agenda - agenda - placer county, ca

DEFERRED COMPENSATION COMMITTEE Thursday, November 14, 2019 | 1:30PM

SPECIAL MEETING AGENDA

COMMITTEE: Andrew Sisk, Auditor Controller

Jenine Windeshausen, Treasurer/Tax Collector Jane Christenson, Assistant CEO

Kate Sampson, Human Resources Director (Chair) Matt Bartholomew, PPEO Representative

Noah Frederito, DSA Representative Vicki Ramsey, Retiree Representative

Placer County is committed to ensuring that persons with disabilities are provided the resources to participate fully in its public meetings. If you are hearing impaired, we have listening devices available. If you require additional disability-related modifications or accommodations, including auxiliary aids or services, please contact the Executive Secretary. If requested, the agenda shall be provided in appropriate alternative formats to persons with disabilities. All requests must be in writing and must be received by the Executive Secretary five business days prior to the scheduled meeting for which you are requesting accommodation. Requests received after such time will be accommodated only if time permits.

MEETING LOCATION:

Placer County Human Resources 1st Floor Conference Room

145 Fulweiler Ave., Suite 200 Auburn, CA 95603 1:30PM – 3:00PM

OPEN SESSION Call to Order: 1:30 PM Roll Call Administration of the Oath of Office | Vicki Ramsey

1. Approval of Agenda | Special Meeting November 14, 2019

2. Approval of Minutes | Regular Meeting August 28, 2019 ABSENT: Sisk (arrived at 2:06PM), Ramsey

Public Comment: This is a special meeting pursuant to Government Code Section 54956. Public comment is limited to items appearing on the agenda. Pursuant to Government Code Section 54954.3, the public shall have the right to comment on any item appearing on the agenda prior to consideration of the item. Public comment on items not appearing on the agenda should be made at a regular meeting of the Committee.

3. Receive a Quarterly Program Update – Lincoln Financial Group

4. Receive a Report on the Education and Communication Results for 2019 – Dana Coleman, Lincoln Financial Group

5. Approve the 2020 Education and Communication Plan – Lincoln Financial Group

6. Approve the 2019 Fiduciary Review Report – Joseph Morgan

Deferred Compensation Committee – November 14, 2019

7. Approve 2020 Regular Meeting Calendar – Kate Sampson

8. Approve Investment Policy Statement – Joseph Morgan CLOSED SESSION

Pursuant to the cited authority (all references are to the Government Code), the Deferred Compensation Committee will hold a closed session to discuss the following listed items. A report of any action taken will be presented prior to adjournment. 9. §54956.9 – CONFERENCE WITH LEGAL COUNSEL

a) Anticipated Litigation: i. Significant exposure to litigation pursuant to subdivision (d)(2) of Government

Code §54956.9: one potential case.

OPEN SESSION Report of action taken in closed session.

10. Committee Member Comments

11. Adjournment to the next Regularly Scheduled Meeting

Upcoming Regular Quarterly Meetings To be approved at 11/14/2019 Special Meeting

February 26, 2020

May 27, 2020 August 26, 2020

November 18, 2020

Location Placer County Human Resources

1st Floor Conference Room 145 Fulweiler Ave., Suite 200

Auburn, CA 95603 1:30PM – 3:00PM

DEFERRED COMPENSATION COMMITTEE Wednesday August 28, 2019

REGULAR MEETING MINUTES





Placer County is committed to ensuring that persons with disabilities are provided the resources to participate fully in its public meetings. If you are hearing impaired, we have listening devices available. If you require additional disability-related modifications or accommodations, including auxiliary aids or services, please contact the Executive Secretary. If requested, the agenda shall be provided in appropriate alternative formats to persons with disabilities. All requests must be in writing and must be received by the Executive Secretary five business days prior to the scheduled meeting for which you are requesting accommodation. Requests received after such time will be accommodated only if time permits.

MEETING LOCATION:


145 Fulweiler Ave., Suite 200, Auburn, CA 95603 1:30PM – 3:00PM

OPEN SESSION Call to Order: 1:34 PM – Kate Sampson Roll Call: Judy McKeig Members Present: Sampson, Windeshausen, Christenson, Bartholomew, Frederito Members Absent: Sisk (arrived at 2:06PM), Ramsey Staff Attendees: Brett Holt, Michelle Beauchamp, Joseph Morgan Oaths of Office Administered by Brett Holt after item 9 to all members excluding Vicki

Ramsey, absent.

1. Approval of Agenda | Regular Meeting August 28, 2019 Motion: Christenson/Frederito/Majority 5:0 Vote Ayes: Sampson, Windeshausen, Christenson, Bartholomew, Frederito Absent: Sisk, Ramsey

2. Approval of Minutes | Regular Meeting May 22, 2019 ABSENT: Andrew Sisk, Matt Bartholomew, Vicki Ramsey Motion: Christenson/Windeshausen/Majority 5:0 Vote Ayes: Sampson, Windeshausen, Christenson, Bartholomew, Frederito Absent: Sisk, Ramsey

Deferred Compensation Committee – August 28, 2019 Page 2

3. Approval of Minutes | Special Meeting July 26, 2019 ABSENT: Noah Frederito Motion: Christenson/Bartholomew/Majority 4:1 Vote Ayes: Sampson, Windeshausen, Christenson, Bartholomew, Abstain: Frederito Absent: Sisk, Ramsey

The Committee requested minutes providing action items only going forward.

Public Comment: None Persons may address the Committee on items not on this agenda. Please limit comments to 3 minutes per person since the time allocated for Public Comment is 15 minutes. If all comments cannot be heard within the 15-minute time limit, the Public Comment period will be taken up at the end of the regular session. The Committee is not permitted to take any action on items addressed under Public Comment.

4. Approve Cancellation of November 27, 2019 Regular Meeting and provide direction on scheduling a Special Meeting – Kate Sampson Motion: Frederito/Bartholomew/Majority 5:0 Vote Ayes: Sampson, Windeshausen, Christenson, Bartholomew, Frederito Noes: None Absent: Sisk, Ramsey The Committee agreed to hold a Special Meeting on November 14, 2019 at 1:30PM. Mr. Holt requested adding a closed session to the agenda.

5. Receive a Quarterly Program Update – Lincoln Financial Group Presenters: Alison Layne and Bob Cowsert, Lincoln Financial Group (LFG) Ms. Layne provided a handout entitled ‘Quarterly Report ‘, a copy of which is on file with the Executive Secretary and briefed the Committee. The Committee would like to emphasize beneficiary nominations during open enrollment.

6. Receive an update on the draft 2019 Fiduciary Audit Report and provide direction to staff – Joseph Morgan Mr. Morgan discussed the draft Fiduciary Audit Report incorporating language regarding the services of Morningstar Investment Management for fiduciary advisory services. The Committee requested amendments to the report reflecting who conducted the review and confirmation the fiduciary liability insurance policy was renewed.

7. Receive an update on the Voluntary Compliance Plan – Joseph Morgan

Mr. Morgan provided a verbal update to the Committee. Committee discussion included plan merger amendments, ineligible employees, untimely death benefit distribution, and untimely required minimum distributions. Final edits have been provided to outside Counsel and will be brought back to the Committee for approval at the November 14, 2019 Special Meeting in closed session due to potential litigation. After Committee approval, it will be sent to the County Executive Office (CEO) for signature.

8. Receive an update on the Investment Policy and provide direction to staff – Joseph

Morgan Mr. Morgan provided the draft Investment Policy. The Committee discussed whether to use the County’s Investment Policy or adopt Morningstar’s. The Committee requested

Deferred Compensation Committee – August 28, 2019 Page 3

Nancy Hilu review the Morningstar policy and service agreement to ensure compliance. Mr. Morgan will consult with Ms. Hilu and bring a final recommendation to the November 14, 2019 meeting for approval. The Committee also noted that other information from the County’s Investment Policy could be added to the bylaws, including proxy voting.

9. Receive a review of Committee Bylaws and provide direction to staff – Kate Sampson Ms. Sampson provided an overview of the Committee’s current Bylaws noting it was last amended March 8, 2016. Regarding Article II, the Committee suggested periodic training could be provided by Nancy Hilu or the organization that provides the liability policy. Ms. Beauchamp and Mr. Morgan will follow up with Ms. Hilu, Morningstar, and Risk Management on policy and training options. The Committee also discussed designated alternates, vacancies, and voting concerns. The Committee suggested Ms. Hilu review Article III and recommended no changes to Article IV. The Committee believes a form exists for Article IV Section 10 acknowledgement of fiduciary responsibilities. Ms. Beauchamp and Mr. Sisk will search their files for the form. Ms. Sampson will return with proposed language at a future meeting.

10. Committee Member Comments a. Ms. Sampson noted the website has been updated to include links and contact

information for Bob Cowsert, LFG. Mr. Cowsert will join the HR Benefits booth at the Employee Picnic.

b. No other member comments.

11. Adjournment to the next Scheduled Meeting

Upcoming Special Meeting Thursday, November 14, 2019 at 1:30 PM

Upcoming Regular Quarterly Meeting

Wednesday, November 27, 2019 at 1:30 PM


145 Fulweiler Ave., Suite 200 Auburn, CA 95603

Lincoln Alliance® programLincoln Alliance® program

LCN-2357525-122118 For plan sponsor use only. Not for use with plan participants.

RETIREMENT PLAN SERVICES

©2019 Lincoln National Corporation

COUNTY OF PLACERQuarterly review as of September 30, 2019

• Executive Summary Tab 1• Plan Review Tab 2• Demographics Tab 3• Morningstar Tab 4• Mutual Fund Summary Data Tab 5

Mutual Funds offered through the Lincoln Alliance® program by prospectus and Lincoln Financial Advisors Corp., a broker/dealer.Annuity products offered through Lincoln Financial Group affiliates and other fine companies.Supervising office: Lincoln Financial Advisors, 1300 South Clinton Street, Fort Wayne, IN 46802.

This review booklet will be produced periodically as per client request and will provide important objective information for the plan sponsor and plan fiduciaries to enable them to make decisions regarding the operation of their retirement plan and evaluation of the investment options in their plan.

The illustrations and discussions contained within this review are not intended as investment advice. The information should not be construed as an endorsement or recommendation by Lincoln Financial Group, should it be the sole basis for any investment decisions. Any decision made regarding the investment choices within the plan is the responsibility of the plan sponsor.

Information for this review has been compiled by Lincoln Financial Advisors, Corp. (LFA) from Morningstar Direct® and our recordkeeping system. The information contained herein is taken from sources we believe to be reliable but Lincoln doesn't guarantee its accuracy or completeness; it is sent to you for informational purposes only. Any statements that are non-factual in nature constitute current opinions only, which are subject to change.

Past results are not necessarily indicative of future results. Neither the information, nor any opinion expressed herein shall be construed as an offer to buy or an offer to sell any securities, futures or other financial products.

Lincoln Alliance® program

Benchmark source: PLANSPONSOR (Strategic Insight) 2018 Defined Contribution (DC) Survey Results. PAD-1990438-011018

TOTAL PLAN ASSETS: $82,181,888

Participation rate based on eligible employees contributing Average deferral of active participants Average number of funds held by

participants

PARTICIPATION DEFERRAL RATES DIVERSIFICATION

457(b) Executive summary

28% N/A 3.0 Funds457(b) Benchmarking 457(b) Benchmarking 457(b) Benchmarking

72.6% 6.5% 4.9Governmental Benchmarking Governmental Benchmarking Governmental Benchmarking

68.2% 6.5% 5.1

CONTRIBUTIONS WITHDRAWALS LOAN BALANCE

Prior Period: Prior Period:

$1,187,587 $1,674,349

$1,044,577 $2,510,694 N/ACurrent Period: Current Period:

As of 9/30/2019

1

OF ALL PARTICIPANT STATUSES BALANCE A BALANCE WITH A BENEFICIARY

457(b) Executive summary

AVERAGE ACCOUNT BALANCE MEDIAN ACCOUNT PARTICIPANTS WITH % OF PARTICIPANTS

CONTRIBUTION TYPES INVESTMENT ALLOCATIONS

$60,031 $28,536

1,369 30%457(b) Benchmarking 457(b) Benchmarking

$68,959 $55,734

Governmental Benchmarking Governmental Benchmarking

$79,706 $58,698

As of 9/30/2019

93%

6%1%

EMPLOYEE PRE-TAX

ROTH

ROLLOVER

24%

76%

STABLE VALUE

MUTUAL FUNDS

PAD-1990438-011018

2


TOTAL PLAN ASSETS: $114,431,494

Participation rate based on eligible employees contributing Average deferral of active participants Average number of funds held by

participants

PARTICIPATION DEFERRAL RATES DIVERSIFICATION

401(k) Executive summary

42% N/A 2.8 Funds401(k) Benchmarking 401(k) Benchmarking 401(k) Benchmarking

80.4% 6.9% 5.5Governmental Benchmarking Governmental Benchmarking Governmental Benchmarking

68.2% 6.5% 5.1

CONTRIBUTIONS WITHDRAWALS LOAN BALANCE

Prior Period: Prior Period: Prior Period:

$2,306,387 $1,808,871 $1,689,742

$3,018,503 $2,044,343 $1,672,187Current Period: Current Period: Current Period:

As of 9/30/2019

3

OF ALL PARTICIPANT STATUSES BALANCE A BALANCE WITH A BENEFICIARY

401(k) Executive summary

AVERAGE ACCOUNT BALANCE MEDIAN ACCOUNT PARTICIPANTS WITH % OF PARTICIPANTS

CONTRIBUTION TYPES INVESTMENT ALLOCATIONS

$49,281 $20,276

2,322 23%401(k) Benchmarking 401(k) Benchmarking

$106,314 $82,469

Governmental Benchmarking Governmental Benchmarking

$79,706 $58,698

As of 9/30/2019

65%3%

18%

14% EMPLOYEE PRE-TAX

ROTH

EMPLOYER

ROLLOVER

19%

80%

1%STABLE VALUE

MUTUAL FUNDS

LOANS

PAD-1990438-011018

4

As of 9/30/2019

457(b) & 401(k) Executive summary

TOTAL PLAN ASSETS:$196,616,432Participation % Total Active & Eligible in Both Total Eligible

81% 553 1994

Active & Eligible in one Plan

only

Active and Eligible not

contributing to either Plan

Active Participants

Contributing to at least One

1441 3841610


5 5

Our Innovative Technology Drives Outcomes

6

Plan summary

Total plans04/01/2019 - 06/30/2019 07/01/2019 - 09/30/2019 % Change

$189,433,030 $194,638,772 3%Contributions 1

Employee Salary Deferral $947,689 $1,108,796 17%Employee Rollover $42,899 $6,238 -85%Roth $53,989 $72,554 34%

Employee Salary Deferral $1,259,069 $1,494,151 19%Employer Match $371,943 $415,512 12%Employee Rollover $1,321,958 $331,117 -75%Roth $53,693 $65,606 22%Roth Rollover $11,841 $0 -100%

Earnings $5,680,838 $1,943,547 -66%

Other 2 $16,861 $20,309 20%

Withdrawal Activity ($4,555,037) ($3,483,221) -24%Lincoln Alliance program asset balance $194,638,772 $196,613,382 1%

Forfeiture assets $24 $24 1%Expense account assets $2,012 $3,025 50%

Total ending balance for all assets $194,640,808 $196,616,432 1%

1 Contributions include any monies entering the plan, such as deferrals, company match, and/or rollovers2 The Other category contains monies from the following: Net Trustee Transfers, Net Loan Transfers, Exchange, Loan Interest assets, and Admin Error.

Your review begins with a high-level overview of plan activity, including opening balance, contributions by plan and contribution type, earnings, withdrawal activity and ending balance.

Opening balance

457(b)

401(k)

Plan activity summary

7

Asset trend

Quarter Total assets % change

Jun-18 $186,217,069 N/A

Sep-18 $192,157,949 3%

Dec-18 $175,758,945 -9%

Mar-19 $189,433,030 8%

Jun-19 $194,638,772 3%

Sep-19 $196,613,382 1%

Changes in your plan’s assets reflect market forces as well as contributions and participation levels. This overview may help you identify underlying contribution and participation trends.

$186,217,069

$192,157,949

$175,758,945

$189,433,030

$194,638,772 $196,613,382

Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19

Plan asset trend

8

Contribution trend

Quarter Total contributions % change

Mar-19 $3,188,556 N/A

Jun-19 $4,063,080 27%

Sep-19 $3,493,974 -14%

This overview may help you identify underlying contribution and participation trends.

$3,188,556

$4,063,080

$3,493,974

Mar-19 Jun-19 Sep-19

Plan contribution trend

9

Distribution trend

Quarter Total distributions % change

Mar-19 $4,471,397 N/A

Jun-19 $4,555,037 2%

Sep-19 $3,483,221 -24%

This overview may help you identify underlying distribution and participation trends.

$4,471,397 $4,555,037

$3,483,221


Plan distribution trend

10

Loan trend

Quarter Total loans % change

Mar-19 $1,602,736 N/A

Jun-19 $1,672,187 4%

Sep-19 $1,689,742 1%

This overview may help you identify underlying loan and participation trends.

$1,602,736

$1,672,187 $1,689,742


Plan loan trend

11

Total plan asset allocation

Asset category Balance % of planStable Value $40,654,191 21%Ultrashort Bond $219,158 0%Intermediate Core Bond $5,333,488 3%Multisector Bond $1,434,024 1%Inflation-Protected Bond $105,600 0%Target-Date Retirement $3,524,956 2%Target-Date 2015 $2,176,223 1%Target-Date 2020 $8,246,883 4%Target-Date 2025 $8,401,950 4%Allocation--50% to 70% Equi $8,628,461 4%Target-Date 2030 $8,664,249 4%Target-Date 2035 $8,849,162 5%Target-Date 2040 $5,477,889 3%Target-Date 2045 $4,774,918 3%Target-Date 2050 $2,239,699 1%Target-Date 2055 $1,215,038 1%Target-Date 2060+ $494,699 0%Large Blend $51,305,693 26%Large Value $6,488,347 3%Foreign Large Blend $7,452,465 4%Large Growth $6,767,327 4%Real Estate $113,095 0%Mid-Cap Blend $6,254,465 3%Diversified Emerging Mkts $249,994 0%Small Growth $2,547,246 1%Small Value $2,521,525 1%Other $2,472,637 1%

Total assets $196,613,382 100%

The asset allocation information can help you determine if your employees are properly allocated among the investment options available to them in your retirement plans.

$40,654,191 $219,158

$5,333,488 $1,434,024

$105,600 $3,524,956

$2,176,223 $8,246,883 $8,401,950 $8,628,461 $8,664,249 $8,849,162

$5,477,889 $4,774,918

$2,239,699 $1,215,038

$494,699 $51,305,693

$6,488,347 $7,452,465

$6,767,327 $113,095

$6,254,465 $249,994

$2,547,246 $2,521,525 $2,472,637

Stable ValueUltrashort Bond

Intermediate Core BondMultisector Bond

Inflation-Protected BondTarget-Date Retirement

Target-Date 2015Target-Date 2020Target-Date 2025

Allocation--50% to 70%…Target-Date 2030Target-Date 2035Target-Date 2040Target-Date 2045Target-Date 2050Target-Date 2055

Target-Date 2060+Large BlendLarge Value

Foreign Large BlendLarge Growth

Real EstateMid-Cap Blend

Diversified Emerging MktsSmall Growth

Small ValueOther

Plan asset allocation

12

457(b) Plan assets and contributions

Fund name Ticker Fund style Assets % of plan Contributions % of planLincoln Stable Value Z166 Stable Value $19,413,335 24% $33,163 3%Federated Government Ultrashrt Dur R6 FGULX Ultrashort Bond $37,080 0% $5,555 1%Baird Aggregate Bond Inst BAGIX Intermediate Core Bond $1,518,325 2% $2,412 0%PIMCO Income Instl PIMIX Multisector Bond $532,265 1% $2,155 0%Vanguard Inflation-Protected Secs Adm VAIPX Inflation-Protected Bond $66,252 0% $783 0%Vanguard Target Retirement Income Inv VTINX Target-Date Retirement $1,493,976 2% $2,186 0%Vanguard Target Retirement 2015 Inv VTXVX Target-Date 2015 $874,200 1% $14,339 1%Vanguard Target Retirement 2020 Inv VTWNX Target-Date 2020 $4,285,446 5% $70,132 6%Vanguard Target Retirement 2025 Inv VTTVX Target-Date 2025 $3,508,387 4% $167,779 14%American Funds American Balanced R6 RLBGX Allocation--50% to 70% Equi $3,784,174 5% $3,889 0%Vanguard Target Retirement 2030 Inv VTHRX Target-Date 2030 $2,634,921 3% $192,811 16%Vanguard Target Retirement 2035 Inv VTTHX Target-Date 2035 $3,142,837 4% $180,710 15%Vanguard Target Retirement 2040 Inv VFORX Target-Date 2040 $1,955,282 2% $156,191 13%Vanguard Target Retirement 2045 Inv VTIVX Target-Date 2045 $1,450,523 2% $113,082 10%Vanguard Target Retirement 2050 Inv VFIFX Target-Date 2050 $720,019 1% $59,241 5%Vanguard Target Retirement 2055 Inv VFFVX Target-Date 2055 $323,632 0% $40,135 3%Vanguard Target Retirement 2060 Inv VTTSX Target-Date 2060+ $194,874 0% $13,068 1%Vanguard 500 Index Admiral VFIAX Large Blend $20,571,550 25% $51,654 4%Invesco Diversified Dividend R6 LCEFX Large Value $2,505,885 3% $6,420 1%American Funds Intl Gr and Inc R6 RIGGX Foreign Large Blend $1,946,247 2% $5,240 1%Vanguard Developed Markets Index Admiral VTMGX Foreign Large Blend $820,162 1% $5,544 1%MFS Growth R6 MFEKX Large Growth $3,580,145 4% $24,864 2%Vanguard Real Estate Index Admiral VGSLX Real Estate $77,632 0% $3,154 0%Vanguard Mid Cap Index Admiral VIMAX Mid-Cap Blend $3,273,910 4% $17,115 2%Invesco Oppenheimer Developing Mkts R6 ODVIX Diversified Emerging Mkts $129,201 0% $4,427 0%PGIM Jennison Small Company R6 PJSQX Small Growth $1,162,983 2% $6,002 1%DFA US Small Cap Value I DFSVX Small Value $1,675,369 2% $3,789 0%Self Directed Brokerage Account SDBA Other $503,275 1% $1,750 0%

Total $82,181,888 100% $1,187,587 100%

09/30/2019 07/01/2019 - 09/30/2019

Assets have decreased by 0% from the prior period

Plan assets and contributions

13

401(k) Plan assets and contributions

Fund name Ticker Fund style Assets % of plan Contributions % of planLincoln Stable Value Z166 Stable Value $21,240,856 19% $30,002 1%Federated Government Ultrashrt Dur R6 FGULX Ultrashort Bond $182,078 0% $8,038 0%Baird Aggregate Bond Inst BAGIX Intermediate Core Bond $3,815,163 3% $6,468 0%PIMCO Income Instl PIMIX Multisector Bond $901,758 1% $6,366 0%Vanguard Inflation-Protected Secs Adm VAIPX Inflation-Protected Bond $39,348 0% $1,399 0%Vanguard Target Retirement Income Inv VTINX Target-Date Retirement $2,030,980 2% $2,472 0%Vanguard Target Retirement 2015 Inv VTXVX Target-Date 2015 $1,302,023 1% $14,179 1%Vanguard Target Retirement 2020 Inv VTWNX Target-Date 2020 $3,961,437 3% $128,594 6%Vanguard Target Retirement 2025 Inv VTTVX Target-Date 2025 $4,893,563 4% $247,244 11%American Funds American Balanced R6 RLBGX Allocation--50% to 70% Equi $4,844,287 4% $10,783 1%Vanguard Target Retirement 2030 Inv VTHRX Target-Date 2030 $6,029,328 5% $373,673 16%Vanguard Target Retirement 2035 Inv VTTHX Target-Date 2035 $5,706,325 5% $300,339 13%Vanguard Target Retirement 2040 Inv VFORX Target-Date 2040 $3,522,607 3% $329,825 14%Vanguard Target Retirement 2045 Inv VTIVX Target-Date 2045 $3,324,395 3% $352,247 15%Vanguard Target Retirement 2050 Inv VFIFX Target-Date 2050 $1,519,680 1% $176,106 8%Vanguard Target Retirement 2055 Inv VFFVX Target-Date 2055 $891,407 1% $114,203 5%Vanguard Target Retirement 2060 Inv VTTSX Target-Date 2060+ $293,586 0% $53,154 2%Vanguard Target Retirement 2065 Inv VLXVX Target-Date 2060+ $6,239 0% $1,684 0%Vanguard 500 Index Admiral VFIAX Large Blend $30,734,143 27% $41,803 2%Invesco Diversified Dividend R6 LCEFX Large Value $3,982,462 3% $8,589 1%American Funds Intl Gr and Inc R6 RIGGX Foreign Large Blend $2,970,119 3% $5,404 0%Vanguard Developed Markets Index Admiral VTMGX Foreign Large Blend $1,715,937 2% $5,459 0%MFS Growth R6 MFEKX Large Growth $3,187,183 3% $39,337 2%Vanguard Real Estate Index Admiral VGSLX Real Estate $35,463 0% $4,195 0%Vanguard Mid Cap Index Admiral VIMAX Mid-Cap Blend $2,980,555 3% $14,208 1%Invesco Oppenheimer Developing Mkts R6 ODVIX Diversified Emerging Mkts $120,793 0% $6,638 0%PGIM Jennison Small Company R6 PJSQX Small Growth $1,384,263 1% $7,443 0%DFA US Small Cap Value I DFSVX Small Value $846,156 1% $6,934 0%Self Directed Brokerage Account SDBA Other $279,621 0% $9,600 1%Loans LOAN Other $1,689,742 2% $0 0%

Total $114,431,494 100% $2,306,387 100%

09/30/2019 07/01/2019 - 09/30/2019

Assets have increased by 1% from the prior period

Plan assets and contributions

14

TerminologyParticipantActive participant

Eligible participant Employee who has an active, eligible but not contributing, or suspended employment status

AnalysisAge Calculated from date of birth

Years of service Calculated from the most recent date of hire

Account balance Sum of assets in all funds, not including forfeitures

CalculationsParticipation rate Number of active participants divided by eligible participants and multiplied by 100

Average account balance An average of the account balances of all employees who have a balance in the plan

Fund utilization The average number of funds used by employees with a balance in the plan

Eligible participant who has a deferral rate greater than zero or made a contribution during the reporting period

Terminology & calculations

15

457(b)

Participation rate 31% 28% 73% 68%

Average account balance of all participant statuses $59,642 $60,031 $68,959 $79,706

Average number of investment options held by investors 3.0 3.0 4.9 5.1

Automatic enrollment Not offered Not offered 46.9% 34.6%

Organizational match on the participant contribution Not offered Not offered 63.7% 47.7%

Loan provision Not offered Not offered 90.7% 82.7%

Hardship withdrawal provision Offered Offered 85.9% 80.3%

Targeted maturity funds and/or Portfolio Offered Offered 89.7% * 87.4% *

*Benchmarking data is for Target-Date funds.

Governmental

06/30/2019 09/30/2019Your plan Your plan Industry BenchmarkNational Benchmark

Plan progress report

16

RC Activity SummaryActivity Summary One on One Detail

7/1/2019-9/30/2019

RC Activity SummaryRC Activity Summary One on OnesOne on Ones

66

11 82

85

15

0

10

20

30

40

50

60

70Account Review

Contribution Increase

Loan/Distribution

Beneficiary Update

Roll-In

Enrollment

Other2

6

91

4

RC Initiative Outreach calls Group Meetings

1:1 Meetings Days Onsite

Onsite Visits RC Days Used Bob Cowsert 4 3.5Rachael Schneider 1 .5

91

0

Other

Click2Meet

17

457(b)

By ageActive

ParticipantsTotal

EligibleParticipation

Rate

≤ 20 0 1 0%

21 - 30 47 283 17%

31 - 40 184 747 25%

41 - 50 294 881 33%

51 - 60 207 655 32%

≥ 61 51 202 25%

Overall 783 2,769 28%

By years of serviceActive

ParticipantsTotal


Rate

≤ 5 250 1,313 19%

6 - 10 104 350 30%

11 - 15 181 512 35%

16 - 20 164 370 44%

≥ 21 84 224 38%

Overall 783 2,769 28%

Below you will find an analysis of plan participation by participant age and years of service. Generally, older and longer-tenured employees are more likely to have higher participation rates. However, younger employees and new hires should be informed that it's important to start saving as early as possible.

19%

30%

35%

44%

38%

28%68%

≤ 5

6 - 10

11 - 15

16 - 20

≥ 21

Overall

457(b) Industry Benchmark

0%

17%

25%

33%

32%

25%

28%68%

≤ 20

21 - 30

31 - 40

41 - 50

51 - 60

≥ 61

Overall


Participation

18

457(b)

By ageAverage account

balance

≤ 20 $0

21 - 30 $10,224

31 - 40 $23,511

41 - 50 $49,398

51 - 60 $77,758

≥ 61 $84,566

Overall $60,031

By years of serviceAverage account

balance

≤ 5 $31,341

6 - 10 $40,624

11 - 15 $56,307

16 - 20 $87,177

≥ 21 $98,050

Overall $60,031

Average account balance reflects market performance as well as contribution levels. Average account balance can be tracked over time and may increase with targeted communication and education campaigns.

$31,341

$40,624

$56,307

$87,177

$98,050

$60,031$79,706

≤ 5

6 - 10

11 - 15

16 - 20

≥ 21

Overall


$0

$10,224

$23,511

$49,398

$77,758

$84,566

$60,031$79,706

≤ 20

21 - 30

31 - 40

41 - 50

51 - 60

≥ 61

Overall


Average account balance of all participant statuses

19

457(b)

By ageAverage funds

utilized

≤ 20 0.0

21 - 30 2.4

31 - 40 3.2

41 - 50 3.3

51 - 60 3.3

≥ 61 2.5

Overall 3.0

By years of serviceAverage funds

utilized

≤ 5 2.7

6 - 10 2.9

11 - 15 3.2

16 - 20 3.4

≥ 21 3.2

Overall 3.0

This is a breakdown of fund utilization by participant age and years of service. Fund utilization can be tracked over time to determine trends in the average number of funds selected.

2.7

2.9

3.2

3.4

3.2

3.05.1

≤ 5

6 - 10

11 - 15

16 - 20

≥ 21

Overall


0.0

2.4

3.2

3.3

3.3

2.5

3.05.1

≤ 20

21 - 30

31 - 40

41 - 50

51 - 60

≥ 61

Overall


Fund utilization

20

401(k)

Participation rate 46% 42% 80% 68%

Average account balance of all participant statuses $48,453 $49,281 $106,314 $79,706

Average number of investment options held by investors 2.8 2.8 5.5 5.1

Automatic enrollment Not offered Not offered 47.5% 34.6%

Organizational match on the participant contribution Offered Offered 79.6% 47.7%

Loan provision Offered Offered 92.2% 82.7%

Hardship withdrawal provision Offered Offered 87.4% 80.3%

Targeted maturity funds and/or Portfolio Offered Offered 80.5% * 87.4% *

*Benchmarking data is for Target-Date funds.

Governmental

06/30/2019 09/30/2019Your plan Your plan Industry BenchmarkNational Benchmark

Plan progress report

21

401(k)

By ageActive

ParticipantsTotal


Rate

≤ 20 1 1 100%

21 - 30 129 283 46%

31 - 40 278 747 37%

41 - 50 366 881 42%

51 - 60 312 654 48%

≥ 61 83 203 41%

Overall 1,169 2,769 42%

By years of serviceActive

ParticipantsTotal


Rate

≤ 5 597 1,312 46%

6 - 10 142 350 41%

11 - 15 200 513 39%

16 - 20 144 370 39%

≥ 21 86 224 38%

Overall 1,169 2,769 42%

Below you will find an analysis of plan participation by participant age and years of service. Generally, older and longer-tenured employees are more likely to have higher participation rates. However, younger employees and new hires should be informed that it's important to start saving as early as possible.

46%

41%

39%

39%

38%

42%68%

≤ 5

6 - 10

11 - 15

16 - 20

≥ 21

Overall

401(k) Industry Benchmark

100%

46%

37%

42%

48%

41%

42%68%

≤ 20

21 - 30

31 - 40

41 - 50

51 - 60

≥ 61

Overall


Participation

22

401(k)

By ageAverage account

balance

≤ 20 $4,796

21 - 30 $8,823

31 - 40 $19,623

41 - 50 $41,813

51 - 60 $72,925

≥ 61 $72,918

Overall $49,281

By years of serviceAverage account

balance

≤ 5 $22,245

6 - 10 $42,363

11 - 15 $66,496

16 - 20 $81,671

≥ 21 $101,613

Overall $49,281

Average account balance reflects market performance as well as contribution levels. Average account balance can be tracked over time and may increase with targeted communication and education campaigns.

$22,245

$42,363

$66,496

$81,671

$101,613

$49,281$79,706

≤ 5

6 - 10

11 - 15

16 - 20

≥ 21

Overall


$4,796

$8,823

$19,623

$41,813

$72,925

$72,918

$49,281$79,706

≤ 20

21 - 30

31 - 40

41 - 50

51 - 60

≥ 61

Overall


Average account balance of all participant statuses

23

401(k)

By ageAverage funds

utilized

≤ 20 1.0

21 - 30 2.1

31 - 40 2.7

41 - 50 3.1

51 - 60 3.1

≥ 61 2.4

Overall 2.8

By years of serviceAverage funds

utilized

≤ 5 2.3

6 - 10 3.0

11 - 15 3.4

16 - 20 3.3

≥ 21 3.1

Overall 2.8

*Loan assets included in fund count

This is a breakdown of fund utilization by participant age and years of service. Fund utilization can be tracked over time to determine trends in the average number of funds selected.

2.3

3.0

3.4

3.3

3.1

2.85.1

≤ 5

6 - 10

11 - 15

16 - 20

≥ 21

Overall


1.0

2.1

2.7

3.1

3.1

2.4

2.85.1

≤ 20

21 - 30

31 - 40

41 - 50

51 - 60

≥ 61

Overall


Fund utilization

24

National industry

For Profit Organization industry

Not For Profit Organization industry

K-12 industry

Higher Education industry

The PLANSPONSOR (Strategic Insight) 2018 Defined Contribution (DC) Survey results incorporate the responses of 4,000 plan sponsors from a broad

variety of U.S. industries. Within the survey, 92 respondents are from the Higher Education industry. Of these Higher Education respondents, 15

(15.2%) are “Micro” plans (< $5 million in DC assets), 30 (32.6%) are “Small” plans ($5-<$50 million), 20 (21.7%) are “Mid” plans ($50-<$200 million), 11

(12.0%) are “Large” plans ($200 million-<$1 billion), and 17 (18.5%) are “Mega” plans (> $1 billion).


variety of retirement plans. Of these 4,000 respondents, 1,191 (29.8%) were "For Profit Organization" plans, 194 (4.9%) were "Corporate Non Profit"

plans, 98 (2.5%) were "K-12" plans, 92 (2.3%) were "Higher Education" plans, 133 (3.3%) were "Governmental" plans, 230 (5.8%) were "Healthcare

For Profit" plans, 217 (5.4%) were "Healthcare Not For Profit" plans, and 1,845 (46.1%) were "Other industries" plans.


variety of U.S. industries. Within the survey, 1,191 respondents are from the For Profit Organization industry. Of these For Profit Organization

respondents, 341 (28.6%) are “Micro” plans (< $5 million in DC assets), 494 (41.5%) are “Small” plans ($5-<$50 million), 184 (15.4%) are “Mid” plans

($50-<$200 million), 125 (10.5%) are “Large” plans ($200 million-<$1 billion), and 49(3.9%) are “Mega” plans (>$1 billion).


variety of U.S. industries. Within the survey, 194 respondents are from the Not For Profit Organization industry. Of these Not For Profit Organization

respondents, 79 (40.7%) are “Micro” plans (< $5 million in DC assets), 82 (42.3%) are “Small” plans ($5-<$50 million), 20 (10.3%) are “Mid” plans ($50-

<$200 million), 7 (3.6%) are “Large” plans ($200 million-<$1 billion), and 6 (3.1%) are “Mega” plans (> $1 billion).


variety of U.S. industries. Within the survey, 98 respondents are from the K-12 industry. Of these K-12 respondents, 30 (30.6%) are “Micro” plans (< $5

million in DC assets), 42 (42.9%) are “Small” plans ($5-<$50 million), 20 (20.4%) are “Mid” plans ($50-<$200 million), 3 (3.1%) are “Large” plans ($200

million-<$1 billion), and 3 (3.1%) are “Mega” plans (> $1 billion).

Demographic Disclosures

25

Demographic Disclosures

Governmental industry

Healthcare for Profit industry

Healthcare Not for Profit industry


variety of U.S. industries. Within the survey, 133 respondents are from the Governmental industry. Of these Governmental respondents, 16 (12%) are

“Micro” plans (< $5 million in DC assets), 27 (20.3%) are “Small” plans ($5-<$50 million), 21 (15.8%) are “Mid” plans ($50-<$200 million), 31 (23.3%) are

“Large” plans ($200 million-<$1 billion), and 38 (28.6%) are “Mega” plans (> $1 billion).


variety of U.S. industries. Within the survey, 230 respondents are from the Healthcare For Profit industry. Of these Healthcare For Profit respondents,

91 (39.6%) are “Micro” plans (< $5 million in DC assets), 85 (37.0%) are “Small” plans ($5-<$50 million), 33 (14.3%) are “Mid” plans ($50-<$200 million),

10 (4.3%) are “Large” plans ($200 million-<$1 billion), and 11 (4.8%) are “Mega” plans (> $1 billion).


variety of U.S. industries. Within the survey, 217 respondents are from the Healthcare Not For Profit industry. Of these Healthcare Not For Profit

respondents, 34 (15.7%) are “Micro” plans (< $5 million in DC assets), 69 (31.8%) are “Small” plans ($5-<$50 million), 41 (18.9%) are “Mid” plans ($50-

<$200 million), 44 (20.3%) are “Large” plans ($200 million-<$1 billion), and 29 (13.4%) are “Mega” plans (> $1 billion).

26

PLACER COUNTY DEFERRED COMPENSATIONScreens Summary (Data as of 06-30-2019) Fund Removed from Approved List Fund on Watch List

Trailing Performance and Risk Management Style Expense

Name Ticker Asset Class 1 Yr 3 Yr 5 Yr 10 Yr Pass/ Std Dev Beta 3 Tenure Pass/ Style Pass/ Exp Pass/Fail 3 Yr % Yr % Fail Box Fail Ratio Fail

US Stock

Vanguard 500 Index Admiral VFIAX Large BlendIndex 10.38 14.15 10.68 14.67 12.19 1.00 3.18 4 0.04

percentile rank 28 19 12 10# of funds in category 1,414 1,212 1,071 816

MFS Growth R6 MFEKX Large Growth 14.95 20.02 14.54 – 13.23 0.96 17.25 7 0.57

percentile rank 12 18 10 –# of funds in category 1,386 1,248 1,113 823

Invesco Diversified Dividend R6 LCEFX Large Value 9.18 6.93 7.26 – 9.30 0.73 16.51 1 0.40

percentile rank 25 94 43 –# of funds in category 1,240 1,107 959 704

Vanguard Mid Cap Index Admiral VIMAX Mid-Cap Blend 7.83 12.32 8.82 15.21 13.29 0.99 21.12 5 0.05

percentile rank 18 24 12 6# of funds in category 437 362 312 228

PGIM Jennison Small Company R6 PJSQX Small Growth -1.19 11.78 7.18 – 15.26 0.85 19.16 8 0.68

percentile rank 72 79 77 –# of funds in category 672 585 517 397

DFA US Small Cap Value I DFSVX Small Value -10.84 7.71 3.32 12.92 19.09 1.09 7.34 3 0.52


Non-US Stock

Invesco Oppenheimer Developing Mkts R6 ODVIX DiversifiedEmerging Mkts 3.14 12.57 2.89 – 13.36 0.93 12.17 7 0.87


American Funds Intl Gr and Inc R6 RIGGX Foreign LargeBlend 2.72 8.95 1.48 7.30 11.37 0.98 10.75 4 0.57


Vanguard Developed Markets Index Admiral VTMGX Foreign LargeBlend Index -0.02 8.86 2.53 7.05 11.36 0.98 6.35 4 0.07


Alternative

Vanguard Real Estate Index Admiral VGSLX Real Estate 12.21 4.03 7.69 15.46 13.17 0.98 23.15 — 0.11


Fixed Income

Vanguard Inflation-Protected Secs Adm VAIPX Inflation-Protected Bond 4.74 1.92 1.69 3.56 2.99 1.01 7.87 — — 0.10


Release Date 08-14-2019 | Quarterly Plan Performance Report Page 1 of 3

©2019 Morningstar Investment Management LLC. All Rights Reserved. Morningstar Investment Management LLC is a registered investment adviser and subsidiary of Morningstar, Inc. The services are either performedby Morningstar Investment Management or an affiliate. The data shown represents past performance which is no guarantee of future performance. The Morningstar name and logo are registered marks of Morningstar,Inc.

27




Baird Aggregate Bond Inst BAGIX Intermediate-Term Bond 8.16 2.75 3.29 5.06 3.01 0.99 18.76 5 — 0.30


PIMCO Income Instl PIMIX Multisector Bond 6.87 6.31 5.30 9.89 1.73 0.40 12.26 — — 1.05


Federated Government Ultrashrt Dur R6 FGULX Ultrashort Bond 2.22 1.50 – – — 0.26 0.02 21.99 — — 0.24

percentile rank 88 79 – –# of funds in category 194 151 131 61

Target Date

Vanguard Target Retirement 2015 Inv VTXVX Target Date 6.48 6.66 4.89 8.33 4.82 0.90 6.35 — 0.13

percentile rank 36 43 31 23

# of funds in category 133 107 77 54

Vanguard Target Retirement 2020 Inv VTWNX Target Date 6.53 7.82 5.55 9.15 6.22 1.04 6.35 — 0.13


Vanguard Target Retirement 2025 Inv VTTVX Target Date 6.61 8.69 5.94 9.79 7.23 1.06 6.35 — 0.13


Vanguard Target Retirement 2030 Inv VTHRX Target Date 6.42 9.39 6.22 10.35 8.06 1.02 6.35 — 0.14


Vanguard Target Retirement 2035 Inv VTTHX Target Date 6.27 10.11 6.49 10.88 8.91 0.99 6.35 — 0.14


Vanguard Target Retirement 2040 Inv VFORX Target Date 6.00 10.79 6.72 11.17 9.76 0.99 6.35 — 0.14


Vanguard Target Retirement 2045 Inv VTIVX Target Date 5.90 11.05 6.86 11.24 10.34 1.00 6.35 — 0.15


Vanguard Target Retirement 2050 Inv VFIFX Target Date 5.86 11.03 6.85 11.23 10.35 0.99 6.35 — 0.15


Vanguard Target Retirement 2055 Inv VFFVX Target Date 5.88 11.04 6.82 – 10.33 0.98 6.35 — 0.15


Vanguard Target Retirement 2060 Inv VTTSX Target Date 5.86 11.03 6.81 – 10.34 0.99 6.35 — 0.15

percentile rank 41 49 42 –# of funds in category 207 119 15 –

Vanguard Target Retirement 2065 Inv VLXVX Target Date 5.84 – – – — – – 1.97 — 0.15

percentile rank 43 – – –# of funds in category 207 119 15 –



28




Vanguard Target Retirement Income Inv VTINX Target Date 6.54 5.24 4.18 6.36 3.78 0.88 6.35 — 0.12


Balanced

American Funds American Balanced R6 RLBGX ModerateAllocation 7.31 9.18 7.72 11.38 7.01 1.00 20.51 — 0.28




29

Investment Policy Statement

• Is an investment policy statement in place?• Are watch list criteria being monitored regularly?

Diversification

Current lineup: • Number of Mutual Funds: 27• The following asset classes are among those in diversified pension portfolios:

Domestic Equity: Large Value, Large Blend, Large Growth, Mid-Value, Mid-Blend, Mid-Growth, Small Value, Small Blend, Small GrowthInternational Equity: Foreign Large Value, Foreign Large Blend, Foreign Large Growth, Diversified Emerging MarketsFixed Income: Intermediate-Term Bond, Inflation-Protected Bond, High Yield Bond, World BondBalanced: Conservative Allocation, Moderate Allocation, Aggressive Allocation, World Allocation, Target Date Funds/PortfoliosSpecialty: Alternative Asset Allocation Funds, REITs

Expenses • The average (mean) net expense ratio for the line-up: 0.28%• Number of fund(s) with a below-average, or equal-to net expense ratio: 27• Number of fund(s) with an above-average net expense ratio: 0• Some investment options may impose a redemption fee or a contingent deferred sales charge (CDSC). Additional information about these fees

can be found in the investment performance summary.• Compared to each fund(s) Morningstar category average net expense ratio

Performance

County of Placer09/30/2019

The purpose of an investment policy statement (IPS) is to assist plan sponsors in effectively supervising, monitoring and evaluating the investment of the organization’s retirement plan assets. With this in mind:

The three major asset classes consist of stocks, bonds and cash instruments. A retirement plan should provide an array of investment options across all three to allow participants an opportunity to build well-diversified portfolios.

Investment performance can be judged against a variety of metrics; regardless of the means of comparison, financial analysts generally agree that greater emphasis should be placed on a fund’s longer-term record. This longer time period is desirable in changing market dynamics is because it provides investors with a higher probability of judging a fund’s investment managers over a complete market cycle, including both bull and bear markets.

Investment executive summary

30

Investment executive summaryCategory performance quartile rankings (3 year period)

• First quartile: 11 Funds• Second quartile: 11 Funds• Third quartile: 2 Funds• Fourth quartile: 3 Funds

Morningstar Rating™ ("star ratings")(using Morningstar load-waived shares for all A shares)• 5 Stars: 8 Funds• 4 Stars: 13 Funds• 3 Stars: 3 Funds• 2 Stars: 2 Funds• 1 Star: 0 Funds

Morningstar Analyst Ratings• Gold: 17 Funds• Silver: 8 Funds• Bronze: 1 Fund• Neutral: 0 Funds• Negative: 0 Funds

*Morningstar does not provide an analyst rating for 1 fund.

Morningstar, an independent mutual fund tracking service, rates mutual funds from 1 Star to 5 Stars. These ratings depict a measure of a fund’s risk-adjusted return relative to other funds within the same investment category. Within each category, the top 10% of mutual funds receive a 5 Star rating, and the bottom 10% of funds receives a 1 Star rating. A 3 Star rating is considered average.

The Morningstar Analyst Rating is the summary expression of Morningstar’s forward-looking analysis of a fund. Morningstar analysts assign the ratings on a five-tier scale, with three positive ratings of Gold, Silver, and Bronze; a Neutral rating; and a Negative rating. The Analyst Rating is based on the analysts' conviction in the fund’s ability to outperform its peer group and/or a relevant benchmark on a risk-adjusted basis over the long term. If a fund receives a positive rating of Gold, Silver, or Bronze, it means Morningstar analysts think highly of the fund and expect it to outperform over a full market cycle of at least five years. The Analyst Rating is not a market call, and it's not meant to replace an investor's due-diligence process.

31

Investment executive summaryManagement changes

Fund company ownership changes within the past yearNone

Morningstar categorization changes (from 01/01/2018 - 12/31/2018)

Style analysis

The following fund(s) had a change to its longest tenured portfolio manager over the last year: N/A

N/A

Style analysis of mutual funds is an analytical procedure that seeks to help investors understand a mutual fund’s investment style (i.e. investment policies and objectives). There are two primary ways to evaluate a manager’s investment style; holdings-based analysis and returns-based analysis. Holdings-based analysis evaluates the actual holdings that a particular mutual fund submits at a point in time. Returns-based analysis uses a statistical process to compare a mutual fund’s monthly returns with the returns of a palette of individually weighted style indices, to determine a manager’s investment style. These style indices represent distinct investment styles or asset classes such as large-cap value, large-cap growth, small-cap growth, small-cap value, government bonds, or cash equivalents asset classes. Lincoln Alliance relies on Morningstar to provide this service for your

Investment style “drift” is the degree to which a fund’s investment manager shifts assets among various categories (e.g., growth, value, blend, and large-cap, mid-cap and small-cap) with the objective of optimizing investment performance while still staying within the stipulated investment objective. Investment style “drift” is common for many mutual funds and isn't cause for major concern unless it violates the fund’s mandate. It's mentioned in order to provide information to the plan sponsor so he or she may manage the investment styles of the available fund options more effectively.

The illustrations and discussions contained within this document are not intended as investment advice. The final decision for all investment choices is the responsibility of the retirement plan sponsor.

32

Index: YTD 1 Yr 3 Yr 5 Yr 10 Yr

U.S. 3 Month T-Bill 1.74 2.35 1.62 1.02 0.55

BarClays US Govt/Credit 5-10 Yr 10.23 12.49 3.18 4.01 4.84

Barclays US Treasury US TIPS 7.58 7.13 2.21 2.45 3.46

BofAML US HY Master II 11.50 6.30 6.07 5.36 7.85

Citi WGBI NonUSD 5.39 6.78 0.60 1.28 1.15

Russell 1000 Value 17.81 4.00 9.43 7.79 11.46

S&P 500 20.55 4.25 13.39 10.84 13.24

Russell 1000 20.53 3.87 13.19 10.62 13.23

Russell 1000 Growth 23.30 3.71 16.89 13.39 14.94

Russell Mid Cap Value 19.47 1.60 7.82 7.55 12.29

S&P MidCap 400 17.87 -2.49 9.38 8.88 12.56

Russell Mid Cap Growth 25.23 5.20 14.50 11.12 14.08

Russell 2000 Value 12.82 -8.24 6.54 7.17 10.06

Russell 2000 14.18 -8.89 8.23 8.19 11.19

Russell 2000 Growth 15.34 -9.63 9.79 9.08 12.25

DJ US Select REIT 24.64 16.41 6.48 9.70 12.69

MSCI EAFE 12.80 -1.34 6.48 3.27 4.90

MSCI AC World Ex USA 11.56 -1.23 6.33 2.90 4.45

MSCI EM 3.65 -4.48 3.48 -0.09 0.91

Total Returns:1.74

10.23

7.58

11.50

5.39

17.81

20.55

20.53

23.30

19.47

17.87

25.23

12.82

14.18

15.34

24.64

12.80

11.56

3.65

U.S. 3 Month T-Bill

BarClays US Govt/Credit 5-10 Yr

Barclays US Treasury US TIPS

BofAML US HY Master II

Citi WGBI NonUSD

Russell 1000 Value

S&P 500

Russell 1000

Russell 1000 Growth

Russell Mid Cap Value

S&P MidCap 400

Russell Mid Cap Growth

Russell 2000 Value

Russell 2000

Russell 2000 Growth

DJ US Select REIT

MSCI EAFE

MSCI AC World Ex USA

MSCI EM

YT

D a

s o

f S

ep

tem

be

r 3

0, 2

01

9

Fixed Income

Mid

SmallCap

LargeCap

Real Estate

International

Index Performance

33

Sector: YTD 1 Yr 3 Yr 5 Yr 10 Yr

Basic Materials 17.84 -0.28 8.03 4.93 8.41

Communication Svcs 26.18 15.93 9.14 9.23 13.81

Consumer Cyclical 18.79 0.24 14.71 12.64 16.84

Consumer Defensive 22.88 15.48 7.99 9.41 12.41

Energy 3.98 -22.68 -3.99 -6.53 2.95

Financial Services 21.72 5.51 16.98 11.69 11.56

Healthcare 6.08 -4.57 9.70 9.06 14.56

Industrials 24.04 2.27 12.72 10.57 13.77

Real Estate 26.49 17.84 7.96 9.89 12.62

Technology 28.41 5.27 20.72 16.60 16.10

Utilities 24.77 25.91 13.93 13.12 12.70

Total Returns:

Source: Morningstar Direct. Past performance is no guarantee of future results.

17.84

26.18

18.79

22.88

3.98

21.72

6.08

24.04

26.49

28.41

24.77

Basic Materials

Communication Svcs

Consumer Cyclical

Consumer Defensive

Energy

Financial Services

Healthcare

Industrials

Real Estate

Technology

Utilities

YT

D a

s o

f S

ep

tem

be

r 3

0, 2

01

9Sector Performance

34

Morningstar CategoryIndexMutual Fund NameHueler Stable Value Index***Lincoln Stable Value

Ultrashort BondBBgBarc Govt/Corp 1 Yr Duration TR USD

0 Federated Government Ultrashrt Dur R6% Rank Within Category# Funds Ranked In Category

Intermediate Core BondBBgBarc US Agg Bond TR USD

0 Baird Aggregate Bond Inst% Rank Within Category# Funds Ranked In Category

Multisector BondBBgBarc US Universal TR USD

0 PIMCO Income Instl% Rank Within Category# Funds Ranked In Category

Ticker

Overall Morningstar

Rating

Morningstar Analyst Rating

Gross Expense Ratio**

Net Expense Ratio**

County of Placeras of 09/30/2019

The quoted performance data represent past performance; past performance does not guarantee future results. Investment returns and principal value will fluctuate so your account balance, when redeemed, may be worth more or less than your original cost. Current performance may be lower or higher than the performance data quoted. Instances of high double-digit returns are highly unusual and cannot be sustained. Investors should be aware that returns vary due to market conditions. Fees and expenses reduce the assets allocated to your investment under the plan, ultimately lowering the net rate of return.

Please obtain performance data for the most recent month end by visiting www.Morningstar.com and requesting a quote using the appropriate ticker symbol. For the performance of collective trusts, please call 877-533-9710.

YTD*1.66 2.19 1.89

2.51 2.81 1.93 1.43 1.30

1.73 1.92Z166 0.10 0.10 1.68 2.25 2.25

1 Year* 3 Year* 5 Year*

10 Yr or Since

Inception*Inception

Date

2.25 2.46

0.50

2.35 1.61 1.04 0.76 3/29/201692 83 79 83 77

FGULX ÙÙ - 0.43 0.24 1.802.45 3.32 1.68 1.26 0.96

2.95 3.598.52 10.30 2.92 3.38 3.75

205 205 180 167 93

0.67 7.89 9.35 2.58

417 412 387 367 334

1.11 8.36 6.56 4.09

10.69 3.31 3.73 4.72 9/29/200016 8 11 6 5

BAGIX ÙÙÙÙÙ Gold 0.30 0.30 9.15

6.16 5.29 5.12 8.88 3/30/200791 58 15 9 1

PIMIX ÙÙÙÙÙ Silver 1.05 1.05 5.39

3.46 5.288.80 10.07 3.23 3.62 4.14

340 337 318 286 177

Investment performance summary

35

Morningstar CategoryIndexMutual Fund Name

Inflation-Protected BondBBgBarc US Treasury US TIPS TR USD

0 Vanguard Inflation-Protected Secs Adm% Rank Within Category# Funds Ranked In Category

Target-Date RetirementMorningstar Lifetime Mod Incm TR USD

0 Vanguard Target Retirement Income Inv% Rank Within Category# Funds Ranked In Category

Target-Date 2015Morningstar Lifetime Mod 2015 TR USD

0 Vanguard Target Retirement 2015 Inv% Rank Within Category# Funds Ranked In Category





5 Year*

10 Yr or Since

Inception*Inception

Date


Ticker

Overall Morningstar

Rating



Net Expense Ratio** YTD* 1 Year* 3 Year*

1.86 2.927.58 7.13 2.21 2.45 3.46

0.75 7.00 5.97 1.94

226 225 215 210 147

0.75 10.11 5.90 4.78

7.03 2.04 2.38 3.39 6/10/200531 24 41 20 19

VAIPX ÙÙÙÙ Gold 0.10 0.10 7.56

6.75 5.10 4.57 5.76 10/27/200352 21 39 23 34

VTINX ÙÙÙÙ Gold 0.12 0.12 10.29

4.01 5.289.73 5.21 4.99 4.18 5.61

4.91 6.7512.28 6.45 6.19 5.15 7.05

198 198 176 157 129

0.68 11.25 5.36 5.88

136 136 109 91 72

0.75 11.83 5.02 6.20

6.08 6.18 5.33 7.26 10/27/200350 21 42 34 29

VTXVX ÙÙÙÙ Gold 0.13 0.13 11.26

5.29 7.08 5.97 7.96 6/7/200630 38 17 5 9

VTWNX ÙÙÙÙÙ Gold 0.13 0.13 12.61

5.07 6.9113.28 6.53 6.78 5.57 7.64

5.57 7.6614.23 6.22 7.51 6.04 8.31

253 253 221 193 140

0.74 12.91 4.54 7.01

239 239 208 181 115

4.89 7.77 6.39 8.48 10/27/200325 39 18 8 11

VTTVX ÙÙÙÙÙ Gold 0.13 0.13 13.70


36

Morningstar CategoryIndexMutual Fund Name 5 Year*

10 Yr or Since

Inception*Inception

Date


Ticker

Overall Morningstar

Rating





Allocation--50% to 70% EquityMorningstar Mod Tgt Risk TR USD

0 American Funds American Balanced R6% Rank Within Category# Funds Ranked In Category









1.11 13.42 3.53 7.13

5.43 9.09 7.91 10.37 5/1/200966 24 13 7 5

RLBGX ÙÙÙÙÙ Silver 0.28 0.28 12.80

5.60 7.8013.11 5.41 7.43 5.91 7.51

6.00 7.9915.11 5.40 8.31 6.50 8.90

724 724 701 660 541

0.78 13.83 3.85 7.65

245 245 215 187 134

0.77 14.68 3.09 8.32

4.15 8.29 6.67 8.92 6/7/200638 44 31 21 16

VTHRX ÙÙÙÙ Gold 0.14 0.14 14.28

3.37 8.78 6.92 9.35 10/27/200355 46 32 27 15

VTTHX ÙÙÙÙ Gold 0.14 0.14 14.77

6.37 8.5715.76 4.24 8.96 6.84 9.29

6.56 8.6416.11 3.23 9.30 6.98 9.42

233 233 203 176 109

0.80 15.14 2.50 8.58

245 245 215 187 134

0.77 15.65 2.10 8.91

2.63 9.28 7.15 9.61 6/7/200648 46 24 26 16

VFORX ÙÙÙÙ Gold 0.14 0.14 15.35

2.06 9.41 7.23 9.66 10/27/200354 52 28 26 18

VTIVX ÙÙÙÙ Gold 0.15 0.15 15.69

6.72 8.9416.18 2.62 9.37 6.97 9.38

233 233 203 176 108

37


10 Yr or Since

Inception*Inception

Date


Ticker

Overall Morningstar

Rating









Target-Date 2060+Morningstar Lifetime Mod 2060 TR USD



Large BlendRussell 1000 TR USD

0 Vanguard 500 Index Admiral% Rank Within Category# Funds Ranked In Category

6.76 8.8616.11 2.39 9.32 6.89 9.28

0.81 15.74 1.99 8.88

245 245 215 187 109

0.78 15.86 1.84 9.04

2.07 9.42 7.24 9.65 6/7/200653 45 35 27 20

VFIFX ÙÙÙÙ Gold 0.15 0.15 15.71

2.09 9.41 7.21 10.06 8/18/201056 43 37 31 -

VFFVX ÙÙÙÙ Gold 0.15 0.15 15.69

6.84 9.0916.02 2.29 9.26 6.81 9.17

7.20 -15.91 2.22 9.18 6.71 9.11

233 233 200 170 -

0.78 16.07 1.87 9.20

222 222 146 41 -

2.07 9.41 7.20 9.72 1/19/201267 44 48 60 -

VTTSX ÙÙÙ Gold 0.15 0.15 15.68

2.09 - - 7.12 7/12/201763 41 - - -

VLXVX - Gold 0.15 0.15 15.71

8.98 11.7620.53 3.87 13.19 10.62 13.23

222 222 - - -

0.95 18.98 3.00 11.70

1458 1442 1318 1240 1069

4.22 13.36 10.80 13.21 11/13/200031 34 19 14 9

VFIAX ÙÙÙÙÙ Gold 0.04 0.04 20.54

38


10 Yr or Since

Inception*Inception

Date


Ticker

Overall Morningstar

Rating





Large ValueRussell 1000 Value TR USD

0 Invesco Diversified Dividend R6% Rank Within Category# Funds Ranked In Category

Foreign Large BlendMSCI ACWI Ex USA NR USD

0 American Funds Intl Gr and Inc R6% Rank Within Category# Funds Ranked In Category

0 Vanguard Developed Markets Index Admiral% Rank Within Category# Funds Ranked In Category

Large GrowthRussell 1000 Growth TR USD

0 MFS Growth R6% Rank Within Category# Funds Ranked In Category

Real EstateS&P United States REIT TR USD

0 Vanguard Real Estate Index Admiral% Rank Within Category# Funds Ranked In Category

1.00 16.43 1.93 9.43

8.61 8.03 8.25 11.21 9/24/201217 7 80 31 37

LCEFX ÙÙÙÙ Silver 0.43 0.42 19.35

7.30 10.6617.81 4.00 9.43 7.79 11.46

2.92 4.5111.56 -1.23 6.33 2.90 4.45

1234 1232 1169 1085 955

1.02 12.13 -2.04 5.55

748 738 683 595 503

2.38 6.74 2.63 5.44 5/1/200910 8 15 65 16

RIGGX ÙÙÙÙ Gold 0.55 0.55 15.51

-2.08 6.28 3.62 5.07 8/17/199939 52 33 23 28

VTMGX ÙÙÙÙ Silver 0.07 0.07 12.63

11.04 13.1323.30 3.71 16.89 13.39 14.94

748 738 683 595 503

1.08 20.54 1.87 14.62

1408 1407 1346 1287 1126

1.21 26.60 17.47 7.22

7.56 18.83 14.61 14.86 8/26/20115 11 7 6 15

MFEKX ÙÙÙÙÙ Silver 0.58 0.58 26.96

19.89 7.06 9.94 12.89 11/12/200135 28 50 36 35

VGSLX ÙÙÙ Silver 0.12 0.12 28.14

9.33 12.1525.45 17.81 6.91 9.88 12.86

274 272 254 244 200

39


10 Yr or Since

Inception*Inception

Date


Ticker

Overall Morningstar

Rating





Mid-Cap BlendRussell Mid Cap TR USD

0 Vanguard Mid Cap Index Admiral% Rank Within Category# Funds Ranked In Category

Diversified Emerging MktsMSCI EM NR USD

0 Invesco Oppenheimer Developing Mkts R6% Rank Within Category# Funds Ranked In Category

Small GrowthRussell 2000 Growth TR USD

0 PGIM Jennison Small Company R6% Rank Within Category# Funds Ranked In Category

Small ValueRussell 2000 Value TR USD

0 DFA US Small Cap Value I% Rank Within Category# Funds Ranked In Category

6.61 10.9421.93 3.19 10.69 9.10 13.07

1.07 17.73 -1.36 8.47

433 432 405 360 305

1.35 7.99 -0.03 5.06

3.65 10.67 9.20 13.05 11/12/200112 20 21 15 8

VIMAX ÙÙÙÙÙ Gold 0.05 0.05 22.60

2.65 8.05 2.83 5.86 12/29/201123 26 11 29 4

ODVIX ÙÙÙÙ Silver 0.85 0.85 11.31

1.66 3.405.89 -2.02 5.97 2.33 3.37

9.63 12.2915.34 -9.63 9.79 9.08 12.25

867 852 769 663 357

1.24 16.80 -7.52 11.52

676 673 654 630 562

1.24 12.30 -9.38 4.92

-5.44 8.92 7.19 11.16 11/29/201047 38 75 84 78

PJSQX ÙÙ Bronze 0.68 0.68 17.43

-13.74 4.24 4.43 10.03 3/2/199385 84 67 63 41

DFSVX ÙÙÙ Silver 0.52 0.52 8.19

5.03 9.3612.82 -8.24 6.54 7.17 10.06

435 430 415 389 339

40

Fees and expenses

Insurance company information

Data for mutual fund performance is provided by Morningstar, Inc.

The Stable Value Account is a fixed annuity issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, on Form 28866-SV and state

variations thereof. The Lincoln Fixed Annuity is issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, on Form 28866 and state

variations thereof. The Lincoln NY Fixed Annuity is issued by Lincoln Life & Annuity Company of New York, Syracuse, NY, on Form 28866. The Lincoln

NY Stable Value Account is issued by Lincoln Life & Annuity Company of New York, Syracuse, NY, on Form 28866-SV. The Lincoln National Life

Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Guarantees are based on the claims-paying ability of

the issuing insurance company. These companies are separately responsible for satisfying their own financial and contractual obligations. Lincoln

Financial Group is the marketing name for Lincoln National Corporation and its affiliates.

The Lincoln Alliance ® program includes certain services provided by Lincoln Financial Advisors Corp. (LFA), a broker-dealer (member FINRA) and an

affiliate of Lincoln Financial Group, 1300 S. Clinton St., Fort Wayne, IN 46802. Unaffiliated broker-dealers also may provide services to customers.

A participant charge or asset-based charge may be applied to cover administrative expenses. These charges may result in actual performance being

different from reported fund performance. Contact your representative for additional information. Fees and expenses reduce the assets allocated to your

investments under the plan, ultimately lowering the net rate of return. In addition, the fees and expenses of the investment options in your plan will

negatively impact the net rate of return of those investments. Higher fees, of course, will impact the performance of your investments.

Important investment information

41


Morningstar information

Hueler Analytics information

***Hueler Stable Value Index performance is adjusted for investment management fees and revenue appropriate for your specific product.

*Mutual fund performance is shown net of all investment management fees and revenue

**If the performance for an investment option reports a difference between the gross expense ratio and net expense ratio, it is due to a contractual

waiver that is set to expire within the next year.

© 2019 Morningstar, Inc. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or

distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any

damages/losses arising from use of this information.

The Hueler Analytics Stable Value Pooled Fund Comparative Universe, first made available to the marketplace in 1989, is recognized today as the

industry standard, for monitoring over $93 billion in pooled fund assets. The Hueler Stable Value Index and in-depth reports are widely used and have

been considered the gold standard, as well as the most broadly used benchmark in our industry for over 15 years. The Hueler Analytics Stable Value

Pooled Fund Index is a 25-year historical return series and represents investment strategies of approximately $93 billion in stable value assets, across

24 pooled funds, invested in contracts across a universe of 18 general account issuers and 14 synthetic wrap providers. (Copyright Hueler Analytics, Inc.

2019. All Rights Reserved.)

Expressed in percentage terms, Morningstar's calculation of total return is determined by taking the change in price, reinvesting (if applicable) all income

and capital-gains distributions during that month, and dividing by the starting price. Reinvestments are made using the actual reinvestment price, and

daily payoffs are reinvested monthly.

Morningstar, an independent mutual fund tracking service, rates mutual funds from 1 Star lowest to 5 Stars highest. These ratings depict a measure of a

fund’s risk-adjusted return relative to other funds within the same investment category. Within each category, the top 10% of mutual funds receive a 5

Star rating, and the bottom 10% of funds receives a 1 Star rating. A 3 Star rating is considered average.

42


LCN-2357525-122118

A collective trust is an investment fund that is exempt from registration with the Securities and Exchange Commission as an investment company under

the Investment Company Act of 1940, and unit holders are not entitled to the protections of the 1940 Act. Collective trusts may hold only the assets of

qualified retirement and governmental plans, including 401(k) plans, Taft-Hartley plans, profit sharing and cash balance plans, and governmental 457

plans. An investment in a collective trust is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government

agency. Investment values will fluctuate with changes in market conditions so that, upon withdrawal, your investment may be worth more or less than the

amount originally invested. In addition to the quoted expense ratios, other collective trust expenses, including legal, auditing, custody service and tax

form preparation, investment and reinvestment expenses may apply. The collective trusts are maintained by Wilmington Trust Company of Delaware, a

Delaware state chartered trust company. Wilmington Trust is an independent trust company and is not an affiliate of Lincoln Financial Group.

Participation in the collective trusts is governed by the terms of the trust and participation materials. An investor should consider carefully

the investment objectives, risks, charges and expenses of the collective trusts before investing. The participation materials contain this and

other important information and should be read carefully before investing or sending money. For participation materials, please contact your

Lincoln representative.

43

2 5 8 11 14 17 20 23 26 29 32 35 38 41 44 47 50 53 56 59

1-year total return percentile ranking for the periods ending

Fund name Ticker4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2ndQtr

3rdQtr

2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019Federated Government Ultrashrt Dur R6 FGULX N/A N/A N/A N/A N/A N/A N/A N/A N/A 77 72 76 73 59 58 59 23 85 88 83Baird Aggregate Bond Inst BAGIX 8 8 10 9 22 14 9 33 37 50 54 42 31 35 42 53 41 17 11 8PIMCO Income Instl PIMIX 6 5 2 7 3 2 18 42 31 20 10 5 10 13 18 42 18 29 34 58Vanguard Inflation-Protected Secs Adm VAIPX 5 10 10 4 32 3 8 26 80 58 69 73 39 54 43 60 47 14 26 24Vanguard Target Retirement Income Inv VTINX 19 11 10 5 7 2 7 32 41 73 66 74 62 42 36 32 21 35 32 21Vanguard Target Retirement 2015 Inv VTXVX 3 2 4 22 11 22 39 36 56 64 63 66 44 40 36 38 20 33 36 21Vanguard Target Retirement 2020 Inv VTWNX 1 3 9 25 23 26 38 11 29 27 27 33 17 13 20 16 42 33 33 38Vanguard Target Retirement 2025 Inv VTTVX 4 4 12 29 24 25 36 17 23 34 29 35 21 17 27 23 42 34 28 39American Funds American Balanced R6 RLBGX 16 17 15 10 3 2 2 6 20 21 48 17 15 23 9 19 8 18 25 24Vanguard Target Retirement 2030 Inv VTHRX 5 12 21 28 31 20 39 27 32 40 35 41 34 31 33 31 37 36 32 44Vanguard Target Retirement 2035 Inv VTTHX 10 14 25 40 37 22 35 26 32 41 38 41 35 39 42 36 32 32 32 46Vanguard Target Retirement 2040 Inv VFORX 12 21 27 47 43 24 40 21 27 24 27 34 25 26 33 28 37 38 34 46Vanguard Target Retirement 2045 Inv VTIVX 12 23 28 48 42 27 31 23 28 29 32 34 26 37 39 28 43 42 33 52Vanguard Target Retirement 2050 Inv VFIFX 16 26 30 46 45 24 33 29 29 34 36 41 38 38 44 30 37 38 38 45Vanguard Target Retirement 2055 Inv VFFVX 16 24 34 50 53 28 29 30 27 36 40 52 48 47 52 43 37 38 35 43Vanguard Target Retirement 2060 Inv VTTSX 16 25 35 50 50 27 33 33 21 41 44 60 53 47 61 53 34 44 41 44Vanguard Target Retirement 2065 Inv VLXVX N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 56 39 46 43 41Vanguard 500 Index Admiral VFIAX 18 21 24 24 20 13 15 11 27 33 42 36 29 35 28 20 27 22 27 34Invesco Diversified Dividend R6 LCEFX 20 14 10 1 3 4 7 58 45 93 94 91 97 97 97 97 35 26 25 7American Funds Intl Gr and Inc R6 RIGGX 20 81 88 84 90 72 52 51 28 47 66 60 33 15 47 67 43 57 17 8Vanguard Developed Markets Index Admiral VTMGX 54 44 58 49 36 39 29 30 29 25 31 36 35 42 30 28 51 49 56 52MFS Growth R6 MFEKX 65 55 47 24 18 8 6 17 54 59 49 38 28 18 21 14 11 13 12 11Vanguard Real Estate Index Admiral VGSLX 32 44 55 52 64 36 10 10 18 32 46 44 57 82 73 84 58 16 30 28Vanguard Mid Cap Index Admiral VIMAX 5 6 9 15 18 38 35 40 73 58 49 59 17 30 48 42 32 21 18 20Invesco Oppenheimer Developing Mkts R6 ODVIX 68 72 78 81 45 34 49 23 56 58 39 36 49 33 9 13 13 9 31 26PGIM Jennison Small Company R6 PJSQX 6 15 65 78 62 23 24 51 29 70 68 43 56 71 80 90 90 86 72 38DFA US Small Cap Value I DFSVX 58 57 52 61 71 68 78 56 33 42 37 35 67 49 22 35 48 51 79 84

County of PlacerMorningstar data as of 09/30/2019

The following chart compares one-year performance of the investment options to that of other peer-group funds. Note that a change in color for any given fund highlights an upward or downward shift in that fund's quartile ranking for the periods shown.

= TOP TWO QUARTILES (0% - 50%) OF PEER GROUP =3RD QUARTILE (51% - 75%) OF PEER GROUP =BOTTOM QUARTILE (76% - 100%) OF PEER GROUP

Percentile rankings

44

2 5 8 11 14 17 20 23 26 29 32 35 38 41 44 47 50 53 56 59


Percentile rankings

60 63 66 69 72 75 78 81 84 87 90 93 96 99 102 105 108 111 114 117

3-year total return percentile ranking for the periods endingFund name Ticker

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2ndQtr

3rdQtr

2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019

Federated Government Ultrashrt Dur R6 FGULX N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 78 79 79

Baird Aggregate Bond Inst BAGIX 19 15 19 13 13 8 8 12 11 13 14 16 24 30 28 41 33 38 12 11

PIMCO Income Instl PIMIX 1 1 1 1 1 1 5 5 4 3 3 6 1 3 6 11 6 10 9 15

Vanguard Inflation-Protected Secs Adm VAIPX 20 7 27 18 21 13 8 10 24 10 15 16 28 29 23 45 32 50 50 41

Vanguard Target Retirement Income Inv VTINX 51 22 28 22 22 14 12 11 8 13 16 33 41 27 28 46 32 48 42 39

Vanguard Target Retirement 2015 Inv VTXVX 14 11 16 10 10 7 8 7 13 20 21 43 43 35 40 54 38 51 43 42

Vanguard Target Retirement 2020 Inv VTWNX 8 5 9 5 5 4 5 4 3 4 4 13 13 11 12 17 18 25 23 17

Vanguard Target Retirement 2025 Inv VTTVX 19 14 18 13 9 7 7 4 3 6 6 15 18 14 16 21 18 28 26 18

American Funds American Balanced R6 RLBGX 3 4 8 2 2 2 2 2 5 2 2 2 2 2 2 9 7 11 20 13

Vanguard Target Retirement 2030 Inv VTHRX 13 11 16 12 10 7 7 4 6 9 12 25 27 22 24 26 25 35 34 31

Vanguard Target Retirement 2035 Inv VTTHX 17 16 19 17 13 9 7 5 9 12 17 30 30 24 29 31 24 36 35 32

Vanguard Target Retirement 2040 Inv VFORX 13 12 14 15 14 9 7 8 16 12 18 30 26 23 27 23 18 28 28 24

Vanguard Target Retirement 2045 Inv VTIVX 20 19 21 20 15 12 10 10 13 13 18 27 23 19 27 23 21 31 28 28

Vanguard Target Retirement 2050 Inv VFIFX 19 17 22 21 19 12 16 12 19 14 19 30 32 22 31 24 22 36 33 35

Vanguard Target Retirement 2055 Inv VFFVX 25 25 30 33 25 18 16 21 17 20 23 37 38 32 39 33 24 43 41 37

Vanguard Target Retirement 2060 Inv VTTSX N/A 22 29 35 24 17 1 1 1 1 36 61 62 49 61 46 32 48 49 48

Vanguard Target Retirement 2065 Inv VLXVX N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Vanguard 500 Index Admiral VFIAX 30 30 37 27 17 10 9 5 6 7 9 14 15 12 12 11 16 17 19 19

Invesco Diversified Dividend R6 LCEFX N/A N/A N/A 5 10 4 3 4 5 12 14 23 58 79 79 96 86 95 94 80

American Funds Intl Gr and Inc R6 RIGGX 29 32 51 58 81 67 71 60 68 77 85 85 85 49 66 74 28 27 29 15

Vanguard Developed Markets Index Admiral VTMGX 32 29 28 26 29 34 27 38 26 29 31 31 18 27 21 26 34 23 33 33

MFS Growth R6 MFEKX 32 30 34 26 24 23 13 28 44 32 17 21 24 13 11 14 16 19 18 7

Vanguard Real Estate Index Admiral VGSLX 16 16 28 27 30 36 25 21 20 18 22 27 46 55 43 45 47 49 58 50

Vanguard Mid Cap Index Admiral VIMAX 20 22 17 8 8 8 8 6 31 21 14 34 43 39 42 47 51 28 24 21

Invesco Oppenheimer Developing Mkts R6 ODVIX 13 22 32 39 25 20 42 61 69 67 68 61 58 37 11 13 29 18 10 11

PGIM Jennison Small Company R6 PJSQX 41 28 51 28 52 19 21 26 21 23 46 72 58 66 66 88 81 85 79 75

DFA US Small Cap Value I DFSVX 6 8 6 33 41 43 53 55 55 60 62 57 58 56 53 38 46 47 54 67


45

2 5 8 11 14 17 20 23 26 29 32 35 38 41 44 47 50 53 56 59


Percentile rankings

118 121 124 127 130 133 136 139 142 145 148 151 154 157 160 163 166 169 172 175

5-year total return percentile ranking for the periods endingFund name Ticker

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1stQtr

2ndQtr

3rdQtr

4thQtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2ndQtr

3rdQtr

2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019

Federated Government Ultrashrt Dur R6 FGULX N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 83

Baird Aggregate Bond Inst BAGIX 16 13 16 10 9 6 7 15 17 15 17 16 16 18 18 22 14 14 7 6

PIMCO Income Instl PIMIX 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 9

Vanguard Inflation-Protected Secs Adm VAIPX 6 6 7 3 4 4 4 9 37 13 20 30 26 33 20 21 18 22 19 20

Vanguard Target Retirement Income Inv VTINX 40 13 15 10 10 10 13 25 29 23 30 35 38 36 33 33 18 23 19 23

Vanguard Target Retirement 2015 Inv VTXVX 5 7 11 7 12 9 11 27 31 26 30 31 30 34 31 36 17 29 31 34

Vanguard Target Retirement 2020 Inv VTWNX 4 6 9 7 8 6 5 10 10 7 9 10 8 10 9 6 4 5 8 5

Vanguard Target Retirement 2025 Inv VTTVX 14 17 21 12 14 10 10 20 18 15 17 13 11 11 13 7 5 5 6 8

American Funds American Balanced R6 RLBGX 3 2 2 2 1 2 1 2 4 3 3 3 3 3 3 5 4 5 5 7

Vanguard Target Retirement 2030 Inv VTHRX 11 14 16 10 12 9 9 16 17 12 14 14 15 15 16 16 11 16 18 21

Vanguard Target Retirement 2035 Inv VTTHX 12 16 14 13 16 13 12 18 16 13 16 17 17 16 20 18 12 19 21 27

Vanguard Target Retirement 2040 Inv VFORX 7 13 12 11 13 9 11 14 14 9 11 16 11 16 15 16 11 21 22 26

Vanguard Target Retirement 2045 Inv VTIVX 10 19 14 15 18 14 13 18 18 14 12 14 13 16 19 12 12 16 19 26

Vanguard Target Retirement 2050 Inv VFIFX 10 19 17 16 19 14 14 19 17 12 14 15 14 17 20 11 14 22 24 27

Vanguard Target Retirement 2055 Inv VFFVX N/A N/A N/A 17 23 18 19 30 26 21 23 23 18 25 27 22 17 26 28 31

Vanguard Target Retirement 2060 Inv VTTSX N/A N/A N/A N/A N/A N/A N/A N/A N/A 1 1 1 1 1 1 1 1 1 42 60

Vanguard Target Retirement 2065 Inv VLXVX N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Vanguard 500 Index Admiral VFIAX 19 19 20 16 13 9 9 11 15 11 19 18 13 12 11 9 10 10 12 14

Invesco Diversified Dividend R6 LCEFX N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 35 61 74 66 68 41 47 43 31

American Funds Intl Gr and Inc R6 RIGGX 12 20 26 28 36 34 28 54 64 47 59 63 73 53 77 72 58 67 72 65

Vanguard Developed Markets Index Admiral VTMGX 45 41 28 33 28 28 25 27 20 18 17 19 22 27 20 25 25 25 27 23

MFS Growth R6 MFEKX N/A N/A N/A N/A N/A N/A N/A 22 29 23 15 24 29 23 19 22 21 16 10 6

Vanguard Real Estate Index Admiral VGSLX 14 17 23 26 26 18 11 14 16 14 16 20 26 46 49 51 44 41 38 36

Vanguard Mid Cap Index Admiral VIMAX 10 11 15 11 14 12 9 14 38 25 12 17 17 16 20 18 15 11 12 15

Invesco Oppenheimer Developing Mkts R6 ODVIX N/A N/A N/A N/A N/A N/A N/A N/A 21 23 27 25 24 23 17 32 41 23 25 29

PGIM Jennison Small Company R6 PJSQX N/A N/A N/A N/A 54 35 36 46 39 29 37 40 51 53 57 68 65 72 77 84

DFA US Small Cap Value I DFSVX 8 12 5 15 29 28 31 20 11 22 24 37 39 43 41 40 52 53 60 63


46

Alpha Morningstar ratings

Information ratio

Downside capture ratio

Upside capture ratio

Sharpe ratio

Beta

Standard deviation Morningstar broad asset class indices

Broad asset class Broad asset class index

U.S. Stocks S&P 500

International Stocks MSCI EAFE

Balanced Morningstar Moderate Target Risk

Alternative ML USD LIBOR 3 Mon

Taxable Bonds BarCap US Aggregate Bond

Beta reflects the sensitivity of the fund’s return fluctuations in the

market index. A beta greater than 1.00 indicates above average

volatility; thus, the higher the beta, the higher the risk.

The Sharpe ratio is a measure of reward per unit of risk (higher is

better). It is a fund’s excess return over the risk-free rate divided by

the portfolio’s standard deviation. The fund’s excess return is its

geometric mean return minus the geometric mean return of the risk-

free instrument (by default, T-bills).

Standard deviation is a stand-alone measure of volatility that

measures how much a fund’s return deviates from its average return.

Higher standard deviation indicates greater risk (i.e., funds with higher

standard deviation often take investors on a more volatile “ride” in

order to achieve their average historical return).

Alpha measures the difference between a fund’s actual returns and

what it might be expected to deliver based on its level of risk (as

measured by beta). A positive alpha means the fund has beaten

expectations. A negative alpha means the manager failed to match

performance with risk. If two managers had the same return but one

had a lower beta, that manager would have a higher alpha.

Morningstar®, an independent mutual fund tracking service, rates

mutual funds from 1 Star lowest to 5 Stars highest. These ratings

depict a measure of a fund’s risk-adjusted return relative to other

funds within the same investment category. Within each category, the

top 10% of mutual funds receive a 5 star rating and the bottom 10%

of funds receive a 1 star rating. A 3 star rating is considered average.

The downside capture ratio measures the performance of an

investment relative to a benchmark during periods in which the

benchmark had negative returns

The upside capture ratio measures the performance of an investment

relative to a benchmark during periods in which the benchmark had

positive returns.

The information ratio measures a fund’s risk-adjusted performance

relative to a benchmark (higher is better). It is calculated by dividing

the fund’s excess return over a benchmark by its tracking error (the

standard deviation of the difference of returns between the portfolio

and benchmark). Investments that attempt to replicate the

performance of a benchmark (i.e., index funds) typically have an

information ratio close to zero.

Investment terminology

47


Indices used for returns-based style analysis

Small Growth – The Russell 2000 Growth Index includes the 2000

smallest companies in the Russell 3000 Index. Companies included

in the index have relatively high price-to-book ratios and forecasted

growth rates.

Small Value – The Russell 2000 Value Index includes the 2000

smallest companies in the Russell 3000 Index. Companies included

in the index have relatively low price-to-book ratios and forecasted

growth rates.

The Stable Value Account is a fixed annuity issued by The Lincoln

National Life Insurance Company, Fort Wayne, IN, on Form 28866-

SV and state variations thereof. Guarantees are based upon the

claims-paying ability of the issuer.

The Stable Value Account is a fixed annuity issued by The Lincoln

National Life Insurance Company, Fort Wayne, IN, on Form 28866-

SV and state variations thereof. Guarantees are based upon the

claims-paying ability of the issuer.

The following indices are used in returns-based style analysis to

regress the returns of domestic equity mutual funds:

Large Growth – The Russell Top 200 Growth Index includes the 200

largest companies in the Russell 3000 Index. Companies included in

the index have relatively high price-to-book ratios and forecasted

growth rates.

Large Value – The Russell Top 200 Value Index includes the 200

largest companies in the Russell 3000 Index. Companies included in

the index have relatively low price-to-book ratios and forecasted

growth rates.

Midcap Growth – The Russell Midcap Growth Index includes

companies with market capitalizations ranging from the 201st to

1000th largest in the Russell 3000 Index. Companies included in the

index have relatively high price-to-book ratios and forecasted growth

rates

Midcap Value – The Russell Midcap Value Index includes companies

with market capitalizations ranging from the 201st to 1000th largest in

the Russell 3000 Index. Companies included in the index have

relatively low price-to-book ratios and forecasted growth rates.

Cash – This represents the Citigroup 3-month T-bill. It is a proxy in

the regression for cash.

The Lincoln Fixed Annuity is issued by The Lincoln National Life

Insurance Company, Fort Wayne, IN, on Form 28866 and state

variations thereof. Guarantees are based upon the claims-paying

ability of the issuer.

The Lincoln NY Fixed Annuity is issued by Lincoln Life & Annuity

Company of New York, Syracuse, NY, on Form 28866. Guarantees

are based upon the claims-paying ability of the issuer.

48


Redemption fees - Mutual fund companies encourage investing for

the long term. Certain funds may plave restrictions on short-term

trading and market timing by imposing redemption fees or trade

restrictions. The fees and expenses section of a fund prospectus

contains additional information about redemption fees.

Morningstar Analyst Rating - This the summary expression of

Morningstar’s forward-looking analysis of a fund. Morningstar analysts

assign the ratings on a five-tier scale, with three positive ratings of

Gold, Silver, and Bronze, a Neutral rating, and a Negative rating. The

Analyst Rating is based on the analysts' conviction in the fund’s ability

to outperform its peer group and/or a relevant benchmark on a risk-

adjusted basis over the long term. If a fund receives a positive rating

of Gold, Silver, or Bronze, it means Morningstar analysts think highly

of the fund and expect it to outperform over a full market cycle of at

least five years. The Analyst Rating is not a market call, and it is not

meant to replace an investor’s due-diligence process.

Contingent deferred sales charge (CDSC) - A CDSC may be

imposed if the employer removes a mutual fund from the list of mutual

funds available to plan participants. Individual participant transfers

between different families of mutual funds will not trigger CDSCs. In

general, CDSCs are phased out over an 18-month period after

deposit. The Fees and Expenses section of a fund prospectus

contains additional information about CDSCs.

49

• •

•

•

•

•

•

•

•

•

•

•

•

If your company has stock, it may also be an available investment

option. However, it has not been evaluated or rated for risk or asset

class. Individual securities may carry greater risk than more broadly

diversified mutual funds. Please contact your company benefits

department for information about your company stock.

Stable value mutual funds seek to provide income while preventing

price fluctuations. A stable value fund is designed as a low-risk

investment, but you can still lose money by investing in it. The primary

risks of investing in the fund are credit risk, income risk and market

risk.

Bond funds are less volatile than stock funds but experience higher

volatility and increased credit risk when compared to other fixed

income investments.

An investment in a money market fund is not insured or

guaranteed by the FDIC or any other government agency.

Although the fund seeks to preserve the value of your

investment at $1.00 per share, it is possible to lose money

by investing in the fund. Funds that concentrate their investments in one region or

industry may carry greater risk than more broadly diversified

funds.

There are special risk factors associated with REITS, such as

refinancing, economic conditions in the real estate industry,

changes in property values, dependency on real estate

management and other risks associated with a portfolio that

concentrates its investments in one sector or geographic region.

Social Awareness funds invest only in companies that meet

socially responsible criteria, so exposure to certain industry

sectors may be greater or less than similar funds or market

indices and, thereby, may lead to performance differences.

Small-cap stocks may be riskier than stocks from more

established companies. Small-cap investments may not be

readily converted into cash. This may affect stock value so that

shares, when redeemed, may be worth more or less than what

they originally cost.

Investing internationally involves risks not associated with

investing solely in the United States, such as currency

fluctuation, political risk, differences in accounting and the

limited availability of information.

Investing in emerging markets can be riskier than investing in

well-established foreign markets. International investing

involves special risks not found in domestic investing, including

increased political, social, economic and currency instability.

Government bonds and Treasury bills are backed by the full faith and

credit of the U.S. government and typically pay a fixed rate of return.

High-yield bonds experience higher volatility and increased credit risk

when compared to other fixed-income investments.

Funds that diversify across asset classes generally have the same,

but reduced, risks relative to the underlying asset classes.

Risks associated with asset class

50

Risks associated with asset class

• •

•

• •

•

•

The Target Maturity Profile Funds’ mixture of investments is

designed to reduce the volatility of investment returns while still

providing the potential for higher long-term total returns that are

more likely to be achieved by including some exposure to

stocks. The principal value of these funds will fluctuate with

market conditions and is not guaranteed at any time, including

at the target date.

For a complete list of risks, please see the fund disclosure

statement.

With an index fund, there is no assurance that the performance of the

fund will track the benchmark. An index is unmanaged, and it is not

possible to invest directly in an index.

Collective trusts and non-deposit investment products are not bank

deposits or obligations, are not guaranteed by any bank, and are not

insured or guaranteed by the FDIC, the Federal Reserve Board, or

any other government agency.

The target date is the approximate date when investors plan to retire

or start withdrawing their money. Some target-date funds make no

changes in asset allocations after the target date is reached; other

target-date funds continue to make asset allocation changes following

the target date. (See the prospectus for the fund's allocation strategy.)

The principal value is not guaranteed at any time, including at the

target date.

Funds in the convertible category invest primarily in bonds and

preferred stocks that can be converted to common stocks.

Bear market funds use short positions and derivatives in order to

profit from stocks that drop in price. Because these funds have

extensive holdings in shorts or puts, their returns generally move in

the opposite direction of the benchmark index.

51

Mutual funds in the Lincoln Alliance® program are sold by prospectus. An investor should consider carefully the investment objectives, risks,

and charges and expenses of the investment company before investing. The prospectus and, if available, the summary prospectus contain

this and other important information and should be read carefully before investing or sending money. Investment values will fluctuate with

changes in market conditions so that, upon withdrawal, your investment may be worth more or less than the amount originally invested.

Prospectuses for any of the mutual funds in the Lincoln Alliance®

program are available at 800-234-3500.

The Lincoln Alliance®

program includes certain services provided by Lincoln Financial Advisors Corp. (LFA), a broker-dealer (member FINRA) and an affiliate of Lincoln

Financial Group, 1300 S. Clinton St., Fort Wayne, IN 46802. Unaffiliated broker-dealers also may provide services to customers. Lincoln Investment Advisors Corporation (LIAC)

is the investment management organization of Lincoln Financial Group.

This review provides important objective information for the plan sponsor and plan fiduciaries to enable them to make decisions regarding the operation

of their retirement plans and evaluation of the investment options in their plans.

The illustrations and discussions contained within this review are not intended as investment advice. The information should not be construed as an

endorsement or recommendation by any Lincoln Financial Group® affilate, nor be the sole basis for any investment decisions. Any decision made

regarding the investment choices within the plan is the responsilibilty of the plan sponsor or the appropriate plan fiduciary or official.

Information for this review has been compiled from Morningstar Direct® and DST RS Reporting System. The information contained herein is taken from

sources we believe to be reliable but we do not guarantee its accuracy and completeness. Any statements constitute current opinions only, which are

subject to change.

Past results are not necessarily indicative of future results. Neither the information, nor any opinion expressed herein shall be construed as an offer to

buy or an offer to sell any securities, futures or other financial products.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New

York, Syracuse, NY, and their applicable affiliates (collectively referred to as "Lincoln"). This material is intended for general us with the public. Lincoln

does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the

sale of Lincoln programs, products and service.

Lincoln Alliance® program review

52

For plan sponsor use only.

Not for use with plan participants.

LCN-2357525-122118

©2019 Lincoln National Corporation

Lincoln Financial Group is the marketing name for Lincoln

National Corporation and its affiliates. Affiliates are

separately responsible for their own financial and

contractual obligations.

Not a deposit Not FDIC-insured Not insured by any federal government agency

Not guaranteed by any bank or savings association May go down in value

MEMORANDUM

1

_____________________________________________________________________________________ DATE: November 14, 2019

TO: Deferred Compensation Committee

FROM: Joseph Morgan, Risk Management Administrator

SUBJECT: Deferred Compensation Fiduciary Review - 2019 _____________________________________________________________________________________

ACTION REQUESTED It is requested the Deferred Compensation Committee approve the 2019 Deferred Compensation Fiduciary Review. BACKGROUND In 2018 the County’s deferred compensation plans underwent revisions and a new recordkeeping provider was selected for the County’s plans. The new recordkeeper, Lincoln Financial Group, recommended that a comprehensive fiduciary review be completed of the County’s plans. FISCAL IMPACT None ATTACHMENT 1. Draft 2019 Fiduciary Review 2. 2019-2020 Fiduciary Liability Insurance Policy

Placer County Deferred Compensation Program2019 Fiduciary Review

457(b) ‐ PLC‐001 401(k) ‐ PLC‐0021

Document type: Specimen 457(b) Plan Document Base Plan Document [DC‐BPD #05]Last amendment: June 21, 2018 December 31, 2018

2

Age requirement: There is no minimum age requirement. [Ref: 457(b) Plan Document Section 2.1] There is no minimum age requirement. [Ref: 401(k) Adoption Agreement Section 4‐1]Service requirement: There is no minimum service requirement. [Ref: 457(b) Plan Document Section 2.1] There is no minimum service requirement. [Ref: 401(k) Adoption Agreement Section 4‐1]Excluded employees: Leased Employees [Ref: 457(b) Plan Document Section 1.1 ‐ Definition: Employee]

Temporary Employees [Ref: 457(b) Plan Document Section 1.1 ‐ Definition: Employee]Extra Help Employees [Ref: 457(b) Plan Document Section 1.1 ‐ Definition: Employee]Golden Sierra Employees [Ref: 457(b) Plan Document Section 1.1 ‐ Definition: Employee]

Leased Employees [Ref: 401(k) Adoption Agreement Section 3‐1 ‐ Eligible Employees]Temporary Employees [Ref: 401(k) Adoption Agreement Section 3‐1 ‐ Eligible Employees]Extra Help Employees [Ref: 401(k) Adoption Agreement Section 3‐1 ‐ Eligible Employees]Golden Sierra Employees [Ref: 401(k) Adoption Agreement Section 3‐1 ‐ Eligible Employees]

3

Definition of compensation: Specimen 457(b) Plan DocumentPage 2: CompensationPage 4: Includible Compensation

Base Plan Document [DC‐BPD #05]Page 2: 1.18 Compensation LimitPage 3: 1.19 Compensation PeriodPage 4: 1.48 Excess CompensationPage 7: 1.72 Plan CompensationPage 8: 1.89 Total CompensationAdoption Agreement Page 7: Section 5 Compensation Definitions

4 Match Formula: ACORN has control table in place that defines which employees are eligible for the match anda control table that limits the overall match to $750. [Ref: Screen shots from ACORN]Distributions: Reviewed all distributions of active and eligible participants to ensure they meet requirementsfor In‐Service Distributions. All distributions were appropriate. [Ref: Distributions Report]Loan Administration: Loans are not authorized by plan documents. No loans have been approved.

Match Formula: ACORN has control table in place that defines which employees are eligible for the match anda control table that limits the overall match to $750. [Ref: Screen shots from ACORN]Distributions: Reviewed all distributions of active and eligible participants to ensure they meet requirementsfor In‐Service Distributions. All distributions were appropriate. [Ref: Distributions Report]Loan Administration: Reviewed all loans for participants and confirmed they comply with the plan documents.[Ref: Loans Report]

5 Deferral Contributions: Collected via payroll deduction.Loan payments: The County's 457(b) plan does not allow for loans.

Deferral Contributions: Collected via payroll deduction.Loan payments: Current employees are collected via payroll deduction. Former employees are eligible to signup for ACH directly with LFG.

6 There were a total of 14 payroll deposits in 2018. There were two delayed deposits, payroll dates of 6/22/18and 7/20/18. The normal procedure at implementation is to review the files for accuracy and there werequestion on these files that required additional processing thus creating a one business day delay. All otherdeposits met the processing guidelines for the plan. [Ref: Contribution Report]In General, payroll files are processed the next business day if it is received before 1:00 pm EST and if it isreceived after 1:00 pm EST it will be processed within 2 business days.

There were a total of 14 payroll deposits in 2018. There were two delayed deposits, payroll dates of 6/22/18and 7/20/18. The normal procedure at implementation is to review the files for accuracy and there werequestion on these files that required additional processing thus creating a one business day delay. All otherdeposits met the processing guidelines for the plan. [Ref: Contribution Report]In General, payroll files are processed the next business day if it is received before 1:00 pm EST and if it isreceived after 1:00 pm EST it will be processed within 2 business days.

Plan Documents and Administration

Confirm that the plan document is up‐to‐date for all legislative and regulatoryrequirements (e.g., EGTRAA and PPA amendments). Updates are providedautomatically for plans using the Lincoln plan document. For those plans, skipto item 2.

Confirm that the plan’s definition of “eligible employee” is consistent with theadministration of the plan.

Confirm that compensation is being calculated correctly (as defined in theplan document) and communicated to providers.

Confirm that the plan is being administered in accordance with the plan andtrust documents (e.g., match formula, distribution options, loanadministration and more).

Review the plan’s process for collecting deferral contributions and loanpayments.

Confirm that deferral contributions and loan payments are being deposited ina timely manner.

Prepared by Joseph Morgan in consultation with Nancy Hilu, Hanson Bridgett LLPReviewed: May 2019. Revised: October 2019. Submitted for Approval: November 2019

DraftPage 1 of 3

Attachment 1


457(b) ‐ PLC‐001 401(k) ‐ PLC‐0021 The plan fiduciary is the Placer County Deferred Compensation Committee consisting of the following

members: [Ref: BOS Resolution 2016‐042 & Committee Bylaws]Auditor‐Controller: Andrew SiskTreasurer‐Tax Collector: Jenine WindeshausenCounty Executive Officer: Jane ChristensonHuman Resources Director: Kate SampsonPlacer Public Employees Organization Rep.: Matt BartholomewDeputy Sheriffs' Association Rep.: Noah FrederitoPlacer County retired employee Rep.: Vicki Ramsey

The Deferred Compensation Committee has elected to utilize the services of Morningstar InvestmentManagement LLC to provide ERISA 3(38) level advisory services. Under the attached agreement, Morningstarhas agreed to a highest level of fiduciary advise with respect to plan investments. Morningstar is responsiblefor selecting, monitoring and replacing investment options provided under the plans. This type of advisoryrelationship shifts the fiduciary risk for investments from the plan sponsor (the County) to Morningstar. Underthis type of fiduciary agreement, the County’s risk for investments is limited to monitoring Morningstar toensure it is properly carrying out its fiduciary investment duties, and if not, to find an adequate replacement.[Ref: Morningstar Agreement]

The relationship with Morningstar does not shift the fiduciary responsibility for all other aspects of the plan.The Deferred Compensation Committee remains responsible for ensuring that the plans remains tax qualified,are administered according to the tax rules and that errors are corrected timely and in accordance withapplicable law, etc.

The Deferred Compensation Committee has also developed an Investment Policy Statement that establishesinvestment principles and a framework for selecting, monitoring and evaluating investment options for theCounty's Plan. The Investment Policy Statement is being reviewed to ensure it appropriately outlines theresponsibilities of Morningstar and the Committee. [Ref: Investment Policy Statement]

The plan fiduciary is the Placer County Deferred Compensation Committee consisting of the followingmembers: [Ref: BOS Resolution 2016‐042 & Committee Bylaws]Auditor‐Controller: Andrew SiskTreasurer‐Tax Collector: Jenine WindeshausenCounty Executive Officer: Jane ChristensonHuman Resources Director: Kate SampsonPlacer Public Employees Organization Rep.: Matt BartholomewDeputy Sheriffs' Association Rep.: Noah FrederitoPlacer County retired employee Rep.: Vicki Ramsey

The Deferred Compensation Committee has elected to utilize the services of Morningstar InvestmentManagement LLC to provide ERISA 3(38) level advisory services. Under the attached agreement, Morningstarhas agreed to a highest level of fiduciary advise with respect to plan investments. Morningstar is responsiblefor selecting, monitoring and replacing investment options provided under the plans. This type of advisoryrelationship shifts the fiduciary risk for investments from the plan sponsor (the County) to Morningstar. Underthis type of fiduciary agreement, the County’s risk for investments is limited to monitoring Morningstar toensure it is properly carrying out its fiduciary investment duties, and if not, to find an adequate replacement.[Ref: Morningstar Agreement]

The relationship with Morningstar does not shift the fiduciary responsibility for all other aspects of the plan.The Deferred Compensation Committee remains responsible for ensuring that the plans remains tax qualified,are administered according to the tax rules and that errors are corrected timely and in accordance withapplicable law, etc.

The Deferred Compensation Committee has also developed an Investment Policy Statement that establishesinvestment principles and a framework for selecting, monitoring and evaluating investment options for theCounty's Plan. The Investment Policy Statement is being reviewed to ensure it appropriately outlines theresponsibilities of Morningstar and the Committee. [Ref: Investment Policy Statement]

2 The Placer County Deferred Compensation Committee meets at least quarterly and complies with The BrownAct. Lincoln Financial Group representatives attend and present quarterly plan reviews.

The Placer County Deferred Compensation Committee meets at least quarterly and complies with The BrownAct. Lincoln Financial Group representatives attend and present quarterly plan reviews.

3 The County maintains a Fiduciary Liability policy through Solidarity Protection Group. Policy Effective from7/1/2018 through 7/1/2019 and renewed for 7/1/2019 through 7/1/2020. Policy Limit: $5,000,000. Retention:$10,000. [Ref: Policy Statement]

The County maintains a Fiduciary Liability policy through Solidarity Protection Group. Policy Effective from7/1/2018 through 7/1/2019 and renewed for 7/1/2019 through 7/1/2020. Policy Limit: $5,000,000. Retention:$10,000. [Ref: Policy Statement]

Confirm the identity of each plan fiduciary and ensure that each understandshis or her responsibilities as a plan fiduciary.

Confirm that regular retirement committee meetings are being held, anddocument the attendance of all plan fiduciaries, advisors, employeerepresentatives, and service providers. Committee meetings should beconducted in a manner that ensures proper due diligence and facilitatesinformed decision‐ making by fiduciaries.

Evaluate the need for fiduciary liability insurance to protect the planfiduciaries’ personal assets against claims.

General Requirements


DraftPage 2 of 3

Attachment 1


457(b) ‐ PLC‐001 401(k) ‐ PLC‐0021 The County has established a Deferred Compensation Committee to obtain advice of qualified counsel when

appropriate, establish objectives and policies relating to investments, discharge its duties regarding eachdecision made in administering the Plan, solely in the interests of the Plan. NOTE: Not less than every 12months, the committee shall consider the advisability of soliciting proposals from qualified providers.

The County has established a Deferred Compensation Committee to obtain advice of qualified counsel whenappropriate, establish objectives and policies relating to investments, discharge its duties regarding eachdecision made in administering the Plan, solely in the interests of the Plan. NOTE: Not less than every 12months, the committee shall consider the advisability of soliciting proposals from qualified providers.

Note: This should be done at least annually and documented withmeeting minutes, discussion topics, a summary of decisions made, a listof attendees, and other important details.

The Deferred Compensation Committee adheres to The Brown Act and all committee meetings includeagendas, discussion topics, minutes of decisions made and list of attendees.

The Deferred Compensation Committee adheres to The Brown Act and all committee meetings includeagendas, discussion topics, minutes of decisions made and list of attendees.

2 The County maintains 27 investment options as well as a Self Directed Brokerage Account and a Stable ValueAccount with a guaranteed minimum rate of return.

The County maintains 27 investment options as well as a Self Directed Brokerage Account and a Stable ValueAccount with a guaranteed minimum rate of return.

3 The Committee approved the current version of the IPS on 5/10/2017. This document is available on theDeferred Compensation Committee site. [Ref: Investment Policy Statement]

The Committee approved the current version of the IPS on 5/10/2017. This document is available on theDeferred Compensation Committee site. [Ref: Investment Policy Statement]

4 Contact information for LFG, the Committee and HR Representative is made available to participants via theintranet, County website and available in print at the Human Resources Department.

Contact information for LFG, the Committee and HR Representative is made available to participants via theintranet, County website and available in print at the Human Resources Department.

5 The County has developed an Education Plan that encompasses these topics that was reviewed and approvedby the Committee on 11/14/2018. [Ref: Deferred Compensation Committee Minutes ‐ 11/14/18]Additionally, LFG maintains an educational section on their website that participants may access through theiraccount.

The County has developed an Education Plan that encompasses these topics that was reviewed and approvedby the Committee on 11/14/2018. [Ref: Deferred Compensation Committee Minutes ‐ 11/14/18]Additionally, LFG maintains an educational section on their website that participants may access through theiraccount.

6 The investment options are clearly outlined on the participant's LFG website and only approved options arelisted.

The investment options are clearly outlined on the participant's LFG website and only approved options arelisted.

7 New Hire packets, open enrollment and periodic educational campaigns include information about eligibilityto participate in the County's plan.

New Hire packets, open enrollment and periodic educational campaigns include information about eligibilityto participate in the County's plan.

8 The County has a Record Keeping Service Agreement with LFG that meets and or exceeds the requirements ofthis section. Additionally, Plan Documents and amendments are also maintained electronically by the HumanResources Department.

The County has a Record Keeping Service Agreement with LFG that meets and or exceeds the requirements ofthis section. Additionally, Plan Documents and amendments are also maintained electronically by the HumanResources Department.

9

• Summary Plan Description (SPD) The SPD is available to participants upon request. Additionally, the SPD is available on the County's DeferredCompensation Website so participants are able to review on demand. [Ref: Website Printout]

The SPD is available to participants upon request. Additionally, the SPD is available on the County's DeferredCompensation Website so participants are able to review on demand. [Ref: Website Printout]

• Summary of material modifications (SMM) N/A ‐ There have not been any material modifications to the County's plan. N/A ‐ There have not been any material modifications to the County's plan.• Individual Benefit Statement Lincoln Financial Group issues quarterly statements to all participants. Lincoln Financial Group issues quarterly statements to all participants.• Automatic Enrollment Notice N/A ‐ The County's plans do not allow for Automatic Enrollment N/A ‐ The County's plans do not allow for Automatic Enrollment• Black out Notice Black out Notices were sent out on 5/31/18. [Ref: Notice to Employees] Black out Notices were sent out on 5/31/18. [Ref: Notice to Employees]

Confirm that any restrictions on transferring to or from investment optionshave been communicated clearly to participants.Confirm that the plan properly notifies employees when they become eligiblefor the plan.Confirm the plan’s record retention policy. Generally, records pertaining toagency filings or to participant or beneficiary disclosures must be retained andkept available for examination for at least six years from the filing date.Records needed to determine benefits must be maintained as long as theymay be relevant to the determination of benefit entitlements. For example,plan documents and amendments may need to be retained indefinitely.Confirm that each participant has been furnished the appropriate disclosures,such as:

Confirm that each participant has received general financial and investmentinformation, such as: Advantages of tax deferral and tax diversification,Risk/reward concepts, Impacts of inflation, Dollar cost averaging &Compounding.

Plan Investment and Employee Education

Confirm that the plan has a formal process for evaluating its investments.

Confirm that the plan has a well‐diversified investment lineup that includesoptions that span the risk/reward spectrum.Confirm that the plan has an Investment Policy Statement (IPS) and that it canbe provided to a plan participant upon request.Confirm that participants have been provided the contact names andresources they need to acquire plan investment information.


DraftPage 3 of 3

Attachment 1

ESVP-31210000 (03/2018)

SOLIDARITY PROTECTION GROUP a voluntary membership organization operating pursuant to the Liability Risk Retention Act of 1986 and whose principal office is:

4323 Warren Street, NW, Washington, DC 20016-2437

The Euclid Vanguard Package Insurance Policy Fiduciary Liability, Employee Dishonesty, D&O and EPL for Employee

Benefit Plans

NOTICE:

EXCEPT WITH RESPECT TO THE FIDUCIARY DISHONESTY COVERAGE PART, THIS IS A CLAIMS

MADE INSURANCE POLICY WITH DEFENSE EXPENSES INCLUDED WITHIN THE LIMIT OF

LIABILITY. PLEASE CAREFULLY REVIEW THE ENTIRE POLICY.

Attachment 2

ESVP-31210000 (03/2018)

The Euclid Vanguard Package Policy Certificate

THIS IS A CLAIMS-MADE POLICY WITH CLAIM EXPENSES INCLUDED WITHIN THE LIMITS OF LIABLITY.

PLEASE READ THE ENTIRE POLICY CAREFULLY.

This Policy Certificate is issued under Master Policy Number SFM31210000 issued to Solidary Protection Group

Policy Number: SFD31211070-01 Renewal of: SFD31211070 Issued By: Hudson Insurance Company

100 William Street New York, NY 10038

ITEM 1. Producer: AmWINS Insurance Brokerage of California, LLC

Address: 444 Flower Street, 45th Floor Los Angeles, CA 90071

ITEM 2. Named Insured: County of Placer Deferred Compensation Plans

Plans: Placer County 401(k) Plan; 150005 County of Placer 401(k); 150004 County of Placer Deferred Compensation Plan

Address: 145 Fulweiler Avenue, Suite 100 Auburn, CA 95603 ITEM 3. Policy Period:

Effective Date: 07/01/2019 (12:01 a.m. local time) Expiration Date: 07/01/2020 (12:01 a.m. local time)

ITEM 4.

A. Limits of Liability and Retentions: (Other than Fiduciary Dishonesty Coverage Part)

Coverage Section Separate Limit(s) Shared Limit(s) Retention

Fiduciary Liability Coverage

$5,000,000 N/A $10,000

Directors and Officers Liability Coverage

N/A N/A N/A

Employment Practices Liability Coverage

N/A N/A N/A

B. Aggregate Limit of Liability: Applicable: NO If Yes, Aggregate Limit is: $

The Aggregate Limit of Liability is the maximum Limit of Liability of the Insurer for all Loss for which coverage is provided under all Coverage Sections listed in Item 4.A. above. This Aggregate Limit of Liability does not apply to

Attachment 2

ESVP-31210000 (03/2018)

the Crime Coverage Section.

C. Limits of Liability and Deductibles for Fiduciary Dishonesty Coverage Section

Insuring Agreements Limit(s) of

Insurance

Retention

Amount(s)

1. Employee Theft $ $

2. Depositors Forgery or Alteration $ $

3. Inside the Premises – Money, Securities and Other Property $ $

4. Outside the Premises – Money, Securities and Other Property $ $

5. Computer and Funds Transfer Fraud $ $

6. Money Orders and Counterfeit Currency $ $

7. Investigatory Expense Coverage $ $

*Retentions shall apply for loss outside the scope of ERISA, pursuant to Department of Labor

Regulation 2580.412-20

D. Fiduciary Dishonesty Coverage Part Aggregate Limit of Liability: N/A This Aggregate Limit of Liability set forth above is the maximum Limit of Liability of the Insurer for any loss or losses for which coverage is provided under the Fiduciary Dishonesty Coverage Part. E. Other Coverage Sublimits

Fiduciary Liability Enhancements Sublimit

Settlor Coverage $5,000,000

Trustee Claims Expense Coverage [Defense of Non-Fiduciary

Claims] $500,000

Voluntary Compliance Program Expenditures $500,000

ERISA 502(c) Civil Penalties $250,000

HIPAA and HITECH Fines and Penalties $1,500,000

PPACA Fines and Penalties $250,000

Section 4975 Penalties (Fiduciary) $250,000

Miscellaneous/ Other Penalties $100,000

Benefit Overpayment (Fiduciary) $100,000

Coverage for Claims of Equitable Relief and Surcharges

(Fiduciary ) $250,000

Reinstatement of Sublimit for Voluntary Compliance Program

Expenditures $250,000

Death Master File Penalties (Bipartisan Budget Act of 2013) $1,000,000

ITEM 5. Pending or Prior Proceeding Date: 07/01/2014 Continuity Date: none (full continuity)

Attachment 2

ESVP-31210000 (03/2018)

ITEM 6. Coverage Sections and Premium

This Policy provides coverage under a Coverage Part only if purchase by the Insured and indicated by an “X” below.

Liability Coverage Section Premium

Fiduciary Liability Coverage $20,840.00 + $100.00 Waiver of Recourse = $20,940.00

Fiduciary Dishonesty Coverage

Directors & Officers Coverage

Employment Practices Coverage

Taxes/Fees $0.00

Total Policy Premium $20,940.00

ITEM 7. Extended Reporting Period

1 Year 100%

2 Years 150% 3 Years 200%

ITEM 8. Contact Information for Notices Under this Policy Claim-related notices: [email protected]; or Euclid Specialty Managers ATTN: Claims Department 100 East Street SE, Suite 204 Vienna, VA 22180 All Other Notices: [email protected]; or Euclid Specialty Managers ATTN: Underwriting Department 100 East Street SE, Suite 204

Vienna, VA 22180 ITEM 9. Endorsements:

The following schedule lists all endorsements which form a part of the policy. It is only for reference and provides no coverage. The actual endorsement(s) should be reviewed to determine the effect on coverage:

1. California Amendatory Endorsement 2. AmWins Vanguard Elite/Alliant Public Pension Practice Enhancement Endorsement

for Governmental Plans 3. Cyber Essentials Endorsement

Attachment 2

mailto:[email protected]




ESVP-31210000 (03/2018)

This Policy Certificate, together with Policy Form ESVP-31210000 (03/2018), the endorsements indicated in ITEM 9 above, if any, and the completed and signed application(s) with any submitted attachments, complete the above-numbered policy.

Date: 8/19/2019

Authorized Representative

Attachment 2

ESVP-31210000 (03/2018)

FIDUCIARY COVERAGE PART

In consideration of the payment of the premium and subject to the limits of liability and the Policy Certificate, conditions, limitations, provisions and other terms of this policy, Hudson Insurance Company (the “Insurer”) and the Insureds agree as follows:

I. INSURING AGREEMENTS

A. The Insurer will pay on behalf of the Insureds those Damages and Claim Expenses which the Insureds become legally obligated to pay as a result of any Claim first made against them during the policy period or, if applicable, the extended reporting period.

B. The Insurer will pay on behalf of the Insureds those Voluntary Compliance Program

Expenditures incurred by the Insureds as a result of their participation in any Voluntary Compliance Program if such participation commences during the policy period or, if applicable, the extended reporting period.

II. DEFINITIONS

The following terms, when set forth in this policy in bold-face type, will have the meanings set forth below:

A. Administration means, with respect to a Plan: giving advice and/or counseling to participants and beneficiaries; providing interpretations; handling records; determining and calculating Benefits, including the alleged failure to make timely determinations of eligibility for Benefits; preparing, distributing or filing required notices or documents, including but not limited to the actual or alleged failure to properly and timely provide COBRA notices or other required notices; or activities relating to enrollment, termination or cancellation of participants or beneficiaries under a Plan.

B. Benefits means any obligation under a Plan to a Plan participant or beneficiary that is a payment of money or property.

C. Claim means:

1. a written demand for civil monetary damages or other civil relief, including any arbitration or mediation that is commenced by a written request or demand for such proceeding, or a written request to waive or toll a statute of limitation;

2. a civil proceeding commenced by the service of a complaint or similar pleading; 3. a criminal proceeding commenced by the return of an indictment; 4. a formal administrative or regulatory proceeding commenced by the filing of a notice of

charges, formal investigative order or similar document; or 5. a written notice by the Department of Labor or the Pension Benefit Guaranty Corporation

of the commencement of an investigation;

seeking to hold an Insured liable or responsible for a Wrongful Act committed or attempted, or allegedly committed or attempted, by such Insured or by any person for whose Wrongful Acts such Insured is or is alleged to be legally responsible.

D. Claim Expenses means reasonable expenses and legal fees (other than regular and overtime wages, salaries or fees of the directors, officers, trustees or employees of the Insured) incurred by or on behalf of the Insureds in the investigation, adjustment, defense or appeal of a Claim, including the premium for an appeal bond.

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E. Covered Penalties means, solely in connection with a Plan, and subject to the aggregate limit of the policy and the aggregate sublimit of liability set forth in the Policy Certificate:

1. civil penalties or any excise tax imposed pursuant to Section 502(c) of the Employee Retirement Income Security Act of 1974 (“ERISA”) or pursuant to any other provision of ERISA or the Code that was amended by the multiemployer plan provisions of the Pension Protection Act of 2006;

2. civil penalties of up to five percent (5%) imposed pursuant to Section 502(i) of ERISA; 3. civil penalties of up to twenty percent (20%) of any settlement or judgment imposed

pursuant to Section 502(l) of ERISA for breach of fiduciary duty; 4. civil fines and penalties imposed pursuant to the Health Insurance Portability and

Accountability Act of 1996 (“HIPAA”) and the HITECH Act of 2009; 5. civil fines and penalties imposed pursuant to the Patient Protection and Affordable Care Act

(“PPACA”); 6. the 15% or less excise tax penalty imposed pursuant to Section 4975 of the Internal Revenue

Code, with respect to covered judgments; and

7. relief arising under Section 502(a)(3) of ERISA.

F. Damages means monetary and non-monetary damages, judgments (including pre- and post- judgment interest on a covered judgment), settlements and Covered Penalties which an Insured is legally obligated to pay as a result of a Claim. Damages shall also include reasonable and necessary fees and expenses of an Independent Fiduciary if such fiduciary is retained as a necessary measure under fiduciary standards to review a proposed settlement of a covered Claim.

Damages will not include:

1. civil or criminal fines or penalties other than Covered Penalties; 2. taxes or tax penalties other than Covered Penalties; 3. cleanup costs relating to hazardous materials, pollution or product defects; 4. wages, tips and commissions; 5. Benefits, or that portion of any settlement or award in an amount equal to such Benefits,

unless and to the extent that recovery of such Benefits is based upon a covered Wrongful Act and is payable as a personal obligation of an Insured Person; provided, however, that Damages shall include a monetary award in, or fund for settling, a Claim against any Insured to the extent it alleges a loss to a Plan or loss in the actual accounts of participants in a Plan by reason of an alleged breach of fiduciary duty resulting in a change in value of the investments held by that Plan; and provided further, however, that Damages shall include any negligent act, error or omission committed by the Insured solely in the miscalculation of any Benefit which results in an overpayment that would otherwise not be covered by the Plan and cannot be recovered by the Plan after reasonable effort; and

6. matters that may be deemed uninsurable under the law pursuant to which this policy shall be construed.

Where permitted by law, Damages shall include punitive, exemplary and multiplied damages imposed upon any Insured, subject to this policy’s other terms, conditions, and limitations, including, but not limited to, Section V.A(1) of this policy. Enforceability of this paragraph shall be governed by the applicable law that most favors coverage for such penalties and punitive, exemplary and multiplied damages.

Claims Expenses shall be provided for items specifically excluded from Loss pursuant to subparagraphs 1 – 6 above, subject to the other terms, conditions, and exclusions of this policy.

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G. Employee Benefit Law means:

1. the Employee Retirement Income Security Act of 1974, as amended (ERISA), or any state statute or provision concerning fiduciary standards of care with respect to a Plan, including but not limited to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the Newborns’ and Mothers’ Health Protection Act of 1996, the Mental Health Parity Act of 1996, the Women’s Health and Cancer Rights Act of 1998, the Pension Protection Act of 2006, and Patient Protection and Affordable Care Act (PPACA);

2. the privacy provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH); and solely with respect to subparagraph (2) of the definition of Wrongful Act, unemployment insurance, Social Security, government-mandated disability benefits or similar law; and

3. Section 301 of the Labor Management Relations Act (LMRA) relating to alleged violations of collectively bargained contracts in connection with a Plan.

In no event shall Employee Benefit Law, other than as set forth in subparagraph (2) above, include any law other than ERISA which concerns workers’ compensation, unemployment insurance, Social Security, government-mandated disability benefits or similar law.

H. Insurance Representative means the person or organization authorized to represent the Insureds and designated as such in ITEM 1 of the Policy Certificate of this policy.

I. Insured means:

1. any Plan; 2. any natural person serving as a past, present or future trustee, committee member or

employee of a Plan in his or her Administration of a Plan or in his or her capacity as a fiduciary or trustee of a Plan;

3. any members of the board of trustees, directors, officers, management committee members that sponsor or offer any plan; and

4. any other entity or natural person designated as an additional Insured by written endorsement to this policy.

J. Loss means Damages, Claim Expenses, Voluntary Compliance Program Expenditures and Information Breaches; provided, however, that Loss will not include:

1. any overhead expenses or charges, salaries, wages, fees or benefits of any Insured; 2. any surcharges, taxes, fines or penalties other than those defined as Covered Penalties in

Section II.F; or

3. any matter uninsurable under the law pursuant to which this policy is construed.

K. Plan means each plan or trust enumerated in ITEM 2 of the Policy Certificate of this policy.

L. Related Claims means all Claims based upon, arising from or in consequence of causally connected Wrongful Acts.

M. Voluntary Compliance Program means any voluntary compliance resolution program or similar voluntary settlement program administered by the U.S. Internal Revenue Service or the U.S. Department of Labor, including but not limited to the Employee Plans Compliance Resolution System, the Audit Closing Agreement program, the Voluntary Compliance Resolution Program, the Walk-In Closing Agreement Program, the Administrative Policy Regarding Self-Correction, the Tax

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Sheltered Annuity Voluntary Correction Program, the Delinquent Filer Voluntary Compliance Program and the Voluntary Fiduciary Correction Program.

N. Voluntary Compliance Program Expenditures means:

1. reasonable costs, charges and expenses of attorneys, accountants and/or other professionals that are incurred solely in investigating and evaluating a Plan’s actual or alleged noncompliance with any statute, rule or regulation and effecting a resolution thereof pursuant to a Voluntary Compliance Program; and

2. any fees, fines, penalties or sanctions paid by an Insured to a governmental authority pursuant to a Voluntary Compliance Program as a result of a Plan’s actual or alleged inadvertent noncompliance with any statute, rule or regulation and, subject to the Insurer’s approval, costs to correct a Plan’s actual or alleged inadvertent noncompliance with any statute, rule or regulation that are incurred by the Plan in connection with its participation in a Voluntary Compliance Program.

O. Wrongful Act means:

1. any breach of the responsibilities, obligations or duties imposed upon fiduciaries of a Plan by an Employee Benefit Law;

2. any negligent act, error or omission by any Insured in the Administration of any Plan; and 3. with respect to Claims Expenses only, any negligent act, error or omission, other than a

wrongful employment practice, by an Insured solely in such Insured’s capacity as a trustee of a Plan that is not otherwise covered in subparagraphs (1) and (2) above.

III. DEFENSE AND SETTLEMENT

A. The Insurer will have the right and duty to defend any Claim covered by this policy, even if the allegations in such Claim are groundless, false or fraudulent. Upon the exhaustion of the limit of liability applicable to any Claim, the Insurer’s duty to defend such Claim will cease and, upon the exhaustion of the Insurer’s maximum aggregate limit of liability under this policy as set forth in ITEM 4(a) of the Policy Certificate, the Insurer will thereafter have no duty or obligation to defend or to continue to defend any Claim.

B. Subject to Section III.A above, the Insureds will have the right to select defense counsel to defend Claims against them, subject to the Insurer’s approval, such approval not to be unreasonably withheld, and subject to such counsel’s agreement to comply with applicable litigation management guidelines. The Insureds must, however, exercise this right in writing within thirty (30) days after first giving the Insurer notice of the Claim with respect to which such counsel is to be retained. If the Insureds do not inform the Insurer in writing of their intent to retain their own defense counsel within thirty (30) days after providing notice of a Claim, the Insurer will have the right to appoint defense counsel to represent the Insureds in connection with such Claim and to conduct the defense thereof.

C. Claim Expenses incurred by counsel retained by the Insureds, or by the Insurer if the Insureds

do not exercise their right to retain their own defense counsel, are part of and not in addition to the applicable limit of liability as set forth in ITEM 4(a) of the Policy Certificate, and the payment by the Insurer of such Claim Expenses will reduce, and may exhaust, the applicable limit of liability under this policy.

D. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and the Insureds further agree that, in the event of a Claim, they will do nothing that may prejudice the Insurer’s position or actual or potential rights of recovery. At

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the Insurer’s request, the Insureds will assist in the conduct of actions, suits or proceedings, including but not limited to attending hearings, trials and depositions, securing and giving evidence and obtaining the attendance of witnesses, and will also assist in making settlements.

E. The Insureds agree not to settle any Claim, incur any Claim Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the Insurer’s written consent, which consent will not be unreasonably withheld. The Insurer will not be liable for any settlement, Claim Expenses, assumed obligation or admission to which it has not consented.

F. The Insurer may make any investigation it deems necessary and may, with the written consent of the Insureds, make any settlement of a Claim it deems expedient.

IV. EXTENSIONS OF COVERAGE

A. Spouses, Estates and Legal Representatives

Subject to the limits of liability and the Policy Certificate, conditions, limitations, provisions and other terms of this policy, the coverage provided by this policy will extend to Claims made against:

1. the estate, heirs, legal representatives or assigns of any natural person Insured if such natural

person Insured is deceased, or the legal representatives or assigns of any natural person Insured if such natural person Insured is incompetent, insolvent or bankrupt; and

2. the lawful spouse or domestic partner of a natural person Insured solely by reason of such spouse or domestic partner’s status as such or such spouse or domestic partner’s ownership interest in property which the claimant seeks as recovery for liability of such natural person Insured.

All conditions, limitations, provisions and other terms of this policy applicable to Claims against and Loss incurred by natural person Insureds will also be applicable to Claims against and loss incurred by their estates, heirs, legal representatives, assigns, spouses and domestic partners. No coverage will be available under this Section IV.A, however, for any loss, including costs, charges or expenses of defense, arising from any act, error or omission committed or attempted, or allegedly committed or attempted, by a natural person Insured’s estate, heir, legal representative, assign, spouse or domestic partner.

B. Extended Reporting Period

1. If this policy is terminated or not renewed for any reason other than the non-payment of premium, the Insureds will have the right to purchase an extension of the coverage granted by this policy for a twelve (12) month period (the “extended reporting period”) after the effective date of such termination or non-renewal. The extended reporting period, if purchased, will apply only to:

a. Claims first made during the extended reporting period, and only if such Claims

are for otherwise covered Wrongful Acts committed, attempted or allegedly committed or attempted before the effective date of such termination or non- renewal;

b. Voluntary Compliance Program Expenditures incurred by Insureds as a result of the Insureds’ participation during the extended reporting period in a Voluntary Compliance Program, but only if such participation commences during the extended reporting period and involves a Plan’s actual or alleged inadvertent

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noncompliance with any statute, rule or regulation before the effective date of such termination or non-renewal.

2. The additional premium for the extended reporting period will be that amount set forth in

ITEM 8 of the Policy Certificate. This additional premium must be paid within thirty (30) days after the effective date of the termination or non-renewal of the policy, and will be deemed to have been fully earned immediately as of the inception of the extended reporting period.

3. The Insurer’s limits of liability for Loss from Claims first made or deemed made during the extended reporting period and for Voluntary Compliance Program Expenditures resulting from the Insureds participation during the extended reporting period in a Voluntary Compliance Program will be part of, and not in addition to, the limits of liability stated in ITEM 4(c) of the Policy Certificate, which are applicable to all Loss for which this policy provides coverage.

4. The Insurer reserves the right to approve a request for a longer extended reporting period not to exceed seventy-two (72) months, for such additional premium as the Insurer may require.

V. EXCLUSIONS

A. The Insurer will not be liable for any Loss on account of any Claim against any Insured:

1. Arising out of, based upon or attributable to any:

a. profit or advantage to which the Insured was not legally entitled; or b. deliberate criminal or deliberate fraudulent act, or any knowing or willful violation

of any statute, rule or law, including, but not limited to Employee Benefit Law, by the Insured;

if established by any final, non-appealable adjudication in any action or proceeding other than an action or proceeding initiated by the Insurer to determine coverage under the policy;

2. For any actual or alleged libel or slander;

3. For any actual or alleged bodily injury to, or mental or emotional distress, sickness, disease or death of, any person, or damage to or destruction, loss or loss of use of any tangible property; provided, however, this exclusion shall not apply to Claims Expenses incurred in the defense of a Claim for a violation of an Employee Benefit Law by an Insured;

4. Based upon, arising from or in consequence of any liability of others assumed by any Insured under any contract or agreement, whether oral or written, other than an agreement or declaration of trust or similar agreement creating or establishing a Plan; provided, that this exclusion will not apply to the extent that an Insured would have been liable in the absence of such contract or agreement;

5. Based upon, arising from or in consequence of:

a. any act, error, omission, fact, circumstance, situation, transaction, event, decision or Wrongful Act if written notice thereof has been given under any policy of which this policy is a renewal or replacement if such prior policy affords coverage or, but

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for the exhaustion of its limit or limits or liability, would have afforded coverage for such Loss, in whole or in part, as a result of such notice; or

b. any demand, suit or other proceeding, or order, decree or judgment rendered, against any Insured on or prior to the Pending or Prior Proceeding Date set forth in ITEM 6 of the Policy Certificate of this policy, or the same or substantially similar facts, circumstances or situations underlying or alleged in any such demand, suit, proceeding, order, judgment or decree;

6. The failure to collect contributions owed to any Plan, or the failure to fund a Plan in

accordance with any Employee Benefit Law or the Plan instrument. However, this exclusion shall not apply to Claim Expenses.

B. Full Severability of Exclusions

No facts pertaining to or knowledge possessed by any Insured will be imputed to any other Insured to determine the application of any of the above Exclusions.

VI. CONDITIONS

A. Limits of Liability and Retention

1. Regardless of the number of Claims, the number of persons or entities included within the definition of Insured, the number of Insureds included in a particular Claim or the number of claimants who may make Claims against the Insureds, the amount stated in ITEM 4(a) of the Policy Certificate will be the Insurer’s maximum aggregate limit of liability under this policy for all Loss for which this policy provides coverage, and the retention stated in ITEM 5 of the Policy Certificate will apply separately to each Claim.

2. Claim Expenses are part of and not in addition to the limit of liability set forth in ITEM 4(a) of the Policy Certificate, and payment of Claim Expenses by the Insurer will reduce, and may exhaust, that limit of liability.

3. The Insurer will have no obligation to pay Loss, including Claim Expenses, or to defend or continue to defend any Claim, after the limit of liability set forth in ITEM 4(a) of the Policy Certificate has been exhausted.

4. The amount set forth in ITEM 4(b) of the Policy Certificate will be the Insurer’s maximum limit of liability under this policy for Claim Expenses only in connection with Claims solely alleging Wrongful Acts as defined in Section II.R(3) of this policy, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

5. The amount set forth in ITEM 4(c) of the Policy Certificate will be the Insurer’s maximum

limit of liability under Section I. Insuring Agreement B for all Voluntary Compliance Program Expenditures incurred in connection with the Insureds participation in Voluntary Compliance Programs, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

6. The amount set forth in ITEM 4(d) of the Policy Certificate will be the Insurer’s maximum

limit of liability under this policy for Loss in the form of civil penalties or excise tax imposed pursuant to Section 502(c) of ERISA and the Pension Protection Act of 2006, and such

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amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

7. The amount set forth in ITEM 4(e) of the Policy Certificate will be the Insurer’s maximum

limit of liability under this policy for Loss in the form of civil fines and penalties imposed pursuant to HIPAA and the HITECH Act, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

8. The amount set forth in ITEM 4(f) of the Policy Certificate will be the Insurer’s maximum limit of liability under this policy for civil fines and penalties imposed pursuant to the Patient Protection and Affordable Care Act (PPACA), and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

9. The amount set forth in ITEM 4(g) of the Policy Certificate will be the Insurer’s maximum limit of liability under this policy for excise taxes imposed pursuant to Section 4975 of the Internal Revenue Code, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

10. The amount set forth in ITEM 4(h) of the Policy Certificate will be the Insurer’s maximum limit of liability under the policy for relief imposed pursuant to Section 502(a)(3) of ERISA, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

11. The amount set forth in ITEM 4(i) of the Policy Certificate will be the Insurer’s maximum

limit of liability under the policy for miscalculation of benefits resulting in the overpayment of a benefit that would otherwise not be covered by the Plan, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

12. The amount set forth in ITEM 4(j) of the Policy Certificate will be the Insurer’s maximum limit of liability under Section I. Insuring Agreement C for all Loss resulting from an Information Breach, and such amount will be part of and not in addition to the Insurer’s maximum aggregate limit of liability for all Loss under this policy as stated in ITEM 4(a) of the Policy Certificate.

13. The obligations of the Insurer to pay Loss, including Claim Expenses, will only be in excess of any applicable retention as stated in ITEM 5 of the Policy Certificate, which amount will be borne by the Insureds at their own expense. The Insurer will have no obligation whatsoever, either to the Insureds or to any other person or entity, to pay all or any portion of any applicable retention amount on behalf of any Insured, although the Insurer will, at its sole discretion, have the right and option to do so, in which event the Insureds agree to repay the Insurer any amounts so paid.

B. Notice

1. As a condition precedent to exercising their rights under Section I. Insuring Agreement A of this policy, the Insureds must give the Insurer written notice as soon as practicable of any Claim made against them.

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2. As a condition precedent to exercising their rights under Section I. Insuring Agreement B of this policy, the Insureds must give the Insurer written notice as soon as practicable of their participation or intent to participate in a Voluntary Compliance Program; provided, that the Insurer will not be liable under Section I. Insuring Agreement B for any Voluntary Compliance Program Expenditures incurred in connection with any Voluntary Compliance Program before such written notice has been given to the Insurer.

3. As a condition precedent to exercising their rights under Section I. Insuring Agreement C of this policy, the Insureds must give the Insurer written notice as soon as practicable of an Information Breach discovered by the Insured or a trusted party. When an Information Breach is discovered that may reasonably be expected to result in a covered Loss, the Insured must:

a. immediately, upon the first discovery of the Information Breach, notify the Insurer in writing or by email. This notification must include a description of the Information Breach, a description of how, when and where the Information Breach or circumstances happened and copies of all available information relating to the Information Breach and its duration;

b. promptly authorize the Insurer to obtain records and other information and provide the Insurer with records and information as requested by the Insurer;

c. promptly cooperate with and assist the Insurer in the investigation of the Information Breach and any Loss; and

d. promptly assist the Insurer, upon request, in enforcing all rights of contribution or indemnity that any Insured or the person affected may have against all persons or entities.

4. If during the policy period or, if exercised, the extended reporting period an Insured

becomes aware of circumstances that could give rise to a Claim or an Information Breach and gives the Insurer written notice of such circumstances, then any Claims or Information Breaches subsequently arising from such circumstances will be considered to have been made during the policy period or, if exercised, the extended reporting period in which such circumstances were first reported to the Insurer.

5. As a condition precedent to exercising their rights under this policy, the Insureds must give the Insurer such information and cooperation as the Insurer may reasonably require, including but not limited to a description of any Claim or circumstances that could give rise to a Claim, the nature of any Wrongful Acts actually or allegedly committed or attempted, the nature of the alleged or potential damage, the identities of actual or potential claimants, and the manner in which the Insureds first became aware of any such Claim or circumstances that could give rise to a Claim.

C. Coverage Territory

The insurance afforded by this policy applies anywhere in the world.

D. Related Claims

All Related Claims will be deemed to be a single Claim which will be deemed to have been first made at the earlier of the following times:

1. When the earliest of such Related Claims was first made, or

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2. At the earliest time at which notice was given under any policy of insurance of any act, error, omission, fact, circumstance, situation, transaction, event, decision or Wrongful Act underlying any such Related Claim.

E. Changes in Exposure

1. If, during the policy period, a Plan merges into or consolidates with another plan not enumerated in ITEM 2 of the Policy Certificate, written notice thereof must be provided to the Insurer as soon as practicable. Coverage under this policy will continue in full force and effect with respect to Claims for Wrongful Acts committed, attempted or allegedly committed or attempted before such event by such Plan, by any natural person Insureds with respect to any Plan or by any person for whose Wrongful Acts any such Insured is legally responsible, and for the Insureds’ participation in Voluntary Compliance Programs in respect of any such Plan’s actual or alleged noncompliance with any statute, rule or regulation before such event. However, coverage under this policy will cease with respect to Claims for Wrongful Acts committed, attempted or allegedly committed or attempted after such event by any such Insured or by any person for whose Wrongful Acts any such Insured is legally responsible and for the Insureds’ participation in Voluntary Compliance Programs in respect of any such Plan’s actual or alleged noncompliance with any statute, rule or regulation after such event.

2. If, during the policy period, the responsibility for the administration of a Plan is fully assumed by another person, entity or group of persons or entities, written notice thereof must be provided to the Insurer as soon as practicable. Coverage under this policy will continue in full force and effect with respect to Claims for Wrongful Acts committed, attempted or allegedly committed or attempted before such event by any natural person Insureds with respect to such Plan prior to such transfer of responsibilities or by any person for whose Wrongful Acts any such Insured is legally responsible, and for such natural person Insureds’ participation in Voluntary Compliance Programs in respect of any such Plan’s actual or alleged noncompliance with any statute, rule or regulation before such event. However, coverage under this policy will cease with respect to Claims for Wrongful Acts committed, attempted or allegedly committed or attempted after such event by any such natural person Insured or by any person for whose Wrongful Acts any such Insured is legally responsible and for such natural person Insureds’ participation in Voluntary Compliance Programs in respect of any such Plan’s actual or alleged noncompliance with any statute, rule or regulation after such event.

3. If any Plan is terminated, whether before or during the policy period, written notice thereof must be provided to the Insurer as soon as practicable. Coverage under this policy will continue to apply to Claims for Wrongful Acts committed, attempted or allegedly committed or attempted before such event by such Plan, by any natural person Insureds with respect to such Plan or by any person for whose Wrongful Acts any such Insured is legally responsible, and to the Insureds’ participation in Voluntary Compliance Programs in respect of any such Plan’s actual or alleged noncompliance with any statute, rule or regulation before such event. No coverage will be available under this policy, however, with respect to Claims for Wrongful Acts committed, attempted or allegedly committed or attempted after such event by any such Insured or by any person for whose Wrongful Acts any such Insured is legally responsible, or for Voluntary Compliance Program Expenditures in connection with Voluntary Compliance Programs in respect of any such Plan’s actual or alleged noncompliance with any statute, rule or regulation after such event.

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F. Other Insurance

All Loss payable under this policy will be specifically excess of and will not contribute with any other valid and collectible insurance, whether such other insurance is stated to be primary, contributing, excess (except insurance specifically in excess of this policy), contingent or otherwise.

G. Allocation

If, in connection with a Claim, both Loss covered by this policy and loss not covered by this policy are incurred, either because the Claim contains both covered and uncovered matters or because the Claim is made in part against persons or entities not insured hereunder, the Insureds and the Insurer will use their best efforts to determine a fair and appropriate allocation of amounts incurred in connection with such Claim as between Loss covered under this policy and loss not covered under this policy. The Insureds and the Insurer agree that, in determining such a fair and appropriate allocation, the parties will take into account the relative legal and financial exposures associated with any such covered and uncovered matters, as well as the relative legal and financial exposures of, and the relative benefits obtained in connection with the defense and/or settlement of any Claim by, the Insureds and other persons or entities not insured hereunder. If an agreement between the Insureds and the Insurer as to a fair and appropriate allocation cannot be reached, then the Insurer will pay or advance that portion of those amounts incurred in connection with such Claim which the Insureds and the Insurer agree constitutes Loss covered under this policy until a final allocation is agreed upon or determined pursuant to the provisions of this policy and applicable law.

H. Subrogation; Waiver of Right of Recourse

1. In the event of payment under this policy, the Insurer will be subrogated to, and will be entitled to an assignment of, all of the Insureds’ rights of recovery therefor. The Insureds will execute all papers and do everything necessary to secure such rights, including the execution of any documents necessary to enable the Insurer effectively to pursue and enforce such rights and to bring suit in the name of the Insureds.

2. If any premium for this policy is paid out of the assets of a Plan, the Insurer will have the right of recourse required by Section 410(b)(1) of ERISA, unless an Insured other than a Plan shall have paid the additional waiver of recourse premium set forth in the Policy Certificate.

I. Termination of Policy; No Obligation to Renew

1. This policy may not be cancelled or rescinded by the Insurer except for non-payment of premium.

2. This policy will terminate at the earliest of the following times:

a. Upon receipt by the Insurer of written notice of termination from the Insurance Representative;

b. Subject to Section IV.B, above, upon expiration of the policy period, as set forth in ITEM 3 of the Policy Certificate; or

c. At such other time as the Insurer and the Insurance Representative may agree.

3. If the policy is terminated by the Insurance Representative, the Insurer will refund any unearned premium computed at customary short rates. Under all other circumstances, unearned premium, if any, will be computed pro rata. Refund of any unearned premium will be made either at the time of termination or as soon as practicable thereafter, but payment or tender by the Insurer of any unearned premium is not a condition of termination.

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4. The Insurer will not be required to renew this policy upon its expiration. The offer of renewal terms and conditions or premiums different from those in effect prior to renewal will not constitute refusal to renew.

J. Representations and Severability

1. The Insureds represent that the Policy Certificate and statements contained in the written application for this policy are true, accurate and complete, and agree that this policy is issued in reliance on the truth of that representation, and that such Policy Certificate and statements, which are deemed to be incorporated into and to constitute a part of this policy, are the basis of this policy and are material to the Insurer’s acceptance of this risk.

2. Such written application for coverage will be considered as a separate application for coverage by each Insured and, with respect to the Policy Certificate and statements contained in such written application for coverage, no declaration or statement in the application or knowledge possessed by any Insured will be imputed to any other Insured for the purpose of determining whether coverage is available.

K. No Action Against the Insurer

No action may be taken against the Insurer unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy. No person or entity will have any right under this policy to join the Insurer as a party to any Claim to determine the liability of any Insured; nor may the Insurer be impleaded by an Insured or his, her or its legal representative in any such Claim.

L. Bankruptcy or Insolvency of Insured

The Insurer will not be relieved of any of its obligations under the policy by the bankruptcy or insolvency of any of the Insureds or their estates.

M. Authorization and Notices

1. By acceptance of this policy, the Insurance Representative agrees to act on behalf of all Insureds with respect to all matters under this policy, including but not limited to the payment of premiums and the receipt of any return premiums, the giving and receiving of notices of Claim and of circumstances that may give rise to a Claim and all other notices and communications (except notices to effect the purchase of any extended reporting period), the effecting or accepting of any endorsements to or termination or non-renewal of this policy and the Insureds agree that the Insurance Representative will act on their behalf.

2. All notices to the Insurer of Claims, of circumstances that may give rise to Claims or of the

Insureds’ intent to participate in a Voluntary Compliance Program or any other notice required under the policy must be given in writing via mail, fax or email to:

Euclid Specialty Managers, LLC 380 Maple Avenue West, Suite 302

Vienna, VA 22180 (571) 730-4813 (fax) [email protected]

N. Alteration and Assignment

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No change in, modification of or transfer or assignment of interest under this policy will be effective unless made by written endorsement to this policy signed by an authorized representative of the Insurer or a designated affiliate thereof.

O. Valuation and Foreign Currency

All premiums, limits, retentions, Loss and other amounts under this policy are expressed and payable in the currency of the United States of America. If judgment is rendered, settlement is denominated or any element of Loss under this policy is stated in a currency other than United States of America dollars, payment under this policy will be made in United States of America dollars at the rate of exchange published in the Wall Street Journal on the date such final judgment is reached, the amount of such settlement is agreed upon or such element of Loss is due, respectively.

Q. Entire Agreement

The Insureds agree that this policy, including the application and any endorsements, constitutes the entire agreement between them and the Insurer or any of its agents relating to this insurance.

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CRIME COVERAGE PART

In consideration of the payment of the premium and subject to the terms and provisions of this policy, the Insurer agrees with the Insured to pay for losses any Insured shall sustain at any time which are Discovered during the Policy Period in the manner set forth below:


1. Fiduciary Dishonesty Coverage

The Insurer shall pay the Insured for loss of Money, Securities, or Property resulting directly from Fraud or Dishonesty committed by any Plan Official, acting alone or in collusion with others, that the Insured may during the policy period sustain or discover it has sustained.

2. Forgery Coverage The Insurer shall pay the Insured for loss of Money or Securities resulting directly from Forgery or alteration of a Financial Instrument committed by a Third Party.

3. Computer Fraud Coverage The Insurer shall pay the Insured for loss of Money, Securities or Property resulting directly from Computer Fraud committed by a Third Party.

4. Funds Transfer Fraud Coverage The Insurer shall pay the Insured for loss of Money or Securities resulting from Funds Transfer Fraud committed by a Third Party.

5. Payment Instruction Fraud Coverage (Social Engineering Fraud Coverage) The Insurer shall pay the Insured for loss of Money or Securities resulting directly from Payment Instruction Fraud committed by a Third Party.

6. Expense Coverage The Insurer shall pay the Insured for:

(1) Investigative Expenses resulting from any loss covered under any Insuring Clause, except this Expense Coverage Insuring Clause; or

(2) Computer Violation Expenses resulting from any direct loss covered under the Fiduciary Dishonesty Coverage, Computer Fraud Coverage or Funds Transfer Fraud Coverage Insuring Clauses; incurred by any Insured in the amount set forth in Item 3 of the Declarations, solely if such covered loss is in excess of the Deductible applicable to such covered loss. Other than with regard to the Fiduciary Dishonesty Coverage, such amount shall be part of and not in addition to the Limit of Liability applicable to such covered loss.

II. DEFINITIONS

The terms appearing in bold in this Policy shall have the following meanings:

Administrator means any natural person plan administrator as defined in section 3(16)(A) of ERISA, executive director or any other natural person in an equivalent position thereof of an Employee Benefit Plan.

Computer Fraud means the unlawful taking of Money, Securities or Property resulting from a Computer Violation.

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Computer System means computer hardware, software, voice-based telecommunications systems, firmware, and the date stored thereon, as well as associated input and output devices, data storage devices, networking equipment and storage area network or other electronic data backup facilities.

Computer Violation means an unauthorized: (1) entry into or deletion of data from a Computer System; (2) change to Data elements or program logic of a Computer System, which is kept in machine readable

format; or

(3) introduction of instructions, programmatic or otherwise, which propagate themselves through the Insured’s Computer System

directed solely against any Insured by a Third Party.

Computer Violation Expenses means reasonable expenses, other than an Insured’s internal corporate costs (such as employee remuneration), incurred by an Insured with the Insurer’s prior written consent to reproduce or duplicate damaged or destroyed electronic Data or computer programs. If such computer programs cannot be duplicated from other computer programs, then Computer Violation Expenses shall also include reasonable costs incurred for computer time, computer programmers, technical experts or consultants to restore the computer programs to substantially the same level of operational capability immediately preceding the covered direct loss.

Data means information contained in records, manuscripts, accounts, microfilms, tapes or other records, which are processed and stored in a Computer System.

Discovery, Discover or Discovered means knowledge acquired by a trustee or Administrator of any Insured which would cause a reasonable person to believe a covered loss has occurred or an occurrence has arisen that may subsequently result in a covered loss. This includes loss:

(1) sustained prior to the inception date of any coverage under this policy; (2) which does not exceed the Retention Amount; or (3) the exact amount or details of which are unknown.

Discovery, Discover or Discovery shall not include knowledge acquired by a trustee or Administrator of any Insured acting alone or in collusion with a Plan Official, or the knowledge possessed by any trustee or Administrator of an Insured who is a participant in any Fraud or Dishonesty.

Employee Benefit Plan means any plan listed as an Insured in Item 1 of the Declarations.

Employee Benefit Plan Participant means any natural person who has a written agreement with the Insured authorizing the Insured to transfer Money or Securities on deposit in their account in reliance upon instructions transmitted to the Insured via telefacsimile, telephone, electronic mail or electronic instruction.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Financial Instrument means checks, drafts or similar written promise, order or directions to pay a sum certain in money, that are made, drawn by or drawn upon an Insured or by anyone acting as an Insured’s agent, or by an Employee Benefit Plan vendor, acting in such capacity, or that are purported to have been so made or drawn.

Forgery means the signing of another natural person’s name with the intent to deceive, but does not mean a signature that includes one’s own name, with or without authority, in any capacity for any purpose. Mechanically or electronically reproduced or reproduced signatures shall be treated the same as hand-written signatures, but shall not include a typed name in any form (including but not limited to email, letterhead or pre-printed material).

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Fraud or Dishonesty means any intentional act of larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion or willful misapplication, or any other intentional fraudulent or dishonest act. Fraud or Dishonesty shall also include any intentional act prohibited by Title 18, Section 1954 of the U.S. Code.

Funds Transfer Fraud means fraudulent written, electronic, telegraphic, cable, teletype or telephone instructions issued to a financial institution directing such institution to transfer, pay or deliver Money or Securities from any bank account maintained by an Insured at such institution, without an Insured’s knowledge or consent.

Insured means any Employee Benefit Plan listed in ITEM 1 of the Policy Certificate. Principal Insured means the Named Insured listed in ITEM 1 of the Policy Certificate.

Insured’s Computer System means a Computer System leased, owned or operated by an Insured or operated solely for the benefit of an Insured by a Third Party under written contract with an Insured.

Investigative Expenses means reasonable expenses, other than an Insured’s internal corporate costs (such as employee Salary or remuneration), incurred by an Insured with the Insurer’s prior written consent to establish the existence and amount of a covered loss.

Legal Expenses means the reasonable court costs and attorneys’ fees incurred and paid with the Insurer’s prior written consent in defending an Insured or its bank in any legal proceeding brought against it to enforce payment of a Financial Instrument.

Money means currency, coin, bank notes and bullion.

Official Authorization means a valid handwritten signature of an actual Plan Official, or an electronic record of entry and approval into a wire transfer system, accounting system, or similar system which is capable of maintaining and reproducing an audit trail which demonstrates that an actual Plan Official approved a transaction within his or her authority. A Forgery is not an Official Authorization. Official Authorization shall not include a typed name in any form (including but not limited to email, letterhead or pre-printed material), but shall include electronic reproductions of handwritten signatures in any form.

Payment Instruction Fraud or Social Engineering Fraud means the intentional misleading of a Plan Official through misrepresentation of a material fact which is relied upon by such Plan Official believing it to be genuine, committed by a person purporting to be a (i) Vendor, (ii) Employee Benefit Plan Participant, or (iii) a Plan Official who was authorized by the Insured to instruct other Plan Officials to transfer Money or Securities, which results in such transfer, provided that the Insured has complied with the Section XXIV Special Conditions prior to transferring such Money or Securities.

Plan Official means any natural person while in the service of an Employee Benefit Plan as a fiduciary, trustee, committee member, administrator, officer, or employee, and any other natural person who handles Employee Benefit Plan assets, whether or not required to be bonded by Title 1 of ERISA. Plan Official also includes any natural person described in the preceding sentence during a period not exceeding sixty (60) days following the termination of such natural person’s service.

Policy Period means the period of time set forth in ITEM 2 of the Policy Certificate (subject to any termination in accordance with section XVIII of the Policy).

Premises means the interior portion of a building occupied by an Insured in conducting its business.

Property means tangible property other than Money or Securities.

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Recovery Legal Expenses means the reasonable court costs and attorneys’ fees incurred and paid by an Insured in pursuing subrogation and recovery of loss from any source.

Salary means compensation an Insured pays a natural person trustee, Administrator, officer or Plan Official, including but not limited to bonus, commission, incentive payments, and the cost of health, welfare and pension benefits.

Securities means negotiable and non-negotiable instruments representing either Money or Property.

Third Party means a person other than an Insured or Plan Official.

Vendor means any Third Party natural person or entity other than an Insured or Plan Official that has provided goods or services to a Plan Official under a legitimate pre-existing arrangement or written agreement. However, Vendor does not include any asset manager, broker-dealer, counter party, custodian, or any similar entity.

III. NON-ACCUMULATION OF LIABILITY

Regardless of the number of years this policy shall continue in force, and the number of premiums which shall be payable or paid or any circumstance whatsoever, the liability of the Insurer under this policy with respect to any loss or losses shall not be cumulative from policy year to policy year or from Policy Period to Policy Period.

IV. DISCOVERY PERIOD

This policy does not cover any loss not discovered within twelve (12) calendar months following the termination of this policy as an entirety or any loss sustained by any Plan not discovered within twelve (12) calendar months following the termination of this policy as to such Plan, or if coverage has been replaced.

V. EXTENDED DISCOVERY PERIOD

This policy covers loss sustained prior the termination or cancellation of this Policy and Discovered: (A) within twelve (12) calendar months following the termination or cancellation of this policy in its

entirety; or

(B) within twelve (12) calendar months following the termination or cancellation of this policy as to any Insured, in accordance with Section VXIII, Termination of Policy.

Provided that this Extended Discovery Period terminates immediately upon the effective date of any other insurance obtained which replaces the coverage afforded by this policy in an amount no less than the minimum amount required under ERISA Section 412 and provides coverage for loss sustained prior to its effective date.

VI. JOINT INSURED

The total liability of the Insurer for loss or losses sustained by any or all Employee Benefit Plans shall not exceed the amount of coverage specified herein and the Insurer shall not be liable for loss sustained by one Plan to the advantage of any other Plan. Only the Principal Insured shall have the right to make, adjust, receive and enforce payment of any and all claims hereunder and shall be deemed to be the sole agent of all Plans for such purposes and for the giving or receiving of any notice required or permitted to be given by the terms hereof and for the purpose of affecting or accepting any amendments to or termination of this policy.

Each and every Plan shall be conclusively deemed to have consented and agreed that none of them shall have any direct beneficiary interest herein or any right of action hereunder whatsoever and that this policy or any right of action herein shall not be assignable; but knowledge possessed for discovery made by any office of any Insured shall constitute knowledge possessed or discovery made by all Insureds for the purposes of this policy.

VII. PAYOVER

In compliance with Title 1 of ERISA, and the Pension Protection Act of 2006, payment by the Insurer shall be held to the benefit of any Employee Benefit Plan(s) sustaining a loss. If such payment is in excess of the

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amount of coverage required by such Acts for said Plan(s), such excess shall be held for the use and benefit of any other named Plan(s) should such Plan(s) also discover loss recoverable hereunder. If Money, Securities and other property of two or more Employee Benefit Plans is commingled, recovery hereunder for loss of such Money, Securities and other property shall be shared by such Plans on a pro rata basis in accordance with the amount of coverage each such Plan is required to carry by such Acts.

VIII. EXCLUSIONS [do not apply to Fiduciary Dishonesty Coverage]

No coverage will be available under the Forgery Coverage, Computer Fraud Coverage, Funds Transfer Fraud Coverage, Payment Instruction Fraud Coverage, and Expense Coverage Insuring Agreements for:

(A) loss caused by a Plan Official, whether or not in collusion with a Third Party, except loss otherwise covered under the Payment Instruction Fraud Coverage Insuring Agreement;

(B) loss resulting directly or indirectly from any authorized or unauthorized trading of Money, Securities, or Property, whether or not in the name of the Insured and whether or not in a genuine or fictitious account;

(C) threat to do bodily harm to any person or a threat to do damage to any property;

(D) loss involving:

(1) the disclosure of confidential or personal information while in the care, custody or control of an Insured, including but not limited to patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information, retirement or health savings account information or any similar type of non-public information, provided that this limitation shall not apply to loss that is otherwise covered under this policy caused by a Plan Official or Third Party through the use of, disclosure of or access to such confidential or personal information; or

(2) fees, costs, fines or penalties or any other expenses incurred by an Insured which result, directly or indirectly, from the access to or disclosure of an Insured’s or another entity’s or person’s confidential or personal information, including but not limited to patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information, retirement or health savings account information or any similar type of non-public information.

(E) loss of trade secrets, confidential processing methods or other confidential information of any kind;

(F) Forgery committed against an Insured by a Plan Official of such Insured whether acting alone or in collusion with others; provide that, if Forgery committed by such Plan Official would have resulted in a covered loss, the Insurer shall pay the amount which exceeds such Plan Official’s percentage ownership of such Insured, on the day immediately preceding the date of Discovery, multiplied by such Insured’s total assets as reflected in such Insured’s most recent audited financial statements;

(G) loss due to declared or undeclared war, civil war, insurrection, rebellion or revolution, military, naval or usurped power, governmental intervention, expropriation or nationalization; or any act or condition incident to any of the foregoing;

(H) loss due to nuclear reaction, nuclear radiation or radioactive contamination;

(I) loss of income not realized as the result of a covered loss;

(J) indirect or consequential loss of any kind; provided that this Exclusion (J) shall not apply to otherwise covered: (1) Investigative Expenses, Computer Violation Expenses, Legal Expenses or

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Recovery Legal Expenses provided under the Legal Expense Extension, as forth in Section XXI of this Policy;

(K) expenses incurred:

a. as a result of the reconstitution of Data if an Insured knowingly uses illegal copies of programs;

b. to render the Data usable by replacement processing equipment; c. to design, update or improve software or programs or to perfect their operation or

performance; or d. as a result of an alternation in Data held on magnetic media due to the effect of magnetic

fields, their incorrect use or the obsolescence of the Computer System;

(L) fees, costs or expenses incurred or paid by an Insured in defending or prosecuting any legal proceeding or claim; provided that this Exclusion (L) shall not apply to the coverage provided under the Legal Expense Extension, as set for in Section XXI of this Policy;

(M) loss due to an Insured knowingly having given or surrendered Money, Securities or Property in any exchange or purchase with a Third Party, not in collusion with a Plan Official, except when covered under the Forgery Coverage Insuring Agreement;

(N) loss sustained by one Insured to the advantage of any other Insured;

(O) loss due to the unlawful taking of Money, Securities or Property, Computer Fraud or any other fraudulent, dishonest or criminal act, by any authorized representative of an Insured, other than a Plan Official, provided that such authorized representative is not acting in collusion with any Plan Official;

(P) loss unless sustained prior to the termination of this policy in its entirety, and Discovered and written

notice thereof is given to the Insurer:

a. within sixty (60) days following such termination, if this policy is not renewed with the Insurer; or

b. prior to such termination, if this policy is renewed with the Insurer.

No coverage will be available under the Computer Fraud Coverage and Funds Transfer Fraud Coverage Insuring Agreements for:

(A) loss or damage of Money, Securities and other property as a result of a kidnap, ransom or other extortion payment surrendered to any person as a result of a threat to do bodily hard to any person or a threat to do damage to the Premises or other property. For purposes of this Limitation, Property shall include Data held, owned or controlled by the Insured;

(B) loss or damage to Money, Securities or Property as a result of Payment Instruction Fraud.

No coverage will be available under the Forgery Coverage Insuring Agreement for loss due to Forgery or alteration of: (1) any Financial Instrument committed to any Third Party in collusion with any Plan Official; or (2) any registered or coupon obligations issued or purported to have been issued by an Insured, or any coupons whether attached or detached.

No coverage will be available under the Payment Instruction Fraud Coverage for:

(A) loss or damage to Money or Securities as a result of Forgery, Computer Fraud or Funds Transfer Fraud;

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(B) loss due to the failure of any party to perform, in whole or in part, under any contract;

(C) loss due to the extension of any loan, credit or similar promise to pay;

(D) loss due to any party’s use of or acceptance of any credit card, debit card or similar instrument, or any digital currency payments, whether or not genuine;

(E) loss due to any person purporting to be a representative of any financial institution, asset manager, broker-dealer, armored motor vehicle company, or any similar entity;

(F) loss of Money or Securities while in the mail or in the custody of any carrier for hire, including

but not limited to any armored motor vehicle company;

(G) loss due to the failure, malfunction, inadequacy or illegitimacy of any product or service;

(H) loss of or damage to any Property; or

(I) loss of Money or Securities if any Employee Benefit Plan Participant or their beneficiary is not entitled to receive such Money or Securities.

IX. LIABILITY FOR PRIOR LOSSES

Coverage will be available for loss sustained at any time and Discovered during the policy period, provided that coverage for loss sustained prior to the inception date of this policy, or the effective date of coverage for any additional Insureds, or the effective date of any coverage added by endorsement, is subject to the following:

(a) if an Insured or some predecessor in interest of such Insured carried a prior bond or policy which afforded coverage for a loss sustained during the period of such prior bond or policy and such prior bond or policy was not issued by the Insurer or its affiliates and such loss was first Discovered by an Insured prior to the expiration of the time allowed for discovery under the last such policy, then no coverage shall be available under this policy, unless the total amount of covered loss exceeds the limit of liability of the last such bond or policy carried by the Insured or predecessor in interest of such Insured, and the Insurer’s Limit of Liability for any such loss will be in excess of the limit of liability of the last bond or policy subject to all of the terms and conditions of this policy; or

(b) if an Insured or some predecessor in interest of such Insured carried a prior bond or policy which afforded coverage for a loss sustained during the period of such prior bond or policy and such prior bond or policy was issued by the Insurer or its affiliates, then such prior bond or policy shall terminate as of the inception of this policy and such prior bond or policy shall not cover any loss not discovered and noticed to the Insurer prior to the inception of this policy and then the Insurer’s Limit of Liability for such loss shall be the applicable Limit of Liability as set forth in Item 3 of the Policy Certificate.

X. TOTAL LIABILITY

Solely with respect to the Fiduciary Dishonesty Coverage, the payment of any loss under this policy shall not reduce the liability of the Insurer for other losses whenever sustained; provided however, that the total liability of the Insurer for any loss or losses caused by a Plan Official or in which such Plan Official is concerned or implicated, is limited to the amount of coverage specified herein.

With respect to any Employee Benefit Plan:

a. if covered loss is sustained by any Employee Benefit Plan which does not have any employer

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securities, the Limit of Liability applicable to such covered loss shall be the lesser of ten percent (10%)

of the Employee Benefit Plan’s funds handled as of the beginning of such Employee Benefit Plan’s fiscal year or five hundred thousand dollars ($500,000); or

b. if covered loss is sustained by an Employee Benefit Plan which does have any employer securities, the Limit of Liability applicable to such covered loss shall be the lesser of ten percent (10%) of the Employee Benefit Plan’s funds handled as of the beginning of such Employee Benefit Plan’s fiscal year or one million ($1,000,000);

provided that, in all events, (i) if the Limit of Liability as set forth in Item 3 of the Declarations of this policy is less than the amounts set forth in paragraphs a. or b. above, then the applicable Limit of Liability shall be amended to the respective amounts set forth in paragraphs a. or b. above; or (ii) if the Limit of Liability as set forth in Item 3 of the Declarations of this policy equals or exceeds the amount set forth in paragraphs a. or b. above, then the Limit of Liability shall be the Limit of Liability as set forth in Item 3 of the Declarations of this policy.

Solely with respect to the coverage afforded under the Forgery Coverage, Computer Fraud Coverage, Funds Transfer Fraud Coverage, Payment Instruction Fraud, and Expense Coverage Insuring Agreements, the following Limits of Liability shall apply:

a. The Insurer’s maximum liability for each loss shall not exceed the Limit of Liability applicable to such loss, as set forth in Item 3 of the Declarations, regardless of the number of Insureds sustaining the loss.

b. If a direct loss is covered under more than one Insuring Agreement, the maximum amount payable under this policy shall not exceed the largest applicable Limit of Liability of any such Insuring Agreements.

c. All loss resulting from a single act or any number of acts of the same Plan Official or Third Party, and all loss whether such act or acts occurred before or during the Policy Period, will be treated as a single loss and the applicable Limit of Liability of this policy will apply, subject to the Liability for Prior Losses section of this policy.

XI. OWNERSHIP

The money, securities and other property covered under this policy may be owned by any Employee Benefit Plan or as respects which any Employee Benefit Plan is legally liable, or held by it in any capacity, whether or not such Employee Benefit Plan is liable for the loss thereof.

XII. NOTICE OF LOSS – PROOF – LEGAL PROCEEDINGS

(A) Solely with respect to the coverage afforded under the Forgery Coverage, Computer Fraud Coverage, Funds Transfer Fraud Coverage, Payment Instruction Fraud, and Expense Coverage Insuring Agreements, knowledge possessed by any Insured or Discovery shall be deemed knowledge possessed by or Discovery by all Insureds.

(B) It is a condition precedent to coverage hereunder that, upon “Discovery,” the Insured will: a. give written notice to the Insurer at the earliest practicable moment, and in no event later than

ninety (90) days after such Discovery;

b. furnish a proof of loss with full particulars to the Insurer within six (6) months of such Discovery, including:

i. submission to examination under oath at the Insurer’s request; ii. production of all pertinent records at such reasonable times and places as the Insurer

shall designate; and

iii. provide full cooperation with the Insurer in all matters pertaining to a loss or claim. (C) The Insured may offer a comparison between an Insured’s inventory records and actual physical

count of its inventory to prove the amount of loss, only where an Insured establishes wholly apart from such comparison that it has sustained a covered loss, caused by an identified Plan Official.

(D) No Insured shall institute legal proceedings against the Insurer:

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a. after two (2) years immediately following any Discovery; or

b. to recover a judgment or settlement against it or its bank resulting from Forgery, or related legal expenses as set forth in the Legal Expense Extension, as set forth in section XVIII of the Policy, after two (2) years immediately following the date upon which such judgment shall become final or settlement was entered.

If any limitation embodied in this section is prohibited by any law controlling the construction thereof, such limitation shall be deemed to be amended so as to be equal to the minimum period of limitation permitted by such law.

XIII. VALUATION

The Insurer shall pay: (A) the least of:

a. the actual market value of lost, damaged or destroyed Securities at the published closing price of such Securities on the business day immediately preceding the day on which a loss is Discovered, provided that if no market value is published for such Securities, the value shall be fixed by agreement between the parties or by arbitration;

b. the cost of replacing Securities; or c. the cost to post a Lost Instrument Bond; Such cost shall be paid by the Insurer on behalf of an Insured;

(B) the cost of blank books, pages or tapes or other blank materials to replace lost or damaged books of account or other records;

(C) the least of: a. the price paid by an Insured for the Property; or b. the cost to repair or replace Property with that of similar quality and value at the time the

Insured complies with Notice of Loss-Proof-Legal Proceedings regarding the furnishing of proof of loss; or

(D) the United State of America dollar value of foreign currency based on the rate of exchange published in the Wall Street Journal on the day loss involving foreign currency is Discovered.

XIV. SUBROGATION AND RECOVERIES

In the event of any payment under this policy, the Insurer shall be subrogated to all the Insured’s rights of recovery against any person or organization, and the Insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The Insured shall do nothing after loss to prejudice such rights.

If any loss covered by this policy exceeds the amount of coverage provided by this policy, the Insurer shall be entitled to all recoveries (except from suretyship, insurance, reinsurance or indemnity taken by or for the benefit of the Insurer) by whomsoever made, on account of such loss under this policy until fully reimbursed, less the actual cost of effecting the same; and any remainder shall be applied to the reimbursement of the Insurer.

XV. OTHER INSURANCE

If the Insured, or any other party at interest in any loss, has any other bond indemnity or insurance which in the absence of this policy would cover such loss in whole or in part, then this policy shall be null and void, and shall not cover, to the extent of the amount of such other bond, indemnity or insurance; but shall attach to and cover, subject to its conditions and limitations, only the amount of such loss in excess of the amount of such other bond, indemnity or insurance.

XVI. TERMINATION AS TO ANY EMPLOYEE

This policy shall terminate as to any Plan Official and no coverage will be available for loss caused by such Plan Official:

(A) immediately upon Discovery by any trustee or Administrator of the Insured (not in collusion with such Plan Official) of any fraudulent or dishonest act on the part of such Plan Official while in the

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service of any Insured:

(B) after a trustee or Administrator of any Insured becomes aware of any fraudulent or dishonest act by such Plan Official involving Money, Securities or other Property valued at twenty-five thousand dollars ($25,000) or more, committed prior to such Plan Official’s service with any Insured; or

(C) more than sixty (60) days following the termination of service to any Insured of such Plan Official.

XVII. TERMINATION OF POLICY

(A) This policy shall terminate at the earliest of the following times: a. upon receipt by the Insurer of written notice of termination from the Principal Insured; b. upon expiration of the Policy Period as set forth in Item 3 of the Declarations; c. twenty (20) days after receipt by the Principal Insured of a written notice of termination from

the Insurer based upon non-payment of premium, unless the premium is paid within such twenty (20) day period;

d. as to any Insured upon such Insured’s liquidation or dissolution, or upon the full assumption of responsibilities for the administration of an Employee Benefit Plan by another entity or organization that was not the plan sponsor as of either the inception date of this policy or the date such Employee Benefit Plan was added to this policy; or

e. at such other time as may be agreed upon by the Insurer and the Principal Insured. (B) The Insurer shall refund the unearned premium computed at customary short rates if this policy is

terminated by the Principal Insured. Under any other circumstances the refund shall be computed pro rata. Payment or tender of any unearned premium by the Insurer shall not be a condition precedent to the effectiveness of such termination, but such payment shall be made as soon as practicable.

XIII. TERMINATION OF PRIOR BONDS OR POLICIES

Any prior bonds or policies issued by the Insurer or any subsidiary or affiliate of the Insurer, of which this policy is a renewal or replacement thereof shall terminate, if not already terminated, as of the inception of this policy.

XIX. CONCEALMENT, MISPREPRESENTATION OR FRAUD

This policy is void in any case of fraud by the Insured as it relates to this policy at any time. It is also void if any Insured, at any time, intentionally conceals for misrepresents a material fact concerning:

(A) this policy; (B) Money, Securities, or Property covered under this policy; (C) the Insured’s interest in Money, Securities, or Property covered under this policy; or (D) a claim under this policy.

XX. ALTERATION

No change in or modification of this policy shall be effective except when made by written endorsement signed by an authorized representative of the Insurer.

XXI. LEGAL EXPENSE EXTENSION

In addition to the Limits of Liability set forth in Item 3 of the Declarations, the Insurer shall pay the Insured: (A) solely with respect to the Forgery coverage under the Forgery Coverage Insuring Agreement, Legal

Expenses incurred and paid, with the Insurer’s prior written consent; and

(B) as a result of loss covered under any Insuring Agreement of this policy, Recovery Legal Expenses incurred and paid, provided however that such costs shall not exceed $10,000.

XXII. LIMITATIONS

The Insurer shall not be liable for loss involving:

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(A) the disclosure of confidential or personal information while in the care, custody or control of an Insured, including but not limited to patents, trade secrets, processing methods, customer lists,

financial information, credit card information, health information, retirement or health savings account information or any similar type of non-public information, provided that this limitation shall not apply to loss that is otherwise covered under this policy by a Plan Official’s acts of Fraud or Dishonesty through the use of, disclosure of or access to such confidential or personal information; or

(B) fees, costs, fines, penalties or any other expenses incurred by an Insured which result, directly or indirectly, from the access to or disclosure of an Insured’s or another entity’s or person’s confidential or personal information, including but not limited to patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information, retirement or health savings account information or any similar type of non-public information.

XXIII. OWNERSHIP

The Money, Securities, and Property covered under this policy is limited to Money, Securities, and Property:

(A) owned by any Insured; (B) for which any Insured is legally liable; or (C) held by an Insured in any capacity, whether or not such Insured is liable for the loss thereof.

XXIV. SPECIAL CONDITIONS – PAYMENT INSTRUCTION FRAUD

(A) For any single transfer of Money or Securities on deposit in the Insured’s own account, the Insured obtained an Official Authorization from at least two Employees, one of who is a trustee or Administrator; or

(B) For any single transfer of Money or Securities on deposit in an Employee Benefit Plan Participant’s account maintained with an Insured:

i. the sender of the Payment Instruction Fraud instruction confirmed with the Insured the identity of the Employee Benefit Plan Participant with the password, personal identification number, token, or other security code of such Employee Benefit Plan Participant;

ii. the Payment Instruction Fraud instruction was received by an Employee specifically authorized by the Insured to receive and act upon such instructions;

iii. the Insured verified such instructions via a call back to a predetermined telephone number set forth in the Insured’s written agreement with such Employee Benefit Plan Participant or other security procedure approved in writing by the Insurer for the purpose of detecting error in the transmission or the content of such instructions, and verifying that such instructions are that of an Employee Benefit Plan Participant; and

iv. the Insured preserved a contemporaneous record of the call back and the instruction which verifies use of the authorized password, personal identification number, token, or other security code of the Employee Benefit Plan Participant.

The title and any headings in this policy are solely for convenience and form no part of the terms and conditions of coverage.

IN WITNESS WHEREOF, Hudson Insurance Insurer has caused this policy to be signed by its President and Corporate Secretary at 100 William Street, New York, NY 10038 but this policy will not be effective unless the Insurer shall have issued a Policy Certificate as part of this policy.

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President Secretary

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DIRECTORS, OFFICERS AND COMPANY LIABILITY COVERAGE PART

General Terms and Conditions [Applies to Directors, Officers and Company Liability and Employment Practices Liability Coverage Parts]

I. GENERAL TERMS AND CONDITIONS

The Directors, Officers and Company Liability Coverage Part and the Employment Practices Liability Coverage Part are subject to the General Terms and Conditions set forth in this Part of the Policy. If any provision in these General Terms and Conditions is inconsistent or in conflict with the terms and conditions of any Coverage Part, the terms and conditions of such Coverage Part shall control for purposes of such Coverage Part. The terms and conditions of each Coverage Part shall apply only to such Coverage Part, unless otherwise specifically stated to the contrary.

II. DEFINITIONS

The following terms shall have the meanings specified below:

(A) "Affiliate" means any insurance company controlling, controlled by or under common

control with the Insurer.

(B) "Application" means the application for this Policy, which shall be deemed to be a part

of this Policy and attached to it, regardless of physical attachment, including any materials or information submitted therewith or made available to the Insurer during the underwriting process, which application shall be on file with the Insurer.

Application shall also mean the application for any policy in an uninterrupted series of policies issued by the Insurer or any Affiliate of which this Policy is a renewal or replacement.

(C) "Claim" shall have the meaning specified for such term in each Coverage Part.

(D) "Company" means:

(1) The entity or organization that is the Named Insured; or

(2) any Subsidiary.

Company shall include any such entity as a Debtor in Possession as that term is defined in Chapter 11 of the United States Bankruptcy Code as well as any equivalent status under any similar law.

(E) "Defense Costs" means all reasonable and necessary legal fees and expenses incurred in

the defense of any Claim after such Claim has been made, and shall also include the reasonable and necessary expenses in connection with any appeal of such Claim or in connection with an Extradition, but shall not include the Company’s overhead expenses

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or any salaries, wages, fees, or benefits of any Insured Person or agents or Employees of the Company.

(F) "Extradition" means any formal and lawful process or proceeding commenced against

an Insured Person located in any jurisdiction in an attempt to obtain the voluntary or involuntary surrender of such Insured Person to another jurisdiction in connection with a Claim.

(G) "Employee" shall mean any past, present or future employee of the Company, other than

an Insured Executive, including any part-time, seasonal or temporary employee, acting solely in his or her capacity as such.

Employee shall also mean any person leased to the Company, but only if the Company indemnifies such leased person in the same manner as is provided to the Company’s permanent employees. Any person hired by contract to perform work for the Company, or who is an independent contractor for the Company, or who is a volunteer serving the Company, shall also be an Employee, but only if the Company indemnifies the person in the same manner as is provided to the Company’s permanent employees. However, this definition of Employee shall hereby expressly not apply for purposes of the Crime Coverage Part of this Policy.

(H) "ERISA" means the Employee Retirement Income Security Act of 1974 including any

amendments thereto and any rules or regulations promulgated thereunder, including but not limited to similar laws that are applicable to not-for-profit organizations.

(I) "Financial Insolvency" means the status of a Company as a result of the appointment of

any conservator, liquidator, receiver, rehabilitator, trustee, or similar official to control, supervise, manage or liquidate such Company; or such Company becoming a Debtor in Possession.

(J) “Insured Executive” means any or all of the following:

(1) a past, present or future duly elected trustee, director, duly appointed officer or duly

elected or appointed member of a board of managers of the Company, including any general counsel who is also an employee of the Company and other employed lawyers who are both employees and duly appointed officers of the Company;

(2) the functional equivalent of such director, officer or manager of the Company

when serving in such capacity outside the United States of America; or

(3) any duly elected or appointed member of a Medical, Scientific, or Technology

Advisory Board of the Company in such person’s capacity in such position.

(K) "Insured Person" shall have the meaning specified, if any, for such term in each Coverage

Part.

(L) "Insureds" shall have the meaning specified, if any, for such term in each Coverage Part.

(M) "Interrelated Wrongful Acts" means Wrongful Acts that are logically, causally or

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otherwise related based upon, arising from, resulting from, or in consequence of the same of related facts, circumstances, situations, transactions, causes or events, regardless of whether such Wrongful Acts are alleged by way of a single or multiple Claims under this Policy or any other policy in effect prior to the inception of the Policy Period.

(N) "Liability Coverage Part" means the Directors and Officers Liability, Employment

Practices Liability and Fiduciary Liability Coverage Parts, if granted and marked “YES” in ITEM 3 of the Declarations.

(O) "Loss" shall have the meaning specified, if any, for such term in each Coverage Part of

this Policy.

(P) "Named Insured" means the entity named in ITEM 1 of the Declarations.

(Q) "Policy Period" means the period set forth in ITEM 2 of the Declarations, or any shorter

period resulting from termination of this Policy pursuant to its terms and conditions.

(R) "Pollutants" means any solid, liquid, gaseous or thermal irritant, nuisance or contaminant,

including, without limitation, smoke, vapor, soot, fumes, acids, alkalis, chemicals, odors, noise, lead, oil or oil product, radiation, asbestos or asbestos-containing product, waste and any electric, magnetic or electromagnetic field of any frequency. Waste includes, without limitation, material to be recycled, reconditioned or reclaimed. Pollutants also means any substance located anywhere in the world identified on a list of hazardous substances or emissions issued by any federal agency or any state, local or foreign equivalent thereof.

(S) "Subsidiary" means any organization that is scheduled as a Subsidiary on an

endorsement to this Policy, or is created or acquired during the Policy Period and:

(1) is an organization in which and so long as the Named Insured owns or controls,

directly or indirectly, the right to elect, appoint or designate more than 50% of such organization’s managers; or

(2) is a foundation, charitable trust or political action committee in which and so

long as such entity or organization is controlled by the Named Insured or any Subsidiary as defined in (1) above.

(T) "Wrongful Act" shall have the meaning specified, if any, for such term in each Coverage

Part.

III. COVERAGE EXTENSIONS

(A) Spouses and Domestic Partners

Coverage under this Policy shall extend to the lawful spouse or domestic partner of an Insured Person for a Claim made against such spouse or domestic partner, provided that:

(1) the Claim arises solely from:

(a) such person's status as the spouse or domestic partner of an

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Insured Person; or

(b) such spouse's or domestic partner's ownership of property, and the property is sought solely as a source of recovery for a Wrongful Act by an Insured Person;

(2) the Insured Person is named in such Claim together with the spouse or domestic partner; and

(3) coverage of the spouse or domestic partner shall be on the same terms and conditions, including any applicable Retention, as apply to coverage of the Insured Person for such Claim.

No coverage shall apply to any Loss resulting from any act, error or omission of such spouse or domestic partner.

(B) Estates and Legal Representatives

In the event of the death, incapacity or bankruptcy of an Insured Person, any Claim made against the estate, heirs, legal representatives or assigns of such Insured Person for a Wrongful Act of such Insured Person shall be deemed to be a Claim made against such Insured Person. No coverage shall apply to any Loss directly resulting from any act, error or omission of such estate, heirs, legal representatives or assigns.

IV. LIMIT OF LIABILITY

With respect to all Coverage Parts and Liability Coverage Parts of this Policy:

(A) The Limit of Liability for each Liability Coverage Part in ITEM 3 of the

Declarations shall be the maximum aggregate amount that the Insurer shall pay under such Liability Coverage Part for all Loss from all Claims covered under such Liability Coverage Part.

(B) Notwithstanding the above, if a Combined Aggregate Limit of Liability for all Coverage

Parts is granted in ITEM 3 of the Declarations, then:

(1) such single Limit of Liability shall be the maximum aggregate amount that the

Insurer shall pay for all Loss covered under all included Coverage Parts combined; and

(2) any amount specified as a Limit of Liability for any individual Coverage Part in

ITEM 3 of the Declarations shall be subject to, part of, and not in addition to, the amount stated as the Combined Aggregate Limit of Liability for all Coverage Parts.

(C) At such time as any Limit of Liability under any Coverage Part of this Policy is exhausted, the premium for this Policy shall be deemed fully earned.

V. DEFENSE COSTS

Solely with respect to all Liability Coverage Parts of this Policy:

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(A) Defense Costs shall be part of, and not in addition to, each applicable Limit of Liability. Payment of Defense Costs by the Insurer shall reduce each Limit of Liability.

(B) Notwithstanding the above, if Defense Outside the Limit of Liability is included in ITEM

3 of the Declarations, then payment of Defense Costs shall be in addition to any applicable Limit of Liability, provided that:

(1) if a Limit of Liability is specified for any individual Liability Coverage

Part in ITEM 3 of the Declarations, then the maximum aggregate amount

that the Insurer shall pay for all Defense Costs from all Claims covered

under such Liability Coverage Part shall be limited and capped by the

percentage of the Limit of Liability indicated within ITEM 3 of the Declarations .

(2) if a Combined Aggregate Limit of Liability for all Coverage Parts is included in

ITEM 3 of the Declarations, then:

(a) the single maximum aggregate amount that the Insurer shall pay

for all Defense Costs from all Claims covered under all included Liability Coverage Parts combined shall be the percentage amount stated in ITEM 3 of the Declarations and shall only be a percentage of the Combined Aggregate Limit of Liability for all Liability Coverage Parts; and

(b) any amount of Defense Costs available for any individual Coverage Part

shall be subject to, part of, and not in addition to, the single maximum amount of Defense Costs available for all included Coverage Parts combined specified in Section V. (B) (2) (a), above; and

(3) if the amount available for Defense Costs in Sections V. (B) (1) or (2), above is

exhausted by the payment of Defense Costs, then Defense Costs shall be paid by the Insurer solely from any remaining applicable Limit of Liability until the exhaustion of the applicable Limit of Liability.

VI. RETENTIONS

Solely with respect to the Liability Coverage Parts of this Policy:

(A) The Insurer shall pay Loss only in excess of the Retention applicable to each

Claim as specified in ITEM 3 of the Declarations.

(B) All Retentions shall be borne by the Insureds at their own risk, and shall not be insured under any other insurance policy.

(C) If a Claim is covered under more than one Liability Coverage Part, the applicable

Retention for each Liability Coverage Part shall be applied separately to such Claim, provided that the maximum Retention applied to such Claim

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shall not exceed the highest of all applicable Retentions.

(D) No Retention shall apply to Loss incurred by any Insured Person that a

Company is not legally permitted to indemnify, or for which the Company is unable to legally indemnify by reason of its Financial Insolvency.

(E) If any Company is permitted or required by law to indemnify an Insured Person for Loss, or to advance Defense Costs on their behalf, and does not do so other than because of Financial Insolvency, then the Company and Named Insured shall be jointly and severally obliged to reimburse and hold harmless the Insurer for the Insurer’s payment or advancement of such Loss up to the amount of the Retention that would have applied if such indemnification had been made.

VII. DEFENSE AND SETTLEMENT

Solely with respect to the Liability Coverage Parts of this Policy and unless specifically stated to the contrary within such Coverage Part:

(A) The Insurer shall have the right and duty to defend any Claim for which the Insureds

give notice to the Insurer, even if such Claim is groundless, false or fraudulent. The Insurer may make any investigation of such Claim it deems appropriate, and according assign counsel at its sole choice and discretion to defend such Claim.

(B) The Insurer's duty to defend a Claim shall cease upon exhaustion of any applicable Limit

of Liability.

Notwithstanding the above, if Defense Outside the Limit of Liability is included in ITEM 3 of the Declarations then the Insurer's duty to defend any Claim shall cease upon exhaustion of the maximum aggregate amount of Defense Costs available under Section V. DEFENSE COSTS, and any applicable Limit of Liability.

(C) The Insureds shall not admit nor assume any liability, make any settlement offer, enter

into any settlement agreement, stipulate to any judgment, or incur any Defense Costs regarding any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any admission, assumption, settlement, stipulation, or Defense Costs to which it has not consented.

(D) If with respect to any Claim the Insureds consent to the first settlement opportunity which is recommended by the Insurer and which is acceptable to the claimant, the applicable Retention for Loss on account of such Claim shall be retroactively reduced 10%. If the Insureds refuse to consent to a settlement opportunity acceptable to the claimant in accordance with the Insurer’s recommendation, then with respect to all Loss (inclusive of Defense Costs) on account of such Claim which exceeds the amount for which such Claim could have been settled by the Insurer plus Defense Costs incurred prior to the date the Insureds first refused to consent to the proposed settlement of such Claim, the Insurer shall be liable under this Policy solely for 80% of the amount of Loss (inclusive of Defense Costs).

(E) Notwithstanding the above, if Defense Outside the Limit of Liability is included in ITEM

3 of the Declarations, then the Insurer may settle any Claim for a monetary amount that the Insurer deems reasonable and the consent of the Insureds shall not be

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required to settle such Claim.

(F) As a condition precedent to any payment obligations of the Insurer under this Policy,

the Insureds, severally according to their interests, shall provide the Insurer all information and cooperation as the Insurer may reasonably request to enable it to assess the causation, liability and damages issues and exposure with respect to such Insureds.

VIII. AWARENESS OF WRONGFUL ACT OR CIRCUMSTANCES AND NOTICE OF CLAIM AND OTHER MATTERS


(A) If, during the Policy Period, any Insured first becomes aware of a Wrongful Act or

circumstances that might reasonably be expected to give rise to a Claim for a Wrongful Act and if, during such Policy Period, the Insured provides the Insurer with written notice of the specific circumstances and actual, alleged or potential Wrongful Act, the consequences which have resulted or may result from such Wrongful Act or circumstances (including but not limited to actual or potential damages), the identities or descriptions of potential claimants, and the manner in which the Insured first became aware of such circumstances or Wrongful Act, then, any Claim subsequently made arising from such Wrongful Act or circumstances shall be treated as if it had been first made during the Policy Period.

(B) Any and all Claims shall be reported to the Insurer as soon as practicable after they

are first made against an Insured and first known by either the Company’s executive director, chief executive officer, chief financial officer, chief operating officer, general counsel or risk manager, but in no event later than ninety (90) days after the termination of the Policy Period, or Discovery Period, if applicable.

(C) All notices intended for the Insurer under this Policy, whether with regard to Claims,

Wrongful Acts, circumstances or any other matter pertaining to this Policy, should be directed to the appropriate address set forth in ITEM 7 of the Declarations.

IX. DISCOVERY PERIOD


(A) If either the Named Insured or the Insurer does not renew this Policy, the Insureds

shall have the right, upon payment of the additional premium set forth in ITEM 4 of the Declarations, to an extension of the insurance provided by this Policy with respect solely to any Claim first made during the Discovery Period set forth in ITEM 4 of the Declarations, but only with respect to a Wrongful Act occurring prior to the termination of the Policy Period.

(B) As a condition precedent to the right to purchase the Discovery Period, the total premium

for this Policy must have been paid in full. The right of the Insureds to purchase the Discovery Period shall be immediately terminated if the Insurer does not receive written notice from or on behalf of an Insured advising that any or all Insureds wish to purchase the Discovery Period together with full payment of the premium for the Discovery Period on a non-refundable basis within thirty (30) days after the

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termination of the Policy Period.

(C) The purchase of the Discovery Period shall not in any way increase the Limit of Liability

set forth in ITEM 3 of the Declarations, and the Limit of Liability with respect to Claims made during the Discovery Period shall be part of and not in addition to the Limit of Liability for all Claims made during the Policy Period.

This Section IX, Discovery Period, shall not apply to the Crime Coverage Part of this Policy.

X. RELATED CLAIMS


All Claims based upon, arising from or in any way related to the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to be a single Claim for all purposes under this Policy first made on the earliest date that:

(A) any of such Claims was first made, regardless of whether such date is before or during

the Policy Period;

(B) notice of any Wrongful Act described above was given to the Insurer under this Policy

pursuant to Section VIII. (A);

(C) notice of any Wrongful Act described above was given under any prior insurance policy,

whether issued by the Insurer, an Affiliate or any other insurance company.

XI. ALLOCATION


Where Insureds who are afforded coverage for a Claim incur an amount consisting of both Loss that is covered by this Policy and also amounts that are not covered by this Policy because such Claim includes both covered and uncovered matters or covered and uncovered parties, then coverage shall apply as follows:

(A) 100% of Defense Costs shall be allocated to covered Loss; and

(B) Loss other than Defense Costs shall be allocated between covered Loss and non-

covered amounts based upon the relative legal exposure of all parties to such matters.

XII. OTHER INSURANCE

Except for the Employment Practices Liability Coverage Part, if Loss arising from any Claim is insured under any other valid and collectible policy or policies, then this Policy shall apply only in excess of the amount of any deductibles, retentions and limits of liability under such other policy or policies, whether such other policy or policies are stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written specifically excess of this Policy by reference in such other policy or policies to this Policy's Policy Number.

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XIII. CANCELLATION AND NON-RENEWAL

(A) The Company as listed in ITEM 1 of the Declarations or any duly authorized party acting on its behalf shall have the exclusive right to cancel this Policy on behalf of any or all Insureds. Such cancellation may be effected by mailing to the Insurer written notice stating when such cancellation shall be effective, provided the date of cancellation is not later than the Expiration Date set forth in ITEM 2(B) of the Declarations. In such event, the Insurer shall retain the customary short rate portion of the earned premium. Return or tender of the unearned premium is not a condition of cancellation.

(B) The Insurer may cancel this Policy only for nonpayment of premium. In such event, the

Insurer shall deliver or mail written notice of cancellation to the Named Insured at the address stated in ITEM 1 of the Declarations not less than twenty (20) days before the effective date of cancellation. The notice shall state the reason for cancellation.

(C) The Insurer is under no obligation to renew this Policy upon its expiration. Upon the Insurer’s election to non-renew this Policy, the Insurer shall deliver or mail written notice of non-renewal to the Named Insured, at the address listed in ITEM 1 of the Declarations at least sixty (60) days before the Expiration Date set forth in ITEM 2(B) of the Declarations.

XIV. CHANGES IN EXPOSURE


(A) If, during the Policy Period, the Company consummates any of the following

transactions:

(1) makes an asset acquisition;

(2) acquires any entity, including one that is a Subsidiary; or

(3) assumes the liability of another entity,

then, insurance under this Policy shall only apply to a Claim for a Wrongful Act involving such assets or entities and first made against an Insured, provided that such Wrongful Act is committed or alleged to have been committed after such transaction closes.

(B) If, during the Policy Period, any entity ceases to be a Subsidiary, such Subsidiary

and its Insured Persons shall only be covered under this Policy with respect to a Claim for a Wrongful Act that occurred or allegedly occurred prior to the time such entity ceased to be a Subsidiary.

(C) If, during the Policy Period, there is a "change in control" of the Named Insured listed in

ITEM 1 of the Declarations, the coverage provided under this Policy shall continue to apply but only with respect to a Claim for a Wrongful Act occurring prior to the time of the "change in control." The entire premium for the Policy shall be deemed to be fully earned immediately upon the consummation of the "change in control" transaction.

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"Change in control" means:

(1) the merger or acquisition of the Named Insured listed in ITEM 1 of the Declarations, or of all or substantially all of its assets, by any other entity such that another entity becomes the surviving entity; or

(2) the acquisition by any person, entity, or affiliated group or persons or entities of the

right to vote for, select, or appoint more than fifty percent (50%) of the directors of the Named Insured listed in ITEM 1 of the Declarations.

XV. SUBROGATION

In the event of any payment under this Policy, the Insurer shall be subrogated to all of the potential or actual rights of recovery of the Company and the Insured Persons. The Company, through its Employees or other agents, and the Insured Persons shall execute all papers required and shall do everything necessary to secure such rights including but not limited to the execution of such documents as are necessary to enable the Insurer to effectively bring suit in their name, and shall provide all other assistance and cooperation which the Insurer may reasonably require. The Insurer does not waive, compromise or release any of its rights to recover Loss paid under this Policy from the issuers of any other insurance under which coverage may be owed.

XVI. REPRESENTATIONS AND SEVERABILITY

It is agreed by the Insureds that the particulars and statements contained in the Application and any information provided therewith (which shall be on file with the Insurer and attached hereto as if physically attached hereto) are the basis of this Policy and are to be considered as incorporated in and constituting a part of this Policy. It is further agreed by the Insureds that the statements in the Application or in any information provided therewith are their representations, that they are material and that this Policy is issued in reliance upon the truth of such representations; provided, in the event that the Application contains misrepresentations made with the actual intent to deceive, or contains misrepresentations which materially affect either the acceptance of the risk or the hazard assumed by the Insurer under this Policy, this Policy shall be void and have no effect whatsoever with respect to those Insureds who made or had knowledge of such misrepresentations. Knowledge of any matter which may give rise to a Claim or any misrepresentation made by the Company’s Executive Director, Chief Executive Officer or Chief Financial Officer shall be imputed to the Company, but shall not be imputed to any Insured Person who had no knowledge of the matter which may give rise to a Claim or the misrepresentation with respect thereto.

XVII. ACTION AGAINST THE INSURER


(A) Except for an action undertaken by or on behalf of an Insured, no action may be taken

against the Insurer unless, as a condition precedent thereto:

(1) there has been full compliance with all of the terms and conditions of this

Policy; and

(2) the amount of any liability of the Insured has been finally determined

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either by judgment against such Insured after actual trial, or by written agreement of the Insured, the claimant and the Insurer.

(B) Nothing contained herein shall give any person or entity the right to join the Insurer as

a party to any Claim against an Insured to determine its liability, nor may an Insured implead or join the Insurer in any such Claim.

(C) Assignment of the interest of any Insured under this Policy shall not bind the Insurer

unless its consent is endorsed hereon.

Solely with respect to the Crime Coverage Part of this Policy:

(D) No legal action shall be taken against the Insurer involving loss unless the

Insured has complied with all the terms of this Policy;

(E) No legal action shall be taken against the insurer involving loss until ninety

(90) days after the Insured has filed proof of loss with us; and

(F) No legal action shall be taken against the Insurer involving loss unless such action is

brought within two (2) years from the date that the Insured discovers such loss.

XVIII. INSOLVENCY OF THE COMPANY AND WAIVER OF AUTOMATIC STAY IN BANKRUPTCY

In the event that an insolvency or bankruptcy proceeding is commenced by or against the Company, the Company waives and releases any automatic stay or injunction which may apply to its benefit and advantage in such proceeding in connection with this Policy or its proceeds, and agrees not to oppose or object to any efforts by the Insurer or any Insured Person to obtain relief from any such stay or injunction that may be applied against their interests.

However, the rights of an Insured Person or the Company under this Policy shall not otherwise be affected by the bankruptcy or insolvency of the Company or any other Insured Person.

XIX. AUTHORIZATION AND NOTICES

The Named Insured as set forth in ITEM 1 of the Declarations shall act on behalf of any and all Insureds with respect to the giving and receiving of notices involving the Insurer and this Policy, as well as payment and any other action with regard to premiums and satisfaction of any Retention Amounts set forth in ITEM 3 of the Declarations.

XX. ENTIRE AGREEMENT

The Insureds agree that this Policy shall constitute the entire agreement between the Insurer and the Insureds in relation to the insurance afforded under the Policy.

Notice to any agent or knowledge possessed by any agent or other person acting or purporting to act on behalf of the Insurer shall not cause a waiver or change in any part of this Policy or prevent

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the Insurer from asserting any right under the terms, conditions and limitations of this Policy. The

terms, conditions and limitations of this Policy may only be waived or changed by written endorsement to the Policy signed by the Insurer.

XXI. HEADINGS, TITLES, NUMBER AND GENDER

Any headings or titles used with respect to any section or sub-section in this Policy are solely for descriptive convenience and shall not be construed as substantive provisions for purposes of interpreting any provision in the Policy.

Wherever used in this Policy, whether in defined or undefined terms, the singular number shall include the plural and vice versa. All personal pronouns shall include the female, male and neutral versions, regardless of which form is used, unless specific provision is made for a natural person as opposed to an entity.

XXII. TERRITORY AND CURRENCY

Insurance provided under this Policy shall apply to Claims that are made anywhere in the world.

The premiums, limits, Loss and other amounts set forth in this Policy are expressed and payable in the currency of the United States of America. If judgment is rendered, settlement is denominated or another element of Loss under this Policy is stated in a currency other than United States of America dollars, payment under this Policy shall be made in such dollars at the applicable rate of currency exchange published in The Wall Street Journal on the date the judgment becomes final or payment of the settlement or other element of Loss is due.

XXIII. CONFORMITY TO STATUTE AND REGULATION

If any provision in this Policy conflicts with any mandatory applicable law, regulation or rule or the provisions of a state amendatory endorsement attached to this Policy as required by applicable state insurance law, regulation or rule, then the terms of such law, regulation, rule or amendatory endorsement shall apply in place of the Policy provision.

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Directors, Officers and Company Liability Coverage Part

I. DIRECTORS, OFFICERS AND COMPANY LIABILITY INSURING AGREEMENTS

(A) Executive and Employee Liability

Except for Loss which the Insurer pays pursuant to Section I. (B) of this Coverage Part, the Insurer shall pay Loss on behalf of an Insured Person, which such Insured Person has become legally liable to pay as a result of a Claim first made against them during the Policy Period or Discovery Period, if applicable, for a Wrongful Act that takes place during or prior to the Policy Period.

(B) Company Indemnification Liability

The Insurer shall pay Loss on behalf of the Company for which the Company has, to the extent permitted or required by applicable law, indemnified an Insured Person, and which such Insured Person has become legally liable to pay as a result of a Claim first made against them during the Policy Period or Discovery Period, if applicable, for a Wrongful Act that takes place during or prior to the Policy Period.

(C) Company Liability

The Insurer shall pay Loss on behalf of the Company, which the Company has become legally liable to pay as a result of a Claim first made against it during the Policy Period or Discovery Period, if applicable, for a Wrongful Act that takes place during or prior to the Policy Period.

II. DEFINITIONS


(A) "Claim" means:

(1) a written demand for monetary or non-monetary relief, including any arbitration

or mediation that is commenced by a written request or demand for such proceeding, or a written request to waive or toll a statute of limitation;

(2) a civil or criminal judicial proceeding seeking monetary or non-monetary relief, including any appeal therefrom;

(3) a formal civil, criminal, administrative, or regulatory proceeding, including any appeal therefrom; or

(4) solely with respect to an Insured Person, a formal investigation of such

Insured Person in which such Insured Person has been identified by name in a subpoena, formal order or notice of investigation, as someone against whom a civil or criminal lawsuit or other legal proceeding may later be commenced.

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A Claim shall be deemed to have been first made at the earliest date of receipt by the Company, Insured Person or their agent of a written demand, criminal indictment or information, notice of charges or service of summons, subpoena or similar document commencing an investigation, lawsuit or proceeding against such Insured Person or the Company.

(A) "Insured" means:

(1) the Company; or

(2) any Insured Person

(B) "Insured Person" means:

(1) any Insured Executive; or

(2) any Employee

(C) "Loss" means judgment and settlement amounts (including pre- or post- judgment interest,

punitive or exemplary damages, and the multiplied portion of any damages award, provided that such amounts are insurable pursuant to the law in any jurisdiction whose law may reasonably be applicable and which holds such amounts to be insurable), and Defense Costs that an Insured is legally liable to pay. In determining applicable law with respect to any amounts referenced in this Definition only the following factors shall be considered.

− the state in which the Company is incorporated;

− the state in which the Company has its principal place of business;

− the state in which the litigation awarding punitive or exemplary damages was filed and maintained; or

− the state in which any Wrongful Act takes place and on which the punitive or exemplary damages award is predicated.

The Insurer shall not challenge any written opinion of counsel retained by or on behalf of an Insured asserting that the award of punitive or exemplary damages at issue is insurable, provided that such counsel is duly licensed to practice law in the jurisdiction whose law is opined to be applicable and such counsel agrees in writing that the Insurer is a party that may rely upon its opinion.

Loss shall also include taxes imposed by law upon any Insured Executive in his or her capacity as such solely in connection with any bankruptcy, receivership, conservatorship or liquidation of the Company, provided always that such taxes are insurable under applicable law.

Loss shall in no event include the following:

1. taxes (other than when imposed as described above in this

Definition);

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ESVP-31210000 (03/2018)

2. the cost of complying with any non-monetary relief;

3. any amounts otherwise uninsurable pursuant to applicable law; and

4. fines and penalties, except for civil penalties imposed upon an Insured

Executive pursuant to the Foreign Corrupt Practices Act (FCPA).

(D) "Outside Capacity" means service by an Insured Person as a director, officer,

trustee, regent, governor or equivalent executive of an Outside Entity with the knowledge and consent of or at the request of the Company.

(E) "Outside Entity" means any entity, other than the Company, which is:

(1) a not-for-profit corporation, community chest, fund or foundation that is exempt from

federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986;

(2) an entity organized for a religious or charitable purpose under any not- for-profit

statute; or

(3) an entity listed as an Outside Entity in a written endorsement issued by the Insurer to

form a part of this Policy.

(F) "Personal, Publishers and Advertising Injury" means, collectively, the following,

whether actual or alleged:

(1) false arrest;

(2) malicious prosecution or abuse of process;

(3) wrongful detention, entry, eviction or imprisonment;

(4) defamation, whether libel or slander;

(5) disparagement;

(6) plagiarism;

(7) misappropriation of ideas, trade secrets or trade dress;

(8) infringement of copyright, trademark or service mark; or

(9) unauthorized use of title.

(G) "Wrongful Act" means any actual or alleged:

(1) Personal, Publishers and Advertising Injury, error, misstatement,

misleading statement, act, omission, neglect, or breach of duty committed

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ESVP-31210000 (03/2018)

by an Insured Person in their capacity as such or in their Outside Capacity, or, with regard to Insuring Agreement (C) the Company; or

(2) matter claimed against an Insured Person, by reason of their serving in

such capacity, including service in an Outside Capacity.

III. COVERAGE EXTENSION FOR OUTSIDE DIRECTORSHIP LIABILITY

Subject to the terms and conditions of this Policy and Liability Coverage Part, coverage is afforded for Loss resulting from any Claim against an Insured Person for a Wrongful Act in an Outside Capacity. Such coverage shall be available and attach solely and specifically excess of all indemnity and insurance available from or provided by the Outside Entity. Payment by the Insurer or any Affiliate under any other insurance policy as a result of such Claim shall reduce by the amount of such payment obligation, the Limit of Liability available under this Policy for such Claim.

IV. ADDITIONAL LIMITS OF LIABILITY

Subject to the terms and conditions of this Policy and Liability Coverage Part and further subject to it being granted as indicated in ITEM 3 of the Declarations, an additional aggregate Limit of Liability shall be available for Loss resulting from a Claim against any Insured Executive, provided that:

(A) such Claim is covered under the Insuring Agreement set forth in Section I. (A) of

this Liability Coverage Part;

(B) such additional Limit shall apply solely in excess of all other insurance and indemnity available to pay Loss for such Claim, including, without limitation, this Policy and insurance written specifically as excess over this Policy, which such insurance must be fully exhausted by payment by the respective insurers thereunder prior to this additional Limit being made available to pay Loss; and

(C) such additional Limit shall be subject to the maximum aggregate Limit of Liability for this

Liability Coverage Part set forth in ITEM 3 of the Declarations.

V. EXCLUSIONS APPLICABLE TO ALL INSURING AGREEMENTS

The Insurer shall not pay Loss in connection with any Claim:

(A) for bodily injury, sickness, disease, emotional distress, mental anguish, or death of any person,

or damage to or destruction of any tangible property, including loss of use or diminution of value thereof;

(B) based upon, arising from, or in any way related to any prior or pending, suit or proceeding

against any Insureds as of the Prior or Pending Date in ITEM 3 of the Declarations, or the same or any substantially similar fact, circumstance or situation underlying or alleged in such suit or proceeding;

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ESVP-31210000 (03/2018)

(C) for any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other similar policy of which this Liability Coverage Part is effectively, in whole or in part, a renewal, replacement or which otherwise succeeds in time;

(D) based upon, arising from, or in any way related to any:

(1) actual or alleged discharge, dispersal, release, or escape of Pollutants, or any threat

of such discharge, dispersal, release or escape; or

(2) direction, request or voluntary decision to test for, abate, monitor, clean up, remove,

contain, treat, detoxify or neutralize Pollutants;

However, these exclusions in this Section V. (D) shall not apply to Loss otherwise covered under the Insuring Agreement set forth in Section I. (A) of this Coverage Part.

(E) based upon, arising from, or in any way related to any employment-related

Wrongful Act involving:

(1) unpaid wages (including overtime pay), workers' compensation benefits,

unemployment compensation, disability benefits, improper payroll deductions, improper employee classification, failure to maintain accurate time records, failure to grant meal and rest periods, or social security benefits; or

(2) actual or alleged violation of, ERISA, the Fair Labor Standards Act (FLSA), Equal

Pay Act (EPA), Worker Adjustment and Retraining Notification Act (WARN), the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), or any similar law;

(F) based upon, arising from, or in any way related to the rendering of, or failure to render, any

professional services for others, including, without limitation, services performed by any Insureds for or on behalf of a customer or client;

(G) that is brought or maintained by or on behalf of the Company, Outside Entity,

any director, officer or functionally equivalent position in an Outside Entity or any Insured Person, regardless of her or his capacity as such;

(H) based upon, arising from, or in any way related to an Insured Person's service, at any

time, as a director, officer, trustee, regent, governor or equivalent executive or as an employee of any entity other than the Company even if such service is at the direction or request of the Company, provided that this exclusion shall not apply to coverage afforded under Section III. of this Liability Coverage Part for a Claim for a Wrongful Act by an Insured Person while serving in an Outside Capacity;

(I) for:

(1) deliberately fraudulent, or deliberately criminal act or deliberately fraudulent or

deliberately criminal omission or any deliberate violation of any statute, rule, or law by the Company or an Insured Person; or

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ESVP-31210000 (03/2018)

(2) profit or remuneration gained by the Company or any Insured Person to which she, he or it is not legally entitled.

provided that the acts or conduct underlying the foregoing exclusions in this Section V. (I) are determined by a final adjudication, after exhaustion of all appeals (including petitions for rehearing), in the underlying Claim. These exclusions shall not be applicable to that part of Loss, which is comprised of Defense Costs. Neither the intent, knowledge nor Wrongful Act of any Insured Person or the Company shall be imputed to any other Insured Person to determine the application of these exclusions

VI. EXCLUSIONS SOLELY APPLICABLE TO INSURING AGREEMENT (C)

The Insurer shall not pay Loss under Insuring Agreement (C) in connection with any Claim based upon, arising from, or in any way related to any actual or alleged:

(A) liability under any contract or agreement, provided that this exclusion shall not apply to the

extent that liability would have been incurred in the absence of such contract or agreement;

(B) employment-related Wrongful Act;

(C) discrimination or sexual harassment;

(D) price fixing, restraint of trade, monopolization, unfair trade practices or any violation of

the Federal Trade Commission Act, Sherman Antitrust Act, Clayton Act, or any similar law regulating antitrust, monopoly, price fixing, price discrimination, predatory pricing or restraint of trade activities;

(E) infringement, dilution or misappropriation of copyright, patent, trademark, trade name, trade

dress, service mark, trade secrets, or other intellectual property; or

(F) a settlement or judgment amount, as well as Defense Costs in such Claim, that represents

the amount by which the purchase price or consideration is effectively increased in connection with a Claim alleging that the price or consideration paid or proposed to be paid in a transaction involving all or substantially all of the ownership interest in or assets of any entity is inadequate, as well as plaintiff counsel fees and costs awarded or settled as part of such Claim.

VII. PRIORITY AND ORDER OF PAYMENTS

If any amount sought as Loss payable under this Policy exceeds the available Limits of Liability or is subject to competing claims of different Insureds, then Loss shall be paid not exceeding the available Limits of Liability in the following order of priority:

(A) First to Loss covered under Section I. (A);

(B) Second to Loss covered under Sections I. (B) or (C) of this Coverage Part at the sole

election of the Company as to the timing of payment and applicable Section.

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ESVP-31210000 (03/2018)

EMPLOYMENT PRACTICES LIABILITY COVERAGE PART


(A) Employment Practices Wrongful Act Liability

The Insurer shall pay Loss on behalf of the Insureds resulting from an Employment Practices Claim first made against the Insureds during the Policy Period or Discovery Period, if applicable, for an Employment Practices Wrongful Act by the Insureds.

(B) Third Party Wrongful Act Liability

If Third Party Liability Coverage is granted by the Insurer and included in ITEM 3 of the Declarations, the Insurer shall pay Loss on behalf of the Insureds resulting from a Third Party Claim first made against the Insureds during the Policy Period or Discovery Period, if applicable, for a Third Party Wrongful Act by the Insureds.

This Insuring Agreement shall be subject to the Third Party Liability Coverage Sublimit of Liability, Retention, and Prior or Pending Date in ITEM 3 of the Declarations. Such Sublimit of Liability shall be the maximum aggregate amount that the Insurer shall pay under this Insuring Agreement for all Loss from all Claims covered under this Insuring Agreement. Such Sublimit of Liability shall be subject to, part of, and not in addition to, the Limit of Liability applicable to this Liability Coverage Part.

II. DEFINITIONS


(A) “Benefits” means perquisites, fringe benefits, severance payments, deferred compensation and any

other form of compensation (other than salaries, wages, or bonuses as a component of a front or back pay award).

(B) “Claim” means any,

(1) Employment Practices Claim; or

(2) Third Party Claim.

(C) “Employment Practices Claim” means any Claim brought by or on behalf of an

Employee, an applicant for employment with the Company, or an Independent Contractor that is:

(1) a written demand for monetary or non-monetary relief (including as example, a written

demand for reinstatement of employment), including any arbitration or mediation that is commenced by a written request or demand for such proceeding, or a written request to waive or toll a statute of limitation;

(2) a civil judicial proceeding seeking monetary or non-monetary relief, including any appeal therefrom;

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ESVP-31210000 (03/2018)

(3) a proceeding brought by, on behalf of or before the Equal Employment Opportunity Commission (EEOC) or similar federal, state or local governmental agencies, including any appeal therefrom.

“Employment Practices Claim” also means an audit conducted by the United States of America Office of Federal Contract Compliance Programs (OFCCP).

An Employment Practices Claim shall be deemed to have been first made at the earliest date of receipt by the Company, Insured Person or their agent of a written demand, notice of violation or charges or service of summons, subpoena, order to show cause or similar document commencing an investigation, lawsuit or proceeding against such Insured Person or the Company.

“Employment Practices Claim” shall not include any labor or grievance proceeding or arbitration that is subject to a collective bargaining agreement.

(D) “Employment Practices Wrongful Act” means any actual or alleged:

(1) wrongful dismissal, discharge, or termination of employment (including constructive

dismissal, discharge, or termination), wrongful failure or refusal to employ or promote, wrongful discipline or demotion, failure to grant tenure, negligent employment evaluation, or wrongful deprivation of career opportunity;

(2) sexual or other workplace harassment, including quid pro quo and hostile work environment;

(3) employment discrimination, including discrimination based upon age, gender, race, color,

national origin, religion, creed, marital status, sexual orientation or preference, gender identity or expression, genetic makeup, or refusal to submit to genetic makeup testing, pregnancy, disability, HIV or other health status, Vietnam Era Veteran or other military status, or other protected status established under federal, state, or local law;

(4) Retaliation;

(5) breach of any oral, written, or implied employment contract, including, without limitation,

any obligation arising from a personnel manual, employee handbook, or policy statement; or

(6) violation of the Family and Medical Leave Act.

Employment Practices Wrongful Act shall also mean the following, but only when alleged in addition to or as part of any Employment Practices Wrongful Act described above:

(a) employment-related wrongful infliction of emotional distress;

(b) failure to create, provide for or enforce adequate or consistent employment-

related policies and procedures;

(c) negligent retention, supervision, hiring or training; or

(d) employment-related invasion of privacy, defamation, or

misrepresentation.

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ESVP-31210000 (03/2018)

(E) “Independent Contractor” means any natural person working in the capacity of an independent contractor pursuant to an Independent Contractor Agreement.

(F) “Independent Contractor Agreement” means any written and express contract or

agreement between an Independent Contractor and an Insured Entity specifying the terms of the Insured Entity’s engagement of such Independent Contractor.

(G) “Insured” means:

(1) the Company; or

(2) any Insured Person.

(H) “Insured Person” means any:

(1) Employee;

(2) Insured Executive; or

(3) solely with regard to Insuring Agreement (A), an Independent Contractor,

provided that within 30 days of an Employment Practices Claim having been made against such Independent Contractor that the Company agrees in writing to indemnify such Independent Contractor for any Loss arising out of such Claim.

(I) “Loss” means the amount that the Insureds are legally liable to pay solely as a result of a Claim

covered by this Liability Coverage Part, including Defense Costs, compensatory damages, front pay and back pay, settlement amounts, pre- and post-judgment interest, and costs awarded pursuant to judgments.

Loss also includes all damages, including liquidated damages, awarded under the Age Discrimination in Employment Act.

However, Loss shall not include:

(1) taxes, fines or penalties imposed by law;

(2) non-monetary relief;

(3) Benefits;

(4) future compensation for any person hired, promoted, or reinstated pursuant to a

judgment, settlement, order or other resolution of a Claim;

(5) Stock Benefits;

(6) costs associated with providing any accommodations required by the Americans with

Disabilities Act or any similar law;

(7) any other matters uninsurable pursuant to any applicable law; provided, however, that with

respect to punitive, exemplary, multiple or liquidated damages, the insurability of such

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ESVP-31210000 (03/2018)

damages shall be governed by the internal laws of any applicable jurisdiction that most favors coverage of such damages.

(J) “Retaliation” means adverse treatment of an Employee or Independent Contractor based upon such person:

(1) exercising any rights under law, including, without limitation, rights under any workers

compensation laws, the Family and Medical Leave Act, ERISA, or the Americans with Disabilities Act;

(2) refusing to violate any law;

(3) assisting, testifying, or cooperating with a proceeding or investigation regarding alleged

violations of law by any Insured;

(4) disclosing or threatening to disclose alleged violations of law to a superior or to any

governmental agency; or

(5) filing any “whistle blower” claim against any Insured under the federal False Claims Act,

the Sarbanes-Oxley Act of 2002, or any similar law.

(K) “Stock Benefits” means any offering, plan or agreement between the Company and any

Employee that grants stock, stock options or stock appreciation rights in the Company to such person, including, without limitation, restricted stock or any other stock grant. Stock Benefits shall not include employee stock ownership plans or employee stock purchase plans.

(L) “Third Party” means any natural person who is a customer, vendor, service provider or other

business invitee of the Company, and shall not include Employees.

(M) “Third Party Claim” means any Claim brought by or on behalf of a Third Party that is:

(1) a written demand for monetary or non-monetary relief, including any arbitration or

mediation that is commenced by a written request or demand for such proceeding, or a written request to waive or toll a statute of limitation;

(2) a civil judicial proceeding seeking monetary or non-monetary relief, including any appeal

therefrom;

A Third Party Claim shall be deemed to have been first made at the earliest date of receipt by the Company, Insured Person or their agent of a written demand, notice of violation or charges or service of summons, subpoena, order to show cause or similar document commencing an investigation, lawsuit or proceeding against such Insured Person or the Company.

(N) “Third Party Wrongful Act” means any actual or alleged:

(1) discrimination against a Third Party based upon age, gender, race, color, national origin,

religion, creed, marital status, sexual orientation or preference, pregnancy, disability, HIV or other health status, Vietnam Era Veteran or other military status, or other protected status established under federal, state or local law; or

(2) sexual harassment against a Third Party, including unwelcome sexual advances, requests

Attachment 2

ESVP-31210000 (03/2018)

for sexual favors or other conduct of a sexual nature.

III. EXCLUSIONS APPLICABLE TO ALL INSURING AGREEMENTS

(A) The Insurer shall not pay Loss in connection with any Claim:

(1) for bodily injury, sickness, disease, death, false arrest or imprisonment, abuse of process,

malicious prosecution, trespass, nuisance or wrongful entry or eviction, or for injury to or destruction of any tangible property including loss of use or diminution of value thereof;

(2) for any actual or alleged Employment Practices Wrongful Act or Third Party

Wrongful Act by Insured Persons of any Subsidiary in their capacities as such, or by any Subsidiary, if such Wrongful Act actually or allegedly occurred when such entity was not a Subsidiary;

(3) based upon, arising from, or in any way related to any suit, or proceeding against any Insured,

including any audit initiated by the OFCCP pending as of or commenced before the Prior or Pending Date in ITEM 3 of the Declarations, or the same or substantially similar fact, circumstance, or situation underlying or alleged in such suit, proceeding, or audit;

(4) for any Employment Practices Wrongful Act or Third Party Wrongful Act, fact,

circumstance or situation which has been the subject of any written notice given under any other similar policy of which this Liability Coverage Part is effectively, in whole or in part, a renewal, replacement or which otherwise succeeds in time;

(5) based upon, arising from, or in any way related to the liability of others assumed by an

Insured under any contract or agreement; provided, however, this exclusion shall not apply to liability that would have been incurred in the absence of such contract or agreement;

(6) for breach of any Independent Contractor Agreement;

(7) based upon, arising from, or in any way related to unpaid wages (including overtime pay),

workers’ compensation benefits, unemployment compensation, disability benefits, improper payroll deductions, improper employee classification, failure to maintain accurate time records, failure to grant meal and rest periods, or social security benefits; or

(8) based upon, arising from, or in any way related to any actual or alleged violation of the Fair

Labor Standards Act (FLSA) (except for Equal Pay Act (EPA)), Worker Adjustment and Retraining Notification Act (WARN), the National Labor Relations Act (NLRA), the Occupational Safety and Health Act (OSHA), the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), ERISA, or any similar federal, state or local law;

Provided that the exclusions set forth in this Section III. (A) (7) and (8) shall not apply to that portion of Loss that represents a specific amount the Insureds become legally obligated to pay solely predicated upon Retaliation.

(9) based upon, arising from, or in any way related to liability incurred for breach of any oral,

written, or implied employment contract; provided, however, this exclusion shall not apply to liability that would have been incurred in the absence of such contract; provided, however, that this exclusion shall not apply to the portion of Loss representing Defense

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ESVP-31210000 (03/2018)

Costs incurred to defend against such liability.

IV. EXCLUSION APPLICABLE TO INSURING AGREEMENT (B)

Solely with respect to Insuring Agreement (B), the Insurer shall not pay Loss in connection with any Third Party Claim based upon, arising from or in any way related to any price discrimination or violation of any anti-trust law or any similar law designed to protect competition or prevent unfair trade practices.

V. OTHER INSURANCE

(A) The coverage provided under this Policy for any Employment Practices Claim shall be primary.

(B) Notwithstanding the above, the coverage provided under this Policy for any Employment

Practices Claim made against a temporary, leased or loaned Employee or an Independent Contractor shall be excess of the amount of any deductible, retention and limits of liability under any other policy or policies applicable to such Claim, whether such other policy or policies are stated to be primary contributory, excess, contingent or otherwise, unless such other insurance is written specifically excess of this Policy by reference in such other policy or policies to this policy’s Policy Number.

(C) Other than as provided in Section V. (A) and V. (B), above, Section XII., Other Insurance, set

forth in the General Terms and Conditions Part of this Policy shall apply.

VI. COORDINATION OF COVERAGE

If this Liability Coverage Part and either the Directors, Officers and Company Liability Coverage Part or Fiduciary Liability Coverage Part are included under this Policy, and a Claim is covered under this Liability Coverage Part and any such other Liability Coverage Part, Loss shall be first covered and paid under this Liability Coverage Part.

If notice of a Claim has been given under either the Directors, Officers and Company Liability Coverage Part or Fiduciary Liability Coverage Part and a determination is made by the Insurer that such Claim would be covered under this Liability Coverage Part if notice had been given under this Liability Coverage Part, then the Insureds shall be deemed to have given notice of such Claim under this Liability Coverage Part at the same time that notice was given under such other Liability Coverage Part.

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ESVP-31210000 (03/2018)

IN WITNESS WHEREOF, Hudson Insurance Company has caused this policy to be signed by its President and Corporate Secretary at 100 William Street, New York, NY 10038 but this policy will not be effective unless the Insurer shall have issued a Policy Certificate as part of this policy.

President Secretary

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ESVP-31210000 (03/2018)

Policyholder Disclosure Notice of Terrorism Insurance Coverage

Coverage for acts of terrorism is included in this policy. You (the Insured) are hereby notified that under the Terrorism Risk Insurance Act, as amended in 2007, the definition of terrorism has changed. As defined in Section 102(1) of the Act: the term “act of terrorism” means any act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States, to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of certain air carriers or vessels or the premises of a United States mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. Under your coverage, any losses resulting from certified acts of terrorism may be partially reimbursed by the United States Government under a formula established by the Terrorism Risk Insurance Act, as amended. However, your policy may contain other exclusions which might affect your coverage, such as exclusion for nuclear events. Under the formula, the United States Government generally reimburses 85% of covered terrorism losses exceeding the statutorily established deductible paid by the insurance company providing the coverage. The Terrorism Risk Insurance Act, as amended, contains a $100 billion cap that limits U.S. Government reimbursement as well as insurers’ liability for losses resulting from certified acts of terrorism when the amount of such losses exceeds $100 billion in any one calendar year. If the aggregate insured losses for all insurers exceed $100 billion, your coverage may be reduced. The portion of your annual premium that is attributable to coverage for acts of terrorism is $0.00 and does not included any charges for the portion of losses covered by the United States Government under the Act. Nothing contained herein shall vary, alter or extend the terms, conditions and limitations of the policy except as stated above. HUDSON INSURANCE COMPANY


Attachment 2

ESF-31230005 (3/2012) Page 1 of 2

Policy Number: SFD31211070-01 Endorsement Number: 01 Endorsement Effective Date: 07/01/2019 (12:01 a.m. local time)

California Amendatory Endorsement It is agreed that the above-numbered policy is amended as follows:

Section VI.I Termination of Policy; No Obligation to Renew is amended by adding the following wording which supersedes any provision to the contrary:

1. If this policy has been in effect for more than sixty (60) days, or if this is a renewal policy of the

Insurer, this policy may be canceled by the Insurer only upon the occurrence, after the effective date of the policy, of one or more of the following: a. Non-payment of premium, including payment due on a prior policy issued by the Insurer and

due during the current policy term covering the same risks; b. Discovery of fraud or material misrepresentation by:

1. Any Insured or their Insurance Representative in obtaining this insurance; or 2. Any Insured or their Insurance Representative in pursuing a Claim under this policy;

c. A judgment by a court or an administrative tribunal that any Insured has violated a California or federal law, having as one of its necessary elements an act which materially increases any of the risks insured against;

d. Discovery of willful or grossly negligent acts or omissions, or of any violations of state laws or regulations establishing safety standards, by any Insured or their Insurance Representative, which materially increase any of the risks insured against;

e. Failure by the Insured or their Insurance Representative to implement reasonable loss control requirements, agreed to by the Insured as a condition of policy issuance, or which were conditions precedent to our use of a particular rate or rating plan, if that failure materially increases any of the risks insured against;

f. A determination by the Commissioner of Insurance that the: 1. Loss of or change in the Insurer’s reinsurance covering all or part of the risk would threaten

the Insurer’s financial integrity or solvency; or 2. Continuation of the policy coverage would place the Insurer in violation of California law, or

the laws of the state where the Insurer is domiciled, or threaten the solvency of the Insurer; g. A change by the Insured or their Insurance Representatives in the activities or property of the

commercial or industrial enterprise which results in a materially added, increased or changed risk, unless the added, increased or changed risk is included in the policy.

2. If this policy is canceled by the Insurer based on one or more of the above reasons it shall mail a

written notice of cancellation stating the reason(s) for cancellation to the Insured shown in ITEM 2 of the Policy Certificate, and to the Insurance Representative shown in ITEM 1 of the Policy Certificate, at least:

a. Ten (10) days before the effective date of cancellation if the policy is canceled for reasons (a) or

(b) stated above; or b. Thirty (30) days before the effective date of cancellation if the policy is canceled for any other of

the above reasons.

3. Subject to the provisions of the following paragraph, if the Insurer elects not to renew this policy it will mail or deliver a written notice of non-renewal stating the reason for non-renewal to the Insured

Attachment 2

ESF-31230005 (3/2012) Page 2 of 2

shown in ITEM 2 of the Policy Certificate, and to the Insurance Representative shown in ITEM 1 of the Policy Certificate, at least sixty (60) days but not more than one hundred twenty (120) days before the anniversary or expiration date of this policy. Non-renewal notice will be mailed or delivered to the addresses shown in the Policy Certificate.

4. The Insurer is not required to send notice of non-renewal in the following situations:

a. If the transfer or renewal of a policy without any changes in terms, conditions or rates, is

between the Insurer and a company within the same insurance group; b. If the policy has been extended for ninety (90) days or less, provided that notice has been given

in accordance with the time periods specified in the preceding paragraph; c. If the Insured shown in ITEM 2 of the Policy Certificate has obtained replacement coverage, or

if the Insured has agreed in writing within sixty (60) days of the termination of the policy to obtain that coverage;

d. If the policy is for a period of no more than sixty (60) days and the Insured shown in ITEM 2 of the Policy Certificate is notified at the time of issuance that it will not be renewed; or

e. If the Insured requests a change in the terms and conditions or risks covered by the policy within sixty (60) days of the end of the policy period.

Nothing contained herein shall vary, alter or extend the terms, conditions and limitations of the policy except as stated above. This endorsement is part of the above-numbered policy and is effective as of the Endorsement Effective Date shown above. It is not binding unless signed by an authorized representative of the Insurer. HUDSON INSURANCE COMPANY


Attachment 2

ESF-31220099 (03/2017) Package Policy Version Page 1 of 9 Euclid Specialty Managers, LLC


AmWINS Vanguard Elite Alliant Public Pension Practice Enhancement Endorsement for the Vanguard Package Policy

In consideration of the premium charged it is agreed that the FIDUCIARY COVERAGE PART of the above-numbered policy is amended as follows:

1. Amend II. DEFINITIONS A. Administration (including Settlor Coverage)

The definition of Administration in Section II. DEFINITIONS A. of the policy is deleted and replaced with the following:

A. Administration means:

a. handling records, giving advice, counsel or interpretation to participants or beneficiaries

regarding a Plan; or b. affecting enrollment, termination, or cancellation of participants or beneficiaries under an Plan;

or c. complying with the privacy provision of HIPAA, or any similar statute, rule or regulation,

regarding a Plan; or d. any matter claimed against an Insured solely by reason of serving as an administrator of

a Plan; or e. determining and calculating benefits regarding a Plan, including making determinations of

eligibility, calculation of benefits or payment of benefits; or f. supervising, reviewing, recommending or directing payment or denial of payment under a Plan; or g. determining eligibility or coverage for or under a Plan; or h. distributing or filing required notices or documents; or i. complying with the notice provisions of the Consolidated Omnibus Budget Reconciliation

Act of 1985 (COBRA); j. or any act, error or omission committed, attempted or allegedly committed or attempted by an

Insured solely in such Insured’s settlor capacity with respect to establishing, amending, terminating, or funding a Plan.

2. Amend II. DEFINITIONS C. Claim

The definition of Claim in Section II. DEFINITIONS C. of the policy is deleted and replaced with the following: Claim means:

1. written demand for:

a. monetary or non-monetary (including injunctive) relief; or b. arbitration, mediation or other alternative dispute resolution against an Insured for a

Wrongful Act, commenced by the first receipt of such demand by an Insured.

Attachment 2


2. proceeding, including any appeal therefrom, against an Insured for a Wrongful Act, commenced by:

a. the service of a civil complaint or similar pleading; b. the filing of a notice of charges or the entry of a formal order of investigation in connection

with a formal civil administrative or formal regulatory proceeding, other than an administrative or dispute resolution proceeding handled internally by a governmental entity, body, agency or subdivision; or

c. solely with respect to a criminal proceeding, an arrest or the return of an indictment, information or similar document;

3. written notice of commencement of a fact-finding investigation by the U.S. Department of Labor

or the U.S. Pension Benefit Guaranty Corporation, against any Insured for a Wrongful Act.

4. investigation of an Insured Person, solely in his or her fiduciary capacity with respect to any Plan, for a Wrongful Act, commenced by the Insured Person’s receipt of a written document from an Enforcement Unit identifying such Insured Person as the target of an investigation, including a Wells Notice, target letter, search warrant, civil investigation demand or subpoena.

5. written notice of commencement of a Pre-Claim Investigation or Benefit Claim Denial, if, at

the Insured’s option, it is reported to the Insurer in writing during the policy period; or

6. a notice of participation in a Voluntary Compliance Program, solely with respect to the Voluntary Compliance Program coverage in Insuring Agreement I.B.

The following definitions are added to Section II. DEFINITIONS of the policy:

Benefit Claim Denial means an appeal of an adverse determination by an Insured pursuant to the U.S. Department of Labor’s claim procedure regulation 29 C.F.R. Section 2560.503-1(h) or any similar claim procedures pursuant to applicable law.

Pre-Claim Investigation means a fact-finding investigation which does not contain any allegation of a Wrongful Act in writing, commenced by the U.S. Department of Labor or the U.S. Benefit Guaranty Corporation.

3. Amend Definition of Insured

The definition of Insured in Section II. DEFINITIONS I. of the policy is deleted and replaced with the following:

I. Insured means:

1. any Plan; 2. the Named Insured on the Policy Declarations, but only with respect to services rendered on behalf

of any Plan; 3. any natural person serving as a past, present or future trustee, committee member, employee,

director, officer, general counsel, governor, general partner, management committee member, member of the board of managers, fiduciary, in-house administrator or public official of a Plan or the Named Insured in his or her Administration of a Plan or in his or her capacity as a fiduciary or trustee of a Plan.

4. any other entity or natural person designated as an additional Insured by written endorsement to this policy.

Attachment 2


5. Amend Definition of Wrongful Act

The definition of Wrongful Act in Section II. DEFINITIONS O. is deleted in its entirety and replaced with the following:

O. Wrongful Act means:

1. any breach of the responsibilities, obligations or duties imposed upon fiduciaries of a Plan by an

Employee Benefit Law; 2. any negligent act, error or omission by any Insured in the Administration of any

Plan; 3. with respect to Claims Expenses only, any negligent act, error or omission, other than a

wrongful employment practice, by an Insured solely in such Insured’s capacity as a trustee of a Plan that is not otherwise covered in subparagraphs (1) and (2) above, or subparagraph (4) below;

4. any act, error or omission committed, attempted or allegedly committed or attempted by an Insured, solely in such Insured’s settlor capacity with respect to establishing, amending, terminating or funding a Plan; and

5. any failure to comply with the provisions of HIPAA, the Health Information Technology for Economic and Clinical Health Act (HITECH) of 2009, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 with respect to a Plan.

6. Add Definition of Non-Indemnifiable Loss

The following definition of Non-Indemnifiable Loss is added to Section II. DEFINITIONS as follows:

Non-Indemnifiable Loss means Loss incurred by a natural person Insured that the Plan has not paid, advanced or indemnified to the natural person Insured due to financial insolvency of the Plan, or because the Plan has provided written notice of refusal to pay, advance or indemnify to the natural person Insured after written request or demand by the natural person Insured for payment, advancement or indemnification. The Plan shall be deemed permitted or required to pay, advance or indemnify Loss to a natural person Insured.

6. Amend III. DEFENSE AND SETTLEMENT

The following is added to Section III. DEFENSE AND SETTLEMENT:

Notwithstanding any of the foregoing, if all Insureds are able to dispose of all Claims that are subject to one retention amount (as set forth in ITEM 5. of the Policy Certificate) for an amount not exceeding such retention amount (inclusive of Claim Expenses) then the Insurer’s consent shall not be required for such disposition.

7. Amend Personal Profit Exclusion

Section V. EXCLUSIONS A.1. is deleted in its entirety and replaced with the following:

A. The Insurer will not be liable for any Loss on account of any Claim against any Insured:

1. Arising out of, based upon or attributable to any:

Attachment 2


a. personal profit or financial advantage to which the Insured was not legally entitled; or b. deliberately criminal or deliberately fraudulent act;

if established by any final, non-appealable adjudication in the underlying action or proceeding other than an action or proceeding initiated by the Insurer to determine coverage under the policy;

8. Amend Prior or Pending Litigation Exclusion


The Insurer will not be liable for any Loss on account of any Claim against any Insured:

5. Based upon, arising from or in consequence of:

a. any act, error, omission, fact, circumstance, transaction, event, decision or Wrongful Act if written notice thereof has been given and accepted under any policy of which this policy is a renewal or replacement if such prior policy affords coverage or, but for the exhaustion of its limit or limits or liability, would have afforded coverage for such Loss, in whole or in part, as a result of such notice; or

b. any demand, suit or other proceeding, or order, decree or judgment rendered, against any Insured of which the Insured had notice on or prior to the Pending or Prior Proceeding Date set forth in ITEM 6 of the Policy Certificate of this policy, or the same or substantially similar facts or circumstances underlying or alleged in any such demand, suit, proceeding, order, judgment or decree;

9. Amend Contract Exclusion


Based upon, arising from or in consequence of any liability of others assumed by any Insured under any contract or agreement; however, this exclusion shall not apply: (i) to Claim Expenses; and (ii) to the extent that liability would have attached to the Insured in the absence of such contract or agreement; or (iii) to the extent the liability was assumed in accordance with or under the Plan’s declaration of trust or equivalent document pursuant to which the Plan was established.

10. Amend Full Severability of Exclusions

Section V. EXCLUSIONS B. is deleted in its entirety and replaced with the following:

B. Full Severability of Exclusions

No facts pertaining to or knowledge or information possessed by any Insured will be imputed to any other Insured to determine the application of any of the above Exclusions.

11. Amend VI. CONDITIONS A.13. Limits of Liability and Retentions

Section VI. CONDITIONS A.13. Limits of Liability and Retentions is deleted in its entirety and replaced with the following:

The obligations of the Insurer to pay Loss, including Claim Expenses, will only be in excess of any

applicable retention as stated in ITEM 4(A) of the Policy Certificate as amended by this Endorsement. If a single Loss is subject to more than one retention amount, the largest retention amount shall be the

Attachment 2


maximum retention amount applicable to such Loss. Loss arising out of the same Wrongful Act of any Insured shall be deemed one Loss and only one retention amount shall apply to such Loss.

If (including, but not limited to insolvency) the Plan fails or refuses to advance, pay or indemnify covered Claims Expenses of any natural person Insured(s) within the retention for all Loss as to any natural person Insured(s), then the Insurer shall advance covered Claim Expenses on a current basis, but no later than sixty (60) days after the receipt by the Insurer of properly itemized and detailed Claim Expenses invoices, on behalf of the natural person Insured(s) until either (i) the Plan has agreed to make such payments, or (ii) the retention for all Loss as to any natural person Insured(s) has been satisfied. In no event shall any such advancement by the Insurer relieve the Plan of any duty it may have to provide advancement, payment or indemnification to any natural person Insured. The natural person Insured(s) agree that such advancement amounts shall be repaid to the Insurer by the natural person Insured(s) severally according to their respective interests if and to the extent it is finally established that any such natural person Insured(s) shall not be entitled under the terms and conditions of this Policy to coverage for such Claim Expenses. Advancement, payment or indemnification of a natural person Insured(s) Claim Expenses by the Plan is deemed “failed” if it has been requested by a natural person Insured in writing and has not: (i) been provided; (ii) agreed to be provided; or (iii) acknowledged as an obligation by the Plan within forty-five (45) days of such request. Advancement, payment or indemnification by the Plan is deemed “refused” if the Plan gives a written notice of the refusal to the natural person Insured. Advancement, payment or indemnification of a natural person Insured(s) Claim Expenses by the Plan shall only be deemed “failed” or “refused” to the extent such advancement, payment or indemnification is not: (i) provided; (ii) agreed to be provided; or (iii) acknowledged by and collectible from the Plan. Any payment or advancement by the Insurer within the retention for all Loss as to any natural person Insured(s) shall apply toward the exhaustion of the limit of liability set forth in ITEM 4(A) of the Policy Certificate.

12. Amend Policy Retention for Non-Indemnifiable Loss

ITEM 5. Retention (each Claim) in the Policy Certificate is revised to add the following retention for Non-Indemnifiable Loss as to any natural person Insured: $0.00

The Insurer’s liability hereunder shall apply to that part of Loss which is excess of the retention set forth in the ITEM 4(A) of the Policy Certificate, as amended in this endorsement, and such retention shall be borne by the Insured at its own risk. The retention for Non-Indemnifiable Loss shall apply to Loss for which the Insured or any governmental body, agency or subdivision has neither indemnified nor is permitted or required to indemnify a natural person Insured. The Insured shall be deemed permitted or required to indemnify any natural person Insured. The retention amount for Indemnifiable Loss shall apply to all other Loss.

If a single Loss is subject to more than one retention amount, the largest retention amount shall be the maximum retention amount applicable to such Loss. Loss arising out of the same Wrongful Act of any Insured shall be deemed one Loss and only one retention amount shall apply to such Loss.

13. Amend Waiver of Right of Recourse

Section VI. CONDITIONS H. Subrogation; Waiver of Right of Recourse is deleted in its entirety and replaced with the following:

In the event of any payment under this policy, the Insurer shall be subrogated to the extent of such payment to all the Insured(s) right of recovery. Unless required pursuant to any Employee Benefit Law, in no event shall the Insurer exercise its rights of subrogation against an Insured. If this policy is purchased by the Plan and if the Insurer pays Loss under this policy, then the Insurer shall have a

Attachment 2


right of recovery for such Loss against any Insured that caused or contributed to such Loss, other than the Plan. However, if this policy is purchased in whole or in part by an Insured other than the Plan, the Insurer shall have no right of recovery against an Insured. With respect to any Insured that ceases to be an Insured before or during the policy period, this waiver of recourse will continue to apply with respect to such Insured until the end of the policy period and in subsequent policy period(s). The Insured(s) shall execute and deliver all instruments and papers and do whatever else is necessary to secure and preserve such rights, including the execution of such documents necessary to enable the Insurer effectively to bring suit in the name of the Insured.

14. Amend Other Insurance Provision

Section VI. CONDITIONS F. Other Insurance is deleted in its entirety and replaced with the following:

Other Insurance

All Loss payable under this policy will be specifically excess of and will not contribute with any other valid and collectible fiduciary liability, general liability, employment practices liability or cyber liability policy or policies, whether such other insurance is stated to be primary, contributing, excess (except insurance specifically in excess of this policy), contingent or otherwise.

15. Amend Allocation Provision

Section VI. CONDITIONS H . Allocation is deleted in its entirety and replaced with the following:

If, in connection with a Claim, both Loss covered by this policy and loss not covered by this policy are incurred, either because the Claim contains both covered and uncovered matters or because the Claim is made in part against persons or entities not insured hereunder, the Insureds and the Insurer will use their best efforts to determine a fair and appropriate allocation of amounts incurred in connection with such Claim as between Loss covered under this policy and loss not covered under this policy. The Insureds and the Insurer agree that, in determining such a fair and appropriate allocation, the parties will take into account the relative legal and financial exposures associated with any such covered and uncovered matters, as well as the relative legal and financial exposures of, and the relative benefits obtained in connection with the defense and/or settlement of any Claim by, the Insureds and other persons or entities not insured hereunder. If an agreement between the Insureds and the Insurer as to a fair and appropriate allocation cannot be reached, then the Insurer will pay or advance that portion of those amounts incurred in connection with such Claim which the Insureds and the Insurer agree constitutes Loss covered under this policy until a final allocation is agreed upon or determined pursuant to the provisions of this policy and applicable law. However, if, in connection with a Claim, the Insureds incur both Claims Expenses covered by this policy and Claims Expenses not covered by this policy, the Insurer shall pay one hundred percent (100%) of such covered and otherwise uncovered Claims Expenses.

16. Amend Extended Reporting Period

Section IV. EXTENSIONS OF COVERAGE B. Extended Reporting Period is deleted in its entirety and replaced with the following: 1. If this policy is terminated or not renewed for any reason other than the non-payment of premium, the

Insureds will have the right to purchase an extension of the coverage granted by this policy (the “extended reporting period”) after the effective date of such termination or non-renewal by paying the additional premium shown below:

Extended Reporting Period Premium

Attachment 2


One (1) Year 100% of original premium Two (2) Years 175% of original premium Three (3) Years 200% of original premium This additional premium must be paid within thirty (30) days after the effective date of the termination or non-renewal of the policy, and will be deemed to have been fully earned immediately as of the inception of the extended reporting period.

2. The extended reporting period, if purchased, will apply only to:

a. Claims first made during the extended reporting period, and only if such Claims are for otherwise

covered Wrongful Acts committed, attempted or allegedly committed or attempted before the effective date of such termination or non- renewal;

b. Voluntary Compliance Program Expenditures incurred by Insureds as a result of the Insureds’ participation during the extended reporting period in a Voluntary Compliance Program, but only if such participation commences during the extended reporting period and involves a Plan’s actual or alleged inadvertent noncompliance with any statute, rule or regulation before the effective date of such termination or non-renewal.

3. The Insurer’s limits of liability for Loss from Claims first made or deemed made during the extended

reporting period and for Voluntary Compliance Program Expenditures resulting from the Insureds participation during the extended reporting period in a Voluntary Compliance Program will be part of, and not in addition to, the limits of liability stated in ITEM 4(F) of the Policy Certificate, which are applicable to all Loss for which this policy provides coverage.

4. The Insurer reserves the right to approve a request for a longer extended reporting period not to

exceed seventy-two (72) months, for such additional premium as the Insurer may require. 17. Interview Coverage

The following is added to Section III. Defense and Settlement of the policy:

Interview Coverage

1. The Insurer will pay, on behalf of an Insured Person, Claim Expenses incurred solely by such Insured on account of an Interview first made during the policy period, except to the extent that such Claim Expenses have been paid or indemnified.

2. The Insurer will pay, on behalf of a Plan, Claim Expenses incurred solely by an Insured Person

on account of an Interview first made during the policy period, to the extent the Plan pays or indemnifies such Claim Expenses; provided that the coverage afforded pursuant to this paragraph III(G)(2) shall be subject to the retention set forth in ITEM 5 of the Policy Certificate.

With respect to Interview Coverage, the Insurer will not be liable for Claim Expenses on account of any Interview: (1) based upon, arising from or in consequence of any circumstance if written notice of such circumstance has been given and accepted under any policy of which this policy is a renewal or replacement; or (2) based upon, arising from or in consequence of any written demand, suit or other proceeding pending, or order, decree or judgment rendered against any Insured on or prior to the Pending or Prior Proceeding Date set forth in ITEM 6 of the Policy Certificate, or the same or substantially similar fact, circumstance or situation underlying or alleged therein.

For purposes of Interview Coverage only as provided in this Endorsement, the following definitions are added to Section II. Definitions of the policy:

Attachment 2


Insured Person means any natural person serving as a past, present, or future trustee, committee member or employee of a Plan, provided that Insured Person shall not include any leased employees, independent contractors or third-party service providers.

Interview means a request for an interview or meeting with, or a sworn statement from, an Insured Person by:

1. an Enforcement Unit in connection with: (i) such Insured Person acting solely in his or her

capacity as a fiduciary of a Plan; or (ii) a Plan’s business activities; 2. a Plan in connection with an inquiry or investigation of the Plan by an Enforcement Unit

commenced by the first receipt of such request by such Insured Person;

provided that Interview does not include: (i) any request for document production or discovery; (ii) any request by an Enforcement Unit that is part of any routine or regularly scheduled Enforcement Unit oversight, compliance, audit, inspection or examination; or (iii) any request that is part of an employment-related investigation or claim.

Enforcement Unit means any federal, state, local or foreign law enforcement or governmental authority (including, the U.S. Department of Justice, the U.S. Securities and Exchange Commission and any attorney general) or the enforcement unit of any securities exchange or similar self-regulatory body; however, the Enforcement Unit shall not include the U.S. Department of Labor, the U.S. Pension Benefit Guaranty Corporation, or any similar governmental authority located outside the United States, including the Pensions Ombudsman appointed by the United Kingdom Secretary of State for Work and Pensions or by the United Kingdom Occupational Pensions Regulatory Authority or any successor thereto.

With respect to Interview Coverage, the following exclusions shall apply:

The Insurer will not be liable for Claim Expenses on account of any Interview: (a) based upon, arising from or in consequence of any circumstance if written notice of such circumstance has been given and accepted under any policy of which this policy is a renewal or replacement; (b) based upon, arising from or in consequence of any written demand, suit or other proceeding pending, or order, decree or judgment rendered against any Insured on or prior to the Pending or Prior Proceeding Date set forth in ITEM 6 of the Policy Certificate, or the same or any substantially similar fact, circumstance or situation underlying or alleged therein.

18. Changes to Policy Exclusions

Section V. Exclusions is amended by adding the following new section:

C. The Insurer will not be liable for any Loss, other than Claim Expenses, on account of any Claim against any Insured:

1. For failure to fund a Plan in accordance with any applicable Employee Benefit Law or the Plan

instrument, or for failure to collect contributions owed to a Plan; provided, that this exclusion will not apply to that portion of Loss payable solely as the personal obligation of such natural person Insured;

2. Which constitute the return to any employer, public entities or governmental authorities of

any contributions if such amounts are or could be chargeable to a Plan. 19. Disproven Allegation Protection

Attachment 2


In the event that an allegation which triggers coverage under this policy is disproven, so that a Claim is outside the scope of coverage under this policy, the Insurer shall not seek recovery of amounts that it has previously paid.

20. Managed Care Coverage

The Insurer will pay on behalf of the Insureds those Damages and Claim Expenses which the Insureds become legally obligated to pay as a result of a Claim alleging improper or negligent selection of a Managed Care Services provider or denial or delay of health care, pharmaceutical, vision, dental, or similar Benefits under a Plan. For purposes of this Managed Care Coverage Extension, Benefits means any obligation under a Plan to a Plan participant or beneficiary that is a payment of money or property, or any health care, pharmaceutical, vision, dental, or similar benefits under a Plan arising out of, based upon or attributable to any actual or alleged improper or negligent selection of a Managed Care Services provider.

HUDSON INSURANCE COMPANY


Attachment 2

ESF-31220099 (03/2017) Package Policy Version Euclid Specialty Managers, LLC


CyberEssentials Endorsement

In consideration of the premium charged, it is agreed that the above-numbered policy is amended as follows:

1. Section I Insuring Agreement is amended to add the following additional insuring agreement: C. The Insurer will pay on behalf of the Insureds those Content Restoration Expenditures and Crisis Restoration Expenditures directly resulting from a covered Information Breach in the Plan’s business operations

2. Section II Definitions is amended to add the following additional definitions: Content Restoration Expenditures means reasonable and necessary costs that are extraordinary and beyond the Plan’s normal expenditures and that are incurred by the Plan, subject to the Insurer’s prior consent, to restore or recreate content when such content was:

1. maintained in the Insured’s care or the care of a trusted party; and 2. damaged or destroyed as a result of an Information Breach.

If the content cannot be restored or recreated, the Content Restoration Expenditures will be the actual expenses incurred to reach that determination. The Insured must secure written consent from the Insurer before incurring any Content Restoration Expenditures.

Content Restoration Expenditures does not include:

1. the cost to restore or recreate content to a level greater than that which existed immediately before

the Information Breach; or 2. costs incurred by the Insured more than twelve (12) months after the Insured’s first discovery

of an Information Breach.

Crisis Notification Expenditures means reasonable and necessary costs that are extraordinary and beyond the Plan’s normal expenditures and are paid by, subject to the Insurer’s prior written consent, the Insured within twelve (12) months of the Insured’s first discovery of the Information Breach for any of the following:

3. the cost of any Insured to notify persons of a breach of the privacy of their personally identifiable

information that was in the Insured’s care, custody or control or in the care, custody or control of a trusted party;

4. an Insured’s public relations activities that are solely intended to mitigate a material impact to any Insured arising out of an Information Breach which has become substantially publicized through the news media;

5. costs, including forensic and investigative expenses, billed to an Insured by others an Insured engages to determine the origin, extent and duration of an Information Breach; and

6. costs an Insured incurs for the credit monitoring services to affected persons because of an Information Breach.

Except for costs of efforts incurred within the first twenty-four (24) hours of the Insured’s first discovery of an Information Breach, all Crisis Notification Expenditures, including, but not limited to, the costs to re-secure the personally identifiable information of affected persons and corporate confidential information, require the Insurer’s prior written approval.

Attachment 2


Information Breach means the following when allegedly or actually done by the Insured or on the Insureds behalf:

7. failure to prevent exposure of, unauthorized access use of, repudiation of access to, tampering

with or introduction of malicious code into data, software, firmware, systems or networks; 8. failure to prevent identity theft or credit/debit card fraud; 9. failure to prevent the theft, unauthorized or illegal exposure of a person’s personally identifiable

information or commercial confidential information that resides in or on an Insureds laptop(s), device(s) or other media containing content or in on a trusted party’s laptop(s), device(s) or other media containing content; and

10. failure to prevent unauthorized access to or unauthorized use of commercial confidential information.

Loss means Damages, Claim Expenses, Voluntary Compliance Program Expenditures and Information Breaches; provided, however, that Loss will not include:

11. any overhead expenses or charges, salaries, wages, fees or benefits of any Insured; 12. any taxes, fines or penalties other than those defined as Covered Penalties in Section II.F; or 13. any matter uninsurable under the law pursuant to which this policy is construed.

3. Section V Exclusions A is amended with the following additional exclusion: The Insurer will not be liable for Loss resulting in an Information Breach arising out of or in any way related to an actual or alleged:

a. refunds, credits, redemption, discounts, coupons, offsets, rebates or returns, including,

but not limited to: licensing fees, subscription charges, access fees, royalties or any other type of fee or charge;

b. the cost to create a proof of Loss or to document a Loss; or c. expenses the Plan incurs to upgrade, enhance or improve content, data, software,

firmware, systems or networks to a state better than that which existed prior to the Information Breach.

4. Section VI. Conditions B is amended to include the following:

1. As a condition precedent to exercising their rights under Section I. Insuring Agreement C of this

policy, the Insureds must give the Insurer written notice as soon as practicable of an Information Breach discovered by the Insured or a trusted party. When an Information Breach is discovered that may reasonably be expected to result in a covered Loss, the Insured must:

a. immediately, upon the first discovery of the Information Breach, notify the Insurer in

writing or by email. This notification must include a description of the Information Breach, a description of how, when and where the Information Breach or circumstances happened and copies of all available information relating to the Information Breach and its duration;

b. promptly authorize the Insurer to obtain records and other information and provide the Insurer with records and information as requested by the Insurer;

c. promptly cooperate with and assist the Insurer in the investigation of the Information Breach and any Loss; and

d. promptly assist the Insurer, upon request, in enforcing all rights of contribution or indemnity that any Insured or the person affected may have against all persons or entities.

Attachment 2


2. If during the policy period or, if exercised, the extended reporting period an Insured becomes aware of circumstances that could give rise to a Claim or an Information Breach and gives the Insurer written notice of such circumstances, then any Claims or Information Breaches subsequently arising from such circumstances will be considered to have been made during the policy period or, if exercised, the extended reporting period in which such circumstances were first reported to the Insurer.

3. Related Information Breaches

All Information Breaches that result in Loss covered by this Policy that are the same, continuous, repeated or in a series of interrelated Information Breaches or are temporally, logically or causally connected by facts, circumstances, situations, transactions, events, utterances or decisions shall be deemed to be a single Information Breach happening at the time of the earliest of those Information Breaches during the policy period.

Nothing contained herein shall vary, alter or extend the terms, conditions and limitations of the policy except as stated above. This endorsement is part of the above-numbered policy and is effective as of the Endorsement Effective Date shown above. It is not binding unless signed by an authorized representative of the Insurer. HUDSON INSURANCE COMPANY


Attachment 2

MEMORANDUM

1

_____________________________________________________________________________________ DATE: November 14, 2019


FROM: Kate Sampson, Director of Human Resources

SUBJECT: 2020 Deferred Compensation Committee Regular Meeting Calendar _____________________________________________________________________________________

ACTION REQUESTED It is requested the Deferred Compensation Committee approve the 2020 Regular Meeting Calendar. BACKGROUND The current Bylaws require the Committee meet quarterly, as needed, but at least annually. The Committee elected to meet quarterly in 2019, and a quarterly schedule is recommended for 2020. FISCAL IMPACT None ATTACHMENT 2020 Regular Meeting Calendar





DEFERRED COMPENSATION COMMITTEE

Placer County is committed to ensuring that persons with disabilities are provided the resources to participate fully in its public meetings. If you are hearing impaired, we have listening devices available. If you require additional disability-related modifications or accommodations, including auxiliary aids or services, please contact the Clerk. If requested, the agenda shall be provided in appropriate alternative formats to persons with disabilities. All requests must be in writing and must be received by the Clerk five business days prior to the scheduled meeting for which you are requesting accommodation. Requests received after such time will be accommodated only if time permits.

2020 Regular Meeting Calendar

The fourth Wednesday quarterly at 1:30PM, except where potential holiday conflicts exist*.

February 26, 2020

May 27, 2020 August 26, 2020

November 18, 2020* November 25, 2020 – Thanksgiving Week

Location

Placer County Human Resources Department

1st Floor Conference Room 145 Fulweiler Avenue, Suite 200

Auburn, CA 95603

Kate Sampson, Human Resources Director Judy McKeig, Clerk

Office: (530) 889-4067

145 Fulweiler Avenue, Suite 200 Auburn, California 95603

www.placer.ca.gov

MEMORANDUM

1

_____________________________________________________________________________________ DATE: November 14, 2019


FROM: Joseph Morgan, Risk Management Administrator

SUBJECT: Update to Deferred Compensation Investment Policy Statement _____________________________________________________________________________________

ACTION REQUESTED It is requested the Deferred Compensation Committee approve the revisions to the Deferred Compensation Investment Policy Statement. BACKGROUND The current Investment Policy Statement was last revised on May 10, 2017. Since that date there have been multiple changes to the County’s deferred compensation plans. The Investment Policy Statement has been revised to reflect these changes. FISCAL IMPACT None ATTACHMENT Draft Revised Investment Policy Statement

Investment Policy Statement

Placer County Deferred Compensation Program

May 10, 2017November 14, 2019

Attachment 1

1 15994395.1

Contents Pages

Program Information and Purpose……………………………………………………………………………………………. 32

Policy Purpose…………………………………………………………………………………………………………………………… 32

Administration of Plan………………………………………………………………………………………………………………. 32

Investment Objectives………………………………………………………………………………………………………………. 53

Selecting Investment Options……………………………………………………………………………………………………. 64

Asset Classes and Investment Options………………………………………………………………………………………. 75

Investment Monitoring and Reporting………………………………………………………………………………………. 107

Investment Option Termination………………………………………………………………………………………………… 118

Administrative Review Procedures……………………………………………………………………………………………. 129

Proxy Voting……………………………………………………………………………………………………………………………… 129

Investment Communication to Participants………………………………………………………………………………. 129

Investment Education……………………………………………………………………………………………………………….. 103

Amendments…………………………………………………………………………………………………………………………….. 103

Exhibit A – Morningstar’s Investment Process…………………………………………………………………………… 11

Attachment 1

2 15994395.1

Program Information and Purpose

Placer County (County) sponsors a Placer County Deferred Compensation Program (Program) to provide employees with a vehicle for saving for their retirement. The Program includes both section 401(k) and 457 plans as described by the Internal Revenue Code. The Program is intended to comply with all federal laws and regulations.

The Program was established to provide eligible employees with a means to save monies on a tax-advantaged basis, to assist employees in reaching their financial goals, and to provide additional financial security to Program participants upon retirement. Program participants allocate and direct their individual account balances among the investment options offered by the plan investment provider. The Program provides participants with the opportunity to make their own investment choices and permits them to make changes to their allocation instructions. The plan fiduciary strives to provide a range of investment options that will enable all participants to invest in the way that they feel best suits their long-term investment objectives.

The County currently offers fourtwo defined contribution plans and is the Plan Administrator for the Program. The fourtwo defined contributions plans are as follows:

• The Retirement Accumulation Plan for the Employees of the Placer County of Placer • The Placer County 401(k) Plan • The Placer County Deferred Compensation Plan • The CaIPERS 457 Deferred Compensation Plan

However, the Board of Administration of CalPERS is fiduciary for the CalPERS 457 Deferred Compensation Plan and retains exclusive control over administration and investments offered for this plan. As a result, this Investment Policy Statement (Policy) only covers the remaining three plans within the Program.

Policy Purpose

This Policy establishes investment principles and a framework for selecting, monitoring and evaluating investment options under the Program. The Policy defines the Program's investment objective as well as the roles of those responsible for the Program's investments. It also establishes investment procedures, measurement standards and monitoring procedures. If this Policy conflicts with the Plan Document, the provisions of the Plan Document will prevail.

The Deferred Compensation Committee will review this Investment Policy Statement annually; and, if appropriate, amend the Policy to reflect changes in the market, Program objectives, or other factors relevant to the Program.

Administration of Plan

The County is the Plan Sponsor and Administrator. The Board of Supervisors has delegated the day to day non-discretionary responsibilities of the Plan Administrator to the Human Resources Department, including serving as staff to assist the Deferred Compensation Committee in meeting its fiduciary obligations with respect to the Program.

To carry out the fiduciary responsibilities involved in the administration of the Program, the Board of Supervisors established a Deferred Compensation Committee (Committee). The responsibilities of the Committee include:

• Oversight of the selection and satisfactory performance of the Program's trustees and other third

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parties retained to help in administration of the Plans, including accountants, record-keepers, purchasing agents, investment managers, investment consultants and legal counsel;

• Oversight of the selection and satisfactory performance of other third parties retained to provide services to the Plans' participants, including advisory services and educational programs for Program participants;

• Evaluation of periodic reports provided by investment managers, investment consultants, legal counsel, auditors, administrative consultants or internal County departments with respect to matters affecting Plan investments, accounting, administrative or compliance matters;

• Periodically report investment and other information to the Board of Supervisors as requested; • In accordance with the Committee's Bylaws, selecting and monitoring the Program's investment

options in a manner consistent with the prudent person standard; • Retain professional advisors as needed to assist the Committee in the performance of its

responsibilities; • Developing a sound and consistent investment policy; • Selecting a suitable investment provider; • Providing a range of diversified investment options with varying objectives and risk/return

characteristics; • Monitoring and evaluating investment performance and implementing investment option

changes as necessary; • Investigate, negotiate, and monitor investment-related expenses; • Assuring that employees are provided investment education opportunities to assist them in

making their investment decisions; • Determining the frequency with which participants may exercise control over the assets in

their account; and

As part of its responsibilities for the selection and monitoring of Plan investments, tThe Committee has appointed Morningstar as a discretionary investment manager to the Plans. Morningstar will select an appropriate lineup of investment options for the Plan, and will provide ongoing monitoring of each Plan's investment options and make changes to the investment lineup as appropriate. Morningstar’s process for selecting and monitoring the investment options available withinunder the Plan is outlined in Exhibit A attached. The responsibilities of the Investment Provider include:

• Providing sufficient information to the Committee and other Program fiduciaries to perform their fiduciary duties;

• Providing Program participants with sufficient information; including, but not limited to, information about fees associated with investments, to make informed investment decisions;

• Recommending investment options that are in line with this Policy and in the best interest of the Program participants, and provide a broad and diverse range of investment within and among investment classes;

• Managing the investment of Program assets in accordance with this Policy, the applicable plan documents, investment prospectuses and in the best interest of the Program participants; and

• Providing investment education to Program participants.

The responsibilities of the Record-keeper include:

• Providing the Plan Sponsor with sufficient information to administer the Program in accordance with the applicable tax rules, including but not limited to the information needed to timely make required

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minimum distributions and timely pursue remediation of defaulted loans and reporting them as deemed distributions when remediation is not successful;

• Maintaining and updating individual account balances in an accurate and confidential manner; and • Providing participants with electronic access to account information and transactions, and updating

plan contributions as well as withdrawals and distributions; and • Preparation of quarterly and annual participant statements and provision of various communication

materials as described in the service agreement or requested by Plan Administrator.

Investment Objectives

This Policy provides a framework for the types of investment options to be offered, and the procedures for the ongoing review and evaluation of the Program's investment options.

The County and the Committee recognize that there is risk inherent in all investments. Furthermore, individual participants each have their own level of tolerance as to the assumption of risk in anticipation of achieving potentially higher returns. The Committee recommends that participants seek out appropriate investment advice, as they deem necessary. The dissemination of information and the provision of investment options do not constitute investment advice by the County or the Committee. Pursuant to Government Code Section 53213.5, the County or Committee are relieved of liability for any losses resulting from investment decisions given by a participant.

The number of investment options shall be considered from the participants' perspective as to the total number of investment options offered by the Program. The number of investment options offered shall be adequately diverse and of sufficient number to facilitate diversification and the opportunity to materially affect potential risk/return. The number of investment options offered shall be limited to avoid unnecessary redundancy and confusion.

All investments must have a liquid market. This means that assets will have a ready market for which the asset is transacted on a day-to-day basis through commonly recognized financial markets without regard to fluctuation in principal value. Liquidations from mutual fund investments shall be accessible within a reasonable period of time. However, since plan assets are self-directed by the participants, there is no minimum requirement for a specific level of asset liquidity (such as a minimum percentage of assets in cash equivalents), nor shall there be any guarantee against market losses due to liquidations.

To the extent possible, transfers among funds within the Plans shall be facilitated daily allowing participants the opportunity to manage risk and return. However, the Securities and Exchange Commission has instituted rules regarding the "trading" of fund shares. Plan funds are not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the securities markets. Each Investment Provider shall develop and communicate to all plan participants their respective policies regarding the purchase and exchange of fund shares.

Selecting Investment Options

The Program intends to provide an appropriate range of investment options that will span the risk-return spectrum and allow Program participants to construct portfolios consistent with their unique individual circumstances, goals, time horizons and tolerance for risk. The Program also intends to provide sufficient information about the investment options to enable participants to make informed investment decisions and exercise control over the assets in their account. There shall be a diverse selection of funds to provide a sufficient level of diversification without having a selection so large as to duplicate and dilute what would otherwise be an advantageous number of funds available.

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The primary goal for each investment fund is to produce reasonably competitive results relative to its benchmark, risk characteristics and investment type. In situations where a participant has not provided investment direction with respect to some or all of the assets allocated to the participant's account, the default investment options for such assets is the target date fund. The most appropriate fund, given the participant's age is the current default investment option; however, from time to time, the Committee may change the default investment option at its sole discretion.

Major asset classes to be offered may include:

• Money Market • Stable Value • Bonds • Equity Index Fund • Large Cap Equity • Mid Cap Equity • Small Cap Equity • International Equity

Additionally, a spectrum of target date funds and a Self-Directed Brokerage Account will be offered.

Participants who wish to follow a disciplined asset allocation strategy require options that stay consistent to their stated investment style. Several style-focused core options, representing the primary asset classes (e.g., stocks, bonds and cash) allow participants to implement and maintain the integrity of their own customized investment strategy. The Plans will also offer target date funds. These options offer a simple means to implement an asset allocation policy by having investment professionals implement and monitor the asset mix. A participant only chooses one target date fund option to implement a chosen investment strategy.

The Committee, after determining the asset classes to be used, evaluates investment providers and chooses a provider to manage the investment options. Each investment provider should meet certain minimum criteria as follows:

• Be an insurance company, bank, investment management company or an investment adviser under the Registered Investment Advisers Act of 1940.

• Be able to provide detailed information on its history, investment philosophy and approach, and its principals, clients, locations, fee schedules and other relevant information.

Investments options will be evaluated based on the following standards:

• Performance equal to or greater than the median return for an appropriate, style-specific benchmark and peer group over a specified time period. The Committee will use multiple time periods and methods to measure each investment option's performance.

• Specific risk and risk-adjusted return measures established by the Committee and within a reasonable range relative to an appropriate, style-specific benchmark and peer group.

• Demonstrated adherence to the stated investment objective. • Competitive fees compared to similar investments. • An investment manager that provides all performance, holdings, and other relevant information in a

timely fashion, with specified frequency. • Quality and consistency of the investment option's investment team and other appropriate

qualitative characteristics of the investment option.

In an effort to align the investment options for the two plan types as much as possible, the Investment

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Provider shall offer the same funds in each asset classification for both the 40l(k) and 457, whenever possible.

Asset Classes and Investment Options

Target Date Funds

Each Investment Provider shall offer a spectrum of target date fund investment options in each of the two plan types, 401(k) and 457, and shall limit the number of options as specified. Target date funds are comprised of a mix of stocks, bonds and cash or cash equivalents based on risk: return profiles for phases of an individual's retirement date.

Target date funds are designed to offer a convenient way to invest for a person expecting to retire around a particular date. A target date fund pursues a long-term investment strategy, using a mix of asset classes (or asset allocation) that the fund provider adjusts to become more conservative over time. This adjustment is referred to as the "glide path" moving from a higher concentration in stocks and a lower concentration of bonds and cash or cash equivalents to the converse as the participant nears retirement.

Mutual Funds and Commingled Institutional Funds

Whenever possible the fund choices in each asset allocation class should be the same for both plans. The Investment Provider may offer funds in the following eight asset allocation classes in each plan. At least one investment option should be actively available in each asset class, but the number of investment options offered shall be limited to avoid unnecessary redundancy and confusion. If a fund is frozen/closed a new fund should be identified to replace the frozen/closed fund and balances may be mapped over to a newly active fund in the same asset class.

• Money market funds, which invests in cash equivalents securities with maturities of less than one year. The average quality of the portfolio must be A1, P1, or AAA. The objective of the fund is to protect underlying principal value and produce a reasonable level of current income. This option should provide the lowest volatility with the least potential for increase in earnings and growth. This type of fund is considered to be in the lowest risk: return category.

• Stable value fixed income funds, which invests primarily in annuities, investment contracts, money market and fixed income investments. The objective of the fund is to provide higher income than a money market fund with no fluctuation in principal value. This type of fund is considered to be in the low risk: return category.

• Bond investment funds, which invests in cash equivalents and fixed income securities. The fund should consist of high quality corporate and government bonds. The objective of the fund is to provide longer-term preservation of capital while earning a higher level of current income. This type of fund is considered to be in the low risk: return category. However, principal values are subject to fluctuation over time due to corresponding fluctuations in interest rates.

• Equity index funds, which identically reflects the broad domestic equities market, such as the S & P 500 or the Russell 2000 Equity Index Fund and seeks to duplicate the returns of the index. The management of this fund is considered passive as it does not evaluate stocks based on perceived value or earnings potential, but merely seeks to mirror the holdings of the relative broad market index identified. The objective of the fund is to capture returns that reflect that of the broad market as represented by the index. This type of fund is considered to be in the moderate risk: return category.

• US large-cap equity funds, which invest in companies that are generally valued at $1 billion or more (share price X number of shares outstanding). These companies are known to be the largest corporations on a financial basis and are considered to be more stable and well established. Thus,

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having less growth potential, but more price stability. This asset class may include investments in both value and growth as deemed by the fund manager. Investment returns may be based both on increased value and on investment increases from reinvestment of earnings. Thise type of fund is considered to be in the moderate risk: return category.

• US mid-cap equity funds, which invests in companies that are generally valued between $500 million to $1 billion (share price X number of shares outstanding). These companies are known to be less stable than large cap stocks, but more stable than small stocks (see below). Accordingly, they have more growth potential than large cap, but less than small cap with corresponding risk profiles. The fund manager may select stocks as they deem appropriate to invest in companies where they identify value or earnings potential. Investment returns may be based both on increased value and on investment increases from reinvestment of earnings. This type of fund is considered to be in moderate-to-high risk: return category.

• US small cap equity funds, which invests in companies that are generally, valued at less than $500 million (share price X number of shares outstanding). These companies are typically newer companies that are known to be less well-established and more susceptible to adverse financial or economic circumstances. Small cap funds have the most potential for increased value and earnings. The fund manager may select stocks as they deem appropriate to invest in companies where they identify value or earnings potential. Investment returns may be based both on increased value and on investment increases from reinvestment of earnings. This type of fund would be considered to be in the high risk: return category.

• International equity funds, of which the international fund invests primarily in common stock of established non-US companies. This type of fund is considered to be in the high risk: return category.

Exclusive of the target date funds, the Investment Provider shall offer at least one fund for each asset classification for a minimum of eight different investment options for each plan, but overall, number of investment options offered shall be limited to avoid unnecessary redundancy and confusion.

Investment options should not be limited to a single mutual fund family. A mutual fund or commingled fund would not typically be appropriate as an option if either a front-end or back-end sales load is charged, or if a fund charges a mortality and expense fee, or if it charges a 12.b1 fee. The program offerings will transition away from funds that charge a 12.b1 fee. The expense ratios of the investment options must be competitive with other mutual funds or commingled funds with similar objectives.

Should current Program offerings differ from those specified herein, the Plan Administrator, the Record Keeper, the Committee and the Investment Providers shall work to make an orderly transition from the current investment offerings to those that comply with this policy. In the interim, the current options are not considered to be in violation of the Policy.

Self-Directed Brokerage Accounts

Additionally, Investment Providers may also offer "self-directed brokerage accounts". Once established, self-directed brokerage accounts allow the participant to invest in almost any mutual fund offered in the market.

Investment Monitoring and Reporting

Investment Providers

The Program's Investment Providers shall provide ongoing monitoring of fund performance and quarterly reports, as described below, to the Committee Chair, who shall forward such reports to the Committee members as soon as possible.

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• The reporting shall be fair, objective and based primarily upon statistical analysis. • The investment options should be rated on a net return basis, after expenses. Full and itemized

disclosure of all expenses, costs and fees shall be noted. • Credit or regulatory issues, deviation from fund descriptions or other material implications that affect

the funds, the Program or the Investment Provider shall be disclosed timely and without regard to periodic reporting requirements.

• A benchmark for each fund should be established based on a comparative index for its fund category. A benchmark may take any of the following forms:

• A well-recognized published index of managed assets • A tailored composite of assets (or indexes) • A peer group (or ''universe") of similar funds or portfolios as determined by Morningstar and

FinancialWeb.

The report shall include a discussion of the fund in relation to its benchmark.

The Investment Provider shall provide to the Committee a copy of its policy for fund monitoring for maintaining, placing on watch status, freezing or closing a fund and justification for replacing or adding a fund. A quarterly report shall include comments for each fund, such as maintaining, placing on watch status, freezing or closing a fund, replacing or adding a fund. The quarterly report shall be provided electronically along with l0 hard copies. The quarterly report shall be provided within 60 days of the close of the reporting period.

• Performance measurements should cover at least five-year periods and should reflect both a net return and risk-adjusted basis.

• The report should contain information on the funds manager's experience and tenure with the funds they manage.

• The reports and fund evaluations should be concise and relatively easy to understand by the members of the Committee and the participants. Voluminous or highly technical reports are discouraged unless specifically warranted and fully explained.

• The reports should contain any other pertinent information that assists in a participant's decision to hold, buy or sell a fund.

The Committee

The policies and actions associated with maintaining, watch list status, freezing, closing or adding funds should strive to maintain a stable list of investment options. Policies and actions that cause frequent changes in the investment options available will be considered in evaluating the performance of the Investment Providers. Frequent changes in investment options may be considered in the context of inappropriate marketing or unstable account management practices.

The ongoing monitoring of each investment option must be a regular and disciplined process. Monitoring will occur on a regular basis and utilize the same criteria that were the basis of the investment selection. All chosen investment options will be reviewed at least annually for acceptability under the guidelines outlined in this Policy.

The Committee, assisted by its Investment Providers, will examine periodic statements, proxies and reports distributed by its Investment Providers and other investment consultants as applicable, and/or obtain from such other publicly available sources as the Committee determines advisable, to evaluate each investment option's performance. This evaluation will consider factors including, but not limited to:

• Current trends and developments in the capital markets and investment management community;

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• Current level of diversification provided by the investment classes and funds within each class; • The degree to which each investment option has satisfied the performance standards, benchmarks

and other criteria adopted by the Committee for the class in which it is included; • Consistency of investment management style within each investment option; • Changes, if any, in the asset management staff for the investment option; and • Changes in fees, expenses, and any revenue sharing arrangements charged to, directly or indirectly, or

payable on account of assets of the plans invested in the investment option.

Investment Option Termination

With the assistance of its Investment Providers and/or investment consultants, during its periodic reviews, the Committee will note any deviations from the prescribed criteria by any of the investment options. Once identified, the Committee will closely monitor each deviation and place the investment option on a "watch list". Investment options placed on the "watch list" shall be monitored and assessed for removal and replacement.

The Committee may terminate an investment option upon losing confidence in the investment option's potential to:

• Achieve performance and risk objectives as measured against its benchmark, • Maintain a consistent investment style, as measured against its benchmark.

There are no hard and fast rules for investment option termination. However, if the investment consistently fails to adhere to one or more of the above conditions, it is reasonable to presume a lack of adherence going forward. Failure to remedy the circumstances of unsatisfactory performance, within a reasonable time, shall be grounds for termination.

Any recommendation to terminate an investment option will be treated on an individual basis and will not be made solely based on quantitative data. In addition to those above, other factors may include investment option manager turnover, or material change to investment processes. Considerable judgment will be exercised in the termination decision process.

If the Committee decides to terminate an investment option from the Plans' investment lineup, the Committee will remove and replace (map assets) to an alternative investment option. Replacement of a terminated option would follow the criteria outlined in the Selecting the Investment Options section of this Policy.

Administrative Review Procedures

The Committee shall develop criteria that it will use to evaluate the performance of the Investment Provider(s), Record-keeper(s) and other Program vendors and consultants on at least an annual basis. The Committee shall then take appropriate action, if necessary, to ensure participants are receiving satisfactory levels of performance from Investment Providers.

Proxy Voting

The Committee may authorize the Trustee/Investment Provider to vote on behalf of the respective Plan for all proxies that are returned. Proxies not voted upon by the Trustee/Investment Provider will be forwarded to the Committee.

Investment Communications to Participants

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At enrollment and on an ongoing basis the Investment Provider/Record Keeper provides participant communication materials similar in detail to the annual and quarterly disclosure requirements for participant directed defined contribution plans under ERISA Section 404(c) and its accompanying regulations so that participants have sufficient information to make informed investment decisions. Information about each investment option will be provided or made available to Participants. The Program shall provide quarterly and annual statements of fund performance to each Participant.

The Investment Providers shall be required to provide account information for both inquiry and transactions over the phone both through voice activated response systems and by live account representatives, over the internet (by both computer and mobile device) and through, at least, quarterly account statements which are normally associated with the review and fees charged by mutual fund companies.

The account statements shall include all investment activity including amounts and dates of such activity and beginning and ending balances for the period.

The Investment Provider will make copies of investment fund prospectuses or similar equivalent information, list of underlying investments for a given fund, and fees available to the Human Resources Department who will make the information electronically available to participants.

Investment Education

It is the Committee's objective to have participants provided with ongoing investment education. The purpose of the investment education program is to provide information and tools to assist in the development of a personal investment strategy for employees and facilitate the achievement of savings and retirement goals.

The County shall at least annually provide an educational program to Plan Participants regarding the assessment and determination of individual risk/return profiles and the appropriate selection of investment options based upon those risk/return profiles. Such program shall address the provisions prescribed by subdivision (c) of Section 1104 of Title 29 of the United States Code.

Amendments

The Committee may amend this Policy at any time. Changes will reflect long-term considerations rather than short-term changes in the financial markets.

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Exhibit A Morningstar’s Investment Process

This document is attached to and made a part of the Investment Policy Statement, and outlines the process Morningstar uses to select and monitor the investment options available under the Plan.

Scope of Investment Universe Plan Sponsor understands that by selecting Morningstar and its Services, the universe of available funds may be limited as part of Service Provider’s administrative offering. This universe of investment options may include options that are both proprietary and non-proprietary investments of Service Provider or its affiliates. From time to time, Service Provider may change the investments available under and as part of the product, contract or platform. Morningstar may or may not make changes to the Morningstar Insight Series Lineup based on these changes. At all times, Morningstar decides on which funds are included in the Morningstar Insight Series Lineup. Plan Sponsor understands that Service Provider’s activities described herein do not cause Service Provider to become a fiduciary to the Plan within the meaning of ERISA or other applicable law.

Investment Selection Process From the investment universe defined above, Morningstar evaluates quantitative and qualitative factors to select investment options to meet a variety of investment objectives. In addition, Morningstar uses returns-based style analysis and holdings-based style analysis of the investment options to determine the investment’s style over time.

Once investments are placed into their appropriate asset class categories, Morningstar applies a series of screens designed to flag funds that exhibit characteristics that its experience has shown to hinder long-term performance. Next, Morningstar uses use a multitude of statistics to begin to assess the overall quality of an investment option and to evaluate investment style, structure, and performance. Some of the factors Morningstar considers in this stage of the process are:

• Fees • Management tenure • Style consistency • Relative alpha • Volatility • Fund size • Asset exposure • Holding concentration • Turnover

After this quantitative review, Morningstar reviews investments from a qualitative perspective, to develop a fundamental understanding of the investment and to create an investment thesis that identifies the rationale for selecting the investment, as well as the barometers by which its success is measured. The thesis also identifies the specific factors Morningstar will monitor to ensure the investment continues to meet expectations.

Morningstar reviews a number of characteristics of an investment that could be relevant to it successfully filling its intended role. Morningstar observes which types of markets the investment fares best in, and which types are trouble for the investment’s style, and determines what it is about the investment that explains the pattern. Morningstar uses many factors to evaluate investments, including:

• Investment sub-style

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• Manager skill (including history at other funds) • Impact of asset growth on performance • Source of investment ideas • Investment decision-making process • Actions in previous market environments • Manager ownership • Process repeatability • Performance attribution

Lineup Design The area of behavioral finance has shown that investors don’t always behave rationally and that the manner in which a problem is posed can impact individual actions. Morningstar is mindful of simple heuristics employed by participants in making investment-related decisions and designs lineups that attempt to drive better action on the part of investors.

The following are several of the concepts Morningstar considers when constructing a lineup:

• Choice Overload – Participants should have options, but they shouldn’t be given so many choices that they become overwhelmed.

• Naïve Allocations – A lineup should be balanced and diverse such that an individual making naïve allocations (equally weighting all investment options is the most common) will still produce a portfolio of reasonable risk-reward tradeoff.

• Loss Aversion – Ensure that the volatility and relative performance of the investment options are appropriate for the given investment category.

Lineup Construction Using the process outlined above, Morningstar narrows the universe of investment options to create an investment lineup appropriate for the Plan. Morningstar strives to select investments to fill a distinct stylistic role within a lineup, and carefully assesses how each investment can be expected to fit with other investments. To accomplish this, Morningstar relies largely on our holdings-based style analysis (returns-based style analysis plays a more limited role in this process) to deconstruct each investment into its individual holdings. This means drilling down into individual holdings and comparing them with the holdings of other offerings in the lineup. Morningstar evaluates stock overlap and return correlation between investment options, Morningstar® Style Box placement, and how sector exposures complement those of investment options. Morningstar strives to choose funds that are clearly different from one another, rather than similar or redundant. The goal is to establish a specific role for each investment option in the Plan lineup that minimizes holdings overlap and maximizes diversification.

Ongoing Investment Monitoring Process Morningstar’s investment professionals will continue to monitor and evaluate the specific investment options on an ongoing basis. However, Morningstar is not responsible for the ongoing monitoring of company stock options or self-directed brokerage options within the Plan. Morningstar continues to evaluate the investment options based on the same process used in the review and selection stage, but understands that the ongoing due diligence of an investment option presents different challenges. Morningstar remains objective about a fund that it has already determined to be an appropriate option. As such, Morningstar focuses on specific issues or events that could change its opinion of the investment option and challenges its original investment thesis. The monitoring process focuses on the following issues:

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• Regulatory issues • Organizational and/or manager changes • Management team updates • Style and process consistency • Portfolio characteristics • Risk-adjusted performance • Asset growth

Morningstar performs a fundamental review of any investment options that appear to have strayed from their investment styles, have experienced management and/or organizational changes, have failed one or more of the initial quantitative screens used in selection or have relative declines in their performance or risk rankings.

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