Governmental Plan
Section 4 – Minimum Age and Service Requirements
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 7 designated date unless designated otherwise under subsection (f) or (g) below. (f) The provisions of this AA §4-4 apply to the following group of Employees employed on the designated date:
(g) Describe special rules:
[Note: An Employee who is employed as of the designated date described in this AA §4- 4 will enter the Plan as of such date unless a different Entry Date is designated under subsection (g) above. The elections under the ER column apply to any Pick-Up Contributions authorized under AA §6-1(d) and any After-Tax Employee Contributions selected under AA §6-7, unless elected otherwise under subsection (g) above. Any special rules under subsection (g) above must be definitely determinable.]
4-5 SERVICE WITH PREDECESSOR EMPLOYER. Service with the following Predecessor Employers will be counted for purposes of determining eligibility, vesting and allocation conditions under this Plan, unless designated otherwise under subsection (a) or (b) below. (See Sections 2.06, 3.07(b) and 6.07 of the Plan.) (a) The Plan will count service with the following Predecessor Employers:
Name of Predecessor Employer Eligibility Vesting
Allocation
Conditions
(1)
(b) Describe any special provisions applicable to Predecessor Employer service:
4-6 BREAKS IN SERVICE. Generally, an Employee will be credited with all service earned with the Employer, including service earned prior to a Break in Service. To disregard service earned prior to a Break in Service for eligibility purposes, complete this AA §4-6. (See Section 2.07 of the Plan.)
(a) If an Employee incurs at least one Break in Service, the Plan will disregard all service earned prior to such Break in Service for purposes of determining eligibility to participate. (b) If an Employee incurs at least Breaks in Service, the Plan will disregard all service earned prior to such Break in Service for purposes of determining eligibility to participate. [Enter “0” if prior service will be disregarded for all rehired Employees.]
(c) The Nonvested Participant Break in Service rule applies to all Employees, including Employees who have not terminated employment.
(d) Describe:
SECTION 5
COMPENSATION DEFINITIONS
5-1 TOTAL COMPENSATION. Total Compensation is based on the definition set forth under this AA §5-1. See Section 1.94 of the Plan for a specific definition of the various types of Total Compensation. (a) W-2 Wages
(b) Code §415 Compensation
(c) Wages under Code §3401(a)
[Note: For purposes of determining Total Compensation, each definition includes Elective Deferrals as defined in Section 1.36 of the Plan, pre-tax contributions to a Code §125 cafeteria plan or a Code §457 plan, and qualified transportation fringes under Code §132(f)(4).]
5-2 POST-SEVERANCE COMPENSATION. Total Compensation includes post-severance compensation, to the extent provided in Section 1.94(b) of the Plan, unless otherwise elected below. (a) Exclusion of post-severance compensation from Total Compensation. The following amounts paid after a Participant’s severance of employment are excluded from Total Compensation. (1) Unused leave payments. Payment for unused accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use the leave if employment had continued. (2) Deferred compensation. Payments received by an Employee pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Employee at the same time if the Nonstandardized Governmental Plan
Section 5 – Compensation Definitions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 8 Employee had continued in employment and only to the extent that the payment is includible in the Employee’s gross income.
[Note: Plan Compensation (as defined in Section 1.75 of the Plan) includes any post-severance compensation amounts that are includible in Total Compensation. The Employer may elect to exclude all compensation paid after severance of employment from the definition of Plan Compensation under AA §5-3(j) below or may elect to exclude specific types of post-severance compensation from Plan Compensation under AA §5-3(l) below.] (b) Continuation payments for disabled Participants. If this subsection (b) is not elected, Total Compensation does not include continuation payments for disabled Participants. If this subsection (b) is elected, Total Compensation shall include post-severance compensation paid to a Participant who is permanently and totally disabled, as provided in Section 1.94(c) of the Plan.
5-3 PLAN COMPENSATION. Plan Compensation is Total Compensation (as defined in AA §5-1 above) with the following exclusions described below.
Deferral Match ER
(a) No exclusions.
N/A (b) Elective Deferrals (as defined in Section 1.36 of the Plan), pre-tax contributions to a cafeteria plan or a Code §457 plan, and qualified transportation fringes under Code §132(f)(4) are excluded.
(c) All fringe benefits (cash and noncash), reimbursements or other expense allowances, moving expenses, deferred compensation, and welfare benefits are excluded.
(d) Compensation above $ is excluded.
(e) Amounts received as a bonus are excluded.
(f) Amounts received as commissions are excluded. (g) Overtime payments are excluded.
(h) Amounts received for services performed for a non-signatory Related Employer are excluded. (See Section 2.02(c) of the Plan.)
[Note: If this subsection (h) is not elected, amounts received for services performed for a non-signatory Related Employer are INCLUDED in Plan Compensation.] (i) “Deemed §125 compensation” as defined in Section 1.94(d) of the Plan. (j) Amounts received after termination of employment are excluded. (See Section
1.94(b) of the Plan.)
(k) Differential Pay (as defined in Section 1.94(e) of the Plan). (l) Describe adjustments to Plan Compensation:
[Note: Any modification under subsection (l) must be definitely determinable and preclude Employer discretion. The elections under the ER column under this AA §5-3 apply to any Pick-Up Contributions authorized under AA §6-1(d) and any After-Tax Employee Contributions selected under AA §6-7, unless elected otherwise under subsection (l).] 5-4 PERIOD FOR DETERMINING COMPENSATION.
(a) Compensation Period. Plan Compensation will be determined on the basis of the following period(s) for the contribution sources identified in this AA §5-4. [Note: If a period other than the Plan Year applies for any contribution source, any reference to the Plan Year as it refers to Plan Compensation for that contribution source will be deemed to be a reference to the period designated under this AA §5-4.] Deferral Match ER
(1) The Plan Year.
(2) The calendar year ending in the Plan Year.
(3) The Employer's fiscal tax year ending in the Plan Year. (4) The 12-month period ending on which ends during the Plan Year.
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Section 5 – Compensation Definitions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 9 (b) Compensation while a Participant. Unless provided otherwise under this subsection (b), in determining Plan Compensation, only compensation earned while an individual is a Participant under the Plan with respect to a particular contribution source will be taken into account.
To count compensation for the entire Plan Year for a particular contribution source, including compensation earned while an individual is not a Participant with respect to such contribution source, check below. (See Section 1.75(b) of the Plan.)
Deferral Match ER
All compensation earned during the Plan Year will be taken into account, including compensation earned while an individual is not a Participant. (c) Few weeks rule. The few weeks rule (as described in Section 5.02(c)(7)(i) of the Plan) will not apply unless designated otherwise under this subsection (c).
Amounts earned but not paid during a Limitation Year solely because of the timing of pay periods and pay dates shall be included in Total Compensation for the Limitation Year, provided the amounts are paid during the first few weeks of the next Limitation Year, the amounts are included on a uniform and consistent basis with respect to all similarly situated Employees, and no amounts are included in more than one Limitation Year.
SECTION 6
EMPLOYER AND EMPLOYEE CONTRIBUTIONS
6-1 EMPLOYER / EMPLOYEE CONTRIBUTIONS. The Employer/Employee may make the following contributions under the Plan:
(a) Employer Contributions under AA §6-2
(b) Voluntary After-Tax Employee Contributions under AA §6-7(a) (c) Mandatory After-Tax Employee Contributions under AA §6-7(b) (d) Employer Pick-Up Contributions under AA §6-7(c)
(e) N/A. No Employer/Employee Contributions are permitted under the Plan [Skip to Section 6A] 6-2 EMPLOYER CONTRIBUTION FORMULA. For the period designated in AA §6-5(a) below, the Employer will make the following Employer Contributions on behalf of Participants who satisfy the allocation conditions designated in AA §6-6 below.
Any Employer Contribution authorized under this AA §6-2 will be allocated in accordance with the allocation formula selected under AA §6-3.
(a) Discretionary contribution. The Employer will determine in its sole discretion how much, if any, it will make as an Employer Contribution.
(b) Fixed contribution.
(1) Fixed percentage. % of each Participant’s Plan Compensation. (2) Fixed dollar. $ for each Participant.
(3) Determined in accordance with the terms of the Employment contract between an Eligible Employee and the Employer. [Note: If this subsection (3) is checked, the provisions of an Employment contract addressing retirement benefits will override any selection under this AA §6-2.] (c) Contributions under Collective Bargaining Agreement, employment contract or equivalent arrangement. The Employer will make an Employer Contribution based on a Collective Bargaining Agreement, employment agreement or equivalent arrangement as follows:
[Note: Insert the appropriate contribution formula (and allocation formula, if applicable) from the Collective Bargaining Agreement, employment agreement or equivalent arrangement. The formula must be definitely determinable as required under Treas. Reg. §1.401-1.]
(d) Service-based contribution. The Employer will make the following contribution:
(1) Discretionary. A discretionary contribution determined as a uniform percentage of Plan Compensation for each period of service designated below.
(2) Fixed percentage. % of Plan Compensation paid for each period of service designated below. (3) Fixed dollar. $ for each period of service designated below.
Nonstandardized Governmental Plan
Section 6 – Employer and Employee Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 10 The service-based contribution will be based on the following periods of service:
(4) Each Hour of Service
(5) Each week of employment
(6) Describe period:
The service-based contribution is subject to the following rules. (7) Describe any special provisions that apply to service-based contribution:
(e) Describe special rules for determining contributions under Plan:
[Note: Any special rules under this subsection (e) may only describe the basis for determining a discretionary servicebased contribution, such as a uniform dollar amount, and must be definitely determinable.] 6-3 ALLOCATION FORMULA.
(a) Pro rata allocation. The discretionary Employer Contribution under AA §6-2(a) will be allocated:
(1) as a uniform percentage of Plan Compensation.
(2) as a uniform dollar amount.
(b) Fixed contribution. The fixed Employer Contribution under AA §6-2 will be allocated in accordance with the selections made with respect to fixed Employer Contributions under AA §6-2. (c) Permitted disparity allocation. The discretionary Employer Contribution under AA §6-2(a) will be allocated under the two-step method (as defined in Section 3.02(a)(1)(i)(B)(I) of the Plan), using the Taxable Wage Base (as defined in Section 1.92 of the Plan) as the Integration Level.
To modify these default rules, complete the appropriate provision(s) below. (1) Integration Level. Instead of the Taxable Wage Base, the Integration Level is:
(i) % of the Taxable Wage Base, increased (but not above the Taxable Wage Base) to the next higher:
(A) N/A (B) $1
(C) $100 (D) $1,000
(ii) $ (not to exceed the Taxable Wage Base)
(iii) 20% of the Taxable Wage Base
[Note: See Section 3.02(a)(1)(i)(B)(IV) of the Plan for rules regarding the Maximum Disparity Rate that may be used where an Integration Level other than the Taxable Wage Base is selected.] (2) Describe special rules for applying permitted disparity allocation formula:
[Note: Any special rules under subsection (2) must be definitely determinable.] (d) Uniform points allocation. The discretionary Employer Contribution designated in AA §6-2(a) will be allocated to each Participant in the ratio that each Participant's total points bears to the total points of all Participants. A Participant will receive the following points:
(1) point(s) for each year(s) of age (attained as of the end of the Plan Year). (2) points for each $ of Plan Compensation.
(3) point(s) for each Year(s) of Service. For this purpose, Years of Service are determined:
(i) In the same manner as determined for eligibility. (ii) In the same manner as determined for vesting.
(iii) Points will not be provided with respect to Years of Service in excess of . (e) Employee group allocation. The Employer may make a separate discretionary Employer Contribution to the Participants in the following allocation groups. The Employer must notify the Trustee in writing of the amount of the contribution to be allocated to each allocation group.
(1) A separate discretionary Employer Contribution may be made to each Participant of the Employer (i.e., each Participant is in his/her own allocation group).
(2) A separate discretionary or fixed Employer Contribution may be made to the following allocation groups. If no fixed amount is designated for a particular allocation group, the contribution made for such allocation group will be allocated as a uniform percentage of Plan Compensation to all Participants within that allocation group, unless otherwise designated as a uniform dollar amount below.
Nonstandardized Governmental Plan
Section 6 – Employer and Employee Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 11 The contribution made for each allocation group will be allocated as a uniform dollar amount to all Participants within the allocation group.
Group 1:
[Note: The Employee allocation groups designated above must be clearly defined in a manner that will not violate the definite allocation formula requirement of Treas. Reg. §1.401-1(b)(1)(ii).] (3) Special rules. Unless designated otherwise under this subsection (3), if a Participant is in more than one allocation group described in (2) above during the Plan Year, the Participant will receive an Employer Contribution based on the Participant’s status on the last day of the Plan Year. (See Section 3.02(a)(1)(i)(D) of the Plan.)
(i) Determined separately for each Employee group. If a Participant is in more than one allocation group during the Plan Year, the Participant’s share of the Employer Contribution will be based on the Participant’s status for the part of the year the Participant is in each allocation group. (ii) Describe:
[Note: This subsection (ii) may only describe the amount of the Employer Contribution a Participant will receive when such Participant is in more than one allocation group. Any language under this subsection (ii) must be definitely determinable.] (f) Age-based allocation. The discretionary Employer Contribution designated in AA §6-2(a) will be allocated under the age-based allocation formula so that each Participant receives a pro rata allocation based on adjusted Plan Compensation. For this purpose, a Participant’s adjusted Plan Compensation is determined by multiplying the Participant’s Plan Compensation by an Actuarial Factor (as described in Section 1.03 of the Plan).
A Participant’s Actuarial Factor is determined based on a specified interest rate and mortality table. Unless designated otherwise under subsection (1) or (2) below, the Plan will use an applicable interest rate of 8.5% and a UP-1984 mortality table.
(1) Applicable interest rate. Instead of 8.5%, the Plan will use an interest rate of % (must be between 7.5% and 8.5%) in determining a Participant’s Actuarial Factor. (2) Applicable mortality table. Instead of the UP-1984 mortality table, the Plan will use the following mortality table in determining a Participant’s Actuarial Factor:
(3) Describe special rules applicable to age-based allocation:
[Note: See Appendix A of the Plan for sample Actuarial Factors based on an 8.5% applicable interest rate and the UP-1984 mortality table. If an interest rate or mortality table other than 8.5% or UP-1984 is selected, appropriate Actuarial Factors must be calculated. Subsection (3) must provide for a definitely determinable allocation method.]
(g) Service-based allocation formula. The service-based Employer Contribution selected in AA §6-2(d) will be allocated in accordance with the selections made in AA §6-2(d).
(h) Describe special rules for determining allocation formula:
[Note: Any special rules under this subsection (h) must be described in a manner that precludes Employer discretion.] 6-4 CONTRIBUTIONS OF ACCRUED SICK, PTO AND/OR VACATION LEAVE. [Note: Do not complete this AA §6-4 and instead use AA§6-7(c) if this is an Employer Pick-Up Contribution.] (a) The Employer will make and allocate Employer Contributions of amounts of accrued unpaid sick leave, as described below:
(b) The Employer will make and allocate Employer Contributions of amounts of accrued unpaid vacation leave, as described below:
[Note: The Employer must describe an Employer Contribution of accrued unpaid sick, and/or vacation leave that meets the following requirements:
The leave converted under the arrangement can only be accrued unpaid leave; The leave converted can only be sick and/or vacation leave; The Employer must designate how often the conversions occur under this AA §6-4; The eligibility requirements for participation in the plan cannot be such that an Employee becomes a Participant only in the plan year in which the Employee terminates employment; Nonstandardized Governmental Plan
Section 6 – Employer and Employee Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 12 The only accrued unpaid leave which can be converted under the arrangement must only be leave for which the Employee has no right to request a cash payment;
The leave conversion formula can only be one which involves multiplying an Employee’s current daily rate of pay against the amount of accrued unpaid leave being converted; and The leave conversion formula is definitely determinable.] 6-5 SPECIAL RULES. No special rules apply with respect to Employer/Employee Contributions under the Plan, except to the extent designated under this AA §6-5. Unless designated otherwise, in determining the amount of the Employer/Employee Contributions to be allocated under this AA §6, the contribution will be based on Plan Compensation earned during the Plan Year. (a) Period for determining Employer/Employee Contributions. Instead of the Plan Year, Employer/Employee Contributions will be determined based on Plan Compensation earned during the following period: [Note: The Plan Year must be used if the permitted disparity allocation method is selected under AA §6-3(c) above.] (1) Plan Year quarter
(2) calendar month
(3) payroll period
(4) Other:
[Note: Although Employer Contributions are determined on the basis of Plan Compensation earned during the period designated under this subsection (a), this does not require the Employer to actually make contributions or allocate contributions on the basis of such period. Employer Contributions may be contributed and allocated to Participants at any time within the contribution period permitted under Treas. Reg. §1.415(c)-1(b)(6)(B), regardless of the period selected under this subsection (a).]
(b) Limit on Employer Contributions. The Employer Contribution elected in AA §6-2 may not exceed:
(1) % of Plan Compensation
(2) $
(3) A discretionary amount determined by the Employer applied in a uniform manner for all eligible Participants for the Plan Year.
(c) Offset of Employer Contribution.
(1) A Participant’s allocation of Employer Contributions under AA §6-2 of this Plan is reduced by contributions under [insert name of plan(s)]. (See Section 3.02(a)(1) of the Plan.) (2) In applying the offset under this subsection (c), the following rules apply:
(d) Special rules:
[Note: Any special rules under this subsection (d) must be definitely determinable.] 6-6 ALLOCATION CONDITIONS. A Participant must satisfy any allocation conditions designated under this AA §6-6 to receive an allocation of Employer Contributions under the Plan. [Note: No allocation conditions apply to After-Tax Employee Contributions or Employer Pick-Up Contributions under AA §6-7.] (a) No allocation conditions apply with respect to Employer Contributions under the Plan. (b) Employment condition. An Employee must be employed with the Employer on the last day of the Plan Year. (c) Minimum service condition. An Employee must be credited with at least:
(1) Hours of Service during the Plan Year.
(i) Hours of Service are determined using actual Hours of Service. (ii) Hours of Service are determined using the following Equivalency Method (as defined under Section
2.03(a)(5) of the Plan):
(A) Monthly (B) Weekly
(C) Daily (D) Semi-monthly
(E) Describe:
[Note: Any description under this subsection (E) must be definitely determinable.] (2) consecutive days of employment with the Employer during the Plan Year.
Nonstandardized Governmental Plan
Section 6 – Employer and Employee Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 13 (d) Exceptions.
(1) The above allocation condition(s) will not apply if the Employee:
(i) dies.
(ii) terminates employment due to becoming Disabled.
(iii) becomes Disabled.
(iv) terminates employment after attaining Normal Retirement Age. [Note: This waiver of allocation conditions applies only once during the Participant’s employment with the Employer. Thus, if an Employee is rehired after such a waiver was applied to such Employee, the waiver of allocation conditions will not apply to a subsequent termination of employment. The Employer may modify this rule in subsection (e) below.] (v) terminates employment after attaining Early Retirement Age. [Note: This waiver of allocation conditions applies only once during the Participant’s employment with the Employer. Thus, if an Employee is rehired after such a waiver was applied to such Employee, the waiver of allocation conditions will not apply to a subsequent termination of employment. The Employer may modify this rule in subsection (e) below.] (vi) is on an authorized leave of absence from the Employer. (2) The exceptions selected under subsection (1) above will apply even if an Employee has not terminated employment at the time of the selected event(s).
(3) The exceptions selected under subsection (1) above do not apply to:
(i) an employment condition under subsection (b) above. (ii) a minimum service condition under subsection (c) above. (e) Describe any special rules governing the allocation conditions under the Plan:
[Note: Any special rules under this subsection (e) must be definitely determinable.] 6-7 AFTER-TAX EMPLOYEE CONTRIBUTIONS AND EMPLOYER PICK-UP CONTRIBUTIONS. (a) Voluntary After-Tax Employee Contributions. If permitted under this subsection (a), a Participant may contribute any amount as Voluntary After-Tax Employee Contributions up to the Code §415 Limitation (as defined in Section 5.02 of the Plan), except as limited under this subsection (a). (1) Limits on Voluntary After-Tax Employee Contributions. If this subsection (1) is checked, the following limits apply to Voluntary After-Tax Employee Contributions:
(i) Maximum limit. A Participant may make Voluntary After-Tax Employee Contributions up to:
(A) % of Plan Compensation
(B) $
for the following period:
(C) the entire Plan Year.
(D) the portion of the Plan Year during which the Employee is eligible to participate. (E) each separate payroll period during which the Employee is eligible to participate. (ii) Minimum limit. The amount of Voluntary After-Tax Employee Contributions a Participant may make for any payroll period may not be less than:
(A) % of Plan Compensation
(B) $
(2) Change or revocation of Voluntary After-Tax Employee Contributions. In addition to the Participant’s Entry Date under the Plan, a Participant’s election to change or resume an after-tax election will be effective as set forth under the After-Tax Employee Contributions election form or other written procedures adopted by the Plan Administrator. A Participant must be permitted to change or revoke an after-tax election at least once per year. Unless the After-Tax Employee Contributions election form or other written procedures adopted by the Plan Administrator provide otherwise, a Participant may revoke an after-tax election (on a prospective basis) at any time. Unless designated otherwise in a Participant’s after-tax election form, a Participant’s affirmative election to make an After-Tax Employee Contribution will cease upon termination of employment and the Participant will need to make a new election upon rehire.
Nonstandardized Governmental Plan
Section 6 – Employer and Employee Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 14 (3) Other limits or special rules relating to Voluntary After-Tax Employee Contributions:
[Note: Any limits described under this subsection (3) must be consistent with the provisions of Section 3.04 of the Plan.]
(b) Mandatory After-Tax Employee Contributions. If this subsection (b) is checked, Employees are required to make Mandatory After-Tax Employee Contributions in order to participate under the Plan. (1) Amount of Mandatory After-Tax Employee Contributions. Employees are required to contribute the following amount in order to participate in the Plan:
(i) % of each Employee’s Total Compensation.
(ii) $ for each Participant.
(iii) Describe rate or amount:
(2) Special rules applicable to Mandatory After-Tax Employee Contributions:
(c) Employer Pick-Up Contributions. Each Participant will be required to make a Pick-up Contribution to the Plan equal to the amount specified under this subsection (c). Any amounts contributed pursuant to this subsection (c) will be picked up by the Employer pursuant to Code §414(h) and will be treated as Employer Contributions under the Plan.
Such contributions and earnings thereon will be 100% vested at all times. (See Section 3.03 of the Plan.) (1) The following amounts will be contributed to the Plan as an Employer Pick-Up Contribution:
(i) % of Plan Compensation.
(ii) $ per pay period.
(iii) Any amount from % to % of Plan Compensation, as designated by the Employee. [Note: This subsection (iii) may only be selected if the Employee designates the amount as a onetime irrevocable election.] (2) Elect this subsection (2) if an Employee may make a one-time irrevocable election not to make Employer Pick-Up Contributions under the Plan.
(3) Special rules applicable to Employer Pick-Up Contributions:
[Note: Any Employer Pick-Up Contributions made under this subsection (c) must satisfy the requirements of Section
3.03 of the Plan. See AA §11-4 for an Employee’s ability to elect out of making Employer Pick-Up Contributions.] SECTION 6A
SALARY DEFERRALS
6A-1 SALARY DEFERRALS. Are Employees permitted to make Salary Deferrals under the Plan? Yes.
No. [If “No” is checked, skip to Section 6B.]
6A-2 MAXIMUM LIMIT ON SALARY DEFERRALS. Unless designated otherwise under this AA §6A-2, a Participant may defer any amount up to the Elective Deferral Dollar Limit and the Code §415 Limitation (as set forth in Sections 5.02 and 5.03 of the Plan).
(a) Salary Deferral Limit. A Participant may not defer an amount in excess of:
(1) % of Plan Compensation.
(2) $ .
[Note: If both subsection (1) and (2) above are checked, the deferral limit is the lesser of the amounts selected.] Any limit described in subsection (1) or (2) above applies with respect to the following period:
(3) Plan Year.
(4) the portion of the Plan Year during which the individual is eligible to participate. (5) each separate payroll period during which the individual is eligible to participate. (b) Limits on deferrals on bonus payments. [Note: This §6A-2(b) only may be selected, if bonus payments are not excluded under AA §5-3.]
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 15 (1) The same limits specified in (a)(1) and (a)(2) above apply to bonus and non-bonus Plan Compensation, Employees may defer any amounts out of bonus payments, subject to the Elective Deferral Dollar Limit and the Code §415 Limitation (as defined in Sections 5.02 and 5.03 of the Plan) and any other limit on Salary Deferrals under this AA 6A-2. The Employer may impose special limits on bonus payments or may impose special limits on bonus payments under the Salary Deferral Election. (See Section 3.02(c)(2) of the Plan.) (2) A Participant may defer up to % (not to exceed 100%) of any bonus payment (subject to the Elective Deferral Dollar Limit and the Code §415 Limitation), without regard to any other limits described under this AA §6A-2. The Employer may impose special limits on bonus payments under the Salary Deferral Election. (See Section 3.02(c)(2) of the Plan.)
(3) Describe special rules applicable to deferrals on bonus payments:
[Note: If this subsection (b) is checked, bonus payments may not be excluded from Plan Compensation in the Deferral column under AA §5-3(e).]
(c) Describe any other limits that apply with respect to Salary Deferrals under the Plan:
6A-3 MINIMUM DEFERRAL RATE. Unless designated otherwise under this AA §6A-3, no minimum deferral requirement applies under the Plan. Alternatively, a Participant must defer at least the following amount in order to make Salary Deferrals under the Plan.
(a) % of Plan Compensation for a payroll period.
(b) $ for a payroll period.
(c) Describe:
[Note: If more than one limit applies under this AA §6A-3, the minimum deferral rate is the lesser of the amounts designated under this AA §6A-3.]
6A-4 CATCH-UP CONTRIBUTIONS. Catch-Up Contributions (as defined in Section 3.02(c)(2)(iv) of the Plan) are permitted under the Plan, unless designated otherwise under this AA §6A-4. Catch-Up Contributions are not permitted under the Plan. 6A-5 ROTH DEFERRALS. Roth Deferrals (as defined in Section 3.02(c)(2)(v) of the Plan) are not permitted under the Plan, unless designated otherwise under this AA §6A-5.
(a) Availability of Roth Deferrals. Roth Deferrals are permitted under the Plan. [Note: If Roth Deferrals are effective as of a date later than the Effective Date of the Plan, designate such special Effective Date in AA §6A-8(b) below. Roth Deferrals may not be made prior to January 1, 2006.]
(b) Distribution of Roth Deferrals. Unless designated otherwise under this subsection (b), to the extent a Participant takes a distribution or withdrawal from his/her Salary Deferral Account(s), the Participant may designate the extent to which such distribution is taken from the Pre-Tax Deferral Account or from the Roth Deferral Account. (As described under Section 7.11(b)(2) of the Plan for default distribution rules if a Participant fails to designate the appropriate Account for corrective distributions from the Plan, such distribution may be withdrawn equally from both the Pre-Tax Salary Deferral Account and the Roth Deferral Account or the Employer may withdraw such amounts first from either the Pre-Tax Salary Deferral Account or the Roth Deferral Account.) Alternatively, the Employer may designate the order of distributions as listed below:
(1) Any distribution will be taken on a pro rata basis from the Participant’s Pre-Tax Deferral Account and Roth Deferral Account.
(2) Any distribution will be taken first from the Participant’s Roth Deferral Account and then from the Participant’s Pre-Tax Deferral Account.
(3) Any distribution will be taken first from the Participant’s Pre-Tax Deferral Account and then from the Participant’s Roth Deferral Account.
(c) In-Plan Roth Conversions. Unless elected under this AA §6A-5(c), the Plan does not permit a Participant to make an In-Plan Roth Conversion under the Plan. To override this provision to allow Participants to make an In-Plan Roth Conversion, subsection (1) below must be checked.
(1) Effective date. Effective [not earlier than 1/1/2013], a Participant may elect to convert all or any portion of his/her non-Roth vested Account Balance to an In-Plan Roth Conversion Account.
Nonstandardized Governmental Plan
Section 6A – Salary Deferrals
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 16 [Note: The Plan must provide for Roth Deferrals under AA §6A-5(a) above as of the effective date designated in this subsection (1). An election under this subsection (1) does not affect an In-Plan Roth Conversion that was allowed under prior Plan provisions.]
(2) In-Service Distribution.
(i) For a Participant to convert his/her eligible contributions to Roth Deferrals through an In-Plan Roth Conversion, the Participant need not be eligible to take a distribution from the Plan. [Note: If this subsection (i) is checked, a Participant may convert any or all of the eligible contribution sources to Roth Deferrals through an In-Plan Roth Conversion.]
(ii) For a Participant to convert his/her eligible contributions to Roth Deferrals through an In-Plan Roth Conversion, a Participant must be eligible for a distribution of any amounts converted to Roth Deferrals through an In-Plan Roth Conversion. Thus, only amounts that are eligible for distribution under AA §9 or AA §10 are eligible for In-Plan Roth Conversion. (3) Contribution sources. An Employee may elect to make an In-Plan Roth Conversion from all available contribution sources under the Plan.
To override this default provision to limit the contributions sources available for In-Plan Roth Conversion, select the applicable contribution sources from which an In-Plan Roth Conversion is available:
(i) Pre-tax Salary Deferrals
(ii) Employer Contributions
(iii) Matching Contributions
(iv) After-Tax Contributions
(v) Rollover Contributions
(vi) Employer Pick-Up Contributions
(vii) Describe:
[Note: Any contribution sources described in this subsection (vii) must be definitely determinable and not subject to Employer discretion.]
(4) Limits applicable to In-Plan Roth Conversions. No limits apply with respect to In-Plan Roth Conversions, unless designated otherwise under this subsection (4).
(i) Roth conversions may only be made from contribution sources that are fully vested (i.e., 100% vested).
[Note: If an In-Plan Roth Conversion is permitted from partially-vested sources, special rules apply for determining the vested percentage of such amounts after conversion. See Section 6.09 of the Plan.]
(ii) A Participant may not make an In-Plan Roth Conversion of less than $ (may not exceed $1,000). (iii) A Participant may not make an In-Plan Roth Conversion of any outstanding loan amount. [Note: If this subsection (iii) is not checked, a Participant may convert amounts that are attributable to an outstanding loan, to the extent the loan relates to a contribution source that is eligible for conversion under subsection (3) above.]
(iv) Describe:
[Note: Any selection in this subsection (iv) must be definitely determinable and not subject to Employer discretion.]
(5) Amounts available to pay federal and state taxes generated from an In-Plan Roth Conversion. No special provisions apply to allow Participants to withdraw funds to pay federal or state taxes generated from an In-Plan Roth Conversion, except as provided otherwise under this subsection (5). (i) In-service distribution. If the Plan does not otherwise permit an in-service distribution at the time of the In-Plan Roth Conversion and this subsection (i) is checked, a Participant may elect to take an in-service distribution solely to pay taxes generated from the In-Plan Roth Conversion to the extent such in-service distribution would otherwise be permitted under Section 7.10 of the Plan. [Note: If this subsection (i) is checked, a Participant may take an in-service distribution only to the extent such distribution would otherwise be permitted under the provisions of Section 7.10 of the Nonstandardized Governmental Plan
Section 6A – Salary Deferrals
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 17 Plan. Thus, for example, a Participant may not take an in-service distribution of amounts attributable to Salary Deferrals prior to age 59½.]
(ii) Participant loan. Generally, a Participant may request a loan from the Plan to the extent permitted under Section 13 of the Plan and AA §B. However, to the extent a Participant loan is not otherwise allowed and this subsection (ii) is selected, a Participant may receive a Participant loan solely to pay taxes generated from an In-Plan Roth Conversion.
[Note: If this subsection (ii) is selected and Participant loans are not otherwise authorized under the Plan, any Participant loan made pursuant to this subsection (ii) will be made in accordance with the default loan policy described in Section 13 of the Plan.] (6) Distribution from In-Plan Roth Conversion Account. Distributions from the In-Plan Roth Conversion Account will be permitted at the same time as permitted for Roth Deferrals, as set forth under AA §10-1, unless designated otherwise under this subsection (6).
(i) In-service distributions will not be permitted from an In-Plan Roth Conversion Account. (ii) An in-service distribution may be made from the In-Plan Roth Conversion Account at any time. (iii) Describe distribution options:
(d) Describe any special rules that apply to Roth Deferrals under the Plan:
6A-6 SALARY DEFERRAL ELECTIONS.
(a) Change or revocation of deferral election: In addition to the Participant’s Entry Date under the Plan, a Participant’s election to change or resume a deferral election will be effective as set forth under the Salary Reduction Agreement or other written procedures adopted by the Plan Administrator. A Participant must be permitted to change or revoke a deferral election at least once per year. Unless the Salary Reduction Agreement or other written procedures adopted by the Plan Administrator provide otherwise, a Participant may revoke a deferral election (on a prospective basis) at any time.
(b) Salary deferral elections of rehired participants: Unless designated otherwise below, a Participant’s affirmative election to defer (or to not defer) will cease upon termination of employment and the Participant will need to make a new election upon rehire.
Participant’s affirmative election does not cease upon termination of employment. If this subsection (b) is selected, a terminated Participant’s affirmative election to defer (or to not defer) will not cease upon termination of employment and the Participant’s affirmative election to defer (or to not defer) in effect at the time of employment termination will apply upon rehire.
[Note: The Employer may modify the rules applicable to rehired employees under the Salary Reduction Agreement or other administrative procedures.]
6A-7 AUTOMATIC CONTRIBUTION ARRANGEMENT. No automatic contribution provisions apply under Section
3.02(c)(2)(iii) of the Plan, unless provided otherwise under this AA §6A-7. (a) Automatic deferral election. Upon becoming eligible to make Salary Deferrals under the Plan (pursuant to AA §3 and AA §4), a Participant will be deemed to have entered into a Salary Deferral Election for each payroll period, unless the Participant completes a Salary Deferral Election (subject to the limitations under AA §6A-2 and AA §6A-3) in accordance with procedures adopted by the Plan Administrator. (1) Effective date of Automatic Contribution Arrangement. The automatic deferral provisions under this AA §6A-7 are effective as of:
(i) The Effective Date of this Plan as set forth under the Employer Signature Page. (ii) [insert date no earlier than the Effective Date of the Plan] (iii) As set forth under a prior Plan document. [Note: If this subsection (iii) is checked, the automatic deferral provisions under this AA §6A-7 will apply as of the original Effective Date of the automatic contribution arrangement. Unless provided otherwise under this AA §6A-7, an Employee who is automatically enrolled under a prior Plan document will continue to be automatically enrolled under the current Plan document.]
(2) Automatic Contribution Arrangement. Check this subsection (2) if the Plan is designated as an Automatic Contribution Arrangement, as described under Section 3.02(c)(2)(iii) of the Plan. [Note: Unless an election is made under this AA §6A-7 that is inconsistent with the requirements of an Eligible Automatic Contribution Arrangement (EACA), the Automatic Contribution Arrangement will qualify as an EACA, as described in Code §414(w).]
Nonstandardized Governmental Plan
Section 6A – Salary Deferrals
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 18 (i) Automatic deferral amount.
(A) % of Plan Compensation.
(B) $ .
(ii) Automatic increase. If elected under this subsection (ii), the automatic deferral amount will increase each Plan Year by the following amount.
(A) % of Plan Compensation.
(B) $ .
(C) If this (C) and subsection (3)(iii) below (relating to the expiration of affirmative deferral elections) are both elected, the automatic increase will apply to all Participants, including those Participants whose affirmative deferral elections have expired and no subsequent affirmative election is made.
Any automatic increase elected under this subsection (ii) will not cause the automatic deferral amount to exceed:
(D) % of Plan Compensation.
(E) $ .
(F) Describe:
[Note: Any special application of the automatic increase provisions must be definitely determinable and must provide for Employer discretion.] (3) Application of automatic deferral provisions. The automatic deferral election under subsection (2) will apply to new Participants and existing Participants as set forth under this subsection (3):
(i) New Participants. The automatic deferral provisions apply to all Participants who become eligible on or after the effective date.
(ii) Current Participants. The automatic deferral provisions apply to all other eligible Participants as follows:
(A) Automatic deferral provisions apply to all current Participants who have not entered into a Salary Deferral Election (including an election not to defer under the Plan). (B) Automatic deferral provisions apply to all current Participants who have not entered into a Salary Deferral Election that is at least equal to the automatic deferral amount under subsection (2)(i) above. Current Participants who have made a Salary Deferral Election that is less than the automatic deferral amount or who have not made a Salary Deferral Election will automatically be increased to the automatic deferral amount unless the Participant enters into a new Salary Deferral election on or after the effective date of the automatic deferral provisions.
(C) Automatic deferral provisions do not apply to current Participants. Only new Participants described in subsection (i) above are subject to the automatic deferral provisions. (D) Describe:
(iii) Expiration of affirmative deferral elections. Unless this subsection (iii) is elected, for purposes of the automatic deferral provisions of the Plan, a Participant’s affirmative elective deferral election will not expire. If this subsection (iii) is elected, a Participant’s affirmative deferral election will expire:
(A) at the end of each Plan Year.
(B) Describe date that the affirmative election will expire:
[Note: The date must be definite and not discriminate in favor of Highly Compensated Employees.]
If a Participant fails to complete a new affirmative deferral election subsequent to the prior election expiring, the Participant becomes subject to the automatic deferral percentage as specified in the Plan pursuant to the automatic contribution arrangement provisions. Each year, the Participant can always complete a new affirmative election and designate a new deferral percentage.
Nonstandardized Governmental Plan
Section 6A – Salary Deferrals
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 19 (iv) Treatment of automatic deferrals. Any Salary Deferrals made pursuant to an automatic deferral election will be treated as Pre-Tax Salary Deferrals, unless designated otherwise under this subsection (iv).
Any Salary Deferrals made pursuant to an automatic deferral election will be treated as Roth Deferrals. [Note: This subsection (iv) may only be checked if Roth Deferrals are permitted under AA §6A-5.]
(v) Special rules:
[Note: Any Salary Deferral Election (including an election not to defer under the Plan) made after the effective date of the automatic deferral provisions will override such automatic deferral provisions.] (4) Application of automatic increase. Unless designated otherwise under this subsection (4), if an automatic increase is selected under subsection (2)(ii) above, the automatic increase will take effect as of the first day of the second Plan Year following the Plan Year in which the automatic deferral election first becomes effective with respect to a Participant.
(i) First Plan Year. Instead of applying as of the second Plan Year, the automatic increase described in subsection (2)(ii) above takes effect as of the appropriate date within the first Plan Year following the date automatic contributions begin.
(ii) Designated Plan Year. Instead of applying as of the second Plan Year, the automatic increase described in subsection (2)(ii) above takes effect as of the appropriate date within the Plan Year following the Plan Year in which the automatic deferral election first becomes effective with respect to a Participant.
(iii) Effective date. The automatic increase described under subsection (2)(ii) above is generally effective as of the first day of the Plan Year. If this subsection (iii) is checked, instead of becoming effective on the first day of the Plan Year, the automatic increase will be effective on:
(A) The anniversary of the Participant's date of hire. (B) The anniversary of the Participant's first automatic deferral contribution. (C) The first day of each calendar year.
(D) Other date:
(iv) Special rules:
(5) Treatment of terminated Employees who are rehired. Unless designated otherwise below, in applying the automatic deferral provisions under this AA§6A-7, including the automatic increase provisions, a rehired Participant is treated as a new Employee (regardless of the amount of time since the rehired Employee terminated employment).
(i) Rehired Employees not treated as new Employee. In applying the automatic deferral provisions under this AA§6A-7, including the automatic increase provisions, a rehired Participant is not treated as a new Employee. Thus, for example, a rehired Participant’s deferral percentage will be calculated based on the date the individual first began making automatic deferrals under the Plan. (ii) Describe special rules applicable to rehired employees:
[Note: Any special rules under this subsection (ii) must satisfy the rules applicable to automatic enrollment under Treas. Reg. §1.401(k)-1, if applicable.] (b) Permissible Withdrawals under Automatic Contribution Arrangement. (1) Permissible withdrawals allowed. An Employee who has Salary Deferrals contributed to the Plan pursuant to an automatic deferral election under this AA §6A-7 may elect to withdraw such contributions (and earnings attributable thereto) within 90 days after the date such Salary Deferrals would otherwise have been included in gross income, unless designated otherwise under subsection (3) below. Unless elected otherwise below, if an Employee does not make automatic deferrals to the Plan for an entire Plan Year (e.g., due to termination of employment), the Plan may allow such Employee to take a permissive withdrawal, but only with respect to default contributions made after the Employee’s return to employment.). The ability to take permissible withdrawals does not apply to rehired Employees, even if such Employees have not made automatic deferrals to the Plan for an entire Plan Year due to termination of employment.
(2) No permissible withdrawals. The permissible withdrawal provisions under this subsection (b) are not available.
Nonstandardized Governmental Plan
Section 6A – Salary Deferrals
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 20 (3) Time period for electing a permissible withdrawal. Instead of a 90-day election period, a Participant must request a permissible withdrawal no later than days after the date the Plan Compensation from which such Salary Deferrals are withheld would otherwise have been included in gross income. (c) Other automatic deferral provisions:
6A-8 SPECIAL DEFERRAL EFFECTIVE DATES. Unless designated otherwise under this AA §6A-8, a Participant is eligible to make Salary Deferrals under the Plan as of the Effective Date of the Plan (as designated in the Employer Signature Page).
However, in no case may a Participant begin making Salary Deferrals prior to the later of the date the Employee becomes a Participant, the date the Participant executes a Salary Reduction Agreement or the date the Plan is adopted or effective. (See Section 3.02(c)(2)(i) of the Plan.)
To designate a later Effective Date for Salary Deferrals or Roth Deferrals, complete this AA §6A-8. (a) Salary Deferrals. A Participant is eligible to make Salary Deferrals under the Plan as of:
(1) the date the Plan is executed by the Employer (as indicated on the Employer Signature Page). (2) (insert date no earlier than the date the Plan is executed by the Employer). (b) Roth Deferrals. The Roth Deferral provisions under AA §6A-5 are effective as of . [If Roth Deferrals are permitted under AA §6A-5 above, Roth Deferrals are effective as of the Effective Date applicable to Salary Deferrals under this AA §6A-8, unless a later date is designated under this subsection.] SECTION 6B
MATCHING CONTRIBUTIONS
6B-1 MATCHING CONTRIBUTIONS. Is the Employer authorized to make Matching Contributions under the Plan? Yes.
No. [If “No” is checked, skip to Section 7.]
6B-2 MATCHING CONTRIBUTION FORMULA: For the period designated in AA §6B-5 below, the Employer will make the following Matching Contribution on behalf of Participants who satisfy the allocation conditions under AA §6B-6 below. [See AA §6B-3 for the definition of Eligible Contributions for purposes of the Matching Contributions under the Plan.] (a) Discretionary match. The Employer will determine in its sole discretion how much, if any, it will make as a Matching Contribution. Such amount will be allocated as a uniform percentage of Eligible Contributions, unless designated otherwise below. (See AA §6B-5 relating to period for determining Matching Contributions and true-up requirements.) (1) Discretionary matching contributions will be allocated as a flat dollar amount. (2) Allocation of discretionary Matching Contribution determined by written instructions to Plan Administrator (or Trustee). If a discretionary Matching Contribution formula applies (i.e., a formula that provides an Employer with discretion regarding how to allocate a Matching Contribution to Participants) and the Employer makes a discretionary Matching Contribution to the Plan, the Employer must provide the Plan Administrator (or Trustee, if applicable), written instructions describing: (1) how the discretionary Matching Contribution formula will be allocated to Participants (e.g., a uniform percentage of Eligible Contributions or a flat dollar amount), (2) the computation period(s) to which the discretionary Matching Contribution formula applies (unless otherwise designated under AA §6B-5), and (3) if applicable, a description of each business location or business classification subject to separate discretionary Matching Contribution allocation formulas.
Such instructions must be provided no later than the date on which the discretionary Matching Contribution is made to the Plan. A summary of these instructions must be communicated to Participants who receive discretionary Matching Contributions no later than 60 days following the last date on which the discretionary Matching Contribution is made to the Plan for the Plan Year. If this AA §6B-2(a)(2) is elected, the written instruction requirement does not take effect until the first day of the Plan Year following the Plan Year in which this Plan’s Cycle 3 restatement is executed.
(b) Fixed match. The Employer will make a Matching Contribution for each Participant equal to:
(1) % of Eligible Contributions made for each period designated in AA §6B-5 below. (2) $ for each period designated in AA §6B-5 below.
Nonstandardized Governmental Plan
Section 6B – Matching Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 21 (c) Matching Contributions under Collective Bargaining Agreement, employment contract or equivalent arrangement. The Employer will make a Matching Contribution based on a Collective Bargaining Agreement, employment agreement or equivalent arrangement as follows:
[Note: Insert the appropriate Matching Contribution formula from the Collective Bargaining Agreement, employment agreement or equivalent arrangement. The formula must be definitely determinable as required under Treas. Reg. §1.401-1.]
(d) Tiered match. The Employer may make a Matching Contribution to all Participants based on the following tiers of Eligible Contributions as a percentage of Plan Compensation. If discretionary Match is elected, the discretionary Matching Contribution will be allocated as a uniform percentage of Eligible Contributions within each tier.
Eligible Contributions Fixed
Match
Discretionary
Match
(1) Up to % of Plan Compensation %
(2) From % up to % of Plan Compensation %
(3) From % up to % of Plan Compensation %
(4) From % up to % of Plan Compensation %
(e) Year of Service match. The Employer will make a Matching Contribution as a uniform percentage of Eligible Contributions to all Participants based on Years of Service with the Employer. If discretionary Match is elected, the discretionary Matching Contribution will be allocated as a uniform percentage of Eligible Contributions within each Year of Service level.
Years of Service Fixed
Match
Discretionary
Match
(1) From up to Years of Service %
(2) From up to Years of Service %
(3) From up to Years of Service %
(4) From up to Years of Service %
(5) Years of Service equal to and above %
For this purpose, a Year of Service is each Plan Year during which an Employee completes at least 1,000 Hours of Service. Alternatively, a Year of Service is:
[Note: Any alternative definition of a Year of Service must meet the requirements of a Year of Service as defined in Section 2.03(a)(1) of the Plan.]
(f) Different Employee groups. The Employer may make a different Matching Contribution to the Employee groups designated under subsection (1) below. The Matching Contribution will be allocated separately to each designated Employee group in accordance with the formula designated under subsection (2) below. (1) Designated Employee groups.
[Note: Each group designation must describe a group of Employees which is definitely determinable with no Employer discretion.]
(2) Matching Contribution formulas.
(i) Discretionary Matching Contribution. The Employer may make a different discretionary Matching Contribution for each Employee group designated under subsection (1) above. The discretionary Matching Contribution will be allocated as a uniform percentage of Eligible Contributions within each Employee group. (See AA §6B-5 relating to period for determining Matching Contributions and trueup requirements.) (ii) Different Matching Contribution formula. The following Matching Contribution will apply for each Employee group designated under subsection (1) above. [Note: Each separate rate of Matching Contribution must be definitely determinable and will be allocated uniformly to the members of the group.]
(g) Describe special rules for determining Matching Contribution formula:
Nonstandardized Governmental Plan
Section 6B – Matching Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 22 [Note: Any special rules may not provide for a discretionary Matching Contribution allocation formula, must be described in a manner that precludes Employer discretion and must satisfy the definitely determinable requirements of Treas. Reg. §1.401-1.]
6B-3 ELIGIBLE CONTRIBUTIONS. Unless designated otherwise under this AA §6B-3, the Matching Contribution described in AA §6B-2 will apply to all Eligible Contributions authorized under AA §6-7 and/or AA §6A. (a) Designated Eligible Contributions. If this subsection (a) is checked, the Matching Contribution described in AA §6B2 will apply only to the Eligible Contributions selected below:
(1) Pre-tax Salary Deferrals under AA §6A.
(2) Roth Deferrals under AA §6A-5.
(3) Catch-Up Contributions under AA §6A-4.
(4) Voluntary After-Tax Employee Contributions under AA §6-7(a). (5) Mandatory After-Tax Employee Contributions under AA §6-7(b). (6) Employer Pick-Up Contributions under AA §6-7(c).
(b) Elective deferrals under another plan. If this subsection (b) is checked, the Matching Contributions described in AA §6B-2 will apply to elective deferrals made under another plan maintained by the Employer. (1) The Matching Contribution designated in AA §6B-2 above will apply to elective deferrals under the following plan maintained by the Employer:
(2) The following special rules apply in determining the amount of Matching Contributions under this Plan with respect to elective deferrals under the plan described in subsection (1) above:
[Note: This subsection (b) may be used to describe special provisions applicable to Matching Contributions provided with respect to elective deferrals under another plan maintained by the Employer, including another qualified plan or Code §403(b) or Code §457(b) plan.]
(c) Calculation of Matching Contributions if Plan uses dual eligibility and/or multiple entry dates. Unless designated otherwise below, if the Plan has dual eligibility and/or multiple entry dates (or the Employer choses to use the Plan’s optional true-up provisions), the Matching Contribution formula(s) will be based on Eligible Contributions and Plan Compensation for the period designated under AA §6B-5.
The Plan will make Matching Contributions only on Salary Deferrals and After-Tax Employee Contributions (if applicable) made after the Participant becomes eligible for Matching Contributions, regardless of the period designated under AA §6B-5.
(d) Special rules. The following special rules apply for purposes of determining the Matching Contribution under this AA §6B-3:
[Note: Any special rules under this subsection (d) must be definitely determinable.] 6B-4 LIMITS ON MATCHING CONTRIBUTIONS. In applying the Matching Contribution formula(s) selected under AA §6B-2 above, all Eligible Contributions designated under AA §6B-3 are eligible for Matching Contributions, unless elected otherwise under this AA §6B-4.
(a) Limit on amount of Eligible Contributions. The Matching Contribution formula(s) selected in AA §6B-2 above apply only to Eligible Contributions under AA §6B-3 that do not exceed:
(1) % of Plan Compensation.
(2) $ .
(3) A discretionary amount determined by the Employer that will be applied in a uniform manner for all eligible Participants for the Plan Year.
[Note: If both subsections (1) and (2) above are selected, the limit under this subsection (a) is the lesser of the percentage selected in subsection (1) or the dollar amount selected in subsection (2).] (b) Limit on Matching Contributions. The total Matching Contribution provided under the formula(s) selected in AA §6B-2 above will not exceed:
(1) % of Plan Compensation.
(2) $ .
(c) Special limits applicable to Matching Contributions:
Nonstandardized Governmental Plan
Section 6B – Matching Contributions
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 23 6B-5 PERIOD FOR DETERMINING MATCHING CONTRIBUTIONS. The Matching Contribution formula(s) selected in AA §6B-2 above (including any limitations on such amounts under AA §6B-4) are based on Eligible Contributions under AA §6B-3 and Plan Compensation for the Plan Year. To apply a different period for determining the Matching Contributions and limits under AA §6B-2 and AA §6B-4, complete this AA §6B-5.
(a) payroll period
(b) Plan Year quarter
(c) calendar month
(d) Other:
[Note: Although Matching Contributions (and any limits on those Matching Contributions) will be determined on the basis of the period designated under this AA §6B-5, this does not require the Employer to actually make contributions or allocate contributions on the basis of such period. Matching Contributions may be contributed and allocated to Participants at any time within the contribution period permitted under Treas. Reg. §1.415(c)-1(b)(6)(B), regardless of the period selected under this AA §6B-5.]
[Note: In determining the amount of Matching Contributions for a particular period, if the Employer actually makes Matching Contributions to the Plan on a more frequent basis than the period selected in this AA §6B-5, a Participant will be entitled to a true-up contribution to the extent he/she does not receive a Matching Contribution based on the Eligible Contributions and/or Plan Compensation for the entire period selected in this AA §6B-5. If a period other than the Plan Year is selected under this AA §6B-5, the Employer may make an additional discretionary Matching Contribution equal to the true-up contribution that would otherwise be required if Plan Year was selected under this AA §6B-5. See Section 3.02(c)(3)(iii) of the Plan.] 6B-6 ALLOCATION CONDITIONS. A Participant must satisfy any allocation conditions designated under this AA §6B-6 to receive an allocation of Matching Contributions under the Plan. (a) Application of allocation conditions.
(1) No allocation conditions apply with respect to Matching Contributions under the Plan. (2) Allocation conditions only apply to discretionary Matching Contributions under the Plan. (3) Allocation conditions only apply to fixed Matching Contributions under the Plan. [Note: (2) or (3) above should be selected only if the Plan provides for both Fixed and Discretionary Matching Contributions.]
(b) Employment condition. An Employee must be employed with the Employer on the last day of the Plan Year. (c) Minimum service condition. An Employee must be credited with at least:
(1) Hours of Service during the Plan Year.
(i) Hours of Service are determined using actual Hours of Service. (ii) Hours of Service are determined using the following Equivalency Method (as defined under AA §4- 3):
(A) Monthly (B) Weekly
(C) Daily (D) Semi-monthly
(E) Describe:
[Note: Any description under subsection (E) above must be definitely determinable.] (2) consecutive days of employment with the Employer during the Plan Year. (d) Exceptions.
(1) The above allocation condition(s) will not apply if the Employee, during the Plan Year:
(i) dies.
(ii) terminates employment due to becoming Disabled.
(iii) becomes Disabled.
(iv) terminates employment after attaining Normal Retirement Age. [Note: This waiver of allocation conditions applies only once during the Participant’s employment with the Employer. Thus, if an Employee is rehired after such a waiver was applied to such Employee, the waiver of allocation conditions will not apply to a subsequent termination of employment. The Employer may modify this rule in (e) below.] (v) terminates employment after attaining Early Retirement Age.
Nonstandardized Governmental Plan
Section 6B – Matching Contributions
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page 24 [Note: This waiver of allocation conditions applies only once during the Participant’s employment with the Employer. Thus, if an Employee is rehired after such a waiver was applied to such Employee, the waiver of allocation conditions will not apply to a subsequent termination of employment. The Employer may modify this rule in (e) below.] (vi) is on an authorized leave of absence from the Employer. (2) The exceptions selected under subsection (1) above will apply even if an Employee has not terminated employment at the time of the selected event(s).
(3) The exceptions selected under subsection (1) above do not apply to:
(i) an employment condition designated under subsection (b) above. (ii) a minimum service condition designated under subsection (c) above. (e) Describe any special rules governing the allocation conditions under the Plan:
SECTION 7
RETIREMENT AGES
7-1 NORMAL RETIREMENT AGE. Normal Retirement Age under the Plan is:
(a) Age (not to exceed 65).
(b) The later of age (not to exceed 65) or the (not to exceed 5th) anniversary of:
(1) the Employee’s participation commencement date (as defined in Section 1.68 of the Plan). (2) the Employee’s employment commencement date.
(c) Describe Normal Retirement Age: The Normal Retirement Age according to the employees' retirement formula under California Public Employees' Retirement System (CalPERS) [Note: The Normal Retirement Age must be reasonably representative of the typical retirement age for the industry in which the Plan Participants work. A Normal Retirement Age of at least age 62 is deemed to be reasonable while a Normal Retirement Age under age 55 is presumed not to satisfy this requirement unless facts and circumstances show otherwise. Whether a Normal Retirement Age between 55 and 62 satisfies this requirement depends on the facts and circumstances. A Governmental Plan must comply with the final Normal Retirement Age regulations under Treas. Reg. §1.401(a)-1, as amended, effective for Annuity Starting Dates occurring in Plan Years beginning on or after the later of the two dates described in IRS Notice 2012-29. The Employer may use AA §7-1(c), for example, to describe a reasonable Normal Retirement Age that is between age 55 and 62 that takes into account service as well as age.]
7-2 EARLY RETIREMENT AGE. Unless designated otherwise under this AA §7-2, there is no Early Retirement Age under the Plan.
(a) A Participant reaches Early Retirement Age if he/she is still employed after attainment of each of the following:
(1) Attainment of age
(2) The anniversary of the date the Employee commenced participation in the Plan, and/or (3) The completion of Years of Service, determined as follows:
(i) Same as for eligibility.
(ii) Same as for vesting
(b) Describe.
SECTION 8
VESTING AND FORFEITURES
8-1 CONTRIBUTIONS SUBJECT TO VESTING. Does the Plan provide for any Employer and/or Matching Contributions that are subject to a vesting schedule under AA §8-2?
Yes
No [If “No” is checked, skip to Section 9.]
[Note: “Yes” should be checked under this AA §8-1 if the Plan provides for Employer Contributions and/or Matching Contributions that are subject to a vesting schedule, even if such contributions are always 100% vested under AA §8-2. “No” should be checked if the only contributions under the Plan are Salary Deferrals, After-Tax Employee Contributions and/or Employer Pick-Up Contributions. If the Plan holds Employer Contributions and/or Matching Contributions that are subject to Nonstandardized Governmental Plan
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 25 vesting but the Plan no longer provides for such contributions, see Sections 6.03(d) and 6.11(e) of the Plan for default rules for applying the vesting and forfeiture rules to such contributions.] 8-2 VESTING SCHEDULE. The vesting schedule under the Plan is as follows for both Employer Contributions and Matching Contributions, to the extent authorized under the Plan. See Section 6.02 of the Plan for a description of the various vesting schedules under this AA §8-2.
(a) Vesting schedule for Employer Contributions and Matching Contributions:
ER Match
(1) Full and immediate vesting.
(2) Three-year cliff vesting schedule
(3) Six-year graded vesting schedule
(4) Modified vesting schedule
% immediately on Plan participation
% after 1 Year of Service
% after 2 Years of Service
% after 3 Years of Service
% after 4 Years of Service
% after 5 Years of Service
% after 6 Years of Service
% after 7 Years of Service
% after 8 Years of Service
% after 9 Years of Service
100% after 10 Years of Service
(5) Other: vesting schedule:
[Note: If a modified vesting schedule is selected under this subsection (a), the vested schedule must satisfy the pre-ERISA Code vesting requirements.] (b) Special provisions applicable to vesting schedule:
[Note: This subsection (b) may be used to apply a different vesting schedule for different contribution formulas or different Employee groups under the Plan. Any special provision must satisfy the pre-ERISA Code vesting requirements.]
8-3 VESTING SERVICE. In applying the vesting schedules under this AA §8, all service with the Employer counts for vesting purposes, unless designated otherwise under this AA §8-3. (a) Service before the original Effective Date of this Plan (or a Predecessor Plan) is excluded. (b) Service completed before the Employee's birthday is excluded. (c) Describe vesting service exclusions:
[Note: See Section 6.07 of the Plan and AA §4-5 for rules regarding the crediting of service with Predecessor Employers for purposes of vesting under the Plan.]
8-4 VESTING UPON DEATH, DISABILITY OR EARLY RETIREMENT AGE. An Employee's vesting percentage increases to 100% if, while employed with the Employer, the Employee (a) dies
(b) terminates employment due to becoming Disabled
(c) becomes Disabled
(d) reaches Early Retirement Age
(e) Not applicable. No increase in vesting applies.
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 26 8-5 DEFAULT VESTING RULES. In applying the vesting requirements under this AA §8, the following default rules apply. [Note:
No election should be made under this AA §8-5 if all contributions are 100% vested.] Year of Service. An Employee earns a Year of Service for vesting purposes upon completing 1,000 Hours of Service during a Vesting Computation Period. Hours of Service are calculated based on actual hours worked during the Vesting Computation Period. (See Section 1.57 of the Plan for the definition of Hour of Service.) Vesting Computation Period. The Vesting Computation Period is the Plan Year.
To override the default vesting rules, complete the applicable sections of this AA §8-5. If this AA §8-5 is not completed, the default vesting rules apply.
ER Match
(a) Year of Service. Instead of 1,000 Hours of Service, an Employee earns a Year of Service upon the completion of Hours of Service during a Vesting Computation Period.
(b) Vesting Computation Period. Instead of the Plan Year, the Vesting Computation Period is:
(1) The 12-month period beginning with the Employee’s Employment Commencement Date and, for subsequent Vesting Computation Periods, the 12-month period beginning with the anniversary of the Employee’s Employment Commencement Date.
(2) Describe:
[Note: Any Vesting Computation Period described in this subsection (2) must be a 12- consecutive month period and must apply uniformly to all Participants.] (c) Elapsed Time Method. Instead of determining vesting service based on actual Hours of Service, vesting service will be determined under the Elapsed Time Method. If this subsection (c) is checked, service will be measured from the Employee’s Employment Commencement Date (or Reemployment Commencement Date, if applicable) without regard to the Vesting Computation Period designated in Section 6.05 of the Plan. (See Section 6.04(b) of the Plan.)
(d) Equivalency Method. For purposes of determining an Employee’s Hours of Service for vesting, the Plan will use the Equivalency Method (as defined in Section 6.04(a)(2) of the Plan). The Equivalency Method will apply to:
(1) All Employees.
(2) Only to Employees for whom the Employer does not maintain hourly records. For Employees for whom the Employer maintains hourly records, vesting will be determined based on actual hours worked.
Hours of Service for vesting will be determined under the following Equivalency Method.
(3) Monthly. 190 Hours of Service for each month worked. (4) Weekly. 45 Hours of Service for each week worked. (5) Daily. 10 Hours of Service for each day worked.
(6) Semi-monthly. 95 Hours of Service for each semi-monthly period. (7) Describe Equivalency Method:
[Note: Any description of an Equivalency Method must be definitely determinable.] (e) Special rules:
[Note: Any special rules under this subsection (e) must be definitely determinable.]
8-6 BREAKS IN SERVICE. Generally, an Employee will be credited with all service earned with the Employer, including service earned prior to a Break in Service. To disregard service earned prior to a Break in Service for vesting purposes, complete this AA §8-6. (See Section 6.08 of the Plan.)
(a) If an Employee incurs at least one Break in Service, the Plan will disregard all service earned prior to such Break in Service for purposes of determining vesting under the Plan. (b) If an Employee incurs at least consecutive Breaks in Service, the Plan will disregard all service earned prior to such consecutive Breaks in Service for purposes of determining vesting under the Plan. [Enter “0” if prior service will be disregarded for all rehired Employees.]
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 27 (c) The Nonvested Participant Break in Service rule applies to all Employees, including Employees who have not terminated employment.
(d) Describe any special rules for applying the vesting Break in Service rules:
[Note: Any special rules under this subsection (d) must be definitely determinable.] 8-7 ALLOCATION OF FORFEITURES.
The Employer may decide in its discretion how to treat forfeitures under the Plan. Alternatively, the Employer may designate under this AA §8-7 how forfeitures occurring during a Plan Year will be treated. (See Section 6.11 of the Plan.) ER Match
(a) N/A. All contributions are 100% vested. [Do not complete the rest of this AA §8-
7.]
(b) Reallocated as additional Employer Contributions or as additional Matching Contributions.
(c) Used to reduce Employer and/or Matching Contributions.
For purposes of subsection (b) or (c) above, forfeitures will be applied:
(d) for the Plan Year in which the forfeiture occurs. (e) for the Plan Year following the Plan Year in which the forfeitures occur.
Prior to applying forfeitures under subsection (b) or (c):
(f) Forfeitures may be used to pay Plan expenses. (See Section 6.11(d) of the Plan.) (g) Forfeitures may not be used to pay Plan expenses.
In determining the amount of forfeitures to be allocated under subsection (b) above, the same allocation conditions apply as for the source for which the forfeiture is being allocated, unless designated otherwise below. (h) Forfeitures are not subject to any allocation conditions. (i) Forfeitures are subject to a last day of employment allocation condition. (j) Forfeitures are subject to a Hours of Service minimum service requirement.
In determining the treatment of forfeitures under this AA §8-7, the following special rules apply:
(k) Describe:
8-8 SPECIAL RULES REGARDING CASH-OUT DISTRIBUTIONS.
(a) Additional allocations. If a terminated Participant receives a complete distribution of his/her vested Account Balance while still entitled to an additional allocation, the Cash-Out Distribution forfeiture provisions do not apply until the Participant receives a distribution of the additional amounts to be allocated. (See Section 6.10(a)(1) of the Plan.) To modify the default Cash-Out Distribution forfeiture rules, complete this AA §8-8(a). The Cash-Out Distribution forfeiture provisions will apply if a terminated Participant takes a complete distribution, regardless of any additional allocations during the Plan Year. (b) Timing of forfeitures. A Participant who receives a Cash-Out Distribution (as defined in Section 6.10(a) of the Plan) is treated as having an immediate forfeiture of his/her nonvested Account Balance.
To modify the forfeiture timing rules to delay the occurrence of a forfeiture upon a Cash-Out Distribution, complete this AA §8-8(b).
A forfeiture will occur upon the completion of consecutive Breaks in Service (as defined in Section 6.08 of the Plan).
(c) Repayment of Cash-Out Distribution. Unless elected otherwise under this AA §8-8(c), if a Participant receives a CashOut Distribution that results in a forfeiture, and the Participant resumes employment covered under the Plan, such Participant may repay to the Plan the amount received as a Cash-Out Distribution. If a Participant receives a Cash-Out Distribution that results in a forfeiture, and the Participant resumes employment covered under the Plan, such Participant may NOT repay to the Plan the amount received as a CashOut Distribution and the provisions of Section 6.10(a)(2) do not apply.
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 28 8-9 SPECIAL RULE FOR FORFEITURE UPON DEATH OF A PARTICIPANT. Unless elected below, no vested benefits are forfeited upon the death of a Participant.
To modify this default forfeiture rule, check to box below. The Plan will forfeit benefits (including vested benefits) upon the death of a Participant, if not precluded by law. In no event may the Plan forfeit any amounts attributable to a Participant’s Salary Deferrals or After-Tax Employee Contributions under the Plan or if the Plan has commenced distributions prior to the Participant’s death.
SECTION 9
DISTRIBUTION PROVISIONS – TERMINATION OF EMPLOYMENT
9-1 AVAILABLE FORMS OF DISTRIBUTION.
Lump sum distribution. A Participant may take a distribution of his/her entire vested Account Balance in a single lump sum upon termination of employment. In addition, the Plan Administrator may permit a Participant to take partial distributions or installment distributions solely to the extent necessary to satisfy the required minimum distribution rules under Section 8 of the Plan.
Additional distribution options. To provide for additional distribution options, check the applicable distribution forms under this AA §9-1.
(a) Installment distributions. A Participant may take a distribution over a specified period not to exceed the life or life expectancy of the Participant (and a designated beneficiary). (b) Partial lump sum. A Participant may take a distribution of less than the entire vested Account Balance upon termination of employment.
Minimum distribution amount. A Participant may not take a partial lump sum distribution of less than $ . (c) Annuity distributions. A Participant may elect to have the Plan Administrator use the Participant’s vested Account Balance to purchase an annuity as described in Section 7.01 of the Plan. (d) Describe distribution options: Repetitive payments [Note: Any distribution option described in this subsection (d) may not be subject to the discretion of the Employer or Plan Administrator.]
9-2 PARTICIPANT AND SPOUSAL CONSENT.
(a) Involuntary Cash-Out Distribution. A Participant who terminates employment with a vested Account Balance of $5,000 or less will receive an Involuntary Cash-Out Distribution, unless elected otherwise under this AA §9-2. If a Participant’s vested Account Balance exceeds $5,000, the Participant generally must consent to a distribution from the Plan, except to the extent provided otherwise under this AA §9-2. See Section 7.03 of the Plan for additional rules regarding the Participant consent requirements under the Plan. (1) No Involuntary Cash-Out Distributions. The Plan does not provide for Involuntary Cash-Out Distributions.
A terminated Participant must consent to any distribution from the Plan. (See Section 14.02(b) of the Plan for special rules upon Plan termination.)
(2) Involuntary Cash-Out Distribution threshold. A terminated Participant will receive an Involuntary CashOut Distribution only if the Participant’s vested Account Balance is less than or equal to $ . (3) Application of Automatic Rollover rules. The Automatic Rollover rules described in Section 7.05 of the Plan do not apply to any Involuntary Cash-Out Distribution below $1,000, unless elected otherwise under this subsection (3). If this subsection (3) is checked, the Automatic Rollover provisions apply to all Involuntary Cash-Out Distributions (including those below $1,000).
(4) Distribution upon attainment of stated age. Participant consent will not be required with respect to distributions made upon attainment of Normal Retirement Age (or age 62, if later), regardless of the value of the Participant’s vested Account Balance.
(5) Treatment of Rollover Contributions. Unless elected otherwise under this subsection (5), Rollover Contributions will be excluded in determining whether a Participant’s vested Account Balance exceeds the Involuntary Cash-Out threshold for purposes of applying the distribution rules under this AA §9 and the Automatic Rollover provisions under Section 7.05 of the Plan. To include Rollover Contributions in determining whether a Participant’s vested Account Balance exceeds the Involuntary Cash-Out threshold, check this subsection (5).
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 29 (b) Spousal consent. Spousal consent is not required for a Participant to receive a distribution or name an alternate beneficiary, unless designated otherwise under this subsection (b). See Section 9.02 of the Plan for rules regarding Spousal consent under the Plan.
(1) Distribution consent. A Participant’s Spouse must consent to any distribution or loan, provided the Participant’s vested Account Balance exceeds $ .
(2) Beneficiary consent. A Participant’s Spouse must consent to naming someone other than the Spouse as beneficiary under the Plan.
(c) Describe any special rules affecting Participant or Spousal consent:
[Note: Any special rules under this subsection (c) must be definitely determinable.] 9-3 TIMING OF DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT. (a) Distribution of vested Account Balances exceeding $5,000. A Participant who terminates employment with a vested Account Balance exceeding $5,000 may receive a distribution of his/her vested Account Balance in any form permitted under AA §9-1 within a reasonable period following:
(1) the date the Participant terminates employment.
(2) the last day of the Plan Year during which the Participant terminates employment. (3) the first Valuation Date following the Participant's termination of employment. (4) the end of the calendar quarter following the date the Participant terminates employment. (5) attainment of Normal Retirement Age, death or becoming Disabled. (6) Describe:
[Note: Any special rules under this subsection (6) must be definitely determinable.] (b) Distribution of vested Account Balances not exceeding $5,000. A Participant who terminates employment with a vested Account Balance that does not exceed $5,000 will receive a lump sum distribution of his/her vested Account Balance within a reasonable period following:
(1) the date the Participant terminates employment.
(2) the last day of the Plan Year during which the Participant terminates employment. (3) the first Valuation Date following the Participant's termination of employment. (4) the end of the calendar quarter following the date the Participant terminates employment. (5) Describe:
[Note: Any special rules under this subsection (5) must be definitely determinable.] (c) Alternate Cash-Out distribution threshold. Instead of a vested Account Balance Cash-Out threshold of $5,000, for purposes of applying the Cash-Out distribution provisions under this AA §9-3, the threshold for distributions upon termination of employment will be based on a vested Account Balance of $ . (d) Describe additional distribution options: If a Participant is also a participant in a tax-qualified defined benefit governmental plan (as defined in Code §414(d)) that provides for the acceptance of plan-to-plan transfers with respect to the Participant, then the Participant, if permitted by the Employer, may elect to have any portion of the Participant’s Account Balance transferred to the defined benefit governmental plan for the purchase of permissive service credit (as defined in Code §415(n)(3)(A)). A transfer may be made before the Participant has had a Severance from Employment. [Note: Any additional distribution option described in this subsection (d) may not be subject to the discretion of the Employer or Plan Administrator.]
9-4 DISTRIBUTION UPON DISABILITY. Unless designated otherwise under this AA §9-4, a Participant who terminates employment on account of becoming Disabled may receive a distribution of his/her vested Account Balance in the same manner as a regular distribution upon termination.
(a) Immediate distribution upon termination of employment. Distribution will be made as soon as reasonable following the date the Participant terminates employment on account of becoming Disabled. (b) Following year distribution upon termination of employment. Distribution will be made as soon as reasonable following the last day of the Plan Year during which the Participant terminates employment on account of becoming Disabled.
(c) Describe:
[Note: Any distribution event described in this subsection (c) will apply uniformly to all Participants under the Plan and may not be subject to the discretion of the Employer or Plan Administrator.] Nonstandardized Governmental Plan
Section 9 – Distribution Provisions – Termination of Employment © Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page 30 9-5 DETERMINATION OF BENEFICIARY.
(a) Default beneficiaries. Under Section 7.07(c) of the Plan, to the extent a Beneficiary has not been named by the Participant (subject to the spousal consent rules) and is not designated under the terms of the Investment Arrangement(s) to receive all or any portion of the deceased Participant’s death benefit, such amount shall be distributed to the Participant’s surviving Spouse (if the Participant was married at the time of death) who shall be considered the designated Beneficiary. If the Participant does not have a surviving Spouse at the time of death, distribution will be made to the Participant’s surviving children (including legally adopted children, but not including step-children), as designated Beneficiaries, in equal shares. If the Participant has no surviving children, distribution will be made to the Participant’s estate.
If this subsection (a) is checked, the default beneficiaries under Section 7.07(c)of the Plan are modified as follows:
(1) The Plan adopts the default beneficiary rules under Section 7.07(c) of the Plan, except, if the Participant does not have a surviving Spouse at the time of death, distribution will be made to the Participant’s children (including legally adopted children, but not including step-children), as designated Beneficiaries, per stirpes.
(2) Describe other modifications to the default beneficiaries under Section 7.07(c) of the Plan: To the extent a Beneficiary has not been named by the Participant to receive all of any portion of the deceased Participants death benefit, such amount shall be distributed to the Participants surviving Spouse. If the Participant does not have a surviving Spouse, distribution will be made to the Participants surviving children (including legally adopted children, but not including step-children) in equal shares by right of representation (one share for each surviving child and one share for each child who predeceases the Participant with living descendants). If the Participant has no surviving children, distribution will be made to the Participants surviving parents in equal shares. If the Participant has no surviving parents, distribution will be made to the Participants estate. [Note: The description of the modifications to the default beneficiaries must be sufficiently clear for the Plan Administrator to determine the beneficiaries and the method of distribution of the Participant’s death benefit.]
(b) One-year marriage rule. For purposes of determining whether an individual is considered the surviving Spouse of the Participant, the determination is based on the marital status as of the date of the Participant’s death, unless designated otherwise under this subsection (b).
If this subsection (b) is checked, in order to be considered the surviving Spouse, the Participant and surviving Spouse must have been married for the entire one-year period ending on the date of the Participant’s death. If the Participant and surviving Spouse are not married for at least one year as of the date of the Participant’s death, the Spouse will not be treated as the surviving Spouse for purposes of applying the distribution provisions of the Plan. (See Section 9.03 of the Plan.) (c) Divorce of Spouse. Unless elected otherwise under this subsection (c), if a Participant designates his/her Spouse as Beneficiary and subsequent to such Beneficiary designation, the Participant and Spouse are divorced, the designation of the Spouse as Beneficiary under the Plan is automatically rescinded as set forth under Section 7.07(c)(6) of the Plan. If this subsection (c) is checked, a Beneficiary designation will not be rescinded upon divorce of the Participant and Spouse.
[Note: Section 7.07(c)(6) of the Plan and this subsection (c) will be subject to the provisions of a Beneficiary designation entered into by the Participant. Thus, if a Beneficiary designation specifically overrides the election under this subsection (c), the provisions of the Beneficiary designation will control. See Section 7.07(c)(6) of the Plan.] SECTION 10
IN-SERVICE DISTRIBUTIONS AND REQUIRED MINIMUM DISTRIBUTIONS 10-1 AVAILABILITY OF IN-SERVICE DISTRIBUTIONS. A Participant may withdraw all or any portion of his/her vested Account Balance, to the extent designated, upon the occurrence of any of the event(s) selected under this AA §10-1. If more than one option is selected for a particular contribution source under this AA §10-1, a Participant may take an in-service distribution upon the occurrence of any of the selected events, unless designated otherwise under this AA §10-1.
Deferral Match ER
(a) No in-service distributions are permitted.
(b) Attainment of age 59½.
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 31 Deferral Match ER
(c) Attainment of age . (Not greater than age 70 1/2) (d) A Hardship that satisfies the safe harbor rules under Section 7.10(e)(1) of the Plan. (e) A non-safe harbor Hardship described in Section 7.10(e)(2) of the Plan. (f) Attainment of Normal Retirement Age.
(g) Attainment of Early Retirement Age.
N/A (h) The Participant has participated in the Plan for at least (cannot be less than 60) months.
N/A (i) The amounts being withdrawn have been held in the Trust for at least two years. (j) Upon a Participant becoming Disabled (as defined in AA §9-4(b)). N/A N/A (k) As a Qualified Reservist Distribution.
N/A N/A (l) Upon a deemed separation of employment when an individual is on active duty for a period of at least 30 days while performing service in the Uniformed Services. (m) Describe:
[Note: No in-service distribution of Salary Deferrals is permitted prior to age 59½, except for Hardship, or Disability. If Normal Retirement Age or Early Retirement Age is earlier than age 59½, such age is deemed to be age 59½ for purposes of determining eligibility to distribute Salary Deferrals (if subsection (f) or (g) above is checked under the Deferral column). If this Plan has accepted a transfer of assets from a pension plan (e.g., a money purchase plan), no in-service distribution from amounts attributable to such transferred assets is permitted prior to age 62, except for Disability.] 10-2 APPLICATION TO OTHER CONTRIBUTION SOURCES. If the Plan allows for Rollover Contributions under AA §C-2 or After-Tax Employee Contributions under AA §6-7, unless elected otherwise under this AA §10-2, a Participant may take an inservice distribution from his/her Rollover Account and After-Tax Employee Contribution Account at any time. Employer PickUp Contributions will not be eligible for in-service distribution.
Alternatively, if this AA §10-2 is completed, the following in-service distribution provisions apply for Rollover Contributions, After-Tax Employee Contributions and/or Employer Pick-Up Contributions:
Rollover After-Tax Pick-Up
(a) No in-service distributions are permitted.
(b) Attainment of age 59½.
(c) Attainment of age . (Not greater than age 70 1/2) (d) A Hardship (that satisfies the safe harbor rules under Section
7.10(e)(1) of the Plan).
(e) A non-safe harbor Hardship described in Section 7.10(e)(2) of the Plan.
(f) Attainment of Normal Retirement Age.
(g) Attainment of Early Retirement Age.
(h) Upon a Participant becoming Disabled (as defined in AA §9-4(b)). (i) Describe:
10-3 SPECIAL DISTRIBUTION RULES. No special distribution rules apply, unless specifically provided under this AA §10-3. (a) In-service distributions will only be permitted if the Participant is 100% vested in the source from which the withdrawal is taken.
(b) A Participant may take no more than in-service distribution(s) in a Plan Year. (c) A Participant may not take an in-service distribution of less than $ . (d) A Participant may not take an in-service distribution of more than $ .
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 32 (e) Unless elected otherwise under this subsection (e), the hardship distribution provisions of the Plan are not expanded to cover primary beneficiaries as set forth in Section 7.10(e)(5) of the Plan. If this subsection (e) is checked, the hardship provisions of the Plan will apply with respect to individuals named as primary beneficiaries under the Plan. (f) In determining whether a Participant has an immediate and heavy financial need for purposes of applying the non-safe harbor Hardship provisions under Section 7.10(e)(2) of the Plan, the following modifications are made to the permissible events listed under Section 7.10(e)(1) of the Plan:
[Note: This subsection (f) may only be used to the extent a non-safe harbor Hardship distribution is authorized under AA §10-1 or AA §10-2.]
(g) If the Plan includes Accounts that hold inactive sources of contributions, the Employer may designate under this AA §10-3(g) the in-service distribution options available to such Accounts:
(h) Other distribution rules:
10-4 REQUIRED MINIMUM DISTRIBUTIONS.
(a) Required distributions after death. If a Participant dies before distributions begin and there is a Designated Beneficiary, the Participant or Beneficiary may elect on an individual basis whether the 5-year rule (as described in Section 8.06(a) of the Plan) or the life expectancy method described under Sections 8.02 of the Plan applies. See Section 8.06(b) of the Plan for rules regarding the timing of an election authorized under this AA §10-4.
Alternatively, if selected under this subsection (a), any death distributions to a Designated Beneficiary will be made only under either the 5-year rule or the life expectancy method, as elected below:
(1) The five-year rule under Section 8.06(a) of the Plan applies (instead of the life expectancy method). Thus, the entire death benefit must be distributed by the end of the fifth year following the year of the Participant’s death. Death distributions to a Designated Beneficiary may not be made under the life expectancy method. (2) The life expectancy method under Sections 8.02 and 8.04 of the Plan (and not the 5-year rule). (b) Describe any special rules applicable to required minimum distributions:
[Note: Any special rule under this subsection (b) must satisfy the requirements of Code §401(a)(9). This subsection (b) may be used to override the default provision under Section 8.06(b) of the Plan. For example, the Employer may designate the life expectancy rules as the default rather than the five-year rule when a Participant or Beneficiary fails to make an election.]
SECTION 11
MISCELLANEOUS PROVISIONS
11-1 PLAN VALUATION. The Plan is valued annually, as of the last day of the Plan Year. (a) Additional valuation dates. In addition, the Plan will be valued on the following dates:
Deferral Match ER
(1) Daily. The Plan is valued at the end of each business day during which the New York Stock Exchange is open.
(2) Monthly. The Plan is valued at the end of each month of the Plan Year. (3) Quarterly. The Plan is valued at the end of each Plan Year quarter. (4) Describe:
[Note: The Employer may elect operationally to perform interim valuations, regardless of any selection in this subsection (a).]
(b) Special rules. The following special rules apply in determining the amount of income or loss allocated to Participants’ Accounts:
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page 33 11-2 SPECIAL RULES FOR APPLYING THE CODE §415 LIMITATION. The provisions under Section 5.02 of the Plan apply for purposes of determining the Code §415 Limitation.
Complete this AA §11-2 to override the default provisions that apply in determining the Code §415 Limitation under Section 5.02 of the Plan.
(a) Limitation Year. Instead of the Plan Year, the Limitation Year is the 12-month period ending . [Note: If the Plan has a short Plan Year for the first year of establishment, the Limitation Year is deemed to be the 12- month period ending on the last day of the short Plan Year.] (b) Imputed compensation. For purposes of applying the Code §415 Limitation, Total Compensation includes imputed compensation for a Participant who terminates employment on account of becoming disabled. (See Section
5.02(c)(7)(ii) of the Plan.)
(c) Special rules:
[Note: Any special rules under this subsection (c) must be consistent with the requirements of Code §415.] 11-3 MILITARY SERVICE PROVISIONS -- BENEFIT ACCRUALS. The benefit accrual provisions under Section 15.04 of the Plan do not apply. To apply the benefit accrual provisions under Section 15.04 of the Plan, check the box below. (a) Eligibility for Plan benefits. Check this box if the Plan will provide the benefits described in Section 15.04 of the Plan.
If this box is checked, an individual who dies or becomes disabled in qualified military service will be treated as reemployed for purposes of determining entitlement to benefits under the Plan. (b) Deemed separation from service. Unless otherwise elected under AA§10-1(l), an individual shall not be treated as having been severed from employment during any period the individual is performing service in the Uniformed Services for purposes of receiving a Plan distribution under Code §401(k)(2)(B)(i)(I). 11-4 ELECTION NOT TO PARTICIPATE (see Section 2.08 of the Plan). All Participants share in any allocation under this Plan and no Employee may waive out of Plan participation.
To allow Employees to make a one-time irrevocable waiver, check below. An Employee may make a one-time irrevocable election not to participate under the Plan. 11-5 TREATMENT OF CERTAIN BENEFITS. The protected benefits rules under Code §411(d)(6)) do not apply to the Plan.
However, the Employer may describe below (or in a separate addendum attached to this Adoption Agreement) the treatment of certain benefits following events such as plan merger or consolidation, transfer of assets or similar events.
Describe treatment of benefits:
[Note: If the benefit described here in the Plan or a plan being merged into the Plan is not either (i) available as a provision through the Pre-Approved Plan or (ii) the subject of a prior determination, advisory, or opinion letter, the Employer cannot rely on the Pre-Approved Plan Provider’s opinion letter for qualification with respect to such benefit. If the benefit described here in the Plan or a plan being merged into the Plan is not permitted in a pre-approved plan, as described in Section 6.03 of Revenue Procedure 2017-41, such provision must be discontinued no later than the date the Employer adopts this Pre-Approved Plan or, in the case of a merger, the merger date.]
11-6 SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS. If the Plan is a Multiple Employer Plan (as designated under AA §2-6), the rules applicable to Multiple Employer Plans under Section 16.07 of the Plan apply. The following special rules apply with respect to Multiple Employer Plans:
[Note: Any special rules under this AA §11-6 must satisfy the nondiscrimination requirements under Code §401(a)(4) and must satisfy the rules applicable to Multiple Employer Plans under Code §413(c).] Nonstandardized Governmental Plan
Appendix A – Special Effective Dates
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Cycle 3 Nonstandardized Governmental Plan #03-001 Page A - 1
APPENDIX A
SPECIAL EFFECTIVE DATES
[Note: This Appendix A may be used to memorialize prior Plan provisions that pertain to sources that no longer accept new contributions under the Plan.]
A-1 Eligible Employees. The definition of Eligible Employee under AA §3 is effective as follows:
A-2 Minimum age and service conditions. The minimum age and service conditions and Entry Date provisions specified in AA §4 are effective as follows:
A-3 Compensation definitions. The compensation definitions under AA §5 are effective as follows:
A-4 Employer Contributions. The Employer Contribution provisions under the Plan are effective as follows:
A-5 After-Tax Employee and Pick-Up Contributions. The provisions of the Plan addressing Employee After-Tax Contributions and Pick-Up Contribution provisions under the Plan are effective as follows:
A-6 Salary Deferrals. The Salary Deferral provisions under AA §6A are effective as follows:
A-7 Matching Contributions. The Matching Contribution provisions under AA §6B are effective as follows:
A-8 Retirement ages. The retirement age provisions under AA §7 are effective as follows:
A-9 Vesting and forfeiture rules. The rules regarding vesting and forfeitures under AA §8 are effective as follows:
A-10 Distribution provisions. The distribution provisions under AA §9 are effective as follows:
A-11 In-service distributions and Required Minimum Distributions. The provisions regarding in-service distribution and Required Minimum Distributions under AA §10 are effective as follows:
A-12 Miscellaneous provisions. The provisions under AA §11 are effective as follows:
A-13 Special effective date provisions for merged plans. If any qualified retirement plans have been merged into this Plan, the provisions of Section 14.03 of the Plan apply, as follows:
A-14 Other special effective dates:
A-15 Special effective dates for restated pre-approved plans: Use this A-15 to memorialize plan operational changes that have occurred after the general effective date of the plan and the actual plan restatement adoption date. Adopting employers may use the above Special Effective Date options (A-1 through A-14) to memorialize these changes or they may use this A-15.
Nonstandardized Governmental Plan
Appendix B – Loan Policy
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page B - 1
APPENDIX B
LOAN POLICY
Use this Appendix B to identify elections dealing with the administration of Participant loans. These elections may be changed without amending this Adoption Agreement by substituting an updated Appendix B with new elections. Any modifications to this Appendix B, or any modifications to a separate loan policy describing the loan provisions selected under the Plan, will not affect an Employer's reliance on the IRS Favorable Letter. Loans are subject to any internal limitations or rules imposed by the Investment Arrangement or the service provider or platform.
B-1 Are PARTICIPANT LOANS permitted? (See Section 13 of the Plan.) (a) Yes
(b) No
B-2 LOAN PROCEDURES.
(a) Loans will be provided under the default loan procedures set forth in Section 13 of the Plan, unless modified under this Appendix B.
(b) Loans will be provided under a separate written loan policy. [Note: If this subsection (b) is checked, do not complete the rest of this Appendix B.]
B-3 AVAILABILITY OF LOANS. Participant loans are available to all active Participants and Beneficiaries. Participant loans are not available to a former Employee or Beneficiary (including an Alternate Payee under a QDRO). To override this default provision, complete this AA §B-3:
(a) A former Employee or Beneficiary (including an Alternate Payee) who has a vested Account Balance may request a loan from the Plan.
(b) A “limited participant” as defined in Section 3.05 of the Plan may not request a loan from the Plan. (c) An officer or director of the Employer, as defined for purposes of the Sarbanes-Oxley Act, may not request a loan from the Plan.
(d) Describe limitations on receiving loans under the Plan:
[Note: Any limitation under subsection (d) must be definitely determinable and not provide any Employer discretion.] B-4 LOAN LIMITS. The default loan policy under Section 13.03 of the Plan allows Participants to take a loan provided all outstanding loans do not exceed 50% of the Participant’s vested Account Balance. To override the default loan policy to allow loans up to $10,000, even if greater than 50% of the Participant’s vested Account Balance, check this AA §B-4. A Participant may take a loan equal to the greater of $10,000 or 50% of the Participant's vested Account Balance. [Note: If this AA §B-4 is checked, the Participant may be required to provide adequate security as required under Section 13.06 of the Plan.]
B-5 NUMBER OF LOANS. The default loan policy under Section 13.04 of the Plan restricts Participants to one loan outstanding at any time. To override the default loan policy and permit Participants to have more than one loan outstanding at any time, complete subsection (a) or (b) below.
(a) A Participant may have loans outstanding at any time. (b) There are no restrictions on the number of loans a Participant may have outstanding at any time.
B-6 LOAN AMOUNT. The default loan policy under Section 13.04 of the Plan provides that a Participant may not receive a loan of less than $1,000. To modify the minimum loan amount or to add a maximum loan amount, complete this AA §B-6. (a) There is no minimum loan amount.
(b) The minimum loan amount is $ .
(c) The maximum loan amount is $ .
B-7 INTEREST RATE. The default loan policy under Section 13.05 of the Plan provides for an interest rate commensurate with the interest rates charged by local commercial banks for similar loans. To override the default loan policy and provide a specific interest rate to be charged on Participant loans, complete this AA §B-7. (a) The prime interest rate plus percentage point(s). (b) The interest rate is determined in accordance with the terms of the Investment Arrangement, service provider procedures, or other loan policy document adopted by the Plan Administrator. (c) Describe:
Nonstandardized Governmental Plan
Appendix B – Loan Policy
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page B - 2 [Note: Any interest rate described in this AA §B-7 must be reasonable and must apply uniformly to all Participants.] B-8 PURPOSE OF LOAN. The default loan policy under Section 13.02 of the Plan provides that a Participant may receive a Participant loan for any purpose. To modify the default loan policy to restrict the availability of Participant loans to hardship events, check this AA §B-8.
(a) A Participant may only receive a Participant loan upon the demonstration of a hardship event, as described in Section
7.10(e)(1)(i) of the Plan.
(b) A Participant may only receive a Participant loan under the following circumstances:
B-9 APPLICATION OF LOAN LIMITS. If Participant loans are not available from all contribution sources, the limitations under Code §72(p) and the adequate security requirements of the Department of Labor regulations will be applied by taking into account the Participant’s entire Account Balance. To override this provision, complete this AA §B-9. The loan limits and adequate security requirements will be applied by taking into account only those contribution Accounts which are available for Participant loans.
B-10 CURE PERIOD. The Plan provides that a Participant incurs a loan default if a Participant does not repay a missed payment by the end of the calendar quarter following the calendar quarter in which the missed payment was due. To override this default provision to apply a shorter cure period, complete this AA §B-10. The cure period for determining when a Participant loan is treated as in default will be days (cannot exceed 90) following the end of the month in which the loan payment is missed. (b) The cure period for determining when a Participant loan is treated as in default will be the greater of days (cannot exceed 90) following the end of the month in which the loan payment is missed or the last day of the second calendar quarter following the calendar quarter in which the missed payment was due. (c) The cure period for determining when a loan is treated as in default will be days (cannot exceed 90) following the first missed loan payment.
B-11 PERIODIC REPAYMENT – PRINCIPAL RESIDENCE. If a Participant loan is for the purchase of a Participant’s primary residence, the loan repayment period for the purchase of a principal residence may not exceed ten (10) years. To override this default provision, complete this AA §B-11.
(a) The Plan does not permit loan payments to exceed five (5) years, even for the purchase of a principal residence. (b) The loan repayment period for the purchase of a principal residence may not exceed years (may not exceed 30). (c) Loans for the purchase of a Participant’s primary residence may be payable over any reasonable period commensurate with the period permitted by commercial lenders for similar loans.
B-12 TERMINATION OF EMPLOYMENT. Section 13.10(a) of the Plan provides that a Participant loan becomes due and payable in full upon the Participant’s termination of employment. To override this default provision, complete this AA §B-12. A Participant loan will not become due and payable in full upon the Participant’s termination of employment.
B-13 DIRECT ROLLOVER OF A LOAN NOTE. Section 13.10(b) of the Plan provides that upon termination of employment a Participant may request the Direct Rollover of a loan note. To override this default provision, complete this AA §B-13. A Participant may not request the Direct Rollover of the loan note upon termination of employment.
B-14 LOAN RENEGOTIATION. The default loan policy provides that a Participant may renegotiate a loan, provided the renegotiated loan separately satisfies the reasonable interest rate requirement, the adequate security requirement, the periodic repayment requirement and the loan limitations under the Plan. The Employer may restrict the availability of renegotiations to prescribed purposes provided the ability to renegotiate a Participant loan is available on a non-discriminatory basis. To override the default loan policy and restrict the ability of a Participant to renegotiate a loan, complete this AA §B-14. (a) A Participant may not renegotiate the terms of a loan. (b) The following special provisions apply with respect to renegotiated loans:
B-15 SOURCE OF LOAN. Participant loans may be made from all available contribution sources, to the extent vested, unless designated otherwise under this AA §B-15.
Participant loans will not be available from the following contribution sources:
Participant loans will only be available from the following contribution sources:
B-16 SPOUSAL CONSENT. Spousal consent is not required for a Participant to receive a loan, unless required by State law. To override this provision, complete this AA §B-16.
Spousal consent is required to receive a Participant loan.
Nonstandardized Governmental Plan
Appendix B – Loan Policy
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page B - 3 B-17 MODIFICATIONS TO DEFAULT LOAN PROVISIONS.
The following special rules will apply with respect to Participant loans under the Plan:
[Note: Any provision under this AA §B-17 must satisfy the requirements under Code §72(p) and the regulations thereunder and will control over any inconsistent provisions of the Plan dealing with the administration of Participant loans.] Nonstandardized Governmental Plan
Appendix C – Administrative Elections
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page C - 1
APPENDIX C
ADMINISTRATIVE ELECTIONS
Use this Appendix C to identify certain elections dealing with the administration of the Plan. These elections may be changed without amending this Adoption Agreement by substituting an updated Appendix C with new elections. The provisions selected under this Appendix C do not create qualification issues and any changes to the provisions under this Appendix C will not affect the Employer's reliance on the IRS Favorable Letter.
C-1 DIRECTION OF INVESTMENTS. Are Participants permitted to direct investments? (See Section 10.07 of the Plan.) (a) No
(b) Yes, but subject to the following restrictions:
(1) No restrictions apply
(2) Only for Accounts that are 100% vested
(3) Specify Accounts:
(4) Describe any special rules that apply for purposes of direction of investments:
[Note: This subsection (4) may be used to describe special investment provisions for specific types of investments.]
C-2 ROLLOVER CONTRIBUTIONS. Does the Plan accept Rollover Contributions? (See Section 3.05 of the Plan.) (a) No
(b) Yes
(1) If this subsection (1) is checked, an Employee may make a Rollover Contribution to the Plan prior to becoming a Participant in the Plan.
(2) Check this subsection (2) if the Plan will accept Rollover Contributions from former Employees with an Account Balance under the Plan.
(3) Describe any special rules for accepting Rollover Contributions:
[Note: The Employer may designate in this subsection (3), or in separate written procedures, the extent to which it will accept rollovers from designated plan types. For example, the Employer may decide not to accept rollovers from certain designated plans (e.g., 403(b) plans, §457 plans or IRAs). Any special rollover procedures will apply uniformly to all Participants under the Plan.]
C-3 LIFE INSURANCE. Are life insurance investments permitted? (See Section 10.08 of the Plan.) (a) No
(b) Yes
C-4 QDRO PROCEDURES. Although the requirements of Code §414(p) do not apply to the Plan, the Employer may elect to apply the procedures set forth under Section 11.05 of the Plan (which are patterned after the rules under Code §414(p)) by electing subsection (a) below or may elect not to apply the procedures set forth under Section 11.05 of the Plan and instead, describe the Plan’s procedures for addressing domestic relations orders below or in separate administrative procedures. (a) The Employer elects to have the requirements of Section 11.05 of the Plan apply to its Plan. (b) The requirements of Section 11.05 of the Plan do not apply to the Plan. The procedures for addressing the receipt of domestic relations orders are either set forth below or in separate administrative procedures.
Describe domestic relations procedures:
Nonstandardized Governmental Plan
Employer Signature Page
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page ER - 1
EMPLOYER SIGNATURE PAGE
PURPOSE OF EXECUTION. This Signature Page is being executed for City of Santa Clara 401(a) Plan to effect:
(a) The adoption of a new plan, effective 9-23-2025 [insert Effective Date of Plan]. [Note: Date can be no earlier than the first day of the Plan Year in which the Plan is adopted.]
(b) The restatement of an existing plan in order to comply with the requirements for Cycle 3 Pre-Approved Plans, pursuant to Rev. Proc. 2017-41.
(1) Effective date of restatement: . [Note: Date can be no earlier than the first day of the Plan Year in which the restatement is adopted.]
(2) Name of plan(s) being restated:
(3) The original effective date of the plan(s) being restated:
(c) An amendment or restatement of the Plan (other than to comply with the requirements for Cycle 3 Pre-Approved Plans under Rev. Proc. 2017-41). If this Plan is being amended, a snap-on amendment may be used to designate the modifications to the Plan or the updated pages of the Adoption Agreement may be substituted for the original pages in the Adoption Agreement. All prior Employer Signature Pages should be retained as part of this Adoption Agreement. (1) Effective Date(s) of amendment/restatement:
(2) Name of plan being amended/restated:
(3) The original effective date of the plan being amended/restated:
(4) If Plan is being amended, identify the Adoption Agreement section(s) being amended:
PRE-APPROVED PLAN PROVIDER INFORMATION. The Pre-Approved Plan Provider (or authorized representative) will inform the Employer of any amendments made to the Plan and will notify the Employer if it discontinues or abandons the Plan. To be eligible to receive such notification, the Employer agrees to notify the Pre-Approved Plan Provider (or authorized representative) of any change in address. The Employer may direct inquiries regarding the Plan or the effect of the IRS Opinion Letter to the Pre-Approved Plan Provider (or authorized representative) at the following location:
Name of Pre-Approved Plan Provider (or authorized representative): Nationwide Financial Services, Inc.
Address: 10 W. Nationwide Blvd. Columbus, OH 43215
Telephone number: 877-677-3678
IMPORTANT INFORMATION ABOUT THIS PRE-APPROVED PLAN. A failure to properly complete the elections in this Adoption Agreement or to operate the Plan in accordance with applicable law may result in disqualification of the Plan. The Employer may rely on the Favorable IRS Letter issued by the Internal Revenue Service to the Pre-Approved Plan Provider as evidence that the Plan is qualified under Code §401(a), to the extent provided in Rev. Proc. 2017-41. The Employer may not rely on the Favorable IRS Letter in certain circumstances or with respect to certain qualification requirements, which are specified in the Favorable IRS Letter issued with respect to the Plan and in Rev. Proc. 2017-41. In order to obtain reliance in such circumstances or with respect to such qualification requirements, the Employer may need to apply to the Internal Revenue Service for a determination letter.
By executing this Adoption Agreement, the Employer intends to adopt the provisions as set forth in this Adoption Agreement and the related Plan document. By signing this Adoption Agreement, the individual below represents that he/she has the authority to execute this Plan document on behalf of the Employer. This Adoption Agreement may only be used in conjunction with Basic Plan Document #03.
The Employer understands that the Pre-Approved Plan Provider has no responsibility or liability regarding the suitability of the Plan for the Employer’s needs, or the options elected under this Adoption Agreement. It is recommended that the Employer consult with legal counsel before executing this Adoption Agreement.
City of Santa Clara
(Name of Employer)
(Name of authorized representative) (Title)
(Signature) (Date)
Nonstandardized Governmental Plan
Trust Declaration
© Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page TD - 1
TRUST DECLARATION
This Trust Declaration may be used to identify and adopt the Trust associated with the Plan. [Note: The Internal Revenue Service does not review the Trust Declaration, or the trust provisions associated with Pre-Approved Plans.
Therefore, the provisions of the Trust Declaration, ASC Trust Agreement or any separate Trust agreement have not been approved by the IRS and the IRS opinion letter does not cover such Trust Agreement. The Provider, the Trustee and the adopting Employer should review the applicable Trust provisions, and any modifications thereto, with legal counsel to ensure the provisions are appropriate for the Plan and consistent with Employer elections.]
Name of Plan. City of Santa Clara 401(a) Plan
Name of Employer. City of Santa Clara
Effective date of Trust Agreement: 9-23-2025
(a) The Trust terms are:
(1) Determined under the Trust provisions contained in the ASC Trust Agreement - Standard. [Note: Trustee must complete the Trustee Signature section under Section (b) below.] (i) Directed Trustee. The Trustee may only invest Plan assets as directed by the Plan Administrator, the Employer, an Investment Manager or other Named Fiduciary or, to the extent authorized under the Plan, a Plan Participant.
(ii) Discretionary Trustee. The Trustee has discretion to invest Plan assets, unless specifically directed otherwise by the Plan Administrator, the Employer, an Investment Manager or other Named Fiduciary or, to the extent authorized under the Plan, a Plan Participant.
[Modification of ASC Trust Agreement Provisions. The Employer may amend the Trust provisions as provided under Section 1.18 of the ASC Trust Agreement. Plan provisions will override any conflicting provisions in the Trust Agreement, including any modification thereto. The Provider and the adopting Employer should review any modifications of the ASC Trust Agreement with legal counsel to ensure the provisions are appropriate for the Plan and consistent with Employer elections.]
(2) Determined under a separate Trust agreement(s). The Trust provisions are contained in a separate Trust Agreement that has been furnished to the Employer. Notwithstanding the terms of the Plan, the terms of the Trust Agreement shall control the rights and responsibilities of the Trustee with respect to the Trust and the assets held in such Trust.
Name of Trustee. Nationwide Trust Company, FSB
Title of Trust Agreement. Nationwide Trust Agreement
Address of Trustee. 10 W. Nationwide Blvd.
Columbus, OH 43215
[Note: In using a separate Trust Agreement, the Trustee may adopt such Trust Agreement by either completing the Trustee Signature section under Section (b) below or may execute the separate Trust Agreement. In either case, the information above – Name of Trustee, Title of Trust Agreement and Address of Trustee – must be completed.] (3) Plan is funded with custodial accounts, annuity contracts and/or insurance contracts. There is no Trust associated with the Plan because the Plan is funded exclusively with custodial accounts, annuity contracts and/or insurance contracts.
[Note: No signature is required under this Trust Declaration if the Plan is funded exclusively with custodial accounts, annuity contracts and/or insurance contracts. The Employer or Plan Administrator may enter into a separate agreement with the custodian or insurance company. Such separate agreement must be consistent with the terms of the Plan.]
Nonstandardized Governmental Plan
Interim Amendment – Hardship Distribution Elective Provisions © Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page HD - 1
INTERIM AMENDMENT - HARDSHIP DISTRIBUTIONS
ELECTIVE PROVISIONS
These Elective Provisions provide for elections as allowed by the Final Regulations and the Hardship Distribution Interim Amendment, attached to the Basic Plan Document. In some cases, the Pre-Approved Plan Provider has Defaults as indicated by the items marked as Default under these Elective Provisions. If the adopting Employer approves of the Defaults of the Pre-Approved Plan Provider, the adopting Employer does not need to execute this Hardship Distribution Interim Amendment. If the adopting Employer wishes to override any of the Defaults of the Pre-Approved Plan Provider, the adopting Employer should make the appropriate election(s) in the Elective Provisions below and sign this Hardship Distribution Interim Amendment. If the Plan does not permit Hardship distributions, no elections should be made below.
HD-1 SOURCES FOR HARDSHIP DISTRIBUTIONS
(a) Source accounts (not including earnings). For Plan Years beginning after December 31, 2018 (or such later date specified under HD-1(a)(8) or HD-1(a)(9) below or the effective date of a new Plan), a Participant may take an in-service distribution upon the occurrence of a Hardship that satisfies the Hardship distribution rules under Section 8.10(e) of the Plan, as amended by this interim amendment, with respect to the following sources:
(1) No change to current Plan sources available for Hardship distributions under AA §§10-1 and 10-2. (2) Qualified Nonelective Contribution (QNEC) Account (Not applicable to 401(a) Governmental Plans) (3) Qualified Matching Contribution (QMAC) Account (Not applicable to 401(a) Governmental Plans) (4) Safe Harbor Employer Contribution Account (Not applicable to 401(a) Governmental Plans) (5) Safe Harbor Matching Contribution Account (Not applicable to 401(a) Governmental Plans) (6) QACA Safe Harbor Employer Contribution Account (Not applicable to 401(a) Governmental Plans) (7) QACA Safe Harbor Matching Contribution Account (Not applicable to 401(a) Governmental Plans) (8) Effective date is January 1, 2020, whether Plan has a calendar or fiscal Plan Year. (9) Describe effective date (if later than the beginning of the Plan Year beginning after December 31, 2018) for which the election(s) above apply:
(b) Earnings on source accounts. For Plan Years beginning after December 31, 2018 (or such later date specified under HD1(b)(11) or HD-1(b)(12) below or the effective date of a new Plan), amounts available for Hardship distributions include earnings on the following available sources:
(1) Amounts available for Hardship include earnings on all available sources. (2) No change to current Plan rule (i.e., earnings are not available on Salary Deferrals, except for those on grandfathered (pre-1989) earnings, if applicable).
(3) Pre-Tax Salary Deferral Account
(4) Roth Deferral Account
(5) Qualified Nonelective Contribution (QNEC) Account (Not applicable to 401(a) Governmental Plans) (6) Qualified Matching Contribution (QMAC) Account (Not applicable to 401(a) Governmental Plans) (7) Safe Harbor Employer Contribution Account (Not applicable to 401(a) Governmental Plans) (8) Safe Harbor Matching Contribution Account (Not applicable to 401(a) Governmental Plans) (9) QACA Safe Harbor Employer Contribution Account (Not applicable to 401(a) Governmental Plans) (10) QACA Safe Harbor Matching Contribution Account (Not applicable to 401(a) Governmental Plans) (11) Effective date is January 1, 2020, whether Plan has a calendar or fiscal Plan Year. (12) Describe effective date (if later than the beginning of the Plan Year beginning after December 31, 2018) for which the election(s) above apply:
HD-2 NEED TO OBTAIN ALL AVAILABLE LOANS (Complete only if Employer maintains any qualified plan(s) that permits Participant loans.)
(a) For Plan Years beginning after December 31, 2018 (or such later date specified in HD-2(d) or HD-2(e) below or the effective date of a new Plan), if a Participant requests a Hardship distribution from any of the Accounts specified in HD-1 above and AA §§10-1 and 10-2, the Participant is NO LONGER required to obtain all nontaxable loans available under the Plan and all other plans maintained by the Employer. (b) No change to current Plan provisions. Participants are required to obtain all nontaxable loans available under the Plan and all plans maintained by the Employer.
(c) Describe any special requirements with respect to the need to first obtain all available loans:
(d) Effective date is January 1, 2020, whether Plan has a calendar or fiscal Plan Year. (e) Describe other effective date (if later than the beginning of the Plan Year beginning after December 31, 2018) for which the election(s) above apply.
Nonstandardized Governmental Plan
Interim Amendment – Hardship Distribution Elective Provisions © Copyright 2020
Cycle 3 Nonstandardized Governmental Plan #03-001 Page HD - 2 HD-3 SUSPENSION OF ABILITY TO MAKE SALARY DEFERRALS AND AFTER-TAX EMPLOYEE CONTRIBUTIONS DURING 2019. (Applicable only to Plans that were using the safe harbor Hardship distribution suspension rule.) [Note: Under the Final Regulations, adopting Employers may continue to apply the suspension of Salary Deferrals and After-Tax Employee Contributions rules for the 2019 Plan Year. However, in no event, may the Plan provide for a suspension of an Employee’s Salary Deferrals or After-Tax Employee Contributions as a condition of obtaining a Hardship distribution for Hardship distributions made on or after January 1, 2020.] (a) For Plan Years beginning after December 31, 2018 (or such later date specified in HD-3(d) below) and applicable to Hardship distributions made before January 1, 2020, if a Participant takes a Hardship distribution as permitted under the Plan, the Participant was NOT suspended from making Salary Deferrals (and After-Tax Employee Contributions, if applicable) for any period of time after the receipt of the Hardship distribution. (b) No change to current Plan provisions. For Hardship distributions made before January 1, 2020, the Participant continued to be suspended from making Salary Deferrals (and After-Tax Employee Contributions, if applicable) for a period of 6 months after the receipt of the Hardship distribution. Suspensions on Hardship distributions made after July 1, 2019 will cease effective January 1, 2020. (c) Describe any special requirements with respect to the suspension from making Salary Deferrals (and After-Tax Employee Contributions, if applicable):
(d) Describe the effective date (if later than the beginning of the Plan Year beginning after December 31, 2018) for which the election(s) above apply:
HD-4 APPLICATION OF SUSPENSION REQUIREMENT FOR PRE-2019 PLAN YEAR HARDSHIP DISTRIBUTIONS. (Applicable only to Plans that were using the Hardship distribution suspension rule as of the last day of the 2018 Plan Year.) (a) No change to current Plan provisions. A Participant who received a Hardship distribution prior to the beginning of the 2019 Plan Year continued to be suspended from making Salary Deferrals (and After-Tax Employee Contributions, if applicable) for a period of 6 months after the receipt of the Hardship distribution. (b) Effective on the first day of the Plan Year beginning after December 31, 2018 (or such later date specified in HD-4(d) below), a Participant who received a Hardship distribution prior to the beginning of the 2019 Plan Year was no longer suspended from making Salary Deferrals (and After-Tax Employee Contributions, if applicable). (c) Describe any special rules with respect to the suspension from making Salary Deferrals (and After-Tax Employee Contributions, if applicable) for Participants who have received pre-2019 Hardship distributions:
(d) Describe the effective date (if later than the beginning of the Plan Year beginning after December 31, 2018) for which the election(s) above apply:
HD-5 OTHER APPLICABLE RULES. Describe any other rules, such as conditions for receiving a Hardship distribution, not otherwise reflected in the Plan or Hardship Distribution Interim Amendment:
HD-6 MEMORIALIZATION OF PRIOR OPERATION. The elections in this Hardship Distribution Interim Amendment should reflect current Plan operations. The Employer may memorialize prior plan operations relevant to the implementation of the Final Regulations by describing such operations below:
APPLICATION OF AMENDMENT
Pursuant to Revenue Procedure 2015-36 and Revenue Procedure 2017-41 (as applicable), these Hardship Distribution Interim Amendment Elective Provisions have been adopted by the Pre-Approved Plan Provider on behalf of all adopting Employers. This amendment supersedes any contrary provisions under the Plan. If the Employer wishes to override the Default elections of the PreApproved Plan Provider, the Employer (or the authorized representative of the Employer) must execute this Hardship Distribution Interim Amendment by signing below. This amendment applies to the signatory Employer and all Participating Employers under the Plan.
City of Santa Clara
(Name of Employer)
(Name of Authorized Representative, if applicable) (Title) (Signature) (Date)
Nonstandardized Governmental Plan
Interim Amendment – CARES/SECURE Acts Elective Provisions © Copyright 2022
Cycle 3 Nonstandardized Governmental Plan #03-001 Page CS-1
CARES/SECURE ACTS INTERIM AMENDMENT
ELECTIVE PROVISIONS
These Elective Provisions provide for elections related to the Interim Amendment. If the adopting Employer agrees to the default for a particular provision or the provision does not apply to the Employer’s Plan, the adopting Employer does not need to make an election for that provision. If the adopting Employer wishes to override any of the defaults, the adopting Employer should make the appropriate election(s) in the Elective Provisions below. If the defaults are not used, the adopting Employer will need to execute these Elective Provisions.
CS-1. TEMPORARY WAIVER OF REQUIRED MINIMUM DISTRIBUTIONS FOR 2020 (See IA §3.03) [Note: Do not complete these Elective Provisions if the Plan was not in existence during 2020 or if the temporary waiver otherwise did not apply to the Plan.]
(a) Default if Participant fails to elect. For purposes of applying the required minimum distribution rules for the 2020 calendar year, effective January 1, 2020 (or such later date as designated below), a Participant (including an Alternate Payee or beneficiary of a deceased Participant) who was eligible to receive a required minimum distribution for the 2020 calendar year could elect whether to receive the 2020 RMD or 2020 Extended RMD (as defined in IA §3.03). If a Participant did not specifically elect to take the 2020 RMD or 2020 Extended RMD from the Plan, such distribution was not made for the 2020 calendar year. The Employer may modify this default rule below, provided such modification satisfies the requirements under Code §401(a)(9)(I) and any applicable IRS guidance.
(1) 2020 RMDs and 2020 Extended RMDs were made. 2020 RMDs and 2020 Extended RMDs were made to Participants who were otherwise required to receive a required minimum distribution for the 2020 calendar year, unless the Participant elected to not receive such distribution.
(2) 2020 RMDs were not made, but 2020 Extended RMDs were made. 2020 RMDs were not made for the 2020 calendar year, but 2020 Extended RMDs were made for the 2020 calendar year, unless the Participant elected otherwise.
(3) 2020 RMDs were made, but 2020 Extended RMDs were not made. 2020 RMDs were made for the 2020 calendar year, but 2020 Extended RMDs were not made for the 2020 calendar year, unless the Participant elected otherwise.
(4) Direct Rollovers. Unless elected otherwise below, the Plan offered a Direct Rollover only for distributions that were Eligible Rollover Distributions in the absence of Code §401(a)(9)(I).
Instead of the default above, the following were treated as Eligible Rollover Distributions in 2020:
(i) 2020 RMDs
(ii) 2020 RMDs and 2020 Extended RMDs
(iii) 2020 RMDs, but only if paid with an additional amount that is an Eligible Rollover Distribution without regard to Code §401(a)(9)(I) (iv) Describe:
(5) Describe other modifications of the default participant election rules:
(6) Effective date. Instead of January 1, 2020, the effective date of the amendment providing for a choice of whether a Participant or beneficiary could receive 2020 RMDs was effective:
(b) Describe any special rules, including any special effective dates, the Plan applied to required minimum distributions for 2020:
CS-2. REQUIRED MINIMUM DISTRIBUTION ELECTIONS (IA §5.02(b)(1)(ii)). Effective for distributions with respect to Participants who die after December 31, 2019 (or such later effective date applicable to the Plan. See IA §5.02(b)(1)(v)) and before the applicable Required Beginning Date, the Plan’s Cycle 3 elections with regard to required minimum distributions continue to apply to Eligible Designated Beneficiaries, except that the 10-year rule will be substituted for the 5-year rule, as appropriate. In addition, the Cycle 3 default applicable to a Participant or Designated Beneficiary who fails to make an election continues to apply. To override this default provision, complete (a) and/or (b) below. (a) Application of life expectancy and 10-year rules to Eligible Designated Beneficiaries. Instead of the default, Nonstandardized Governmental Plan
Interim Amendment – CARES/SECURE Acts Elective Provisions © Copyright 2022
Cycle 3 Nonstandardized Governmental Plan #03-001 Page CS-2 the Plan will apply the following rule:
(1) Effective , the life expectancy rule applies to all Eligible Designated Beneficiaries. (2) Effective , the 10-year rule applies to all Eligible Designated Beneficiaries. (3) Effective , the entire interest of an Eligible Designated Beneficiary will be distributed by the end of the calendar year [may not be greater than 9th] following the year the Participant dies.
(4) Effective September 23, 2025 , the Participant or Eligible Designated Beneficiary may elect to apply either the 10-year rule or the life expectancy rule to determine the required minimum distributions when the Participant dies before his/her Required Beginning Date. If no election is timely made:
(i) the life expectancy rule applies
(ii) the 10-year rule applies
(iii) the 10-year rule, reduced to years applies
(5) Describe the manner (including effective date) in which the 10-year rule and life expectancy rule apply to Eligible Designated Beneficiaries:
(b) Special rules. Describe any special rules that apply for purposes of the required minimum distribution rules under Code §401(a)(9):
[Note: Any special rules for determining required minimum distributions for calendar years beginning on or after January 1, 2022 (or such later date as specified in applicable regulations or guidance) must comply with proposed Treas. Reg §§1.401(a)(9)-1 through 1.401(a)(9)-9 issued on February 24, 2022 (or subsequent applicable final regulations).]
CS-3. DELAYED ADOPTION OF SAFE HARBOR 401(k) PLAN (IA §5.06) (a) Amendment into a 3% nonelective Safe Harbor 401(k) Plan accounts (See IA §5.06(a)). Unless an election is made below, the Plan is not amended and the current Plan provisions will continue to apply. [Do not complete if Plan will not provide for a Safe Harbor contribution.] (1) The Plan is amended to add a % [insert amount of at least 3%] Traditional Safe Harbor 401(k) Plan Employer Contribution, effective for the [insert applicable Plan Year] Plan Year. The elected percentage will continue to apply for future Plan Years, unless otherwise provided in CS-3(a)(3) or by a subsequent Plan amendment. (2) The Plan is amended to add a % [insert amount of at least 3%] QACA Safe Harbor 401(k) Plan Employer Contribution, effective for the [insert applicable Plan Year] Plan Year. The elected percentage will continue to apply for future Plan Years, unless otherwise provided in CS-3(a)(3) or by a subsequent Plan amendment. (3) Describe any special provisions applicable to the adoption of a 3% nonelective Safe Harbor 401(k) Plan:
(b) Amendment into a 4% nonelective Safe Harbor 401(k) Plan accounts See IA §5.06(b). Unless an election is made below, the Plan is not amended and the current Plan provisions will continue to apply. (1) The Plan is amended to add a % [insert amount of at least 4%] Traditional Safe Harbor 401(k) Plan Employer Contribution, effective for the [insert applicable Plan Year] Plan Year. The elected percentage will continue to apply for future Plan Years, unless otherwise provided in CS-3(b)(3) or by a subsequent Plan amendment. (2) The Plan is amended to add a % [insert amount of at least 4%] QACA Safe Harbor 401(k) Plan Employer Contribution, effective for the [insert applicable Plan Year] Plan Year. The elected percentage will continue to apply for future Plan Years, unless otherwise provided in CS-3(b)(3) or by a subsequent Plan amendment. (3) For Plan Years following the effective date stated under CS-3(b)(1) or CS-3(b)(2), the Safe Harbor Employer Contribution will be [insert amount of at least 3%]. (4) Describe any special provisions applicable to the adoption of a 4% nonelective Safe Harbor 401(k) Plan:
Nonstandardized Governmental Plan
Interim Amendment – CARES/SECURE Acts Elective Provisions © Copyright 2022
Cycle 3 Nonstandardized Governmental Plan #03-001 Page CS-3 CS-4. QUALIFIED BIRTH OR ADOPTION DISTRIBUTIONS (“QBADs”). (See IA §5.08) Unless an election is made below, the Plan does not allow for QBADs. (a) Qualified Birth or Adoption Distributions are available from the following sources to Plan Participants as of September 23, 2025 [insert date no earlier than the first day of the Plan Year beginning after December 31, 2019]: [Note: May be checked even if no in-service distributions are otherwise permitted under the Plan.] (1) All available sources
(2) Pre-Tax Deferral Account
(3) Roth Deferral Account (including In-Plan Roth Conversion Account) (4) Matching Contribution Account
(5) Qualified Matching Contribution (QMAC) Account
(6) Employer Contribution Account
(7) Qualified Nonelective Contribution (QNEC) Account (8) Safe Harbor Contribution Account(s)
(9) Rollover Contribution Account
(10) After-Tax Employee Contribution Account
(11) Transfer Account
(12) Describe available sources:
(b) If CS-4(a) is elected, QBADs are available to all Participants who have the applicable Account(s), unless otherwise indicated below.
(1) QBADs are not available to terminated Participants. (2) QBADs will only be permitted if the Participant is 100% vested in the source from which the withdrawal is taken.
(3) Describe the Participants who may receive QBADs:
(c) Describe any special rules related to QBADs:
CS-5. INCREASE OF CAP FOR QACA SAFE HARBOR 401(k) PLAN. (See IA §5.09) Unless an election is made below, the Employer does not elect to increase the cap for its QACA Safe Harbor 401(k) Plan. [Do not complete if plan does not provide for a QACA Safe Harbor contribution.] (a) The cap on the automatic increase of the automatic deferral amount as specified under AA §6C-3(c)(2)(ii) is increased to % [insert number greater than 10, not more than 15], effective as of [insert date no earlier than the first day of the Plan Year beginning after December 31, 2019]. (b) Describe any special rules related to the increase of cap for QACA Safe Harbor 401(k) Plan:
CS-6. IN-SERVICE DISTRIBUTIONS FOR MONEY PURCHASE PENSION PLAN OR TRANSFERRED ASSETS. (See IA §5.11)
Age 59 ½ in-service distributions. Unless an election is made below, the Employer does not elect to change the Plan’s in-service distribution options under AA §10-1 of its money purchase pension plan (or with respect to assets transferred from a money purchase plan).
(a) Effective [insert date no earlier than the first day of the Plan Year beginning after December 31, 2019], a Participant may withdraw all or any portion of his/her vested Account Balance, upon the attainment of age [may not be earlier than age 59 ½ ].
(b) Describe any special rules related to the in-service distributions:
Nonstandardized Governmental Plan
Interim Amendment – CARES/SECURE Acts Elective Provisions © Copyright 2022
Cycle 3 Nonstandardized Governmental Plan #03-001 Page CS-4 CS-7. LONG-TERM PART-TIME EMPLOYEES (“LTPT Employees”). (See IA §5.12) LTPT Employees will participate under the Plan, as of the appropriate effective date, as required under IA §5.12. The Employer may make elections in the Adoption Agreement consistent with the requirements of IA §5.12. In addition, the Employer may describe any provisions relating to the participation of LTPT Employees below. (a) Other contributions. In addition to the ability to make Salary Deferrals, LTPT Employee may receive or make the following in the same manner and under the same conditions as other Eligible Employees under the Plan:
(1) All available Employer and Employee Contribution sources (2) Employer Contributions (including Qualified Nonelective Employer Contributions) (3) Matching Contributions (including Qualified Matching Contributions) (4) Safe Harbor Contributions
(5) Rollover Contributions
(6) After-Tax Employee Contributions
(7) Describe:
(b) Eligibility, Entry Date and minimum age rules. Instead of the Plan rules for Eligibility Computation Period, Entry Date and minimum age rules applicable to Eligible Employees who are not LTPT Employees, the following rules apply to LTPT Employees:
(1) The Eligibility Computation Period for LTPT Employees is based on Anniversary Years and will not switch to the Plan Year.
(2) Describe Eligibility Computation Period for LTPT Employees:
(3) The Entry Dates for LTPT Employees will be the first day of the 1st and 7th month of the Plan Year.
(4) The Entry Dates for LTPT Employees will be . (Must satisfy Entry Date requirements under BPD §2.03(b).)
(5) The minimum age requirement for LTPT Employees is:
(i) Age 21
(ii) No minimum age for eligibility
(iii) Age [not later than age 21]
(c) Collectively Bargained Employees and non-resident aliens. If Collectively Bargained Employees and/or nonresident aliens who receive no compensation from the Employer that constitutes U.S. source income are otherwise eligible for the Plan, the Employer may elect to exclude such Employees from the LTPT Employee rules of IA §5.12 below:
(1) Collectively Bargained Employees are excluded from eligibility as LTPT Employees. (2) Non-resident aliens who receive no compensation from the Employer that constitutes U.S. source income are excluded from eligibility as LTPT Employees. (3) In addition to any election made in CS-7(c)(1) or (2) above, Employees who are otherwise considered Excluded Employees under the Plan will also be excluded from eligibility as LTPT Employees.
(d) Other provisions. To the extent the following provisions or options apply to Eligible Employees who are not LTPT Employees, such provisions do not apply to LTPT Employees:
(1) The opportunity to make Roth Deferrals
(2) The automatic contribution arrangement provisions under AA §6A-8 (3) Describe Plan provisions that do not apply to LTPT Employees:
(e) Describe any special rules related to the participation of LTPT Employees under the Plan:
CS-8. PLAN ADOPTED BY FILING DUE DATE. (See IA §5.13)
The Employer elects to treat the Plan as having been adopted as of the last day of its taxable year ending . (See IA §5.13 for rules relating to the timing of this election.) Nonstandardized Governmental Plan
Interim Amendment – CARES/SECURE Acts Elective Provisions © Copyright 2022
Cycle 3 Nonstandardized Governmental Plan #03-001 Page CS-5 CS-9. SPECIAL PROVISIONS.
If the Employer wishes to provide additional or clarifying provisions to this Interim Amendment, the Employer may include such provisions below.
Describe any special rules related to this Interim Amendment:
APPLICATION OF INTERIM AMENDMENT
Pursuant to Revenue Procedure 2017-41 and Section 14.01(a) of the Plan (Section 11.01(a) in the Owners-Only Plan), to the extent this Interim Amendment has been adopted by the Pre-Approved Plan Provider on behalf of its adopting Employers, the Employer does not need to sign these Elective Provisions. If the Employer wishes to override the Provider’s (default) elections, or adopt as an Employerlevel amendment, the Employer (or the authorized representative of the Employer) must execute this Interim Amendment by signing below. This amendment applies to the Employer and all Participating Employers under the Plan.
City of Santa Clara 401(a) Plan
Name of Plan
City of Santa Clara
(Name of Employer)
(Name of Authorized Representative, if applicable) (Title) (Signature) (Date)
CITY OF SANTA CLARA
PLAN ADMINISTRATION AND RECORDKEEPING SERVICES FOR THE
CITY'S 401(a) DEFINED CONTRIBUTION PLAN
AGREEMENT
BETWEEN
CITY OF SANTA CLARA, CALIFORNIA
AND
NATIONWIDE RETIREMENT SOLUTIONS, INC.
CITY OF SANTA CLARA 1500
WARBURTON AVENUE
SANTA CLARA, CA 95050
i
TABLE OF CONTENTS
1. SERVICES TO BE PROVIDED ..........................................................................1
2. TERM OF AGREEMENT ....................................................................................2
3. QUALIFICATIONS OF CONTRACTOR - STANDARD OF WORKMANSHIP .....2
4. MONITORING OF SERVICES ...........................................................................2
5. WARRANTY .......................................................................................................2
6. PERFORMANCE OF SERVICES .......................................................................3
7. BUSINESS TAX LICENCE REQUIRED .............................................................3
8. RESPONSIBILITY OF CONTRACTOR ..............................................................3
9. COMPENSATION AND PAYMENT ....................................................................3
10. TERMINATION OR SUSPENSION OF AGREEMENT .......................................3
11. NO ASSIGNMENT OF AGREEMENT ................................................................4
12. NO THIRD PARTY BENEFICIARY ....................................................................4
13. INDEPENDENT CONTRACTOR ........................................................................4
14. NO PLEDGING OF CITY'S CREDIT ..................................................................5
15. CONFIDENTIALITY OF MATERIAL ...................................................................5
16. USE OF CITY NAME OR EMBLEM ...................................................................5
17. OWNERSHIP OF MATERIAL.............................................................................5
18. RIGHT OF CITY TO INSPECT RECORDS OF CONTRACTOR ........................6
19. CORRECTION OF SERVICES ..........................................................................6
20. FAIR EMPLOYMENT .........................................................................................6
21. HOLD HARMLESS/INDEMNIFICATION ............................................................6
22. INSURANCE REQUIREMENTS .........................................................................7
23. AMENDMENTS ..................................................................................................7
24. INTEGRATED DOCUMENT ...............................................................................7
25. SEVERABILITY CLAUSE ...................................................................................7
26. WAIVER .............................................................................................................7
27. NOTICES ...........................................................................................................8
28. CAPTIONS .........................................................................................................8
29. LAW GOVERNING CONTRACT AND VENUE ..................................................8
30. DISPUTE RESOLUTION ....................................................................................8
31. COMPLIANCE WITH ETHICAL STANDARDS ...................................................9
32. AFFORDABLE CARE ACT OBLIGATIONS .......................................................9
33. CONFLICT OF INTERESTS...............................................................................9 ii
EXHIBITS
EXHIBIT A - SCOPE OF SERVICES
EXHIBIT B - FEE SCHEDULE
EXHIBIT C - INSURANCE REQUIREMENTS
EXHIBIT D - ETHICAL STANDARDS FOR CONTRACTORS SEEKING TO ENTER
INTO AN AGREEMENT WITH THE CITY OF SANTA CLARA,
CALIFORNIA
1 AGREEMENT FOR PROFESSIONAL SERVICES
BY AND BETWEEN THE
CITY OF SANTA CLARA, CALIFORNIA
AND
NATIONWIDE RETIREMENT SOLUTIONS, INC.
PREAMBLE
This agreement for the performance of services ("Agreement") is by and between Nationwide Retirement Solutions, Inc., an affiliate and subsidiary of Nationwide Financial Services, Inc., a Delaware corporation, with its principal place of business located at 10 West Nationwide Blvd, Columbus, Ohio 43215 ("Contractor"), and the City of Santa Clara, California, a chartered California municipal corporation with its primary business address at 1500 Warburton Avenue, Santa Clara, California 95050 ("City").
City and Contractor may be referred to individually as a "Party" or collectively as the "Parties" or the "Parties to this Agreement."
RECITALS
A. City desires to secure professional services more fully described in this Agreement, in Exhibit A - "SCOPE OF SERVICES," and B. Contractor represents that it, and its subcontractors, if any, have the professional qualifications, expertise, necessary licenses and desire to provide certain goods and/or required services of the quality and type which meet objectives and requirements of City; and
C. The Parties have specified herein the terms and conditions under which such services will be provided and paid for.
The Parties agree as follows:
AGREEMENT PROVISIONS
1. SERVICES TO BE PROVIDED.
Except as specified in this Agreement, Contractor shall furnish all technical and professional services, including labor, material, equipment, transportation, supervision, and expertise (collectively referred to as "Services") to satisfactorily complete the work required by City at its own risk and expense. Services to be provided to City are more fully described in Exhibit A - "SCOPE OF SERVICES," which may be supplemented with additional detail from time to time during the term of the Agreement, as mutually agreed to in writing by the Parties. All exhibits referenced in this Agreement are attached and are incorporated by this reference.
Hereinafter, the City's 401(a) Plan may be referred to as the "Plan".
2. TERM OF AGREEMENT.
Pursuant to and unless otherwise set forth in this Agreement or unless this paragraph is subsequently modified by a written amendment to this Agreement, the term of this Agreement shall begin on the Effective Date of this Agreement for a term of ten (10) years.
2 3. QUALIFICATIONS OF CONTRACTOR - STANDARD OF WORKMANSHIP.
Contractor represents and maintains that it has the necessary expertise in the professional calling necessary to perform services, and its duties and obligations, expressed and implied, contained herein, and City expressly relies upon Contractor's representations regarding its skills and knowledge. Contractor shall perform such services and duties in conformance to and consistent with the professional standards of a specialist in the same discipline in the State of California.
The plans, designs, specifications, estimates, calculations, reports, and other documents furnished under Exhibit A shall be in a format and of a quality acceptable to City. The criteria for acceptance of the work provided under this Agreement shall be a product of neat appearance, well organized, that is technically and grammatically correct, checked and having the maker and checker identified. The minimum standard of appearance, organization, and content of the documents shall be that used by City for similar projects.
Contractor shall provide timely and periodic submittals of all documents required of Contractor, including subcontracts, if any, as requested by City.
4. MONITORING OF SERVICES.
City may monitor the Services performed under this Agreement to determine whether Contractor's operation conforms to City policy and to the terms of this Agreement. City may also monitor the Services to be performed to determine whether financial operations are conducted in accord with applicable City, county, state, and federal requirements. If any action of Contractor constitutes a breach, City may terminate this Agreement pursuant to the provisions described herein.
5. WARRANTY.
Contractor expressly warrants that all materials and services covered by this Agreement shall be fit for the purpose intended, shall be free from defect, and shall conform to the specifications, requirements, and instructions upon which this Agreement is based. Contractor agrees to promptly replace or correct any incomplete, inaccurate, or defective Services at no further cost to City when defects are due to the negligence, errors, and/or omissions of Contractor. If Contractor fails to promptly correct or replace materials or services, City may make corrections or replace materials or services and charge Contractor for the cost incurred by City.
6. PERFORMANCE OF SERVICES.
Contractor shall perform all requested services in an efficient and expeditious manner and shall work closely with and be guided by City. Contractor shall be as fully responsible to City for the acts and omissions of its subcontractors, and of persons either directly or indirectly employed by them, as Contractor is for the acts and omissions of persons directly employed by it. Contractor will perform all Services in a safe manner and in accordance with all applicable federal, state, and local operation and safety regulations.
3 7. BUSINESS TAX LICENSE REQUIRED.
Contractor must comply with Santa Clara City Code section 3.40.060, as that section may be amended from time to time or renumbered, which requires that any person who transacts or carries on any business in the City of Santa Clara pay business license tax to the City. A business tax certificate may be obtained by completing the Business Tax Affidavit Form and paying the applicable fee at the Santa Clara City Hall Municipal Services Division.
8. RESPONSIBILITY OF CONTRACTOR.
Contractor shall be responsible for the professional quality, technical accuracy, and coordination of the Services furnished by it under this Agreement. Neither City's review, acceptance, nor payments for any of the Services required under this Agreement shall be construed to operate as a waiver of any rights under this Agreement or of any cause of action arising out of the performance of this Agreement and Contractor shall be and remain liable to City in accordance with applicable law for all damages to City caused by Contractor's negligent performance of any of the Services furnished under this Agreement.
Any acceptance by City of plans, specifications, construction contract documents, reports, diagrams, maps, and other material prepared by Contractor shall not in any respect absolve Contractor from the responsibility Contractor has in accordance with customary standards of good professional practice in compliance with applicable federal, state, county, and/or municipal laws, ordinances, regulations, rules, and orders.
9. COMPENSATION AND PAYMENT.
Compensation for the Services rendered under this Agreement will be paid to Contractor as described in Exhibit B — FEE SCHEDULE. Unless agreed to by the City in writing, it is anticipated that all Services provided by Contractor under this Agreement shall be provided at no cost to the City. Compensation for all materials provided and services rendered by Contractor shall be at the rate and in the manner outlined in Exhibit B.
10. TERMINATION OR SUSPENSION OF AGREEMENT.
A. The City may terminate this Agreement for any reason, with or without cause, upon providing one hundred eighty (180) calendar days written notice to the Contractor ("Notice of Termination").
B. The City may, by written notice, direct Contractor to suspend performance on all or any part of the Services for such period of time as may be determined by the City to be necessary or desirable for its convenience. If such suspension is not due to the fault or negligence of Contractor, the period for performance of the Services may be extended by mutual agreement.
C. Any final payment owed to the Contractor following termination or suspension of the Agreement, including any termination fee payment, shall be paid to the Contractor within sixty (60) calendar days after Contractor has transferred all assets and records to the City, or its designee determined solely by the City, and the Contractor has delivered to the City all final progress reports, documentation, 4 materials, and evidence of costs and disbursement as required under this Agreement.
11. NO ASSIGNMENT OF AGREEMENT.
City and Contractor bind themselves, their successors, and assigns to all covenants of this Agreement. This Agreement shall not be assigned or transferred without the prior written approval of both Parties.
12. NO THIRD PARTY BENEFICIARY.
This Agreement shall not be construed to be an agreement for the benefit of any third party or parties and no third party or parties shall have any claim or right of action under this Agreement for any cause whatsoever, except as allowed by law by Plan participants. Contractor or its subcontractors shall not contact third parties to provide any information in connection to the Services provided under this Agreement without the prior written consent of the City.
Should Contractor or its subcontractors be contacted by any person requesting information or requiring testimony relative to the Services provided under this Agreement, Contractor or its subcontractors shall promptly inform the City giving the particulars of the information sought and shall not disclose such information or give such testimony without the written consent of the City or court order. The obligations of Contractor and its subcontractors under this Section shall survive the termination of this Agreement.
13. INDEPENDENT CONTRACTOR.
Contractor and all person(s) employed by or contracted with Contractor to furnish labor and/or materials under this Agreement are independent contractors and do not act as agent(s) or employee(s) of City. Contractor has full rights, however, to manage its employees in their performance of Services under this Agreement.
Contractor is not authorized to bind City to any contracts or other obligations.
14. NO PLEDGING OF CITY'S CREDIT.
Under no circumstances shall Contractor have the authority or power to pledge the credit of City or incur any obligation in the name of City. Contractor shall save and hold harmless the City, its City Council, its officers, employees, boards, and commissions for expenses arising out of any unauthorized pledges of City's credit by Contractor under this Agreement.
15. CONFIDENTIALITY OF MATERIAL.
All ideas, memoranda, specifications, plans, manufacturing procedures, data, drawings, descriptions, documents, discussions, or other information developed or received by or for Contractor and all other written information submitted to Contractor in connection with the performance of this Agreement shall be held confidential by Contractor and shall not, without the prior written consent of City, be used for any purposes other than the performance of the Services, nor be disclosed to an entity not connected with performance of the Services. City and Contractor agree that Contractor, its officers, employees, brokers, registered representatives, affiliates, vendors and professional advisors (such as attorneys, accountants and actuaries) may use and disclose Plan and participant 5 information only to enable or assist it in the performance of its duties hereunder and with other Plan-related activities, and the City expressly authorizes Contractor to disclose Plan and participant information to its agents, vendors, and/or broker of record on file with Nationwide. Nothing furnished to Contractor which is otherwise known to Contractor or becomes generally known to the related industry shall be deemed confidential. Notwithstanding anything to the contrary contained herein, it is expressly understood that Contractor retains the right to use any and all information in its possession in connection with its defense and/or prosecution of any litigation which may arise in connection with this Agreement, the investment arrangement funding the Plan, or the Plan; provided, however, in no event will Contractor release any information to any person or entity except as permitted by applicable law.
16. USE OF CITY NAME OR EMBLEM.
Contractor shall not use City's name, insignia, or emblem, or distribute any information related to services under this Agreement in any magazine, trade paper, newspaper, or other medium without express written consent of City.
17. OWNERSHIP OF MATERIAL.
A. All material, including information developed on computer(s), which shall include, but not be limited to, data, sketches, tracings, drawings, plans, diagrams, quantities, estimates, specifications, proposals, tests, maps, calculations, photographs, reports, and other material developed, collected, prepared, or caused to be prepared under this Agreement for exclusive use by the City shall be the property of City. City shall not be limited in any way or at any time in its use of said material. However, Contractor shall not be responsible for damages resulting from the use of said material for work other than project, including, but not limited to, the release of this material to third parties. All materials described in this Section 17 together with all unused materials supplied by the City, are to be delivered to the City upon termination of this Agreement and before final payment, if any, is made to Contractor.
B. Document Review. Contractor shall review all documents provided by the City related to the performance of the Services and shall promptly notify the City of any defects or deficiencies discovered in such review.
18. RIGHT OF CITY TO INSPECT RECORDS OF CONTRACTOR.
City, through its authorized employees, representatives, or agents shall have the right during the term of this Agreement and for three (3) years from the date of termination of this Agreement, to audit the books and records of Contractor for the purpose of verifying any and all charges made by Contractor in connection with Contractor compensation under this Agreement, including termination of Contractor. Contractor agrees to maintain sufficient books and records in accordance with generally accepted accounting principles to establish the correctness of all charges submitted to City. Any expenses not so recorded shall be disallowed by City.
Contractor shall submit to City any and all reports concerning its performance under this Agreement that may be requested by City in writing. Contractor agrees 6 to assist City in meeting City's reporting requirements to the State and other agencies with respect to Contractor's Services hereunder.
19. CORRECTION OF SERVICES.
Contractor agrees to correct any incomplete, inaccurate, or defective Services at no further costs to City, when such defects are due to the negligence, errors, or omissions of Contractor as determined by the Parties.
20. FAIR EMPLOYMENT.
Contractor shall not discriminate against any employee or applicant for employment because of race, color, creed, national origin, gender, sexual orientation, age, disability, religion, ethnic background, or marital status, in violation of state or federal law.
21. HOLD HARMLESS/INDEMNIFICATION.
To the extent permitted by law, Contractor agrees to protect, defend, hold harmless, and indemnify City, its City Council, commissions, officers, employees, volunteers, and agents from and against any claim, injury, liability, loss, cost, and/or expense or damage, including all costs and reasonable attorney's fees in providing a defense to any claim arising therefrom, arising from Contractor's negligent, reckless, or wrongful acts, errors, or omissions with respect to or in any way connected with the Services performed by Contractor pursuant to this Agreement.
To the extent permitted by law, City agrees to protect, defend, hold harmless and indemnify Contractor, its officers, directors, agents and employees from and against any claim, injury, liability, loss, cost, and/or expense or damage, including all costs and reasonable attorney's fees in providing a defense to any claim arising therefrom, arising from City's negligent, reckless, or wrongful acts, errors, or omissions with respect to or in any way connected with the nonperformance of the provisions of this Agreement under the City's exclusive control.
22. INSURANCE REQUIREMENTS.
During the term of this Agreement, and for any time period set forth in Exhibit C, Contractor shall provide and maintain in full force and effect, at no cost to City, insurance policies with respect to employees and vehicles assigned to the performance of Services under this Agreement with coverage amounts, required endorsements, certificates of insurance, and coverage verifications as defined in Exhibit C.
23. AMENDMENTS.
This Agreement may be amended only with the written consent of both Parties.
24. INTEGRATED DOCUMENT.
7 This Agreement represents the entire agreement between City and Contractor.
No other understanding, agreements, conversations, or otherwise, with any representative of City prior to execution of this Agreement shall affect or modify any of the terms or obligations of this Agreement. Any verbal agreement shall be considered unofficial information and is not binding upon City.
25. SEVERABILITY CLAUSE.
In case any one or more of the provisions in this Agreement shall, for any reason, be held invalid, illegal, or unenforceable in any respect, it shall not affect the validity of the other provisions, which shall remain in full force and effect.
26. WAIVER.
Contractor agrees that waiver by City of any one or more of the conditions of performance under this Agreement shall not be construed as waiver(s) of any other condition of performance under this Agreement.
27. NOTICES.
All notices to the Parties shall, unless otherwise requested in writing, be sent to City addressed as follows:
City of Santa Clara
Attention: Human Resources Department
1500 Warburton Avenue
Santa Clara, California 95050
or by facsimile at (408) 985-0667
or by email at [email protected]
And to Contractor addressed as follows:
Alexis Cousineau, AVP RP Operations
10 W. Nationwide Blvd. 5-04-306R
Columbus, OH 43215
or by facsimile at (877) 295-6176
or by email at [email protected]
If notice is sent via facsimile or email, a signed, hard copy of the material shall also be mailed, unless such hard copy requirement is waived by the City. The business day the facsimile or email was sent shall control the date notice was deemed given. A facsimile or email transmitted after 2:00 p.m. (Pacific Time) on the last business day of a week shall be deemed to have been transmitted on the first business day of the following week.
28. CAPTIONS.
The captions of the various sections, paragraphs, and subparagraphs of this Agreement are for convenience only and shall not be considered or referred to in resolving questions of interpretation.
29. LAW GOVERNING CONTRACT AND VENUE.
8 This Agreement shall be governed and construed in accordance with the statutes and laws of the State of California. The venue of any suit filed by either Party shall be vested in the state courts of the County of Santa Clara, or if appropriate, in the United States District Court, Northern District of California, San Jose, California.
30. DISPUTE RESOLUTION.
A. Unless otherwise mutually agreed to by the Parties, any controversies between Contractor and City regarding the construction or application of this Agreement, and claims arising out of this Agreement or its breach, shall be submitted to mediation within thirty (30) calendar days of the written request of one Party after the service of that request on the other Party.
B. The Parties may agree on one mediator. If they cannot agree on one mediator, the Party demanding mediation shall request the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting shall not exceed one day (eight (8) hours). The Parties may agree to extend the time allowed for mediation under this Agreement.
C. The costs of mediation shall be borne by the Parties equally.
D. For any contract dispute, mediation under this section is a condition precedent to filing an action in any court. In the event of mediation which arises out of any dispute related to this Agreement, the Parties shall each pay their respective attorney's fees, expert witness costs, and cost of suit, through mediation only.
31. COMPLIANCE WITH ETHICAL STANDARDS.
Contractor shall comply with the City's Ethical Standards, a copy of which is set forth in Exhibit D, attached hereto and incorporated into this Agreement.
32. AFFORDABLE CARE ACT OBLIGATIONS.
To the extent Contractor is obligated to provide health insurance coverage to its employees pursuant to the Affordable Care Act ("Act") and/or any other similar federal or state law, Contractor warrants that it is meeting its obligations under the Act and will fully indemnify and hold harmless City for any penalties, fines, adverse rulings, or tax payments associated with Contractor's responsibilities under the Act.
33. CONFLICT OF INTERESTS.
This Agreement does not prevent either Party from entering into similar agreements with other parties. To prevent a conflict of interest, Contractor certifies that to the best of its knowledge, no City officer, employee, or authorized representative has any financial interest in the business of Contractor and that no person associated with Contractor has any interest, direct or indirect, which could conflict with the faithful performance of this Agreement. Contractor is familiar with the provisions of California Government Code Section 87100 and following, and certifies that it does not know of any facts which would violate these code provisions. Contractor will advise City if a conflict arises. 9 This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which shall constitute one and the same instrument; and, the Parties agree that signatures on this Agreement, including those transmitted by facsimile, shall be sufficient to bind the Parties.
The Parties acknowledge and accept the terms and conditions of this Agreement as evidenced by the following signatures of their duly authorized representatives. The Effective Date is the date that the final signatory executes the Agreement. It is the intent of the Parties that this Agreement shall become operative on the Effective Date.
CITY OF SANTA CLARA, CALIFORNIA
a chartered California municipal corporation
APPROVED AS TO FORM:
Dated: _______________________
_________________________________ _____________________________ City Attorney City Manager
"CITY"
NATIONWIDE RETIREMENT SOLUTIONS, INC.
a Delaware corporation
Dated: _______________________________
By: _______________________________
Alexis Cousineau
AVP, RP Operations
10 W Nationwide Blvd.
Columbus, OH 43215
Telephone: (614) 435-6998
"CONTRACTOR"
1500 Warburton Avenue
Santa Clara, CA 95050
Telephone: (408) 615-2210
Fax: (408) 241-6771
1 AGREEMENT FOR PROFESSIONAL SERVICES
BY AND BETWEEN THE
CITY OF SANTA CLARA, CALIFORNIA
AND
NATIONWIDE RETIREMENT SOLUTIONS, INC.
EXHIBIT A
SCOPE OF SERVICES
Following is a description of Services that will or may be required of the Contractor.
The requirements presented specify the Services to be provided by the Contractor and the minimum capabilities required. The Agreement will have a term of ten (10) years from the Effective Date of the Agreement.
Contractor will provide third-party administrative and recordkeeping services and investment products for the City's 401(a) Plan (the "Plan").
1. ADMINISTRATION AND RECORD KEEPING
A. The Contractor will provide participant enrollment services, including providing a welcome package and enrollment kit containing instructions and notices necessary to implement the Plan's administration. Enrollment services shall be available in paper and electronic format.
B. The Contractor will establish an account for each participant in the Plan at the time the Contractor receives enrollment instructions in good order.
C. The Contractor will process Plan deferrals in detail consistent with the terms of the Plan and the City's payroll system; reconcile contribution amounts; and direct immediate investment of deferrals and contributions in accordance with participant, City, and Committee instructions. Deferrals, contributions, and records received in good order by 4:00 pm Eastern Time on a Business Day will be credited to participant accounts as of the day on which such deferrals or contributions are received by the Contractor.
Contractor shall record and make available deferrals and contributions to participant accounts within one Business Day of the day in which deferrals or contributions are made available by the City in good order. No transactions can be completed on any Business Day after such time as the New York Stock Exchange closes.
Plan contributions will be sent to the Contractor on a biweekly basis via wire transfer by the City's Finance Department - Accounting Division. Contribution data will also be sent electronically on a biweekly basis by the Contractor.
D. The Contractor will help facilitate participant rollover and plan-to-plan transfers.
E. All work performed by the Contractor will conform to applicable laws, regulations and rules as well as to acceptable industry standards and practices. The Contractor represents itself as an expert in administering governmental 401(a) defined contribution plans.
2 F. The Contractor will perform all administrative and record keeping functions necessary to ensure accurate accounting of the assets in each participant account and to provide for the efficient and prudent management of the Plan. These functions will include reconciling participant accounts to investment accounts. The Contractor will perform all necessary reconciliation under generally accepted accounting principles.
G. The Contractor will establish and maintain records for the Plan showing deferrals, contributions, payouts, transfers, accruals, administrative costs, loans, and withdrawals during the term of the Agreement. The Contractor will also establish and maintain records of each participant's account under the Plan using randomly generated identification numbers assigned to each employee or retiree by the Contractor as the primary identifier and Social Security numbers as the secondary identifier. In addition, Contractor agrees to maintain the employer identification numbers assigned to each employee or retiree by the City on its system. The Contractor will update the value of participants' accounts daily using the most currently available Net Asset Value. Participant records will include, at a minimum, the contributions, earnings, administrative costs, if any, withdrawals, authorizations, loans, addresses, date of birth, Social Security number, employee identification number, beneficiary, and other related information.
H. The Contractor's records of the Plan will be maintained in accordance with generally accepted accounting principles, Governmental Accounting Standards Board Statements, the Plan Document, the Internal Revenue Code, applicable Treasury regulations, and any City Ordinances, Resolutions, and City Manager's Directives as long as these comport with state and/or federal law. Any City Ordinances, Resolutions, and City Manager's Directives related to the Plan will be provided by City to Contractor. Such records will be maintained in a format mutually agreed upon by the Contractor and the City, and will be readily accessible and reproducible. The Contractor will maintain contingency plans for system backup in the event of a disaster or malfunction.
I. Upon expiration or termination of this Agreement, the Contractor will provide to the City all records kept by the Contractor hereunder and all monies held by the Contractor within a mutually agreed upon timeframe following the termination of Contractor's services. The records and monies will be transmitted to the City or its designee pursuant to written instructions provided by the City. The Contractor will also provide the City with a full written accounting of the status of each participant's account under the Plan.
J. Hardship Withdrawal Requests. The Contractor will apprise any participant who requests a hardship withdrawal from their 401(a) Plan account of the applicable rules and will furnish the participant with the appropriate application form and instructions.
The Contractor will be responsible for the review and processing of hardship withdrawal requests in accordance with applicable Internal Revenue Code provisions, Internal Revenue Service guidance, and applicable Treasury regulations, and hardship withdrawal procedures that have been reviewed and approved by the City or Committee.
3 K. Domestic Relations Orders (DROs). The Contractor will receive domestic relations orders and will determine the qualified status of these orders based on the provisions of the City's 401(a) Plan and any Qualified Domestic Relations Order procedures that have been reviewed and approved by the City. The Contractor will be responsible for processing DROs as delegated by the City based upon information specified by the court in the domestic relations order.
L. Plan Benefit Payments. The Contractor will disburse benefits from assets under the Plan to participants in compliance with the Plan Document and applicable requirements of the Internal Revenue Code, Internal Revenue Service guidance, and applicable Treasury regulations, including appropriate withholding of taxes and reporting of distributions. The Contractor will offer direct deposit services to participants electing periodic payments from their Plan account.
M. Beneficiaries. The Contractor shall maintain and process all participant beneficiary designation and election forms, and process all distributions.
N. Trustee/Custodial Services. The Contractor must provide trustee/custodial services for the Plan, if requested.
O. The Contractor will provide participants with quarterly statements of their accounts. Statements will include, at a minimum, the participant's name; address; account number; the period covered by the statement; the beneficiary of record; and detailed reporting by investment option of beginning balance, transactions during the period, investment earnings or losses during the period, and ending balance.
Statements will be sent to participants no later than fifteen (15) business days after the end of each calendar quarter. The Contractor will make quarterly statements available on the Internet for all participants while allowing participants the ability to opt-in for paper delivery.
P. Notification to Participants with Required Minimum Distributions (RMD). The Contractor must identify participants requiring minimum required distributions and shall mail correspondence and election forms (if appropriate) to such participants and required minimum distributions shall be processed by December 1 of each calendar year. Participants with a self-directed brokerage account must hold a balance in the core 401(a) account sufficient to process the minimum required distribution at the time of distribution in order to be processed by December 1 of each calendar year.
Q. The Contractor will provide participants with written or electronic confirmation of all transfers between investment options, deferral amount changes, and beneficiary changes. Each participant will have the ability to choose the preferred delivery method.
R. The Contractor will use its best efforts to maintain current addresses and contact information for all participants.
S. The Contractor will develop a plan for providing services to employees working non-traditional schedules and/or employees working in remote locations. All such plans will be brought to the Committee for review and approval. 4 T. The Contractor will maintain the security and confidentiality of client information through a system of controls including but not limited to, as appropriate: restricting Plan and participant information only to those who need it to provide services, software and hardware security, access controls, data back-up and storage procedures, nondisclosure agreements, security incident response procedures, and audit reviews.
2. PERSONNEL
A. The Contractor shall provide fifty (50) hours per month of on-site personnel for meetings, seminars, and training. Dates, times, and locations of Contractor personnel, as well as the types of on-site meetings, seminars, and training to be provided by the Contractor, shall be coordinated with and preapproved by the City. The Contractor will provide, subject to City approval, qualified personnel to respond to participants, including enrollment, education, benefit payouts and withdrawals and to answer questions from participants regarding account balances and other records maintained or generated by the Contractor. The duties of the Contractor's personnel will include, but not be limited to, the following: provide information about the City's 401(a) Plan; provide information to participants related to financial planning, including retirement income analysis; and assist participants to properly diversify their portfolios and make prudent and educated investment decisions by providing educational materials or by using other instructional methods. All such personnel will possess any licenses required by any applicable statute or regulation, and shall be responsible for obtaining and maintaining such licenses. The City reserves the right to demand replacement of any representative of the Contractor for the performance of any duty under the Agreement.
B. The Contractor will utilize a proposed compensation structure for its personnel that exclude any bonus or commission that results in a conflict of interest between the Contractor's personnel and the City and Plan participants.
C. The Contractor will not allow any of its personnel engaged in any marketing, educational or administrative activity under the Agreement to receive any salary, fee, bonus, commission, prize, override, or remuneration of any kind for recommending or enrolling a Participant in any investment option or for recommending any products or services that are ancillary to the retirement services provided directly by the Contractor.
D. The Contractor will designate a representative to serve as a central point of contact and responsible party for any contact with the City or the Committee. The representative will be subject to the advance approval by the City.
E. In performing its duties under this Agreement, the Contractor will provide all necessary and appropriate support personnel to enable the Contractor to perform its duties, including but not limited to its own legal counsel, investment management, accounting, administration, marketing, and education. All such personnel will possess any licenses required by any applicable statute or regulation and will be responsible for obtaining and maintaining such licenses. 5 3. PROHIBITED CHARGES
A. If the City terminates the Guaranteed Fund contract and withdraws its assets in a lump sum, a Market Value Adjustment (MVA) may apply. The MVA is the amount that Nationwide Life Insurance Company (NLIC), an affiliate, determines would be the net capital loss, if any, resulting to NLIC if investments were liquidated to satisfy the lump sum withdrawal. The MVA would be calculated using NLIC's current procedures applicable to all contracts of this type and class at the time of withdrawal. If the City withdraws its assets over a 60-month period (5 years) instead of in a lump sum, the MVA will not apply. There are no fees associated with early withdrawal at the participant level. Other than the MVA and Termination Fee, the Contractor will not assess charges of any kind on the transfer of the Plan upon expiration or termination of the Agreement. The Contractor will not for any reason whatsoever assess to or pass through to any participant a "front end load" or similar charge, a "back end load" or similar charge, or any charges for the transfer or withdrawal of any participant asset; any such charges that may be assessed by any investment provider under the Plan will either be waived or will be the sole responsibility of the Contractor. The Contractor will indemnify and hold the City, the Committee and the participants harmless from any such charges.
B. Except for fees specifically identified in Exhibit B — Fee Schedule, the Contractor will not assess charges for participant fund changes or any other costs and restrictions specifically applicable to each funding option offered under the Plan, or for custom participant communications expressly approved by the City. If such charges are to be quoted, they must be in the form of a fixed, not-to-exceed amount.
4. TELEPHONE AND INTERNET SERVICES
A. The Contractor will provide an interactive voice response toll-free telephone system to enable participants to obtain current personal account information as well as general information concerning the Plan. The Contractor's system will accommodate use of randomly generated identification numbers assigned to each employee or retiree by the Contractor as the primary identifier and Social Security numbers as a secondary identifier. The voice response system will allow participants to reach a customer service representative from within the interactive voice response system within 40 seconds on average at least 75% of the time. The system will include services for and must be able to accommodate hearing impaired participants.
The interactive phone system will allow participants to obtain information regarding all Plan investment options. This information will include the participant's account balance for each investment used, and the participant's current deferral amount and allocation. The participant will have the ability to exit the interactive system and connect with a customer service representative during the hours such representatives are available. Excluding maintenance, the interactive system will be available twentyfour hours per day, seven days per week, and will have security features to protect client account confidentiality.
B. The Contractor shall provide a toll-free telephone system for participant inquiries staffed by representatives able to answer inquiries regarding the participant's personal account information. In addition to the information in the foregoing paragraph, participants shall be able to authorize the transfer of assets between investment 6 options offered by the Plan. The Contractor shall record on tape and retain for three years, any transfer instructions given by telephone. The representatives shall be able to accommodate hearing impaired participants. Representatives shall be available during the hours of 8:00 a.m. to 5:00 p.m. local California Time, Monday through Friday, City holidays excluded.
C. The Contractor will provide internet services to enable participants to obtain current personal account information as well as general information concerning the Plan, including forms. The internet system will also allow the participant to transfer assets between investment options, to change investment allocations, and obtain loan balances. The internet site will also contain a learning center that includes a retirement planning feature, retirement library, financial and retirement news, and financial tools and calculators, as the Contractor provides to other clients. The Contractor's website will accommodate use of randomly generated identification numbers assigned to each employee or retiree by the Contractor as the primary identifier and Social Security numbers as a secondary identifier. The internet site will have the ability to process an average of 99.5 percent of online transactions within five seconds or less. Information to be available through the Internet system will include the participant's account balance for each investment and the participant's current deferral amount and allocation. The internet site will be available twenty-four hours per day, seven days per week, except for periods of routine scheduled maintenance.
D. The Contractor will advise all participants of the availability of its telephone and internet services.
E. Contractor agrees to provide customized internet and print materials and services that reflect a "brand" of the City of Santa Clara, as well as specifics of the Plan. The Contractor will work with the City to develop this brand, discuss themes, and coordinate materials.
5. COMMUNICATION MATERIALS, FORMS, AND OTHER
REQUIRED DOCUMENTS
A. All communication materials and forms will be designed, produced and distributed at the Contractor's expense and will be approved in advance by the City.
Communication materials will include such materials and forms necessary for accomplishing education activities related to the City's Plan. The materials will include:
a brochure explaining the Plan and available investment alternatives for new and existing participants; a detailed participant handbook explaining all features and attributes of the Plan, including investment options, the Plan Document; a quarterly participant newsletter for the Plan; a distribution brochure explaining distribution options and applicable tax treatments; benefit applications; hardship withdrawal applications; loan applications and documents; transfer and rollover authorization forms; beneficiary forms; catch-up enrollment forms; qualified domestic relations orders forms (QDRO); and any other forms necessary to administer the provisions of the Plan. All communications, materials, and forms must be easily understood by all participants and will prominently reference the City of Santa Clara.
As mutually agreed upon by the Plan and the Contractor, the Contractor is expected to provide branded or co-branded customization to communication and training materials, forms, website pages, and other Plan-related materials to be specific to the City and the Plan. Additionally, materials, forms, and web pages, etc. should be either co-branded with logos for both the Contractor and the City or just branded for the City. 7 In addition to the above materials, the Contractor is also expected to provide access to Plan information and tools via computer programs designed for mobile devices such as smart phones and tablet computers.
B. The Contractor will prepare and maintain a manual of policies and procedures governing all aspects of the Plan and will provide copies as requested by the City or the Committee. The Contractor will assist the City in the drafting and adoption of any administrative rules necessary for the operation of the Plan.
C. The Contractor will enroll eligible participants in the Plan and process changes in participation using standardized forms prepared by the Contractor and approved in advance of use by the City. Enrollment responsibilities will include educating employees regarding all aspects of the Plan and the effect of participation on their net pay and future retirement income; providing each participant with copies of applicable prospectuses, participant handbooks, and Plan Documents, including brochure(s) explaining the attributes of the Plan; providing properly trained and licensed enrollment representatives; ensuring that all forms and authorizations submitted are complete and on file with the Contractor; monitoring participant elections and contributions to ensure compliance with Internal Revenue Code requirements; transmitting deferral data to the City; and providing notice to participants authorized to make catch-up contributions.
D. The Contractor will provide tools, both online and in hard copy format, to participants to assist them in making prudent and educated investment choices for their portfolios. These tools will be able to measure risk, maintain proper diversification, and assist the participant in determining future financial goals. Further, the Contractor's personnel will be able to assist participants to properly diversify their portfolios and make well informed investment decisions by providing educational materials or by using other instructional methods.
E. The Contractor will coordinate with the City's Human Resources Department to provide information, on an annual basis, to participants within ten years of retirement regarding "catch-up" provisions in the Plan, as well as Plan options and requirements relating to retirement.
6. COMMUNICATION AND EDUCATION PLAN
A. The Contractor will draft and present an annual Communication and Education Plan for consideration and approval by the Committee and/or the City. The Communication and Education Plan will fully describe enrollment, participation, and communication goals for City of Santa Clara employees that relate to the City's Plan and how the goals are intended to be met or exceeded. The Communication and Education Plan will be revised as necessary to address any failures to meet goals. The Contractor may be required to provide updates quarterly or as determined necessary by the Committee and the City.
B. The Communication and Education Plan will detail the Contractor's conduct of educational programs/communication informing employees regarding all aspects of the Plan and the effect of participation in the Plan on their net pay and future retirement income. The Contractor will also detail conduct of educational programs and communications to retirees regarding their services related to all aspects of retirees' Plan accounts. As part of the Communication and Education Plan the Contractor will provide information on the City's defined benefit retirement plan and social security to ensure that employees understand how these plans complement each other. These educational programs should focus solely on the City's 457(b) Plan and 401(a) Plan and are not to be used for solicitation for other vendor products or services. 8 7. INVESTMENT OPTIONS
A. The Contractor shall provide a variety of investment options that satisfy the Plan's Investment Policy Statement requirements. Investment options with any front-end or back- end loads or other similar fees, charges or penalties will not be considered. The investment options offered to the Plan will be selected by the Committee in consultation with its investment consultant, if any.
B. The Contractor will record-keep transactions associated with Self-Directed Brokerage Option (SDBO) accounts including establishment of SDBO accounts, facilitation of transfer of funds from participant's core accounts to SDBO accounts, and coordination of reporting related to quantity and asset allocation of SDBO accounts. Certain detailed reporting may be provided by the Contractor's SDBO provider.
C. The Contractor agrees to assist the City and its investment consultant, if any, in negotiating contracts with prospective investment providers, if required. The specifications and any proposed contracts are subject to the prior approval of the City or Committee to the extent any conditions of the proposed contracts are negotiable and to the extent any changes to the proposed contract specifications can be accommodated by Contractor's internal systems.
D. The Contractor will, at all times, represent with impartiality the available investment options offered under the Plan. Contractor shall ensure that investment information provided to participants, either orally through Contractor's personnel or through Contractor's communication materials, will be presented in a fair and equal manner, allowing participants to make individual choices based on their specific investment needs or desires. Contractor's personnel will not engage in preferential solicitation. The Contractor shall monitor its compliance with these provisions at reasonable intervals, and will report to the Committee the results of its monitoring efforts.
8. REPORTS
The Contractor will meet with the City quarterly and provide a written and verbal quarterly report on the performance of current investment options relative to their appropriate benchmarks and peer groups. In addition, at a minimum, the Contractor will provide the following reports to the Committee and additional reports as agreed to by the Contractor and the Committee from time to time. All reports will be submitted in a format approved by the Committee and the City.
A. The Contractor will provide the Committee and its consultant, if any, with quarterly financial statements, by investment, detailing: beginning balance; receipts (specifying deferrals, internal transfers received, and investment earnings or losses); loans; and distributions (specifying death benefit withdrawals, hardship withdrawals, internal transfers out, external transfers out, and administrative fees). The report shall also show aggregate participant asset allocation by asset class and across demographic criteria such as age or compensation. Contractor shall assist the Plan in identifying under-performing investment options and develop and review a list of appropriate alternatives for the Committee to review and approve, if appropriate.
B. Quarterly participation reports by Plan showing the number of participants actively deferring funds, number of participants receiving periodic distributions through the Contractor, number of inactive participants, and total participant accounts maintained by the Contractor.
9 C. Quarterly distribution reports showing the number of participants making a future election, and number of participants and beneficiaries initiating distributions during the quarter, by type (lump sum, periodic, etc.), and by reason (termination of employment, retirement, hardship, death, etc.). The reports should also show the volume of rollovers to the Contractor's proprietary IRA or annuity products, if any.
D. Quarterly marketing report identifying participant activity, including enrollments, increased and decreased deferrals, and describing marketing activity for the period.
E. Quarterly detailed revenue sharing accounting by fund and in aggregate for the Plan, if applicable. Contractor shall also provide an annual review of expense ratios and revenue sharing rates for funds within the Plan to ensure that they are within a reasonable range as compared to other funds of the same asset class.
F. Such reports as may be necessary to accomplish the Contractor's duties regarding participant communication related to the catch-up provision under the Plan, as well as Plan options and requirements related to retirement.
G. Each report will be submitted to City staff for review within thirty business days after the end of the quarter and submitted to the Committee a minimum of five business days in advance of its quarterly meeting following the end of the required reporting period.
9. COMMITTEE ASSISTANCE
A. The Contractor agrees to inform the Committee of any changes in state law or federal laws, rules, and regulations that may affect the validity, desirability, feasibility or the administration services provided to the Plan, and to provide recommendations for consideration by the City and its representatives from the City Attorney's Office.
B. The City will provide Contractor with a Plan Document that has been designed to comply with the requirements of Section 401(a) of the Internal Revenue Code and shall be responsible for preparing, adopting, and executing all amendments required to keep the Plan Document in compliance with the Internal Revenue Code as the result of applicable revisions to federal law. City acknowledges that the accuracy and completeness of the information and representations in the Plan Document are the sole responsibility of the City and that the Contractor is not required to review previous Plan Documents and will express no opinion as to the Plan Document's compliance with applicable laws and regulations. The City agrees to provide Contractor with executed copies of the Plan Document, any amendments to the Plan Document, and any other related Plan documentation requested by Contractor and required for the Contractor to provide the Services under this Agreement.
10. PLAN ADMINISTRATION EXPENSES
A. The Contractor agrees that its fees are to be collected from participants as set forth in Exhibit B of this Agreement, and will be the entire compensation due the Contractor for the Services and all the Contractor's duties and obligations under the Agreement, regardless of the difficulty, hours worked, or material or equipment provided. The fees set forth in the Agreement include, but are not limited to, all applicable taxes, overhead, profits and all other direct and indirect costs incurred or to be incurred by the Contractor. The Contractor acknowledges and agrees that it will not be entitled to receive any other compensation or remuneration whatsoever from the City in connection with the Contractor's services rendered. 10 The Contractor will assess and collect a plan administration expenses fee (the "Administration Fee") in a form determined by the City in writing as set forth in Exhibit B of this Agreement. This Plan Administration Fee will provide for miscellaneous Planrelated expenses, including staff expenses to administer the Plan, consultants, and education and training, and will be in addition to the Contractor's fees. Written direction to the Contractor regarding the assessment of the Administration Fee shall include the percentage rate, fixed amount, or other form of assessment as well as the assets or participants that such assessment shall be applied against, as applicable.
B. The Contractor may assess an internal asset fee (administrative fee) on such assets of a participant as are placed in an investment product of the Contractor, a related entity to the Contractor, a subsidiary of the Contractor or a parent company of the Contractor.
11. PLAN LOAN PROGRAM
Contractor will administer the Plan's participant loan program in accordance with established, written Plan Loan Procedures that have been approved by the City or the Committee.
12. COMPLIANCE WITH INTERNAL REVENUE CODE AND TREASURY
GUIDELINES
The Contractor recognizes that the Plan is intended to at all times comply with the requirements of the Internal Revenue Code and Treasury regulations relevant to the administration of 401(a) defined contibution plans and will maintain knowledge of the federal laws and regulations applicable to such plans and will administer the Plan in a manner consistent with the requirements of the Internal Revenue Code, Internal Revenue Service guidance, applicable Treasury regulations, and the Plan Document.
The Contractor will advise the Committee of any compliance issue or concern arising in the course of performing its duties under the Agreement, and will discuss options for any corrective or alternative course of action necessary. The Contractor will prepare, or engage the services of an external service provider to prepare, any documents or forms necessary to obtain approval from appropriate federal and state agencies as may be required to ensure full compliance with the laws and regulations governing the Plan. The Contractor will only ensure Plan compliance with applicable Internal Revenue Code and Treasury Regulations if the Plan adopts the Contractor's plan document.
13. ANNUAL PARTICIPANT SATISFACTION SURVEY
The Contractor will, at its sole expense, conduct an annual participant satisfaction survey. The content of the survey, the methodology used to conduct the survey, the adequacy of the statistical sampling methods, and the number of participants (including retirees) surveyed will be approved in advance by the Committee. The City and Contractor shall establish an annual timeframe for completion of this survey, which can be changed at the discretion of the City and/or the Committee.
14. ANNUAL FINANCIAL AUDIT
The City may request an annual financial audit of the Plan by an independent Certified Public Accountant. Due to potential conflicts of interest, Contractor will not select or contract with a CPA firm to perform plan financial audits. Contractor will co-sign on the engagement letters and initially cover the cost of the audit, with subsequent 11 reimbursement from the City. However, the CPA solicitation, approval and contracting shall be performed by the City.
15. CONTRACT TERMINATION DUTIES
A. The Contractor agrees that all records regarding the Plan will be the property of the City. Upon expiration or termination of the Agreement, the Contractor will provide to the City records kept by the Contractor hereunder and all monies held by the Contractor within a mutually agreed upon timeframe following the termination of Contractor's services. The records and monies will be transmitted to the City or its designee pursuant to reasonable written instructions given by the City. The Contractor will provide to participants a final statement upon the termination of the Agreement, effective the date the Agreement is terminated. The Contractor will also provide the City will a full written accounting of the status of each participant's account under the Plan.
B. Upon termination of this Agreement, the Contractor must fully cooperate with the City in an orderly transfer of administrative responsibilities and records to a new administrator. In the event that the City elects not to renew the Agreement at the end of its term, or otherwise terminates the Agreement for cause or convenience, the Contractor agrees to fully cooperate in the transition of a new administrator.
C. The Contractor must provide all necessary documents and computer files and generally assist the new administrator and the City in learning the content of such documents and files, or provide any additional assistance as will be mutually agreed upon. Once the Contractor has been notified of its termination, all general participant communications must be approved by the City. No unauthorized communications with participants in the Plan will be permitted.
16. PERFORMANCE STANDARDS
The following table contains performance standards that have associated reward or non-performance fees paid to the Plan. Nationwide has committed to a $25,000 transition performance guarantee based on mutually agreeable standards and a maximum of $25,000 annually to performance guarantees for each subsequent year as reflected below for the applicable activities. Violations of performance standards notwithstanding, any performance guarantee payment made to the City is separate from, and will have no bearing or limitation on, any payment due participant(s) related to errors or omissions with respect to or in any way connected with participant accounts and the Services performed by Contractor pursuant to this Agreement. In addition, nothing in this section shall limit the City's rights with respect to any other section of this Agreement. All of the performance standards below are to be applied to both the 457(b) plan and the 401(a) plan of the Plan Sponsor in the aggregate and not separately.
12 Activity Performance Standard
Client Service All telephone calls by the City's participants to the Contractor's Representatives contact center's will be answered within forty (40) seconds on -Average Speed of average at least 75% of the time.
Answer
A report will be generated yearly from the system to document the necessary information regarding the number of telephone calls received and answered.
$15,000 performance guarantee paid to the City if
Contractor fails to meet this standard on an annual basis.
Local Plan All telephone messages and emails received from participants Representatives by local Plan representatives will be responded to within fortyeight (48) hours unless the representative's voice mail/email indicates the timeframe during which he/she will be unavailable and it exceeds that time limit. If so, the representative will respond to the telephone message and/or email within fortyeight (48) hours of his/her return.
Local Plan representatives shall consistently provide detailed voice mail and email automated messages indicating
timeframes that they are out of their office/unavailable to respond to participants.
13 Participant Starting with the first calendar quarter following the contract Statement Mailing commencement, participant statements will be mailed within fifteen (15) Business Days of the end of each calendar quarter, or following receipt of information in good order from third party sources, whichever is later, as the information will include final fund values and performance/ return information from the participating investment providers.
The fifteen (15) Business Day standard begins on the first calendar day of the calendar quarter or the first calendar day after all required information to be included with the
statements has been received, whichever is later, and ends on the date statements are postmarked for mailing.
$5,000 performance guarantee paid to the City per
quarter for each quarter that Contractor fails to meet
this standard (total annual guarantee of $20,000).
Annual Starting in the quarter following the contract
Group commencement, Contractor will design and present an Seminars Annual Business and Education Plan for consideration and approval by the City's Committee. The Business and
Education Plan will include, but is not limited to, the number of group seminars that the Contractor will perform during the year informing employees of the aspects of the Plan.
Subsequent Annual Business and Education Plans will
include a description of the number of annual group
seminars provided the previous year. Subsequent Annual
Business and Education Plans will also include goals related to communication/education geared toward retirees. The
Contractor will perform at least 95% of the annual group seminars approved in the Annual Business and Education
Plan.
Changes in
Investment Elections
100% of all changes in investment elections received by close of the NYSE requested by participants via telephone or the web site shall be processed on the same day when received in good order.
14 Transfers or
Reallocations
100% of all fund transfers (purchases and redemptions)
requested by participants and in good order shall be
executed within the investments at that day's closing NAV or price, provided the request was entered by close of stock exchanges.
Withdrawals Paid All checks for payments shall be mailed no later than the third Business Day following the receipt of completed
paperwork in good order and the posting of the daily
valuation cycle.
Notification to
Participants with
Required
Minimum
Distributions
Participants requiring minimum required distributions shall be identified, mailed correspondence and election forms (if appropriate) and all RMDs shall be processed by December 1 of each calendar year.
Speed in
correcting
transaction errors
Transaction errors shall be rectified within five Business Days, or as soon as administratively feasible, of a
participant's or the City's notification of such error.
Automated Communications
Confirmations
statements
95% of participant confirmation statements shall be
produced and mailed within two Business Days after
transaction. All confirmation statements shall be mailed no later than five Business Days after the transaction.
Distribution of
educational and
fund selection
materials
Educational and fund selection material should be
mailed within two Business Days after request ismade.
Payment
request
material
Payment request forms should be mailed within
two Business Days after request is made.
Quality/Accuracy Measurements
Participant statement
accuracy
99% accuracy on content of quarterly participant statements as mutually agreed upon by the City and Contractor.
Transaction accuracy
(Participant
requested
transactions)
99% accuracy on processing rate measured by dividing
the total number of transactions processed without errors by the total number of transactions processed; errors
defined through audit and as reported.
15 Accuracy of Plan- Contractor will provide Plan-related reports to the City for related reports to review that are, to the best of Contractor's knowledge, the City and the accurate, and suitable for future use with the Committee.
Committee Verbiage changes, client requested format changes during review, non-substantive errors and Plan Sponsor
collaboration will not be considered to be an issue.
The City can request a review on any specific provided
item and have Contractor respond on their findings of
whether the report met the accuracy component. Upon a
mutually agreeable Service Measurement, a penalty
could be assessed if the material is found to be
inaccurate.
$5,000 performance guarantee paid to the City per quarter for each quarterly report for which Contractor fails to meet this standard (total annual guarantee of $20,000).
Maximum of an additional $5,000 performance guarantee
paid to the City on an annual basis for other reports for which Contractor does not meet this standard.
Communication Contractor will provide Plan-related marketing materials materials accuracy (including mailers, articles, educational materials, class/workshop, and related handouts, emails, and any other types of communication produced by Contractorfor
distribution to participants) that are, to the best of Contractor's knowledge, accurate, and suitable for future use with
participants. Mutually agreed upon verbiage changes, client requested format changes during review, non-substantive errors and Plan Sponsor collaboration will not be considered to be an issue.
The City can request a review on any specific provided item and have Contractor respond on their findings of whetherthe report met the accuracy component. Upon a mutually
agreeable Service Measurement, a agreed upon penalty
could be assessed if the material is to be found to be
inaccurate.
Maximum of $20,000 in guarantee funds paid to the City on an annual basis for materials that Contractor produces
which fail to meet this standard.
16 Controls for Manual & Systems Processes & Procedures Distribution upon
request of generic &
participant specific
documents (including
administrative forms,
prospectuses, Plan
Document and/or
brochure, participant
statement copies,
etc.)
95% of the documents made available shall be mailed
within two Business Days of the request; 100% of the
documents to be faxed or emailed shall be faxed or
emailed the day of the request.
Fulfillment
(acceptable error
rates &turnaround
times)
99% accuracy on participant transaction confirmations,
which shall be mailed within two Business Days.
Excess system
capacity
requirements -Web
Average of 25% excess capacity shall be maintained.
Excess system
capacity
requirements -VRU
Average of 25% excess capacity shall be maintained.
Response time for
resolving issue
whenresearch is
required (contact
initiated through
service
representative)
Written complaints will be responded to within five Business Days. Contractor will report unresolved complaints to the City after ten Business Days.
Standard Commitment for System Availability and Recovery Unscheduled
downtime -web
access for
Participant and City
functions
99% availability rate measured by calculating the total number of hours the system is available divided by the total number of hours it was scheduled for availability (availability is measured 24 hours a day excluding scheduled periods of maintenance and system upgrades, with prior notification).
Unscheduled
downtime - VRU
access for
Participantfunctions
99% availability rate measured by calculating the total number of hours the system is available divided by the total number of hours it was scheduled for availability (availability is measured 24 hours a day excluding scheduled periods of maintenance and system upgrades, with prior notification). 17 Scheduled
maintenance - VRU
VRU maintenance and updates shall typically take
place during weekend and night hours. Long outages
due to maintenance are not anticipated. However, if
outages greater than eight hours are required, the City and participants will be provided at least 48 hours
advance notice.
Scheduled
maintenance -
Web
Web maintenance and updates shall typically take place
during weekend and night hours. Long outages due to
maintenance are not anticipated. However, if outages
greater than eight hours are required, the City and
participants will be provided at least 48 hours advance notice.
Availability of record
keeping system
(exclusive of routine
maintenance)
99% availability out of 24 hours per day, 7 days a week; maintenance should not be scheduled for prime time and
should not exceed 6 hours.
System recovery
following disaster
72 hours.
1 AGREEMENT FOR PROFESSIONAL SERVICES
BY AND BETWEEN THE
CITY OF SANTA CLARA, CALIFORNIA
AND
NATIONWIDE RETIREMENT SOLUTIONS, INC.
EXHIBIT B
FEE SCHEDULE
1. NATIONWIDE FEES
The Contractor's Services under this Agreement are rendered in connection with the City's selection of certain investment products offered by or through Nationwide (the "Investment Options"). It is anticipated that the revenues paid to Contractor from such investment products, in addition to asset management fees assessed by Contractor, and participant fees, if any, shall constitute the sources of compensation for the Services rendered under this Agreement. Fees are subject to certain performance guarantees as described in Exhibit A - Scope of Services, Section 16. It is anticipated that all Services provided by Contractor under this Agreement shall be provided at no cost to the City. Fees are as follows:
A. In connection with the Services contained in this Agreement, the Contractor shall be paid an annualized compensation requirement (the "Contractor Fee") of 0.02% to be calculated and assessed monthly based on the market value of Total Plan Assets held by Contractor as of the last Business Day of each month. The Contractor Fee will be calculated and assessed as detailed below:
Contractor Fee (0.02%) x Total Plan Assets on Last Business Day of Month x (number of calendar days since the last fee was assessed) / (number of days in the calendar year)
If this Agreement is terminated on a date other than the last Business Day of a month, the final Contractor Fee shall be assessed as of the termination date of the Agreement using the Total Plan Assets as of the Termination Date. Total Plan Assets include all Plan assets held by the Contractor, and include Plan assets in the Self-Directed Brokerage Account, but exclude outstanding Plan participant loan balances.
Adjustments to the Contractor Fee may be made to reflect changes to Services or other requirements as mutually agreed to in writing between the Parties.
2. PLAN ADMINISTRATION EXPENSES
The Contractor will assess and collect a plan administration expenses fee (the "Administration Fee") in a form and amount determined by the City in writing. Unless revised in writing, the Administration Fee shall be calculated and assessed monthly 2 based on the market value of Total Plan Assets held by Contractor as of the last Business Day of each month. The Administration Fee will be calculated and assessed as detailed below:
Administration Fee Percentage x Total Plan Assets on Last Business Day of Month x (number of calendar days since the last fee was assessed) / (number of days in the calendar year)
If this Agreement is terminated on a date other than the last Business Day of a month, the final Administration Fee shall be assessed as of the termination date of the Agreement using the Total Plan Assets as of the Termination Date. Total Plan Assets include all Plan assets held by the Contractor and include Plan assets in the SelfDirected Brokerage Account, but exclude outstanding Plan participant loan balances.
The City directs Contractor to establish and maintain a separate account (the "Plan Expense Account") to which the Administration Fee will be credited. Unless agreed to in writing by both Parties, the Administration Fee shall be credited to the Plan Expense Account on a monthly basis and all amounts in the Plan Expense Account, including all investment earnings, shall be sent to the City within thirty Business Days following the end of each March, June, September, and December. The City will select a single investment vehicle to be used for the Plan Expense Account, which cannot be an investment vehicle included in the participant investment option line-up.
The account balance, account transactions and investment experience of the Plan Expense Account will be reported to the City no later than thirty Business Days after the end of each March, June, September, and December.
The City may direct the Contractor in writing to allocate any balance in the Plan Expense Account to participant accounts on a pro-rata basis based on their total average account balance to be mutually determined and agreed to by the Parties.
Payments to the City shall be made by the Contractor to the following address unless other payment instructions are received by Contractor in writing from the City:
City of Santa Clara
Attn: Finance Department
1500 Warburton Avenue
Santa Clara, CA 95050
3. ADMINISTRATIVE EXPENSE TARGET SHORTFALL
If the revenue received is insufficient to meet City expenses under Section 2 above, the City may implement changes that would be expected to generate revenues commensurate with target amounts.
3 4. PARTICIPANT- LEVEL SERVICE FEES
Contractor shall be permitted to charge participants fees related to the following services or options available to participants.
A. Loan Fees. Contractor shall be permitted to charge the following fees to participants who elect to take a loan from the City's Plan:
1. Annual Loan Maintenance Fee: $50.00
B. Self-Directed Brokerage Option ("SDBO"). Contractor shall be permitted to charge the following fees to participants who elect to participate in the SDBO available under the City's Plan:
1. Annual SDBO Maintenance Fee: $50.00
C. Additional Services. If the City requests additional services pursuant to Exhibit A — SCOPE OF SERVICES, of this Agreement, Contractor shall be compensated for such additional services as mutually agreed upon in writing by the Parties.
5. REPORTING
An analysis of revenue generated and fees paid shall be reported to the City by the Contractor each quarter.
4 [PAGE INTENTIONALLY LEFT BLANK]
1 AGREEMENT FOR PROFESSIONAL SERVICES
BY AND BETWEEN THE
CITY OF SANTA CLARA, CALIFORNIA
AND
NATIONWIDE RETIREMENT SOLUTIONS, INC.
EXHIBIT C
INSURANCE REQUIREMENTS
Without limiting the Contractor's indemnification of the City, and prior to commencing any of the Services required under this Agreement, the Contractor shall provide and maintain in full force and effect during the period of performance of the Agreement and for twenty-four (24) months following acceptance by the City, at its sole cost and expense, the following insurance policies from insurance companies authorized to do business in the State of California. These policies shall be primary insurance as to the City of Santa Clara so that any other coverage held by the City shall not contribute to any loss under Contractor's insurance. The minimum coverages, provisions and endorsements are as follows:
COMMERCIAL GENERAL LIABILITY INSURANCE
A. Commercial General Liability Insurance policy which provides coverage at least as broad as Insurance Services Office form CG 00 01. Policy limits are subject to review, but shall in no event be less than, the following:
$1,000,000 Each Occurrence
$2,000,000 General Aggregate
$2,000,000 Products/Completed Operations Aggregate
$1,000,000 Personal Injury
B. Exact structure and layering of the coverage shall be left to the discretion of Contractor; however, any excess or umbrella policies used to meet the required limits shall be at least as broad as the underlying coverage and shall otherwise follow form.
C. The following provisions shall apply to the Commercial Liability policy as well as any umbrella policy maintained by the Contractor to comply with the insurance requirements of this Agreement:
Coverage shall be on a "pay on behalf" basis with defense costs payable in addition to policy limits;
There shall be no cross liability exclusion which precludes coverage for claims or suits by one insured against another; and
Coverage shall apply separately to each insured against whom a claim is made or a suit is brought, except with respect to the limits of liability. 2 BUSINESS AUTOMOBILE LIABILITY INSURANCE
Business automobile liability insurance policy which provides coverage at least as broad as ISO form CA 00 01 with policy limits a minimum limit of not less than one million dollars ($1,000,000) each accident using, or providing coverage at least as broad as, Insurance Services Office form CA 00 01. Liability coverage shall apply to all owned (if any), non-owned, and hired autos.
In the event that the Work being performed under this Agreement involves transporting of hazardous or regulated substances, hazardous or regulated wastes, and/or hazardous or regulated materials, Contractor and/or its subcontractors involved in such activities shall provide coverage with a limit of one million dollars ($1,000,000) per accident covering transportation of such materials by the addition to the Business Auto Coverage Policy of Environmental Impairment Endorsement MCS90 or Insurance Services Office endorsement form CA 99 48, which amends the pollution exclusion in the standard Business Automobile Policy to cover pollutants that are in or upon, being transported, or towed by, being loaded onto, or being unloaded from a covered auto.
WORKERS' COMPENSATION
D. Workers' Compensation Insurance Policy as required by statute and employer's liability with limits of at least one million dollars ($1,000,000) policy limit Bodily Injury by disease, one million dollars ($1,000,000) each accident/Bodily Injury and one million dollars ($1,000,000) each employee Bodily Injury by disease.
E. The indemnification and hold harmless obligations of Contractor included in this Agreement shall not be limited in any way by any limitation on the amount or type of damage, compensation or benefit payable by or for Contractor or any subcontractor under any Workers' Compensation Act(s), Disability Benefits Act(s), or other employee benefits act(s).
F. This policy must include a Waiver of Subrogation in favor of the City of Santa Clara, its City Council, commissions, officers, employees, volunteers, and agents.
PROFESSIONAL LIABILITY
Professional Liability or Errors and Omissions Insurance as appropriate shall be written on a policy form coverage specifically designed to protect against negligent acts, errors, or omissions of the Contractor. Covered services as designated in the policy must specifically include work performed under this agreement. Coverage shall be in an amount of not less than one million dollars ($1,000,000) per claim or two million dollars ($2,000,000) aggregate. Any coverage containing a deductible or self-retention must first be approved in writing by the City Attorney's Office.
3 COMPLIANCE WITH REQUIREMENTS
All of the following clauses and/or endorsements, or similar provisions, must be part of each commercial general liability policy, and each umbrella or excess policy.
G. Additional Insureds. City of Santa Clara, its City Council, commissions, officers, employees, volunteers, and agents are hereby added as additional insureds in respect to liability arising out of Contractor's work for City, using Insurance Services Office (ISO) Endorsement CG 20 10 11 85, or the combination of CG 20 10 03 97 and CG 20 37 10 01, or its equivalent.
H. Primary and non-contributing. Each insurance policy provided by Contractor shall contain language or be endorsed to contain wording making it primary insurance as respects to, and not requiring contribution from, any other insurance which the indemnities may possess, including any self-insurance or self-insured retention they may have. Any other insurance indemnities may possess shall be considered excess insurance only and shall not be called upon to contribute with Contractor's insurance.
I. Cancellation.
Each insurance policy shall contain language or be endorsed to reflect that no cancellation or modification of the coverage provided due to non-payment of premiums shall be effective until written notice has been given to City at least ten (10) calendar days prior to the effective date of such modification or cancellation. In the event of non-renewal, written notice shall be given at least ten (10) calendar days prior to the effective date of non-renewal.
Each insurance policy shall contain language or be endorsed to reflect that no cancellation or modification of the coverage provided for any cause save and except non-payment of premiums shall be effective until written notice has been given to City at least thirty (30) calendar days prior to the effective date of such modification or cancellation. In the event of non-renewal, written notice shall be given at least thirty (30) calendar days prior to the effective date of non-renewal.
J. Other Endorsements. Other endorsements may be required for policies other than the commercial general liability policy if specified in the description of required insurance set forth in Sections A through E of this Exhibit C, above. 4 ADDITIONAL INSURANCE RELATED PROVISIONS
Contractor and City agree as follows:
K. Contractor agrees to ensure that subcontractors, and any other party involved with the Services, who is brought onto or involved in the performance of the Services by Contractor, provide the same minimum insurance coverage required of Contractor, except as with respect to limits. Contractor agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this Agreement. Contractor agrees that upon request by City, all agreements with, and insurance compliance documents provided by, such subcontractors and others engaged in the project will be submitted to City for review.
L. Contractor agrees to be responsible for ensuring that no contract used by any party involved in any way with the project reserves the right to charge City or Contractor for the cost of additional insurance coverage required by this Agreement. Any such provisions are to be deleted with reference to City. It is not the intent of City to reimburse any third party for the cost of complying with these requirements. There shall be no recourse against City for payment of premiums or other amounts with respect thereto.
M. The City reserves the right to withhold payments from the Contractor in the event of material noncompliance with the insurance requirements set forth in this Agreement.
EVIDENCE OF COVERAGE
Prior to commencement of any Services under this Agreement, Contractor, and each and every subcontractor (of every tier) shall, at its sole cost and expense, provide and maintain not less than the minimum insurance coverage with the endorsements and deductibles indicated in this Agreement. Such insurance coverage shall be maintained with insurers, and under forms of policies, satisfactory to City and as described in this Agreement. Contractor shall file with the City all certificates and endorsements for the required insurance policies for City's approval as to adequacy of the insurance protection.
EVIDENCE OF COMPLIANCE
Contractor or its insurance broker shall provide the required proof of insurance compliance, consisting of Insurance Services Office (ISO) endorsement forms or their equivalent and the ACORD form 25-S certificate of insurance (or its equivalent), evidencing all required coverage shall be delivered to City, or its representative as set forth below, at or prior to execution of this Agreement. Upon City's request, Contractor shall submit to City copies of the actual insurance policies or renewals or replacements. Unless otherwise required by the terms of this Agreement, all certificates, endorsements, coverage verifications 5 and other items required to be delivered to City pursuant to this Agreement shall be mailed to:
EBIX Inc.
City of Santa Clara Finance Department
P.O. Box 100085 - S2 or 1 Ebix Way
Duluth, GA 30096 John's Creek, GA 30097
Telephone number: 951-766-2280
Fax number: 770-325-0409
Email address: [email protected]
QUALIFYING INSURERS
All of the insurance companies providing insurance for Contractor shall have, and provide written proof of, an A. M. Best rating of at least A minus 6 (A- VI) or shall be an insurance company of equal financial stability that is approved by the City or its insurance compliance representatives. 6 [PAGE INTENTIONALLY LEFT BLANK]
1 AGREEMENT FOR PROFESSIONAL SERVICES
BY AND BETWEEN THE
CITY OF SANTA CLARA, CALIFORNIA
AND
NATIONWIDE RETIREMENT SOLUTIONS, INC.
EXHIBIT D
ETHICAL STANDARDS FOR CONTRACTORS SEEKING TO ENTER INTO AN
AGREEMENT WITH THE CITY OF SANTA CLARA, CALIFORNIA
Termination of Agreement for Certain Acts.
A. The City may, at its sole discretion, terminate this Agreement in the event any one or more of the following occurs:
1. If a Contractorl
does any of the following:
a. Is convicted of operating a business in violation of any Federal, State or local law or regulation;
b. Is convicted2 of a crime punishable as a felony
involving dishonesty3;
c. Is convicted of an offense involving dishonesty or is convicted of fraud or a criminal offense in connection with: (1) obtaining; (2) attempting to obtain; or, (3) performing a public contract or subcontract;
d. Is convicted of any offense which indicates a lack of business integrity or business honesty which seriously and directly affects the present responsibility of a City contractor or subcontractor; and/or,
For purposes of this Agreement, the word "Consultant" (whether a person or a legal entity) also refers to "Contractor" and means any of the following: an owner or co-owner of a sole proprietorship; a person who controls or who has the power to control a business entity; a general partner of a partnership; a principal in a joint venture; or a primary corporate stockholder [i.e., a person who owns more than ten percent (10%) of the outstanding stock of a corporation] and who is active in the day to day operations of that corporation. 2 For purposes of this Agreement, the words "convicted" or "conviction" mean a judgment or conviction of a criminal offense by any court of competent jurisdiction, whether entered upon a verdict or a plea, and includes a conviction entered upon a plea of nolo contendere within the past five (5) years. 3 As used herein, "dishonesty" includes, but is not limited to, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, failure to pay tax obligations, receiving stolen property, collusion or conspiracy.
2 e. Made (or makes) any false statement(s) or representation(s) with respect to this Agreement.
2. If fraudulent, criminal or other seriously improper conduct of any officer, director, shareholder, partner, employee, or other individual associated with the Contractor can be imputed to the Contractor when the conduct occurred in connection with the individual's performance of duties for or on behalf of the Contractor, with the Contractor's knowledge, approval or acquiescence, the Contractor's acceptance of the benefits derived from the conduct shall be evidence of such knowledge, approval or acquiescence.
B. The City may also terminate this Agreement in the event any one or more of the following occurs:
1. The City determines that Contractor no longer has the financial capability4 or business experiences
to perform the terms of, or operate under, this
Agreement; or
2. If City determines that the Contractor fails to submit information, or submits false information, which is required to perform or be awarded a contract with City, including, but not limited to, Contractor's failure to maintain a required State issued license, failure to obtain a City business license (if applicable) or failure to provide and maintain bonds and/or insurance policies required under this Agreement.
C. In the event a prospective Contractor (or bidder) is ruled ineligible (debarred) to participate in a contract award process or a contract is terminated pursuant to these provisions, Contractor may appeal the City's action to the City Council by filing a written request with the City Clerk within ten (10) calendar days of the notice given by City to have the matter heard. The matter will be heard within thirty (30) calendar days of the filing of the appeal request with the City Clerk.
The Contractor will have the burden of proof on the appeal. The Contractor shall have the opportunity to present evidence, both oral and documentary, and argument.
4 Contractor becomes insolvent, transfers assets in fraud of creditors, makes an assignment for the benefit of creditors, files a petition under any section or chapter of the federal Bankruptcy Code (11 U.S.C.), as amended, or under any similar law or statute of the United States or any state thereof, is adjudged bankrupt or insolvent in proceedings under such laws, or a receiver or trustee is appointed for all or substantially all of the assets of Contractor.
Loss of personnel deemed essential by the City for the successful performance of the obligations of the Contractor to the City.
DC-2038 (02/2021) For help, please call 1-877-677-3678 nrsforu.com