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1993R02- CONTRIBUTION PENSION PLAN RESOLUTION NO. ~:5 - R - ?--- A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS ADOPTING THE AMENDMENT AND TERMINATION AGREEMENT TO THE CITY OF SCHERTZ DEFINED CONTRIBUTION PENSION PLAN AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City sponsors Contribution Pension employees: and the City of Schertz Defined Plan on behalf of its eligible WHEREAS, the City has determined to terminate this Plan effective January 31, 1993; and WHEREAS, the City wishes to comply with the provisions of the Tax Reform Act of 1986, the technical correction to the Retirement Equity Act of 1984 and the Tax Reform Act of 1984 and the temporary regulation under the Retirement Equity Act of 1984, and then terminate the Plan: NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, THAT the City hereby adopts and approves the amendment and termination agreement to the City of Schertz Defined Contribution Pension Plan (the "Plan"), effective as of January 31, 1993, all as set forth in that instrument entitled "Amendment and Termination Agreement to City of Schertz Defined Contribution Pension Plan", a copy of which has been inspected by the Council and is attached hereto. BE IT FURTHER RESOLVED: THAT the City Manager of the City is hereby authorized and directed to execute the Amendment and Termination Agreement as approved, and to execute all other documents and to do all other things as may be necessary or appropriate to make the amendment and termination of the Plan effective, including the execution of any further amendments required by the Internal Revenue Service in order to continue and maintain the qualified and exempt status of the Plan and Trust as amended. PASSED, APPROVED AND ~~'n~ ADOPTED this , 19 '7 ~ the J 9 -rt; day of ATTEST: , . AMENDMENT AND TERMINATION AGREEMENT TO CITY OF SCHERTZ DEFINED CONTRIBUTION PENSION PLAN THIS AMENDMENT AND TERMINATION AGREEMENT made this day of 1993, by City of Schertz, an incorporated municipality of the State of Texas (the "City"), WIT NESS E TH: WHEREAS, the City sponsors the City of Schertz Defined Contribution Pension Plan (the "Plan) on behalf of its eligible employees; and WHEREAS, under Article VII of the Plan, the City retained the right to terminate the Plan; and WHEREAS, the City has determined to terminate the Plan effective January 31, 1993 (the "Termination Date"); and WHEREAS, effective on the "Termination Date" the City has determined to amend this Plan to (i) prohibit additional employees from becoming Participants in the Plan, (ii) cease benefit accruals under the Plan, (iii) cease aU contributions under the Plan, (iv) grant each Participant who was employed on the Termination Date a 100% vested and nonforfeitable interest in benefits under the Plan as of the Termination Date to the extent funded, (v) comply with the provisions of the Tax Reform Act of 1986, the technical corrections to the Retirement Equity Act of 1984 and the Tax Reform Act of 1984 and the temporary regulations under the Retirement Equity Act of 1984, and (vi) then terminate the Plan; NOW, THEREFORE, notwithstanding any other provisions of the Plan to the contrary, as of January 31, 1993 (the "Termination Date") the Plan is amended and terminated as foUows: 0043033 (1) Effective as of the Termination Date, a new Article X is hereby added to the Plan and shall provide as follows: ARTICLE X ELIGIBILITY, BENEFIT ACCRUAL, CONTRIBUTIONS, VESTING AND DISTRIBUTION OF BENEFITS INCIDENT TO TERMINATION OF PLAN 10,01 Eligibility. Notwithstanding any other provision of the Plan to the contrary, no Employee who is not a Participant in the Plan on the Termination Date will become a Participant in the Plan after the Termination Date, 10.02 BenefitAccrual. Notwithstanding any other provision of the Plan to the contrary, any Employee who is a Participant in the Plan as ofthe Termination Date and who has not already ceased accruing benefits under the Plan will cease accruing benefits under the Plan as of such Termination Date. 10.03 Contributions. Notwithstanding any other provision of the Plan to the contrary, no contributions will be made under the Plan with respect to any period after the Termination Date. 10,04 Vesting, Notwithstanding any other provision ofthe Plan to the contrary, with respect to each Participant who was employed on the Termination Date and who was not already fully vested in his or her Account to the extent then funded under the Plan, solely as a result of the termination of the Plan, each Employee who was a Participant in the Plan as of the Termination Date will become fully vested in his or her Account thereunder to the extent then funded. 10.05 Distributions. Distributions will be made as soon as administratively practicable following the Termination Date to Plan Participants under any form of distribution provided for under Article VI of the Plan, All optional forms of distribution shall be preserved under the Plan as terminated, 10.06 Administration Pending Termination of Plan, Notwithstanding any other provision of the Plan to the contrary, except as otherwise required by the City, the Plan Administrator will continue to be responsible for the general administration of the Plan until the termination of the Plan and the distribution to the Participants and beneficiaries. All other terms and provisions of the Plan not in conflict 0043033 -2- with this Article will continue in full force and effect until the Trustee (or any successor trustee) has in accordance with applicable provisions of the amended and terminated Plan not inconsistent with applicable law (i) paid the costs, expenses and fees of the Trustee, Plan Administrator, legal counsel, accountant or any other agent retained by the City or the Plan Administrator to help effect the termination of the Plan, (ii) distributed all assets, and (iii) paid any excise taxes or penalties that may apply, 10,07 "Termination Date" means January 31, 1993. (2) A new Article XI is added to the Plan to read as follows: ARTICLE XI TAX REFORM ACT OF 1986 REQUIRED CHANGES SECTION I: PURPOSE AND EFFECTIVE DATE 1.1. Purpose. It is the intention of the Employer to amend the Plan to comply with those provisions of the Tax Reform Act of 1986 that are effective prior to the first Plan Year beginning after December 31, 1988. Nothing contained in this amendment shall permit Employee contributions or Employer Matching Contributions unless they have been authorized by the Employer under other provisions of the Plan or under other amendments thereto, 1.2, Effective Date. Except as otherwise provided, this amendment shall be effective as of the first day of the first Plan Year beginning after December 31, 1986. SECTION II: DEFINITIONS For purposes of this amendment only, the following definitions shall apply. 2.1 "Adjustment Factor" shall mean the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code for years beginning after December 31, 1987, as applied to such items and in such manner as the Secretary shall provide, 2.2 "Affiliated Employer" shall mean the Employer and any corporation which is a member of a controlled group of 0043033 -3- corporations (as defined in Section 414(b) of the Code) which includes the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to regulations under Section 414(0) of the Code. 2.3 "Code" shall mean the Internal Revenue Code of 1986 and amendments thereto. 2.4 "Compensation" shall mean compensation paid by the Employer to the Participant during the taxable year ending with or within the Plan Year which is required to be reported as wages on the Participant's Form W-2 and, if the provisions of the Plan other than this amendment so provide, shall include compensation which is not currently includible in the Participant's gross income by reason of the application of Sections 125, 401(a)(8), 401(h)(1)(B) or 403(b) of the Code. 2.5 "Employee" shall mean ofthe employees of the Employer and shall include leased employees within the meaning of Section 414(n)(2) of the Code but only if the qualified status of the Plan is dependent upon their coverage. Notwithstanding the foregoing, if such leased employees constitute less than twenty percent of the Employer's nonhighly compensated work force within the meaning of Section 414(n)(1)(C)(ii) of the Code, the term "Employee" shall not include those leased employees covered by a plan described in Section 414(n)(5) of the Code unless otherwise provided by the terms of the Plan other than this amendment. 2,6 "Employee Contributions" shall mean contributions to the plan made by a Participant during the Plan Year, 2,7 "Employer" shall mean the entity that establishes or maintains the Plan; any other organization which has adopted the Plan with the consent of such establishing employer; and any successor of such employer. 2.8 "Family Member" shall mean an individual described in Section 414(q)(6)(B) of the Code. 2,9 "Highly Compensated Employee" shall mean an individual described in Section 414(q) of the Code. 0043033 -4- 2,10 "Inactive Participant" shall mean any Employee or former Employee who has ceased to be a Participant and on whose behalf an account is maintained under the Plan. 2.11 "Matching Contributions" shall mean any contribution to the Plan made by the Employer for the Plan Year and allocated to the Participant's account by reason of the Participant's Employee Contributions. 2.12 "Non-Highly Compensated Employee" shall mean an Employee of the Employer who is neither a Highly Compensated Employee nor a Family Member, 2.13 "Participant" shall mean any Employee of the Employer who has met the eligibility and participation requirements of the plan, 2,14 "Plan Year" shall mean the plan year otherwise specified in the Plan, SECTION III: PROVISIONS RELATING TO LEASED EMPLOYEES 3.1 Safe-Harbor, Notwithstanding any other provisions of the Plan, for purposes of the pension requirements of Section 414(n)(3) of the Code, the employees of the Employer shall include individuals defined as Employees in Section 2.5 of this amendment. 3,2 Participation and Accrual. A leased employee within the meaning of Section 414(n)(2) of the Code shall become a Participant in, or accrue benefits under, the Plan based on service as a leased employee only as provided in provisions of the Plan other than this Section III. 3,3 Effective Date. This Section III shall be effective for services performed after December 31, 1986. 0043033 -5- SECTION N: LIMITATIONS ON CONTRIBUTIONS AND BENEFITS 4.1 Revised Contribution Limitations Under Defined Contribution Plan, 4.l(a) Definition of Annual Additions, For purposes of the plan, "Annual Addition" shall mean the amount allocated to a Participant's account during the Limitation Year that constitutes: (i) Employer Contributions, (ii) Employee Contributions, (iii) Forfeitures, and (iv) Amounts described in Sections 415(1)(1) and 419(A)(d)(2) of the Code, 4,l(b) Maximum Annual Addition. The maximum Annual Addition that may be contributed or allocated to a Participant's account under the Plan for any Limitation Year shall not exceed the lesser 0 f: (i) the Defined Contribution Dollar Limitation, or (ii) 25 percent of the Participant's compensation, within the meaning of Section 415(c)(3) of the Code for the Limitation Year, 4,l(c) Special Rules. The compensation limitation referred to in Section 4,1(b)(ii) shall not apply to: (i) Any contribution for medical benefits (within the meaning of Section 419A(D(2) of the Code) after separation from service which is otherwise treated as an Annual Addition, or (ii) Any amount otherwise treated as an Annual Addition under Section 415(1) (1) of the Code, 4,l(d) Definitions. For purposes of Section 4.1, "Defined Contribution Dollar Limitation" shall mean $30,000 or, if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year, 0043033 -6- 4.2 Special Rules for Plans Subject to Overoll Limitations Under Code Section 415(e). 4.2(a) Recomputation Not Required. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee Contributions as an Annual Addition. 4.2(b) Adjustment of Defined Contribution Plan Fraction. If the plan satisfied the applicable requirements of Section 415 of the Code as in effect for all Limitation Years beginning before January 1, 1987, an amount shall be subtracted from the numerator of the defined contribution plan fraction (not exceeding such numerator) as prescribed by the Secretary of the Treasury so that the sum of the defined benefit plan fraction and defined contribution plan fraction computed under Section 415(e)(1) ofthe Code (as revised by this Section IV) does not exceed 1.0 for such Limitation Year. 4,3 Limitation Year, For purposes of this Section IV, "Limitation Year" shall mean the limitation year specified in the Plan, or if none is specified, the calendar year, 4.4 Effective Date of Section Iv. The provisions of this Section IV shall be effective for Limitation Years beginning after December 31, 1986, SECTION V: LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING EMPLOYER CONTRIBUTIONS. 5.1 Contribution Percentage, 5.l(a) The average Contribution Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for Eligible Participants who are Non-highly Compensated Employees for the Plan Year multiplied by 1.25; or 5.l(b) The average Contribution Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for Eligible Participants who are Non-highly Compensated Employees for the Plan Year multiplied by 2, provided that the Average Contribution Percentage for Eligible Participants who are Highly Compensated Employees does not exceed the Average Contribution Percentage for Eligible Participants who are Non-highly 0043033 -7- Compensated Employees by more than two (2) percentage points or such lesser amount as the Secretary of the Treasury shall prescribe to prevent the multiple use of this alternative limitation with respect to any Highly Compensated Employee, 5,2 Definitions. For purposes of this Section V, and for purposes of Section VII of this amendment, the following definitions shall apply. 5,2(a) "Average Contribution Percentage" shall mean the average (expressed as percentage) of the Contribution Percentages of the Eligible Participants in a group. 5.2(b) "Contribution Percentage" shall mean the ratio (expressed as a percentage) of Employee contributions and Matching Contributions under the Plan on behalf of the Eligible Participant for the Plan Year to the Eligible Participant's Compensation for the Plan Year. 5.2(c) "Eligible Participant" shall mean any employee of the Employer who is otherwise authorized under the terms of the Plan to have Employee Contributions or Matching Contributions allocated to his account for the Plan Year. 5,3 Special Rules, 5.3(a) For purposes of this Section V, the Contribution Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to make Employee Contributions or to receive Matching Contributions, under two or more Plans described in Section 401(a) of the Code that are maintained by the Employer or an Mfiliated Employer shall be determined as if all such contributions were made under a single plan. 5,3(b) In the event that this Plan satisfies the requirements of Section 410(b) of the Code only if aggregated with one or more other Plans, or if one or more other Plans satisfy the requirements of Section 410(b) of the Code only if aggregated with this Plan, then this Section V shall be applied by determining the Contribution Percentages of Eligible Participants as if all such Plans were a single Plan. 5.3(c) For purposes of determining the Contribution Percentage of an Eligible Participant who is a Highly Compensated Employee, the Employee Contributions and Matching Contributions and Compensation of such Participant shall include the Employee Contributions and Matching Contributions, and Compensation of 0043033 -8- Family Members, and such Eligible Participants who are Non- highly Compensated Employees. 5,3(d) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. SECTION VI: DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. 6,1 In Generol. Excess Aggregate Contributions and income allocable thereto shall be forfeited, if otherwise forfeitable under the terms of this Plan, or if not forfeitable, distributed no later than the last day of each Plan Year beginning after December 31, 1987, to Participants to whose accounts Employee Contributions or Matching Contributions were allocated for the preceding Plan Year. 6,2 Excess Aggregate Contributions. For purposes of this amendment, "Excess Aggregate Contributions" shall mean the amount described in Section 401(m)(6)(B) of the Code, 6,3 Determination of Income, the income allocable to Excess Aggregate Contributions shall be determined by multiplying the income allocable to the Participant's Employee Contributions and Matching Employer Contributions for the Plan Year by a fraction, the numerator of which is the Excess Aggregate Contributions on behalf of the Participant for the preceding Plan Year and the denominator of which is the sum of the Participant's account balances attributable to Employee Contributions and Matching Employer Contributions on the last day of the preceding Plan Year, 6.4 Maximum Distribution Amount, The Excess Aggregate Contributions to be distributed to a Participant shall be adjusted for income, and, if there is a loss allocable to the Excess Aggregate Contribution, shall in on event be less than the lesser of the Participant's account under the plan or the Participant's Employee Contributions and Matching Contributions for the Plan Year. 6,5 Aecounting for Excess Aggregate Contributions. Excess Aggregate Contributions shall be distributed from the Participant's Employee Contribution account and forfeited if otherwise forfeitable under the terms of the Plan (or, if not forfeitable, distributed) from the Participant's Matching 0043033 -9- Contribution Account in proportion to the Participant's Employee Contributions and Matching Contributions for the Plan Year, 6,6 Allocation of Forfeitures. 6.6(a) Amounts forfeited by Highly Compensated Employees under this Section VI shall be: (i) Treated as Annual Additions under Section 4,l(a) of this amendment and either; (ii) Applied to reduce employer contributions if forfeitures of Matching Contributions under the Plan are applied to reduce employer contributions; or (iii) Allocated, after all other forfeitures under the Plan, and subject to Section 6.6(b) of this Amendment, to the same Participants and in the same manner as such other forfeitures of Matching Contributions, are allocated to other Participants under the Plan. 6.6(b) Notwithstanding the foregoing, no forfeitures arising under this Section VI shall be allocated to the account of any Highly Compensated Employee. SECTION VII: MISCELLANEOUS PROVISIONS 7,1 The Plan will not accept transfers of benefits from defined benefit plans and defined contributions plans subject to IRC 412 after January 1, 1985, unless the transferred benefits are subject to the joint and survivor annuity and preretirement survivor annuity requirements, as required by IRC Section 401(a)(1l), 7,2 For purposes of breaks in service the repayment period will be in the earlier of five consecutive one-year breaks in service or five years from the date of re-employment with the Employer. 7,3 Distributions due to the termination of the Plan will be made in accordance with the modes of distribution provided for in the Plan. 7.4 The severance from service date of an Employee who is absent from service beyond the first anniversary of the first date of absence by reason of maternity or paternity absence is the 0043033 -10- second anniversary of the first date of absence. The period between the first and second anniversary will be treated as neither a period of severance nor a period of service. 7.5 The surviving spouse shall be able to direct the commencement of benefits within a reasonable time after the death of the Participant, subject to only the restrictions on immediate distribution set forth under Regulation Section 1.417-(1 T)(b)(3). 7,6 Benefits will not be taken into account in determining the top-heavy ratio for any Employee who has not performed services for the last five (5) year period ending upon the Termination Date of the Plan. 7.7 The Plan is hereby amended to incorporate by reference the requirements of the regulations under Code Section 401(a)(9), relating to required distributions. (3) The Plan is hereby terminated, as amended above, on the Termination Date. IN WITNESS WHEREOF, the City has caused this Amendment and Termination Agreement to be executed in multiple counterparts, each of which shall be deemed an original, this day of 1993. CITY OF SCHERTZ By 0043033 -11-