HomeMy WebLinkAboutC-5023 - Agreement for Recordkeeping & Communication ServicesC `,45�)z
AMENDMENT NO. 4
TO
AGREEMENT FOR RECORDKEEPING AND COMMUNICATION SERVICES
kf
§ 457 DEFERRED COMPENSATION PLAN
GROUP # 98310
THIS AMENDMENT NO. 4 is entered into by and between Great -West Life & Annuity Insurance Company
("Great -West"), and/or any successor, assign or affiliate, and the City of Newport Beach ("Plan Sponsor") with
respect to the services to be provided by Great -West Retirement Services°, a division of Great -West, to the
§457 Deferred Compensation Plan (the "Plan").
Effective April 4, 2000, Great -West and Plan Sponsor entered into the Agreement for Recordkeeping and
Communication Services ("Agreement"), under which Great -West provides certain recordkeeping and
communication services for the Plan Sponsor with respect to the Plan; and
Effective January 1, 2002, Great -West and Plan Sponsor entered into the Agreement/Contract Amendment
("hereinafter referred to Amendment No. 1 ") to amend the Agreement with respect to the changes applicable to
the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and
Effective July 7, 2008, Great -West and Plan Sponsor amended the Agreement ("Amendment No. 2") with
respect to the Recordkeeping, Communication and Other Fees, and a new Agreement term; and
Effective April 14, 2010, Great -West and Plan Sponsor amended the Agreement ("Amendment No. 3") with
respect to the Recordkeeping, Communication and Other Fees; and
Great -West and the Plan Sponsor have agreed that it would be mutually beneficial to further amend the
Agreement for the purpose of adding certain provisions to the Agreement.
NOW THEREFORE, in consideration of the covenants and conditions herein contained, and other good and
valuable consideration as herein provided, the parties agree to amend the Agreement as follows:
1. Section IX. B. "Revenue Sharing to the Plans" shall be deleted in its entirety and replace with the
following:
"B. Revenue Sharing to the Plans
Great -West will deposit $6,000 per calendar quarter (i.e. $24,000 per annum), plus any excess
over 0.0525% (i.e. 0.21% per annum) of average Participant account balances invested in
variable options per calendar quarter, into an unallocated trust assets account to be used for
plan purposes as set forth in the plan document. These assets will be invested in a single
investment option as specified by Plan Sponsor.
The quarterly asset fee will be calculated by multiplying 0.0525% times the plan's average
month-end balances in variable options for the calendar quarter. Partial quarters at the
beginning and ending of the Agreement Term(s) shall be calculated on a pro -rata basis."
2. In all other respects, the Agreement shall remain in full force and effect.
City of Newport Beach Svc Agrmt Amend No 4 - 5 27 11.doc
3. This Amendment No. 4 will take effect upon the date executed by both the Plan Sponsor and Great -
West (the "Effective Date").
IN WITNESS WHEREOF, the parties have caused this Amendment No. 4 to the Agreement to be executed, in
duplicate, by their respective officers and agents thereunto duly authorized. The parties certify that they have
read and understood it, that they agree to be bound by its terms, and that they have received a signed and
dated copy of this Amendment No. 4.
For City of Newport Beach
SignatL
Name:
�M x
For Great -West Life & Annuity Insurance Company
Signatu
Name
S�a(oFVi6e President
Title: Government Markets
City of Newport Beach Svc Agrmt Amend No 4 - 5 27 11.doc
Date �/�
Date � . 3. 2 a < (_
City of Newport Beach
Committee Meeting Agenda
April 30,2009 10:00 am
FIDUCIARY AGENDA (DC1C AND MERPICf
1. Additions to Agenda
Ii. Approval of 2/10/09 meeting minutes
III. Deferred Comp Quarterly Investment Review — V4 quarter
• Market Overview
• Portfolio Summary
• Asset Allocation
IV. Fund Search — Deferred Comp Pian
• Socially Responsible
• Mid Cap Value
V. MERP Quarterly Investment Review —1" quarter
• Market Overview
• Portfolio Summary
• Asset Allocation
ADMINISTRATIVE AGENDA (DCAC AND MERPAQ
1. Additions to Agenda
il. Asset Allocation Model Pricing / Administration — status
III. Reimbursement Account Reallocation Policy — Plan Amendment status
IV. MERP Provider Search — Request for Information
Committee Meeting Minutes
DATE:
February 10, 2009
10:00 am —12:00 pm
ATTENDEES:
Ms. Lauren Farley Ms. Sharon Wood
Ms. Terri Cassidy Mr. Dennis Danner
Mr. Richard Kurth Mr. Aaron Harp
GUESTS:
Mr. John Campbell, Benefit Funding Services Group
Ms. Heather Rabara, Benefit Funding Services Group
Mr. Steve Shulman, City of Newport Beach
SUBJECT:
City of Newport Beach DCIC, MERPIC, DCAC, and MERPAC Meeting
FIDUCIARY MINUTE§
(DCIC and MERPIC)
Market Overview: Mr. Campbell reviewed the market conditions for the 4' quarter 2008. Mr. Campbell
noted negative GDP growth in both the Vi (45%) and 4'" (-3.8%) quarters of 2008, and that by the end
of the 0 quarter, the U.S. economy was in a major consume -driven recession. Inflation, although a
concern earlier in 2008, trailed off in the 4'" quarter as oil prices fell drastically. The Fed funds rate is at a
historic low of 0.00% - 0.25%.
41 Quarter Plan Investment Review: Mr. Campbell discussed the performance of the investment
options in the Pian and highlighted a few noteworthy funds for the quarter by providing the following
analysis:
PIMCO Total Return Admin: PIMCO Total Return continues to perform well due to Its flight to quality in
2007, and was a top decile performer in 2008 vs. the intermediate Term Bond peer group.
Maxim Loomis Sayles Bond. This fund is a multi -sector bond fund which is aggressive in its approach.
The fund experienced underperformance in 2008 due to its high yield bond holdings. 80% of the portfolio
Is allocated to bonds rated BBB or lower.
American Century Equity Income Inv: The fund's managers buy and sell holdings based on target pricing.
If a stock in Its portfolio drops more than 10%, the fund's managers immediately sell the stock. While this
philosophy tends to lead to high turnover, it was effective in late 2008's volatile marketplace. The fund
returned -20.05°k in 2008 vs. the peer group at -37.09%. Exposure to the financial sector has lowered
over the past 4 quarters.
Davis NY Venture: The fund underperformed the indexes over the short term, due to overwelghting in
financial stocks. The fund suffered some permanent tosses with the fall of holdings Merrill Lynch and
AIG. However, over the 5 and 10 year periods, the fund has still outperformed the benchmarks.
Arlel Appreciation, The fund is socially responsible, and aims for capital preservation. Historically, the
fund has done well In down markets; however, in this down market, it is slightly underperforming the
active peer group mostly due to overweighting the financial sector. The Committee discussed the fund in
detail given that it has been on the watch list for some time. Mr. Campbell explained that while the fund is
deemed socially responsible, the qualitative screens used by the managers are less strict than some. He
went on to describe how the screens for each socially responsible fund can differ dramatically.
The Committee expressed an interest In reviewing potential replacements for Ariel Appreciation in the
fund lineup. The Committee asked that BFSG conduct 2 searches — one for a socially responsible fund,
regardless of market cap; and secondly, for a mid cap value fund. Should the search produce an
appropriate socially responsible fund in the mid cap space, only one fund would replace Ariel
Appreciation in the lineup. If not, the Committee then would have the option to add both a socially
responsible fund and a mid cap value fund to complete the lineup. BFSG will review the searches with
the Committee at the next meeting.
Thornburg Cone Growth: The fund suffered in 2008 due to Its non -defensive nature, concentrated
portfolio, and sector and stock bets. The fund still performs better than the respective benchmarks on a
5 -year basis.
Third Avenue Value: The fund underperformed in 2008 due to the fact that 65% of Its portfolio is invested
In the financial sector. 60% of its portfolio is invested abroad, which also negatively impacted
performance.
Maxim Bernstein lntematlonal Equity.• The fund has experienced underperformance due to an overweight
in financial stocks, including holdings in suffering European banks.
Thornburg International Value R5: Despite the fund's focused style, it performed well in 2008, and
continues to significantly beat the benchmarks over the long term.
Quantitative Analysis Summary. Based on BFSG's Evaluation Methodology, a score of 0-30 indicates
"outperform% 30-60 indicates "perform"; and 60-100 indicates "underperform". The plan -weighted score
for City of Newport Beach is 32.09, placing the portfolio in "perform" status.
Portfolio Analysis. The plan portfolio as a whole is weighted 45% equities and 55% cash and bonds,
constituting a conservative allocation.
Portfolio Return vs. Custom Benchmark . The Committee noted the Deferred Compensation Plan is
outperforming its passive and active benchmarks on a 3, 5 and 10 year basis; the expense ratio is slightly
above its peer group averages. The Sharpe ratio is higher than the Custom Benchmark, indicating a little
better return with lower risk vs. its peers.
4s' quarter MERP Investment Review: The Committee reviewed the relative performance of each of the
investment options in the Plan to their appropriate benchmarks. Mr. Campbell provided qualitative
commentary on the following noteworthy funds for the quarter.
ING Intermediate Bond., Mr. Campbell noted the underperformance on the fund. The fund returned
-10.01% through 2008 while the active peer group returned -4.70%. Mr. Campbell is continuing to try to
contact ING for more information on why the fund has underperformed, since the written information that
has been released has not given much transparency. BFSG will contact the committee once more
Information is received.
Pioneer Strategic income: The fund has a flexible mandate that allows manager Ken Taubes to invest in
various types of faced -income securities. The manager's tactical approach has paid off as returns have
well exceeded the category peer group on all time periods measured. Its defensive nature helped the
fund through 2008; the manager is now moving more into investment-grade corporate bonds.
Mutual Discovery R. Mutual Discovery outperforms the category benchmarks on a YTD, 3, 5, and 10 year
basis. The fund has a liberal mandate regarding allocation; the fund moved 22% of the portfolio into cash
and 8% Into bonds, which helped cushion the fund and prevent the levet of losses sustained by the active
peer group.
Quantftative Analysis Summary.• Based on BFSG's Evaluation Methodology, a score of 0-30 Indicates
"outperform"; 30-60 indicates "perform"; and 60-100 Indicates "underperform". The plan -weighted score
for City of Newport Beach MERP is 37.46, placing the portfolio in "perform" status. The score is slightly
worse than last quarter's score of 35.13.
Portfolio Composition: The overall plan portfolio is allocated with 12% In stocks and 88% in cash and
bonds, which constitutes a very conservative allocation.
Portfolio Return vs. Custom Benchmark The Committee noted the MERP Plan is underperforming its
passive benchmarks on a 3 and 5 year basis; the expense ratio is well above its peer group averages.
The Committee also noted the high costs for the plan, and discussed pursuing bids from other providers
In the marketplace to benchmark the plan's costs. The Committee also asked BFSG to research the ING
contract term for the MERP plan, as well as what the Market Value Adjustment would potentially be on
F
the ING Fixed Account should the City determine that switching plan providers would be the best course
of action.
BFSG will create a Blind RFI questionnaire for the Committee's review. The Committee and BFSG can
then determine which providers to send the questionnaire to.
Fixed Option Fund Analysis: Mr. Campbell noted that the plan currently offers many fixed fund options,
Including a number of Great West Guaranteed funds, which are general account products. Mr. Campbell
explained the guaranteed funds are a "promise to pay" by Great West and the assets are Invested in
Great West's general account. The general account's principal and crediting rate are guaranteed by the
claims paying ability of Great West.
In contrast, Stable Value funds typically invest in a portfolio of fixed income securities wrapped by an
Insurance wrap contract. Additionally, they may invest in traditional guaranteed investment contracts
(GICs) issued by insurance companies that have a stated coupon and maturity date. For the Custom
Stable Value fund, Great West would be the wrap provider.
Money market funds are a 3rd fixed fund option, which Invest in fixed income securities and have an
average maturity of less than 90 days.
Liquidity, diversification, and credit risk tend to be highest with the general account product vs. the other
two options.
Mr. Campbell informed the Committee that Great West had offered the City a Custom Stable Value fund
for addition to the Deferred Compensation Pian. instituting a Custom Stable Value fund in the lineup
would, in effect, consolidate all of the current fixed funds offered to participants into this single fund
offering In the fixed category. The plan would need to have around $15 million to be eligible for the
Custom Stable Value fund.
The Committee discussed the pros and cons of replacing the fixed fund options with the Custom Stable
Value fund. Pros Included the fact that the Committee could design the investment policy for the fund; the
assets In the fund are not commingled with stable value money from any other plans; and the gross yield
could be higher than the current funds offered (depending on the investment policy designed). Cons
Included potential participant perception that the move would limit their investment options; and the rate of
return on the current fixed funds is guaranteed, while the Stable Value fund would not have a guaranteed
rate of return.
The Committee agreed that they did not wish to consolidate all of the current fixed fund options into the
Stable Value fund at this time, but requested that BFSG gather more information on the following items:
• Whether the Great West Guaranteed Certificate funds are FDIC insured, or who is backing the
guarantee; and
• Whether Great West allows guaranteed, stable value and money market funds to be offered side
by side in a plan's investment lineup.
Qualified Default Investment Alternative (QDIA): In the interest of time, the discussion was tabled until
the next Committee meeting.
Closing: BFSG will produce a socially responsible fund search and a mid cap value fund search for
review at the next Committee meeting. BFSG will create a MERP RFI questionnaire for the Committee's
review, and will research the aforementioned items in the ING contract. BFSG will also gather the
Information requested on the fixed funds.
Fiduciary Meeting adjourned at 12:00 p.m.
U0 in, ii :7jilTl If;ITili3ls�sL►3Ti_I�'i1:3J:L�3
Due to a lack of information from Great West on Asset Allocation Model pricing and adding the
reimbursement account reallocation policy as an amendment to the plan document, these items were
postponed until the next Committee meeting.
3
Prepared for
Plan Name: City of Newport Beach Deferred Compensation Plan
Quarter Ending: March 31, 2009
Market Overview
March 31, 2049
C C C C...._._ C C C C C C = C C = E = i— i_— U --
1st
1st Quaver 2009 market Overview
Economic Summary
The U.S. economy remains mired in a deep recession. GDP likely declined again in the first quarter,
Economic Growth (GDP) following the biggest drop in output in 26 years in the fourth quarter at -6.3%. Growth has been hindered
s by tightening credit markets, constrained consumers and uncertainly about the country's financial
institutions.
Unemployment continues to rise higher in response to big output declines. The unemployment rate jumped
to 8.5% at the end of the first quarter, up from 7.2% at the end of the 2008. The economy has lost 4.5
Employment `_. million jobs since the beginning of the recession in December 2007. History suggests that an expansion is
likely to begin before the jobs market improves, although negative feedback from job losses on consumer
spending and housing will slow the rebound.
i Rebounding oil prices and rising CPI in early 2009 have eased deflation fears but they could revive in a
i worsening recession. In a competitive economy, inflation will not likely start rising until the economy is
Inflation (CPI) 0 back to full employment. At the end of the first quarter, headline CPI was -0.4% and core CPI was
1.8% (unati/usted 12 month trallinsf+S ").
The Federal Reserve is holding short-term interest rates at very low levels and expanding -their assets in
order to hold long-term rates down and thus stimulate the economy. While they may succeed in this in the
Interest Rates 0 i short -run, any economic recovery is likely to push Treasury rates higher, suggesting bond investors will
_. have to embrace some credit risk to avoid negative returns. The target Fed Funds rate remains at 0.00%
i to 0.25%.
' The U.S. yield curve has steepened along with the UK and Eurozone. The 10 Year Treasury rose from
i 2.25% at the end of 2008 to 2.71% by the end of the first quarter. The 90 -day T-bill rose slightly from
Yield Curve i' " € 0.11% at the end of 2008 to 021% by the end of the first quarter. The 90 -day average spread between the
i 90 -day T-bill and the 10 Year Treasury declined from 292 bps at the end of 2008 to 253 bps by the end
of the first quarter.
i F iQOQ 2008
Barclays Aggregate Bond Index 0.120/9 5.240/a
Investment Returns 0 S&P .= Index -11.01% -37.00%
MSCI EAFE Index -13.94% -43.38%
Source Standard b Poor's, FRB, BLS, BEA, IP Morgan. This Unfe nation is not Untended to be used as investment advice. For hOrmanon only related to a general overview of the meket. For plan
Use 0,*.
5
7Ins infofmation is not it? tended to be used a: investment adZ%ice. For information only related to a general overview of the market. For plait sponsor its-. only.
Market Comebacks
Market Returns After Consecutive Down Years (S&P 500 Index) Source: JPMorgan Asset
Management, Standard & Poor's.
z Market returns represented by
160% 148% S&P 500 Index return (price
only). Returns reflect calendar
120% year returns and not peak to
100% trough.
Data are as of 03!31/09.
80% -71%
67%
57%
40% 34% 42% -40%
0%
Great World War 11 Oil Crisis Internet Bubble
Depression War on Terrorism
Market Corrections & Calendar Year Price Return (S&P 600 IndexSource: ) Management, San Asset
Standard & Poor's.
era,,,.-4 e n, -e a r drop r--J 13,F," th -a maek et's ret u rn was D.Ositi Ve in 22 of 29 year-: Market returns represented by
S&P 500 Index return and do not
50 include dividends.
- Calendar year returns
35 -�.1Past performance is not
'77 indicative of future returns.
7 20 20
15 I M Intra-year drops refers to the
20 t2 9 largest market drops over
. I r, I1 7I 1,j .13 23 3 4 37 periods of 6 months or less.
5 Calendar year refers to the price
2
M-1111111 1 _I return for the S&P 500 Index for
0 0 0 0 0 each calendar year.
-10 -3
- 1 -8 -5 -8 -8 _3 -7 -8 -10 Data are as of 03/31/09,
-25 4 -12 -9 20 19 -1-12 7 o -1 A
--26
-40 -34 Intra-year drops 0
-55 -47
'80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 102 103 104 105 106 107 108
6 '17tis information is not intended to be used as investment advice. For inforMation only related to a general ave miew ofthe market. For plan sponsor u4e only.
Historical Perspective 1926 - 2008
L'W,` SMALL -CAP STOCKS LARGE -CAP STOCKS 054,,zi BONDS OM CASH 1=11 INFLATION
510,000
$1.000
$100
$10
$5,474
$2,045
$80
$21
$12
$o
0 LO 0 U) 0 in 0 in 0 0 0 0
CY m m q of in in to CD t- f- w Q0 0 m 0 0
C1 o 0 0 C) 0 0 0 0 a) to (7) 0) 0) 0 0 0
Vq V4 V4 Vq V4 %_4 V4 Vq rf Vq W4 V4 T-1 V4 Vi C4 C4
jC0$_! O'lime-,lec an 12/31/IE"15 pd:�1114 4$4wilc fV1,,t;-,tm,,nt01 capta" m and ccipwiti aro, rto ,e** Z�
oxtts Gcnelat are ,n to tyc=fjj 0 tx.VwN traded corm)afves bastc oe :rz,ket cap -4i zation Th't-=_ &Ixc«s we satIcc-1 to sou"'.'t svnks sc,%Iz,
Brix ?rlwort' 1007 C.191.1N mnt>1x }rz eaSec 0^ th^ 0:rpf;,Vjec -oorM$ W, ir�tv,4 n and S�rq:.ette:! U rkf!.ts Wed wit'l
" 110i-eacn, 3s5et
Cass we W SW 1�:e. ;z*F'P 68 Go'eMme" BOW, lrzl�x and O�UA 0 S a,,)C&j Tteasurs tl� Fit-V�
CRM
quar:ef :-C406 SrrBA.:S� stlx3 remiss -r* pjssell 2000'r3e. ts us-afncices ate, C:) ro: in fps or ei�r� a,,rc Ce sm*stad r Crrma�.'y Past performance is no indicationof
future results -
For infonnatiol., (njly re!:7tled to a ger wral ai r ii tr efthe rnarL!, For plan Use 0111lu
Index Annualized Returns 1989 - 2008
10%
5%
0%
EXCLUDING
S&P 5005 INDEX TOP 10 DAYS
EXCLUDING EXCLUDING EXCLUDING
TOP 20 DAYS TOP 30 DAYS TOP 40 DAYS
r.�Z ca tw.n J,r*.;s .3 f C .1 rJ F cr " Rc
tilt and ; y tout! wvc U.,to
rVthe'+4P 501 W-tc'n a-, Ir"4-aA
f. ry —a - pe I i Z., :,F-- ;; 'a I I n F,—I,. Cc " I r * ee' , or e, pen. s, es, anti ca,) -c' Dee v % e S t ,a i n ci ! je�; ; I y P% t p e vior name is m I n iM cs t i o n of futut e i " ul ts
For ;nionnation only rehifed mark-!. For plait 5pon.,;or u:;e only.
Gross Domestic Product
Q fhis mfor7ratzor: is riot intended to fie nsc d as investment a4luice. For in;�nnation only r-,taf d to a general overvic v of the nurrke t. For plan sponsor use only.
Aftermath of the Housing Bubble
Median Home Prices Unsold New Homes
Thousands, non -seasonally adjusted Thousands, seasonally adjusted
240,,
Home Prices Changes: 3 -years 6W
-year: -16% 550- Inventories since
2007 3 - July 2006: -42/,,
years: -23% IR fS 500 '
Ye
5 -years: _9%
1
160; 1€I -years: +26% Vp 450
400
350 --------- -------
120 1 10-y ears
300
80 250
------ --------------- 2001
190 '92 '94 '66 '98 '00 '02 '04 '06 '08 75 180 185 *90 195 *00 '05
Housing Starts Mortgage Payment on Average New Home
Thousands, seasonally adjusted annual rate % of average household personal income
2,400, 40%
1
------------------------
------- 14---- 35%
ZOM
�!k b
1.600.,
A� - 30%-----
IN
25%
1,200
20%
---------- T --------------------------
Most recent, 15% FAost ri=cent
400
,83
---------
'75 180 185 90 55 QO 05
75 *80 190 195 100 105
Sources: (left chart) Census Bureau, FactSet, EcoWn, JPMorgan Asset Management. (Top right chart) Census Bureau, FactSet, EcoWn. JPMorgan Asset Management, (Bottom
right chart) Census Bureau, Federal Reserve Board, BEA. Data reflects most recently available as of 03/31/09,
Home price based on median sales price of existing homes and are cumulative, not annualized. Existing -home sales include single-family, townhomes, condominiums and co-ops.
Note: Calculation for bottom right chart assumes as 20% down payment, a 30 -year fixed rate mortgage, excludes property tax and homeowners' insurance and is expressed as a
percent of pre-tax income.
10 This information is trot intended to be used as inzystnient advice. For inlionnation only related to a general overview of tie market. For pian sronssor use 011ly,
Employment
Civilian Unemployment Rate
Seasonally adjusted
11%
10%
9%
8%
7%
6%
5%
4%
3%
160 '70 180
Source: BLS, JPMorgan Asset Management.
Data reflects most recently available as of 03/31/09.
Employment - Total Non-farm Payroll
Total job gainfioss (thousands)
QVV
400
200
0
-200
-400
-600
-800
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Source: BLS, JPMorgan Asset Management.
Data reflects most recently available as of 03/31/09,
11 This inforwahon is trot intended to be used as it advice. For information otilly related to a general overoiru, qffiw morket. For plan sponsor list! only.
Consumer Price Index
GPI and Core CPI
CP1
Weight in
112 -month
% chg vs. prior year
60 -yr. Avg. Latest Components
CP1
Change
15%
jrLI, H,,:,,,, fille CPI- 4,1% -0.4% Food & Bev.
15.8%
4.7%
C -ore CP 1: 4.1% 1.8% Housing
43.4%
2.0%
12%
Apparel
3.7%
0.8%
Transportation
15.3%
-11.0%
Medical Care
6.4%
2.8%
Recreation
5.7%
1.9%
Educ. & Comm.
6.3%
3.6%
6%
r.
Other
3.4%
3.2%
Headline CPI
7",
100.0%
0.2%
3%
T
vi Less:
Energy
7.6%
.-18.5%
Food
14.6%
4.8%
0%
'60 '65 '70 '75
'80 '85 190 '95 100 '05 Core CPI
77.7%
1.8%
Source: SLS, JPMorgan Asset Management
Data reflects most recently available as of 03i31/09,
CP1 values shown in legend are % change vs I year ago and reflect the 0232009 CPI data,
CP1 component
weights are as of
12331108 and 12 -month change reflects data through 0212009 Core CPE is defined as CP1 excluding food and energy prices.
h:v
5 dol
12 " :s plot Intemk4i to be a4mvt'4tirell!
"AlulCe. F®rr ly;-"rmahvn of r-.,Li!ed toagen; ral cz-erz,L-w o'fthe market. For p -lair spongier u --;e on�y,
Credit Conditions
Lending Standards: Consumer Loans
LIBOR Spread over Treasuries ("TED Spread")
Net percent of banks reporting tighter lending standards
3 -month LIBOR — 3 -month Treasury
100% 1
consumer Loans 64%
5%
80%]
Commercial and Industrial Loan
Commercial and Industrial Loans
Oct. 10, 2008:
60%1
4.6%
1
40%
4%-
20%
-20%;
3%-
-40%
.......... ----
97 *98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Delinquency Rates
All banks, seasonally adjusted
2%-
7%,
IR idea i a ' "'0, 0 rl �Iir
6% Consumer Lo:ms
Eg Commercial and Industrial Loans
5%
1%-
4.2
A
15 -yr average: 0.6%
4%
3%1 2,6%
2%
0%
- Mar. 31. 2009:
1.0%
.96 198 100 '02 *04 106 -68
1%!_....—......_.___._.....
'92 194196 10 loo *02 N 06 us
Source: Federal Reserve, U.S. Treasury, FactSet, JPMorgan Asset Management. All data
Source: British Bankers Association, U.S Treasury, JPMorgan Asset Management.
reflectmost recently available releases. Delinquent loans are defined as 30 days or more
Data are as of 03/31109.
past due. Data as of 03131109.
Vas inforinatz in is not intended to be zi&ed as investruent adhIce. For informatiort only related, to Ii Sel.,erill ovemjcGt' o,,tPx mark-, t. For plan sponiar rise only.
Interest Rates and Yield Curves
Global Policy Rates: U.S., U.K., Euro Zone & Japan Global Yield Curves: U.S., U.K., Euro Zone & Japan
Yield %
7%- 7%,
UX 6%
5% 5%
U.K.
4%- 4%
3%
U,$.
U.S.
2%- 2%
Euro Zone
Euro Zone japan
1%- Japan 1%
0%
0%
199 100 101 '02 '03 '04 05 '06 '67 '08 '09 3 -mo. 6 -mo. 1 -yr. 2 -yr. 5 -yr. 10 -yr. 30 -yr.
Source: FRB, Bank of England. European Central Bank, Bank of Japan, JPMorgan Source: EcoWin, FactSet, JPMorgan Asset Management
Asset Management. Data are as of 03131109.
Data are as of 03131/09.
14 This illfOrM,261111 iS no For infionnation only related Ica general overvirzva,,rthe nraAcl. For plan sponsor use, only.
Fixed Income Sectors Returns as of 3/31/2009
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1Q09
F -RaMN� I
BaIV4
6.3%
4.1% 1,1144%,
Barcwys Barcmys
1.0%
S&P Index Sectors - Performance as of 3/31/2009
S&P 500 Weight (%)
8.9%
12.8%
13.0%
10.8%
153%
9.7%
3.3%
18.0%
4.0%
43%
Q
C
0
0
2
06is
C
0
0
a
C
W
13.9%
7.9%
CZ
a
a
0
E
0
31.I%
X
S&P 500 Weight (%)
8.9%
12.8%
13.0%
10.8%
153%
9.7%
3.3%
18.0%
4.0%
43%
Russell 1000 Growth Weight
IOZ,*
13.9%
7.9%
3.3%
14.9%
11.90/6
4.2%
31.I%
0.811�6
1.8%
Russell 1000 Value Weight
8,5%
10.0%
17.7%
20.5%
14.4%
7.7%
3.2%,
33% 1
7.3%
7.3%
IQ09 Return
.8M
-10.54
-11.57
-2,05
4,30
-7.13
. -10.79
-11.01
I Year Annualized Return
-35,00
-22.64
-37,95
-19.74
-50.51
-30,07
-25.17
-29.66
-38.09
3 Year Annualized Return
-15.13
-0.92
-4.11
-6.85
-17.40
-10.37
-10.46
-4,77
-2.54
-13.06
5 Year Annualized Return
-7.99
0.94
9.57
-2.29
-5.95
-1,42
4,49
1,26
4:79
4.76
10 Year Annualized Return
-422
1.79
-1.43
-1.88
2.57
�,M
"! �Ln,
- WMA
.57
2"
-3.00
15 Year Annualized Return
3.82
MI
111AI
3.5.3
10'51,
5.08
4.50
7.49
104
5.79
5.91
Forward PIE Ratio
13,0X
12.5x
13-7x
9.7x
10.5x
10.9x
17.lx
14.2x
12,31
10,9x
12.0%
Trailing P/E Ratio
12.9x
13,2\
, ?.IN
13,IX
116x
8,5x
12,Ix
13,Ix
12.2x
10.6\
11.1%
Trailing 20 -year Average PIE Ratio
19.2-%
21.8x
19.4x
155X
24,9x
20 2x
20.2x
NAN
I8.7X
14.5x
19.91
�Ii;nllfd & 11"ir's Ru4sell It vestiptent Group, Jflklorpm A,,w!Managerizent. This informatics 15 riot int --need tobe For iii,fortrumor: only reLaled toa gerrerX
?n.;rke" F"crp"Un 5;vw�cr "As: .fdq,
IN
mscl
Japan
25.6%
C C C C C C C C C C C C C C C C C C C
1st Quarter 2009 Market Overview
Index Definitions
All Indexes are unmanaged and an individual can not invest directly In an index. Index returns do not include fees or expenses.
The S&P 600 index is widely regarded as the best single gauge of the U.S. equities market. This Index includes a representative sample of 500 leading companies in leading
Industries of the U.S. economy. Although the S&P 500 Index focuses on the large -cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ides
proxy for the total market.
The Russell 1000 Growth indanm measures the performance of those Russell 1000 companies with higher price-tobook ratios and higher forecasted growth values.
The Russell 1000 Value Indercm measures the performance of those Russell 1000 companies with lower price- book ratios and lower forecasted growth vakres.
The Russell 20001ndex9 measures the performance of the 2,000 smallest companies In the Russell 3000 Index
The MSCI EAFE ® Index (Europe, Australia, Far East) is a widely recognized benchmark In the United States to measure intematonal equity performance. it comprises 21 MSCI
country indexes, representing the developed markets outside of North America.
The MSCI Emerging Markets Index- is a free float -adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
The Index consists of the following 25 emerging market country Indices: Argentina, Brazil, Chile, China, Columbia, Czech Republic. Egypt, Hungary, India, Indonesia, Israel, Jordan,
Korea, Malaysia, Mexico, Morocco, Pakistan, Peer, Philippines, Poland, Russia, South Africa, Taiwan, ThaHand, and Turkey.
The MSCI Europe Index- Is a free float -adjusted market capitalization index designed to measure developed market equity performance in Europe. The Index consists ofthe
following developed market country indices: Austria. Belgium, Denmark, Finland. France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden.
Switzerland, and the United Kingdom.
The MSCI Pacific Index- is a free float -adjusted market capitalization Index designed to measure equity market performance in the Pacific region. The Index consists of the
following developed market countries: Australia, Hong Kong, Japan, New Zealand and Singapore.
The Lehman Brothers U.S. Aggregate Index represents secxuddes that are SEC -registered, taxable, and dollar denominated. The index covers the U.S. Investment grade fixed
rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are
subdivided into more specific indexes that are calculated and reported on a regular basis.
The U.S. Treasury index is a component of the U.S. Government index.
The Lehman Brothers High Yield Index covers the universe of foxed rate, non -investment grade debt Pay-in-kind (PIK) bands, Eurobonds, and debt issues from countries
designated as emerging markets (e.g.. Argentina, Brazil. Venezuela, eta) are excluded, but Canadian and global bonds (SEC registered) of issues in non -EMG countries are
included. Original issue zeroes, step-up coupon structures, and 144,As are also Ihduded.
The Lehman Brothers Emerging Markets Index inckntes US13-0enominated debt from emerging markets in the following reglons: Americas, Europe. Middle East Africa, and Asia.
As with other fixed income benchrm xs provided by Lehman Brothers, the Index Is rules -based, which allows for an unbiased view of the marketplace and easy replicability.
The Lehman Brother Corporate Bond Index is the Corporate component of the U.S. Credit index.
The Lehman Brother TIPS Index consists of Inflabon-Protection securities issued by the U.S. Treasury.
The NAREIT Equity REIT Index is designed to provide the most comprehensive assessment of overall Industry performance, and includes all tax -qualified real estate Investment
trusts (REffs) that aro listed on the NYSE, the American Stork Exchange or the NASDAQ National Market Lit
The CSFB Equity Market Neutral Index takes both long and short positions In stocks with the aim of minimizing exposure to the systematic risk of the market (i.e., a beta of zero).
19 This information is not intended to be used as inve0nent advice. For information only related to a general overview of the marker. For plan sponsor use anly.
Prepared for
Plan Name: City of Newport Beach Deferred Compensation Plan
Quarter Ending: March 31, 2009
C C C C C C C C C C C C C C C C C C C
1st Quarter 2009 Market Overview
Index Definitions
All Indexes are unmanaged and an individual can not invest directly In an index. Index returns do not include fees or expenses.
The S&P 600 index is widely regarded as the best single gauge of the U.S. equities market. This Index includes a representative sample of 500 leading companies in leading
Industries of the U.S. economy. Although the S&P 500 Index focuses on the large -cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ides
proxy for the total market.
The Russell 1000 Growth indanm measures the performance of those Russell 1000 companies with higher price-tobook ratios and higher forecasted growth values.
The Russell 1000 Value Indercm measures the performance of those Russell 1000 companies with lower price- book ratios and lower forecasted growth vakres.
The Russell 20001ndex9 measures the performance of the 2,000 smallest companies In the Russell 3000 Index
The MSCI EAFE ® Index (Europe, Australia, Far East) is a widely recognized benchmark In the United States to measure intematonal equity performance. it comprises 21 MSCI
country indexes, representing the developed markets outside of North America.
The MSCI Emerging Markets Index- is a free float -adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
The Index consists of the following 25 emerging market country Indices: Argentina, Brazil, Chile, China, Columbia, Czech Republic. Egypt, Hungary, India, Indonesia, Israel, Jordan,
Korea, Malaysia, Mexico, Morocco, Pakistan, Peer, Philippines, Poland, Russia, South Africa, Taiwan, ThaHand, and Turkey.
The MSCI Europe Index- Is a free float -adjusted market capitalization index designed to measure developed market equity performance in Europe. The Index consists ofthe
following developed market country indices: Austria. Belgium, Denmark, Finland. France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden.
Switzerland, and the United Kingdom.
The MSCI Pacific Index- is a free float -adjusted market capitalization Index designed to measure equity market performance in the Pacific region. The Index consists of the
following developed market countries: Australia, Hong Kong, Japan, New Zealand and Singapore.
The Lehman Brothers U.S. Aggregate Index represents secxuddes that are SEC -registered, taxable, and dollar denominated. The index covers the U.S. Investment grade fixed
rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are
subdivided into more specific indexes that are calculated and reported on a regular basis.
The U.S. Treasury index is a component of the U.S. Government index.
The Lehman Brothers High Yield Index covers the universe of foxed rate, non -investment grade debt Pay-in-kind (PIK) bands, Eurobonds, and debt issues from countries
designated as emerging markets (e.g.. Argentina, Brazil. Venezuela, eta) are excluded, but Canadian and global bonds (SEC registered) of issues in non -EMG countries are
included. Original issue zeroes, step-up coupon structures, and 144,As are also Ihduded.
The Lehman Brothers Emerging Markets Index inckntes US13-0enominated debt from emerging markets in the following reglons: Americas, Europe. Middle East Africa, and Asia.
As with other fixed income benchrm xs provided by Lehman Brothers, the Index Is rules -based, which allows for an unbiased view of the marketplace and easy replicability.
The Lehman Brother Corporate Bond Index is the Corporate component of the U.S. Credit index.
The Lehman Brother TIPS Index consists of Inflabon-Protection securities issued by the U.S. Treasury.
The NAREIT Equity REIT Index is designed to provide the most comprehensive assessment of overall Industry performance, and includes all tax -qualified real estate Investment
trusts (REffs) that aro listed on the NYSE, the American Stork Exchange or the NASDAQ National Market Lit
The CSFB Equity Market Neutral Index takes both long and short positions In stocks with the aim of minimizing exposure to the systematic risk of the market (i.e., a beta of zero).
19 This information is not intended to be used as inve0nent advice. For information only related to a general overview of the marker. For plan sponsor use anly.
AMENDMENT NO.3
TO
AGREEMENT FOR RECORDKEEPING AND COMMUNICATION SERVICES
§ 457 DEFERRED COMPENSATION PLAN
GROUP # 98310
THIS AMENDMENT NO. 3 is entered into by and between Great -West Life & Annuity Insurance Company
("Great -West"), and/or any successor, assign or affiliate, and the City of Newport Beach ("Plan Sponsor")
with respect to the services to be provided by Great -West Retirement Services®, a division of Great -West, to
the §457 Deferred Compensation Plan (the "Plan").
Effective April 4, 2000, Great -West and Plan Sponsor entered into the Agreement for Recordkeeping and
Communication Services ("Agreement"), under which Great -West provides certain recordkeeping and
communication services for the Plan Sponsor with respect to the Plan; and
Effective January 1, 2002, Great -West and Plan Sponsor entered into the Agreement/Contract Amendment
("hereinafter referred to Amendment No. 1 ") to amend the Agreement with respect to the changes applicable
to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and
Effective July 7, 2008, Great -West and Plan Sponsor amended the Agreement ("Amendment No. 2") with
respect to the Recordkeeping, Communication and Other Fees, and a new Agreement term; and
Great -West and the Plan Sponsor have agreed that it would be mutually beneficial to amend the Agreement
for the purpose of adding certain provisions to the Agreement.
NOW THEREFORE, in consideration of the covenants and conditions herein contained, and other good and
valuable consideration as herein provided, the parties agree to amend the Agreement as follows:
Section I.A.l.g "Beneficiary Information" shall be deleted in its entirety and replace with the
following:
"g. Beneficiary Names and Address.
Plan Sponsor affirms that Great -West is and shall remain the sole recordkeeper for the Plan
during the term of this Agreement. Plan sponsor also affirms that the Plan allows web -
initiated beneficiary designations. Plan Sponsor hereby instructs and authorizes Great -West
to accept, maintain and file, without Plan Sponsor approval, beneficiary designation forms
received by Great -West in good order and in a manner acceptable to Great -West. Upon
request, Plan Sponsor agrees to provide Great -West with any and all beneficiary information
filed with the Plan by the Participant prior to the effective date of this Agreement.
Plan Sponsor shall provide Great -West with instructions regarding any Plan requirements as
to spousal consent for beneficiary designations. If there are any such requirements, Plan
Sponsor instructs Great -West to rely on the marital status specified by the Participant on the
beneficiary designation form and to obtain spousal consent, when applicable. If a
beneficiary designation requires spousal consent, such designation may be made only via a
paper form.
City of Newport Beach Svc Agrmt Amend No 3 - 02.12.10.doc Page 2 of 2
Plan Sponsor agrees to review and sign each Death Benefit Claim form. In the event the Plan
Sponsor submits a signed Death Benefit Claim form for a claimant other than the beneficiary
on file with Great -West, if any, Great -West will require further instruction from Plan
Sponsor."
2. Section I. "GWL&A Recordkeeping Responsibilities" shall be amended to include the following:
"J. Eligibility Determination Services
Plan Sponsor hereby agrees to provide Great -West with a complete Payroll Data Interchange
("PDI") file with eligibility indicator. Plan Sponsor hereby instructs Great -West to calculate
Participant eligibility based on Plan Sponsor's instructions as to the Plan's eligibility
requirements. Plan Sponsor instructs Great -West to reject the enrollment of any Participant
determined to be ineligible. For each ineligible determination, Plan Sponsor instructs Great -
West to notify the Participant to contact the Plan Sponsor if he or she wishes to appeal the
determination.
K. Online Enrollment
Plan Sponsor hereby agrees to provide Great -West with a complete Payroll Data Interchange
("PDI") file with birth date, address, hire date, rehire date, termination date, eligibility
indicator, and participation date.. Plan Sponsor hereby instructs and authorizes Great -West
to allow online Participant enrollment. Once the PDI file is transmitted, Plan Sponsor
instructs Great -West to issue a Personal Identification Number ("PIN") to every eligible
employee allowing enrollment in the Plan through the website.
L. Deferral Processing
Plan Sponsor agrees to utilize the Plan Service Center ("PSC"), and to provide Participant
information in a Payroll Data Interchange ("PDI") file. Plan Sponsor further agrees to
provide additional information and instructions as required by and in a form acceptable to
Great -West, including but not limited to initial deferral amounts for all Participants. Plan
Sponsor acknowledges that the deferral processing service described in this Section shall
only be available as long as Great -West is the sole recordkeeper for the Plan.
Plan Sponsor hereby instructs and authorizes Great -West to provide for deferral processing
by the Plan Sponsor via the website and voice response unit ("VRU"). Participants may
access the website or VRU to input the required payroll deferral amount/percentage
information.
M. Distribution Processing Due to Severance of Employment Other Than for Death or
Disability
Plan Sponsor hereby affirms that the Plan is not subject to the joint and survivor annuity
requirement of ERISA with respect to participant distributions and that the Plan does not
impose any restriction on distributions other than with respect to frequency and vesting.
Plan Sponsor agrees to provide Great -West with Participant information via a Payroll Data
Interchange ("PDI") file including address, hire date, rehire date, termination date and birth
date. If the Plan has a vesting schedule, Plan Sponsor agrees to utilize Great -West's vesting
tracking service.
City of Newport Beach Svc Agrmt Amend No 3 - 02.12.10.doc Page 3 of 2
Plan Sponsor hereby instructs and authorizes Great -West to process, without Plan Sponsor
approval, Participant requests for distribution due to severance of employment for any
reason other than disability or death, received in good order and in a manner acceptable to
Great -West. If Plan Sponsor does not provide the Participant's termination date or other
required information, Plan Sponsor instructs Great -West to route the request to Plan Sponsor
for approval before processing the distribution.
N. Incoming Rollover Requests Approval
Plan Sponsor hereby agrees to provide Great -West with Participant information in a Payroll
Data Interchange ("PDI") file including address, birth date, hire date, rehire date, termination
date, eligibility indicator and participation date. Plan Sponsor hereby instructs and
authorizes Great -West to accept, without Plan Sponsor approval, requests from Participants
who are active employees for rollover contributions to the Plan(s) that are accompanied by a
properly completed form and any required supporting documentation and are received in
good order and in a manner acceptable to Great -West. Plan Sponsor hereby instructs and
authorizes Great -West to rely on the complete form and accompanying documentation,
without further investigation or action by Great -West, as sufficient to show that the funds
being rolled into the Plan(s) constitute an eligible rollover distribution from an eligible
retirement plan within the meaning of Code section 402 Plan Sponsor hereby instructs
Great -West to establish a separate Participant rollover account for recordkeeping all
incoming rollovers. Plan Sponsor hereby instructs Great -West to reject any rollover request
received without proper documentation and to return any rollover amounts received with
such request. Plan Sponsor further instructs Great -West to forward to Plan Sponsor for its
approval any rollover request received from a terminated employee..
O. In -Service Distributions at age 70'/z
Plan Sponsor hereby affirms that the Plan allows Participants to take in-service distributions
at age 70%2. Plan Sponsor further affirms that the Plan is not subject to the joint and survivor
annuity requirements of ERISA with respect to participant distributions and that the Plan
does not impose any restriction on distributions other than with respect to frequency and
vesting.
Plan Sponsor agrees to provide Great -West with Participant information via a Payroll Data
Interchange ("PDI") file including address, birth date and termination date. If the Plan has a
vesting schedule, Plan Sponsor agrees to utilize Great -West's vesting tracking service.
Plan Sponsor hereby instructs and authorizes Great -West to process, without Plan Sponsor
approval, Participant age 70%2 in-service distribution requests received in good order and in a
manner acceptable to Great -West. If the Participant's birth date information has not been
provided, or if there is a discrepancy between the birth date on the system and the birth date
on the form, Great -West is instructed to rely on the birth date specified by the Participant on
the form.
P. Required Minimum Distribution at Age 70 %2
Great -West will provide a notice and distribution form to each Participant attaining age 70%2
or older in the current calendar year. The notice informs the Participant that required
minimum distributions must begin no later than April 1 of the calendar year following the
later of age 70 '/2 or retirement. Great -West will not determine which Participants fail to
City of Newport Beach Svc Agrmt Amend No 3 - 02.12.10.doc Page 4 of 2
take a required minimum distribution, and will not force out required minimum distributions
to Participants.
Q. In -Service De Minimis Distributions for Governmental 457(b) Plans
Plan Sponsor agrees to provide Great -West with Participant information in a PDI file
including address, hire date, rehire date, termination date and birth date. If the Plan has a
vesting schedule, Plan Sponsor agrees to utilize Great -West's vesting tracking service. Plan
Sponsor instructs and authorizes Great -West to process, without Plan Sponsor approval,
Participant requests for de minimis distributions under Code section 457(e)(9)(A), where the
Participant's total account balance is less than the applicable limit and no deferrals have
been made to the Participant's account in the previous two (2) years."
In all other respects, the Agreement shall remain in full force and effect.
4. This Amendment No. 3 will take effect upon the date executed by both the Plan Sponsor and Great -
West (the "Effective Date").
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to the Agreement to be executed,
in duplicate, by their respective officers and agents thereunto duly authorized. The parties certify that they
have read and understood it, that they agree to be bound by its terms, and that they have received a signed
and dated copy of this Amendment No. 3.
For: City of Newport Beach
Name: L— {,%( C4-- 7-- `'v l �—
Title:
For: Great -West Life & Annuity Insurance Company
Date ) ? V
Date G - i � , 2O(e
City of Newport Beach Svc Agrmt Amend No 3 - 02.12.10.doc Page 5 of 2
AMENDMENT NO.2
TO
AGREEMENT FOR RECORDKEEPING AND COMMUNICATION SERVICES
§ 457 DEFERRED COMPENSATION PLAN
GROUP # 98310
THIS AMENDMENT NO. 2 is entered into by and between Great -West Life & Annuity Insurance Company
("Great -West"), and/or any successor, assign or affiliate, and the City of Newport Beach ("Plan Sponsor") with
respect to the §457 Deferred Compensation Plan (the "Plan") by Great -West Retirement Services M, a division
of Great -West.
Effective April 4, 2000, Great -West and Pian Sponsor entered into the Agreement for Recordkeeping and
Communication Services ("Agreement"), under which Great -West provides certain recordkeeping and
communication services for the Plan Sponsor with respect to the Plan; and
Effective January 1, 2002, Great -West and Plan Sponsor entered into the Agreement/Contract Amendment
("hereinafter referred to Amendment No 1") to amend the Agreement with respect to the changes applicable to
the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and
Great -West and the Plan Sponsor have agreed that it would be mutually beneficial to amend the Agreement for
a new Agreement term, and for the purpose of adding certain provisions to the Agreement.
NOW THEREFORE, in consideration of the covenants and conditions herein contained, and other good and
valuable consideration as herein provided, the parties agree to amend the Agreement as follows:
1. Section VII shall be amended to replace the term "This Agreement shall be an exclusive contract for a
period of five (5) years with an effective date of March 1, 2000. " with "This Agreement shall be an
exclusive contract for a period of three (3) years with an effective date of April 1, 2008.".
2. Section IX. "Fees" shall be deleted in its entirety and replaced with the following:
"IX. Recordkeeping, Communication and Other Fees
A. Recordkeeping and Communication fees
The parties have agreed that the basic annual Recordkeeping and Communication Fees
payable under this Agreement shall be the fees Great -West and/or one or more of its
affiliates receives from mutual fund families and other investment providers for providing
certain administrative or other services. Great -West will provide additional information
upon request.
B. Revenue Sharing to the Plans
Great -West will deposit $6,000 per calendar quarter (i.e. $24,000 per annum), plus .06%
(i.e. 0.24% per annum) of average Participant account balances invested in variable
options per calendar quarter, into an unallocated trust assets account to be used for plan
purposes as set forth in the plan document. These assets will be invested in a single
investment option as specified by Pian Sponsor.
City of Newport Beach Service Agreement Amend No 2 - 03.19.08.doc Page 1 of 2
The quarterly asset fee will be calculated by multiplying .060/0 times the plan's average
month-end balances in variable options for the calendar quarter. Partial quarters at the
beginning and ending of the Agreement Term(s) shall be calculated on a pro -rata basis."
3. in all other respects, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to the Agreement to be executed by
their respective officers and agents thereunto duly authorized.
For City of Newport Beach
Signature:
Name:
Title:
For Great -West Life & Annuity Insurance Company
Signature:
Name:
Title:
Date
Date
City of Newport Beach Service Agreement Amend No 2 - 03.19.08.doc Page 2 of 2
Important Note: Service Agreement Amendments, Pricing Change Agreements and other contractual
documents must be duly executed by both parties prior to the effective date of the changes.
Backdating contracts or funding agreements is In violation of our corporate governance and regulatory
requirements. Changes cannot be implemented prior to the date all documents are fully executed,
even if that requires the effective date to be postponed. There are no exceptions to the rule that the
effective date must follow the date all documents are executed.
F.-
AGREEMENT/CONTRACT AMENDMENT
TO COMPLY WITH THE
ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT
OF 2001 (EGTRRA)
THIS AMENDMENT is entered into thisdsday of Se , 20CL4, by and between BenefitsCorp,
Inc. (hereinafter referred to as "BenefitsCorp") and !:-
(hereinafter referred to as "Plan Sponsor") with respect to the services provided
to the Plan Sponsor's Plan(s) (hereinafter referred to as the "Plan(s)") under the Agreement/Contract.
WHEREAS, the Plan Sponsor entered into an Agreement/Contract (hereinafter referred to as
"Agreement") with Great -West Life & Annuity Insurance Company or one or more of its wholly -owned
subsidiaries with respect to the services provided to the Plan(s); and
WHEREAS, the parties agree that the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
will impact the Agreement and Plan(s); and
WHEREAS, the parties agree that it would be mutually beneficial to amend the Agreement, for the remainder
of the term.
NOW THEREFORE, in consideration of the covenants and conditions herein contained, and other good and
valuable consideration, as herein provided, the parties agree to amend the Agreement. This Amendment
supersedes the provisions of the Agreement to the extent those provisions are inconsistent with the provisions of
this Amendment.
Benefits Communication Corporation has changed its name to BenefitsCorp, Inc. (BenefitsCorp). All
references to Benefits Communication Corporation, if any, shall be changed to BenefitsCorp.
2. By signing this Amendment, Great -West Life & Annuity Insurance Company (hereinafter referred to as
"GWL&A") hereby assumes the performance of all duties, if any, of Financial Administrative Services
Corporation (hereinafter referred to as "FASCorp"), its wholly -owned subsidiary.
3. All distributions from the Plan(s) will be processed and tax reported pursuant to the terms of the Plan(s)
and the Internal Revenue Code (hereinafter referred to as "Code"), as amended from time to time.
4. If the Plan mandatorily distributes account balances less than $5,000 and more than $1,000
and Treasury Regulations require the Plan to designate an IRA provider to receive all such
small accounts not otherwise directed by the participant, a separate IRA product will be made
available to the Plan.
5. A notice shall be provided to Participants pursuant to Code section 402(f). Ongoing retirement
planning education, distribution counseling and an IRA may also be made available to
Participants. The objective is to encourage Participants to roll other retirement plans into the
Plan(s) if allowed by the Plan(s) and to retain all assets in the Plan(s) at separation from
EGTRRA Agreement Amendment.Doc
service. However, where a Participant chooses to establish a separate IRA or roll over eligible
retirement plan assets to an IRA, an IRA product will be made available.
6. This provision is being added to the Agreement in connection with Title V of the Gramm -
Leach -Bliley Act (P.L. 106-102) which was signed into law on November 12, 1999.
BenefitsCorp is committed to protecting your privacy and that of your employees.
BenefitsCorp shall treat as confidential all Plan, Participant and customer information or data
received from the Plan Sponsor and/or Participants which shall not be disclosed to a third party
or be used except for the purpose of providing services to the Plan and Plan Participants
unless agreed to in writing by the parties. Any third party that is retained to provide services
under this Agreement by either party and who has access to confidential information relating to
a customer, the Plan Sponsor or Plan Participant, shall agree in writing to be bound by this
section of the Agreement and to use such confidential information only for the purpose of
carrying out the performance of specific terms of the Agreement.
7. None of the parties hereto shall be liable to the other for any and all losses, damages, costs,
charges, counsel fees, payments, expenses or liability due to any failure, delay or interruption
in performing its obligations hereunder, and without the fault or negligence of such party, due
to causes or conditions beyond its control including, without limitation, labor disputes, riots, war
and war -like operations including acts of terrorism, epidemics, explosions, sabotage, acts of
God, failure of power, fire or other casualty, natural disasters or disruptions in orderly trading
on any relevant exchange or market, including disruptions due to extraordinary market volume
that result in substantial delay in receipt of correct data.
8. The Plan specific Attachment(s) shall be attached to this Amendment and become part of the
Agreement.
EGTRRA Agreement Amendment.Doc 2
4
IN WITNESS WHEREOF, the parties have caused this Amendment to the Agreement to be executed effective
January 1, 2002 by their respective officers and agents thereunto duly authorized as of the day and year first
above written.
For Plan Sponsor
By:
For Great -West Life & Annuity Insurance Company
, �?' e �—' �-
Al Cunningham,
Assistant Vice President
Date Z, .2S- Da
For BenefitsCorp, Inc. (formerly Benefits Communication Corporation)
Charles P. Nelson,
President
EGTRRA Agreement Amendment.Doc 3
Code Section 457 Deferred Compensation Plans
ATTACHMENT
If the Plan Sponsor's Code section 457 Deferred Compensation Plan accepts Qualified
Domestic Relations Orders (hereinafter referred to as "QDROs"), QDROs will be processed
and distributed pursuant to the terms of the Plan(s) and Code requirements in effect on the
date of the distribution. All references to Conforming Equitable Distribution Orders (hereinafter
referred to as "CEDOs") in the Agreement, if any, shall be replaced with the term "Qualified
Domestic Relations Orders (QDROs)".
2. If loans are available under the Plan Sponsor's Code section 457 Deferred Compensation Plan
beginning January 1, 2002 or thereafter, Plan Sponsor agrees that all loans shall be account
reduction loans repaid by payroll deduction and administered pursuant to the loan policy and
procedures established by the recordkeeper from time to time. Participants will be subject to
the fees in the loan documents.
3. Effective January 1, 2002, references to Internal Revenue Service Form W2, if any, are hereby
changed to Form 1099R.
4. If the Plan(s) accepts pre-tax rollovers from other eligible retirement plans, including Individual
Retirement Accounts or Annuities (hereinafter referred to as "IRAs"), beginning January 1,
2002 or thereafter, separate accounts will be maintained for rollovers from eligible Code
Section 457 plans, Code Section 401(a), 401(k) and 403(b) plans and IRAs. Other accounts
may be established from time to time as required for plan administration.
Plan Sponsor agrees that rollovers will be administered according to the rollover policy and
procedures established by the recordkeeper from time to time. Participants will be subject to
the fees, if any, set forth in the rollover policy and procedures.
Amounts distributed from rollover accounts will be tax reported pursuant to the internal
revenue laws in effect on the date of the distribution.
EGTRRA Agreement Amendment.Doc
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AGREEMENT FOR RECORDKEEPING AND COMMUNICATION SERVICES
§457 DEFERRED COMPENSATION PLAN
GROUP 98310
This: Agreement is entered Into by and . between Great -West Life & Annuity Insurance Company
(hereinafter referred to as "GWL&Aj and the City of Newport Beach (hereinafter referred to as "Plan
Sponsor"), with respect to the recordkeeping and communication services to be provided to the §457
Deferred Compton aeon. Pian (the "Plan")... .
WHEREAS, the Plan Sponsor has established or .adopted .the Pian for. its eligible employees in
accordance with Section 457 of the Internal Revenue Code (Code) and all applicable federal
regulations, state and/or municipal statutes for the purpose of providing retirement .plan benefits to
employees. and
WHEREAS, the Plan Sponsor (or its designee) serves as the Plan Administrator and named fiduciary
of the Plan, and
WHEREAS, Plan Sponsor has placed all Plan assets Into a trust, custodial account or annuity
contract meeting the requirements of Section 467(g) of.the ,CgOe .and mill. continue to meet such
requirements for the duration of this Agreement, and
WHEREAS, GWL&A has agreed to act In a non -fiduciary capacity as a directed, nondiscretionary
recordkeeper•and service provider and GWL&A wilt perform the services outlined in this Agreement
as directed by Plan Sponsor In .compliance with all applicable federal,, -state -and local laws and
regulations. ,
NOW THEREFORE, the parties hereby agree as follows:
I. GWL&A Recordkeeping Responsibilities
A. Participant Account Information
1. A Participant account will consist :of. the .following participant indicative data
when provided to GWL&A:
a. Name
b. Gender
c. Social Security Number
d. Mailing Address
e. Telephone Number
f, Date of Birth
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1
g. Beneficiary information
2. Current investment allocation for each investment option authorized by the Pian
Sponsor.
3. History of investment allocations by the participant since enrollment in the Pian
from the date GWL&A began providing recordkeeping services to the Plan.
4. Current account balances of each participant in each investment option
authorized by the Plan Sponsor.
5. Record of each transaction made to each investment option authorized by the
.: Pian Sponsor since enrollment in the Plan from the date. GWL&A began
providing recordkeeping services to. the Plan..
B. Investment Options
1. Authorized Investment Option Array
Pian Sponsor has selected GWL&A's FutureFunds II package of fixed and
variable annuity investment options for the Plan.
2. • " • Designated investment Option
Pian Sponsor initially designates the Daily Interest Guarantee Fund II
investment option for amounts received by GWL&A without complete allocation
Instructions. (This designation shall remain in effect until PlanSponsor has
designated a new Investment option.) Such amounts will be deposited and held
In the designated Investment option until complete allocation Information has
been received by GWL&A at its home office in Englewood, Colorado. Once
complete allocation instructions have been received by GWL&A, GWL&A will
update the participant allocation instruction on the system for future
contributions. Funds deposited , into the designated Investment option will
remain until the participant initiates transfer instructions via the automated voice
response system, Internet, klosk or client service representative.
C. Valuation of Participant Account Balances
Participant Account Balances held with respect to the Plan will be accounted for as
follows:
1. Amounts that are not guaranteed as to principal or interest will be accounted for
at their fair market value as of the close of each Business Day. The term
"Business Day" is defined as any day on which the New York Stock Exchange Is
open.
2. Amounts receiving a guaranteed interest rate and a guarantee of principal will
be accounted for at book value. Interest will be accounted for on a daily
effective method.
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D. Transaction Timing Related to Contributions and Transfers
1. Contributions
Contributions sent directly on-line to OWL&Xs computer system by 11:00 p.m.
Pacific Time will be allocated effective the next Business Day (at that Business
Day's unit value) if GWL&A receives complete and accurate records.
2. Transfers
Participant initiated transfers will be processed and be effective the Business
Day they are received, If received before 1:00 p.m. Pacific Time. If received after
1:00 p.m. Pacific Time, transfers will be processed effective the next Business Day.
E. Automated Voice Response System
Participants will have access to a toil free, automated voice response system which will
provide the following Information and services. to the participant from a touch tone
telephone:
1. Account balance, In total and by fund;
r
2. Current interest rates;
3. Unit values and/or share prices;
4. Daily changes In share prices/unit values;
5. Current deferral election (allocation of contributions);
8. Ability to change allocatlon of future deferrals;
' 7. Ability to transfer between fund Investment options;
8. Ability to change the Personal Identification Number (PIN);
9. Ability to access transaction history; and
10. Ability to activate rebalancer and dollar cost averaging options.
Inquiry services available from the automated voice response system will utilize share
prices, unit values and. account. balances, which are as of the last calculated unit
valuelshare price.
The automated voice response system Is available 24 hours a day, except for system
maintenance that Is generally performed on Sunday mornings.
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F. Internet Site
Participants can access the Internet to obtain the following information from the
GWL&A web site:
1. Account balance, in total and by fund;
2. Current interest rates;
3. _ Unit values and/or share prices;
i
4. Daily changes in share prices/unit values;
i
.5. Current deferral. election (allocation of contributions);
e. Ability to change allocation of future deferrals; f
7. Ability to transfer between fund Investment options;
i
8. Ability to request written notification of the Personal Identification Number (PiN) ►
by mail;
9. Ability to access transaction history: and
10. Ability to activate rebalancer and dollar cost averaging options.
1
G. Client Service
Client service representatives will be available to answer participant questions between
the hours of 7:00 a.m. Pacific Time and 4:00 p.m. Pacific Time each Business Day,
except the Friday after Thanksgiving. On the Friday after Thanksgiving, transactions
submitted other than by the automated voice response unit, Internet or computer link
will not be processed until the next Business Day. jl
i
H. Direct On -Line Access to GWL&A's System
GWL&A will allow Pian Sponsor direct on-line access to GWL&A's system to allow the
Plan Sponsor to access the following Information or perform the following functions (if
desired by the Plan Sponsor) Involved in administering the Plan:
1. Directly process contributions to participant accounts either through on-line
Interaction or electronic transmission of files
2. Inquire about participant account information, account balances, allocations and
transaction history
3. inquire about the plan's basic information, Interest rates and unit values
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4
4. Add a new participant account
5. Change participant Information and investment allocations
GWL&A shall make available to Plan Sponsor the software necessary to allow on-line
access to Plan participant records. GWL&A representative(s) will be made available to
assist and train employees of the Plan Sponsor in properly accessing and processing
transactions on to the GWL&A system.
GWL&A's system will be unavailable periodically for maintenance, routine checks and
backups. . .
i. Reporting
I. - Participant Statements
:Each participant will receive a statement of his/her account summarizing all
activity for the previous calendar quarter, including:
a. Beginning and ending balances.
b. Al transactions processed during the quarter, including contributions.
C. Interest or change In value.
t d. Fees%Chorges (if applicable).
e. Transfers and withdrawals for .each of the investment options for the
quarter.
Such statements will be mailed within twenty (20) Business Days of the end of
:each calendar quarter, except that the first quarterly statement may arrive later
while records are being established. Participant statements are to be mailed to
each participant's last known home address. Additionally, GWL&A will mail to
each participant a confirmation of every completed change. Participants will
also have access to their account activity via a voice response unit, KeyTalk®,
and the Internet. Should Great -West be notified of any errors on a participant's
statement within ninety (90) days afiar the statement date, Great -West will
retroactively correct such error(s) made within said statement period. However,
should Great: -West not be notified of such errors within ninety (90) days of the
statement date, the `error(s) will be corrected, but not made effective
retroactively.
2. Employer Reporting
a. Employer Plan Summary
GWL&A will provide to the Plan Sponsor, an Employer Plan Summary
Report summarizing plan level assets and participant account balances
no later than forty-five (45) calendar days after each calendar quarter
i end. However, the first statement may be delayed beyond this forty-five
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5
(46) calendar day period while records are being set up. The following
plan information Is outlined in the report;
1) Account summary --a summarization of plan transactions and
assets.
2) Summarization of contributions processed.
3) Withdrawals.
4) Annuities purchased.
5) Periodic payments.
6) Investment option grand totals ---summarizes both dollars and
units/shares and plan activity.
7) Investment option totals by money type—summarizes both dollars
and units/shares and money type activity.
8) Participant summa"eport of account activity for each
participant.
II. GWL&A Communication Responsibilities
A. Special Representations
1. GWL&A representative(s) assigned to perform services under this Agreement
will be properly licensed, trained, qualified and supervised with respect to the
conduct of their business activities.
2. GWL&A representatives) will provide information and services described in this
Agreement in a manner consistent with applicable insurance and secerities laws.
Pian Sponsor acknowledges, however, , that the information and services
supplied by GWL&A do not constitute investment or lax advice. GWL&A does
not provide such advice such as that provided by legal, financial, tax or
Investment advisors acting in a fiduciary capacity.
3. GWL&A representative(s) will only provide Information applicable to this Plan,
and representative(s) is/are prohibited from providing services or products not
specifically approved by the Plan Sponsor.
4. No GWL&A representative may discriminate with respect to investment options
provided under the Plan. Representative(s) will give equal and fair
representations when describing the various investment options available under
the Pian.
5. Compensation to representative(s) will not vary based upon investment options
selected by the participants.
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6
B. Enrollment Forms, Communication Material and Presentations
1. GWL&A will be responsible for supplying all forms necessary for the operation of
the plan. All such material will remain the sole property of GWL&A.
2. The above noted forms and materials will include, but not be limited to:
a. Enrollment forms
b. Distribution forms
C. Asset allocation information
d. Quarterly newsletters
e. Summary of Pian details
3. Plan Sponsor will have the ability to review any communication material,
presentation material and general topics to be presented. It is agreed that
approval of the Pian Sponsor will not be unreasonably withheld.
4. GWL&A representative(s) will conduct group meetings at which the following will
be communicated, or made available at the request of the participant:
a. Summary of the iRS rules and regulations applicable under the Plan.
b. Summary of the key provisions of the Plan.
c. Summary of investment options, including the name of investment
option's fund manager, investment objective, transfer restrictions (if any),
and risk/return characteristics.
d. Summary of fees charged to participant accounts, if any,
e. Discussions of services Including automated voice response system
inquiry, retirement planning, and Investment seminars.
L instructions on how to sign up for the Pian or request an individual
counseling session.
C. Additional Services
1. . GWI.&A will provide the following information as requested by a participant:
a. Investment performance data
b. investment option prospectuses
C. Copies of financial statements
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7
d. Information on annual operating expenses for each investment option
2. Upon request, GWL&A representative(s) will conduct prescheduled individual
counseling sessions utilizing a participant paycheck analysis, an asset allocation
model and retirement counseling services as approved by the Plan Sponsor.
3. GWL&A will provide participant seminars regarding financial investing and
retirement options as requested and approved by Plan Sponsor.
III. Miscellaneous Provisions
GWL&A specifically accepts and agrees to each of the following requirements:
A. All books, records, ledgers and journals relating to the Plan will be available, with a 72 -
hour advance notice, for inspection and audit by the Plan Sponsor or its designee at
any time during normal working hours. Records requested will be provided by GWL&A
on electronic media in a standard GWL&A format.within thirty (30) days of receipt of the
request.
B. GWL&A may assign any interest in this Agreement and may subcontract any services
of this Agreement to an affiliate.
C. All information obtained by GWL&A from any individual employees, whether the
employee becomes a participant or not, will be kept in absolute confidence and will not
be utilized by GWL&A or any of its officers, directors, agents or employees In
connection with any other matter without prior written consent of the Plan Sponsor.
GWL&A may disclose -Information as required by law without prior written consent of
the Plan Sponsor. Plan Sponsovagrees GWL&A may use information regarding the
Pian in responses to Requests for Proposals.
D. in connection with the performance of work under the Agreement, GWL&A will not
discriminate against any employee or application for employment because of age, race,
religion, color, handicap, sex, physical condition, developmental disability, sexual
orientation or national origin and will comply with legislative and/or executive
requirements titled "Equal Employment Opportunity," under the Civil Rights Act of 1964,
and the Americans With Disabilities Act (ADA), 42 U.S.C. 12101, et seq. Additionally,
GWL&A will comply with all state non-discrimination laws applicable to the Plan
Sponsor.
E. Upon relinquishing responsibilities at the termination of the Agreement, GWL&A will
provide, if requested, Investment balances for all participants to assure appropriate
account balances within sixty (60) Business Days of termination of the Agreement
GWL&A's standard format. GWL&A will be responsible for statements up to and
Including the statement for the last calendar quarter covered by this Agreement.
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IV. Pian Sponsor Responsibilities
A. Plan Sponsor hereby appoints GWL&A as the exclusive provider of non -discretionary
recordkeeping and communication services for the Plan for the term of this Agreement.
B. Plan Sponsor agrees to electronically remit on-line (directly to GWL&A's system)
payroll deposits and the accounting of deposits among Participants. Funds will be
transmitted via ACH. Plan Sponsor agrees that if the Pian Sponsor changes the
reporting format for contribution reporting, GWL&A will be given two (2) weeks advance
notice to test the new format before monies are remitted on the new file format. If Plan
Sponsor does not provide GWL&A with two (2) weeks advance notice of the new
reporting format, then GWL&A will have two (2) business days- to process the monies
•sent In with the new file format and the Deposits will be made effective two (2) business
days from receipt of such monies.
C. Plan Sponsor authorizes GWL&A to contact any employee at (his/her) business
address to obtain information needed to perform its services in this Agreement. At the
request of the participant (or with the employee's authorization), GWL&A may contact
'the employee at (his/her) home address to obtain information needed to perform its
services in this Agreement.
D. Plan Sponsor agrees to provide GWL&A with all information necessary for GWL&A to
perform its duties under this Agreement.
E. If Plan Sponsor intends that participants choosing Individually directed investments
shall relieve Plan Sponsor of responsibility for the participants' investment
performance, Pian Sponsor shall be responsible for complying with the communication
and education requirements similar to those prescribed in ERISA Section 404(c) as
specified in California Statute 53213.5. GWL&A will assist Plan Sponsor in meeting
these requirements as described In Section 11.8 of this Agreement.
F. Pian Sponsor agrees to use Its best efforts, including, if necessary, the termination of a
participating investment provider(s), to secure and maintain the cooperation, of the
participating investment providers) in providing the timely and accurate transmittal of
data, including providing dally interest rates and unit/sharevalues, required by GWL&A
pursuant to Its responsibilities to the Plan.
G. Should Plan Sponsor choose a custodial or trust account, Plan Sponsor agrees to
require custodian or trustee to provide GWL&A all information In the possession of
custodian or trustee which is necessary for the performance of GWL&A's duties under
this Agreement.
H. Plan Sponsor agrees to facilitate the scheduling of group and Individual presentations
and to provide facilities at which both the Plan Sponsor and GWL&A mutually agree
that satisfactory attendance can be expected.
Agreement for Recvr&aop&V and GV=unbeWw %rvkas (w OV Of aMvit Beech 3-13-W
. 9
I. Plan Sponsor will be responsible for making final decisions approving early withdrawals
of amounts due to °unforeseeable emergency` as that term is defined in the Section
457 Plan, the Code, and all IRS Regulations issued pursuant to the Code.
J. Plan Sponsor, in applying for coverage of its employees under the GWL&A contract,
hereby authorizes GWL&A to accept all properly completed applications. Pian Sponsor
will not require a signature from the employer signature when a properly completed
'application Is received.
V. Hold Harmless and indemnification
GWL&A agrees to hold harmless and Indemnify the Pian Sponsor, their affiliates and their
officers, directors, employees or authorized representatives against any and all expenses,
costs, reasonable attorneys fees, settlements, fines, judgments, damages, penalties or court
awards actually incurred which are the result of negligent or fraudulent acts or omissions of
GWL&A, Its affiliates and their officers, directors, employees or authorized representatives.
Plan Sponsor agrees to hold harmless and indemnify GWL&A, their affiliates and their
officers, directors, employees and authorized representatives against any and all expenses,
costs, reasonable attorney fees, settlements, fines, judgments, damages, penalties or court
awards actually incurred which are the result of negligent or fraudulent acts or omissions of
the Plan Sponsor, its affiliates and their. officers, directors, employees or authorized
representatives.
Plan Sponsor acknowledge that GWL&A, its affiliates and their directors, officers, employees,
-and authorized representatives are not responsible for Investment performance of any
authorized investment options under:the program.
VI. Notification
All notions, requests, demands or other communications provided for or required by this
Agreement (or any Instrument or document delivered pursuant to this Agreement) will be in
writing...
Notices tq QWL&A Will be.addressed as follows:
GWL&A Executive Vice President, Financial Services
8515 Last Orchard Road
Englewood CO 80111
Notices to Plan Sponsor will be addressed as follows:
Mr. Dennis C. Danner, Finance Director
3300 Newport Blvd., P>O>Box 1788
Newport Beach, CA 92859-1788
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10
Each party may designate a different address by sending written notice to the other parties, to
be effective within ten (10) days of the date of the notice.
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11
V11. Agreement Term
This Agreement shall be an exclusive contract for a period of five (5) years with an effective
date of March 1, 2000. Unless terminated earlier as provided in Section VIIi below, this
Agreement shall remain in effect until February 28, 2005. Thereafter, this Agreement shall
automatically renew for successive one year periods unless terminated as follows:
I. Automatically upon the date the FutureFunds Contract, Group Policy Number
98310GP, as amended, or a successor contract, is no longer currently being offered to
eligible employees under the Plan; or,
2. . Upon cancellation by any party upon 90 days prior written notice by Certified Mail to the
addresses herein.
Vlll. Termination for Cause
Subject to GWL&A's right to cure, this Agreement may be terminated by the Plan Sponsor for
cause at any time during the Agreement term upon ninety (90) days written notice to GWL&A.
For purposes of this section, •cause" shall be defined as illegal or fraudulent ads, failure to
comply with the terms of the Agreement, or GWL&A's receipt two of the following ratings in
any one (1) year period:
A. A rating of "A" or lower from Standard & Pooes,
B. A rating of "A" or lower from Moody's,
C. A rating of "A° or lower from Duff & Phelps, or
D. A rating of "A" or lower from A.M. Best.
The parties agree that GWL&A will not be considered in default If the reason GWL&A
receives a rating below a rating listed above is as a result of the rating organization
reclassifying the system for other than the financial condition of GWL&A or GWL&A's ratings
group.
Notice to terminate shall be effected by delivery of a written notice specifying the fault of
GWL&A and date upon which such termination becomes effective.
GWL&A shall have the right to cure any failure to comply with the tenns of this Agreement
within the ninety (90) day notice period. If GWL&A cures the problem identified in such notice
within the ninety (90) day notice period, this Agreement shall remain in full effect.
Any assets held by GWL&A shall be paid according to the Group Deferred Compensation
Annuity Contract.
DL Fees
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12
The fees for providing all of the recordkeeping and communication services described In this
Agreement shall be assessed according to the Group Deferred Compensation Annuity
Contract between the parties to this Agreement.
X. Modification, Waiver and Consent
No modification or waiver of any provision of this Agreement and no consent by any party to
any deviation from its terms by any other party will be effective unless such modification,
waiver or consent is In writing and signed by all parties. The modification, waiver or consent
will be effective 'only for the period, on the 'conditions and for the specific instance and
-purposes specified in such writing. The waiver of any breach of.any term or condition in this
Agreement will not be deemed a waiver of any prior or subsequent breach.
M. • Arbitration
XII.
XIA.
Any dispute, which arises between the parties with respect to any of the terms of this
Agreement, whether such dispute arises during the tern of the Agreement or after its
termination, will be resolved through binding arbitration. Arbitration will be conducted in
accordance with the commercial rules of the American Arbitration Association ("AAA"}. Each
party agrees to waive its right, if any, to a jury trial. Each party will bear its own cost in the
arbitration proceedings. The arbitration award may be entered in, and enforced by, any court
of competent jurisdiction.
Entire Agreement
The entire agreement for recordkeeping
consists of this Agreement, and this
understanding among the parties hereto.
Governing Law
and communication -services between the parties
Agreement supersedas any prior ..agreement or
This Agreement will be construed and enforced In accordance with and governed by the laws
of the State of California.
XIV. Severabiiity
The provisions of this Agreement are severable, and if for any reason, a clause, sentence or
paragraph of this Agreement will be determined to be invalid by a court or federal or state
agency, board or commission having jurisdiction over the subject matter thereof, such
invalidity will not affect other provisions of this Agreement which can be given effect without
the Invaild provision.
XV. Authorized Persons
The Plan Sponsor and any duly appointed Investment advisor(s) will furnish a list to GWL&A
(and from time to time whenever there are changes therein) of the Individuals authorized to
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13
transmit instructions to GWL&A concerning the Plan and/or assets in the account, and written
direction regarding the form of such instructions.
XVI. Independent Contractor
GWL&A will function as an independent contractor for the purposes of this Agreement, and
will .not be.consldered an employee for any purpose. GWL&A will assume sole responsibility
for..any .debts:.or liabilities that may be incurred by GWL&A In fulfilling the terns of this
Agreement, and.,will be solely responsible for the .payment of all federal, state and local taxes
which may accrue bQcause of this Agreement. Nothing In this Agreement will be Interpreted
as authorizing GWL&A or its agents and/or employees to act as an agent or representative for
or on behalf of the State or local authority, or to incur any obligation of any kind on the behalf
of the State or local authority. GWL&A agrees that no healthihospitalization benefits, worker's
compensation and/or similar benefits available to the State or local authority employees, will
Inure to the benefit of GWL&A, or GWL&A agents and/or employees as a result of this
Agreement.
XVII. Legal Advice
Nothing in this Agreement and nothing contained In any other agreement or communication
constitutes legal or tax advice from C3WL&A to the Plan Sponsor or -any other party on which
they may rely.
XVIII. Signatures
By signing ibis Agreement, in duplicate, the.parties certify that they have read and understood
It, that they agree to be bound by the terms of the Agreement, that they have the authority to
sign it, and that they have received a signed and dated copy of the Agreement. This
Agreement is not binding on either party until approved by both parties.
PLAN SPONSOR:
City ofewport Beach
By; .�...
Title:
Date tom► �/, .:t O d �_ _
T
GREAT -WEST LIFE & ANNUITY INSURANCE COMPANY:
141 00
By its Assistant Vice P ent, AI Cunningham Date
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