WATER AND POWER EMPLOYEES RETIREMENT, DISABILITY AND DEATH BENEFIT INSURANCE PLAN 111 NORTH HOPE STREET ● ROOM 357 ● LOS ANGELES, CALIFORNIA 90012 ● (213) 367-1712 ● FAX (213) 367-1891

BOARD OF ADMINISTRATION LINDA P. LE LATANYA BOGIN, PRESIDENT RETIREMENT PLAN MANAGER BARRY POOLE, VICE-PRESIDENT ADOLFO FELIX MONETTE CARRANCEJA TIMOTHY HEMMING ASSISTANT RETIREMENT PLAN MANAGER MARIO IGNACIO AURA VASQUEZ THOMAS SIMONOVSKI (INTERIM) DAVID H. WRIGHT ASSISTANT RETIREMENT PLAN MANAGER JEREMY WOLFSON CHIEF INVESTMENT OFFICER

12/24/2018 REQUEST FOR PROPOSAL: International Small Cap Equity Dear Proposer: The Board of Administration (the Board) of the Water and Power Employees’ Retirement, Disability, and Death Benefit Plan, including the Retiree Health Benefits Fund (the Plan), is seeking to hire the services of one to two International Small Cap Equity manager(s) after a request for proposal (RFP) process. The RFP and other required documents may be downloaded from the Plan’s website http://retirement.ladwp.com. Please submit one (1) hard copy and one (1) electronic copy in pdf format on a CD-ROM (both required) of the completed response to this RFP by 3:00 P.M. PST, 02/08/2019, and mail to: Los Angeles Department of Water and Power Employees’ Retirement Plan Carlo Manjikian, Senior Investment Officer 111 North Hope Street, Room 357 Los Angeles, California 90012-4207 In addition, please submit one (1) electronic copy via email of the completed RFP to: Ryan Sullivan RVK, Inc. 1211 SW 5th Avenue, Suite 900 Portland, OR 97204 503-221-4200 LADWP.IESC.2018@rvkinc.com FACSIMILE, EMAIL OR CD-ROM COPIES WILL NOT BE ACCEPTED FOR DEADLINE PURPOSES. HARD COPIES SUPPLEMENTED WITH A CD-ROM COPY ARE REQUIRED FOR CONSIDERATION FOR THE INTERNATIONAL SMALL CAP MANAGER. If you are selected as a finalist, please be prepared to provide TEN (10) additional hard copies of your RFP response. Any questions regarding this RFP should be submitted to Carlo Manjikian at investments@ladwp.com prior to 4:00 P.M. PST, 01/18/2019. Responses to questions will be shared with all participating firms.

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TABLE OF CONTENTS

I. ....................................................................................... INTRODUCTION 3

II. .......................................................................... SERVICES TO BE PROVIDED 3

III. .............................................. MINIMUM QUALIFICATIONS CERTIFICATION 4

IV. .......................................................... REQUIRED PROPOSAL DOCUMENTS 6

V. .............................................................. PROPOSAL EVALUATION CRITERIA 8

VI. .......................................................................... SUBMISSION PROCEDURES 9

VII. .................................................................................... RFP QUESTIONNAIRE 11

VIII. ......................................................................... COMPLIANCE DOCUMENTS 25

APPENDICES APPENDIX A – Contract Requirements APPENDIX B – Non-Discrimination, Equal Employment Practices, Affirmative Action; Composition of Workforce; Equal Employment Practices Provisions; Service Contract Worker Retention & Living Wage Ordinance Forms; Certification of Compliance with Child Support Obligations; W-9 Form; Tax Registration Certificate and/or Vendor Registration Number and Office of Finance Tax and Permit Division Contacts APPENDIX C – Information and Vendor Questionnaire Package Contents (Exhibits A-M) APPENDIX D – Statement of Investment Objectives, Goals, and Guidelines.

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I. INTRODUCTION

The Board of Los Angeles Water and Power Employees’ Retirement, Disability and Death Benefit Plan, including the Retiree Health Benefits Fund, administers a Defined Benefit Pension Plan (the Plan) with assets in excess of $13 billion. The Retirement Board recently approved an International Small Cap Equity manager search. Selection of one to two manager(s) will be based upon demonstrated ability of the professionals to provide the expertise needed.

II. SERVICES TO BE PROVIDED

The Board is seeking one or two qualified firms to provide pension fund investment management services. The management services sought by the Board entail: 1) Discretionary investment of a portion of the Plan’s assets. 2) Discharge of duties solely in the interests of the Plan’s participants and beneficiaries and

with the judgment, care, skill, prudence and diligence that a Fiduciary would use in a similar situation.

3) Compliance with the Retirement Board Policies and adherence to all applicable sections of the Plan’s Statement of Investment Objectives Goals and Guidelines.

Under the direction of the Board, the Retirement Plan Manager and Retirement Office investment staff, the investment manager(s) will manage a portion of the Plan’s portfolio. The role of the each successful candidate is to manage one (1) portfolio valued in aggregate of approximately $150 to $300 million ($125 - $250 million Retirement Plan and $25 - $50 million Health Plan) that over time will i) maintain characteristics that are consistent with the specified mandate, and ii) add value to the performance of the MSCI ACWI ex USA Small Cap Index (USD). RVK, Inc. (RVK) will work closely with the Plan to select a qualified firm to provide the above described investment management services.

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III. MINIMUM QUALIFICATIONS CERTIFICATION All proposals will be evaluated in two (2) areas: A. Required Minimum Qualifications; and B. Preferred Criteria.

A. Required Minimum Qualifications (RMQ)

The Proposer must meet all of the following RMQs; otherwise its proposal will be rejected. For each RMQ, the Proposer must provide a detailed response (one sentence or more) stating how the Proposer complies and must initial alongside each RMQ, indicating that the Proposer has met the RMQ as of 12/31/2018. A response that is limited to a mere reference to other sections of the RFP will be insufficient. Any known deviations from the RMQs below must be disclosed in detail on this form. The Proposer firm must have been in existence for at least five (5) full years. ____(Initial) The Proposer must be registered with the Securities and Exchange Commission (SEC), a

Bank, or a licensed Insurance Company Affiliate. ____ (Initial) The Proposer must not have been censured by the SEC or subject to regulatory action

within the last five (5) years. ____ (Initial) The Proposer must meet the insurance requirements as indicated in Appendix A of this

RFP. ____(Initial) The Proposer must comply with City of Los Angeles and the Los Angeles Department of

Water and Power requirements as indicated in Appendices B & C of this RFP. ____ (Initial) The Proposer must already have or agree to obtain a City of Los Angeles Business Tax

Registration Certificate. ____(Initial) The Proposer must complete the RFP questionnaire in its entirety as well as the City’s

required attachments pertaining to Worker’s Compensation, Child Care and Equal Employment Opportunity, if applicable. ____ (Initial)

The Proposer must be directly responsible for the management of the account, and all personnel responsible for the account must be employees of the firm. ____ (Initial)

The Proposer must agree to accept the MSCI ACWI ex USA Small Cap Index (USD) as a reasonable benchmark for the mandate over a typical market cycle. ____ (Initial)

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B. Preferred Criteria (PC)

The following PCs are strongly desired by the Plan. Although failure to meet one or more of the PCs may not necessarily result in disqualification, proposers who fail to meet one or more of the PCs may be considered less favorably in the selection process. Please provide a detailed answer for each of the PCs (one sentence or more). Please do not only refer to other sections of the RFP. Any known deviations from the PCs below must be disclosed in detail on this form. Please refer to the data as of 12/31/2018. Total firm assets must be at least $1.5 billion. ____(Initial) The firm must manage at least $750 million dedicated to International Small Cap Equity.

____(Initial) The firm must have at least a five-year track record (i.e., not simulated or back tested),

Global Investment Performance Standards (GIPS) compliant performance history for the period ending 12/31/2018 in the International Small Cap Equity mandate. ____(Initial)

Over the past five (5) years, the Proposer must not have been involved in any litigation concerning material allegations against the Proposer. ____(Initial)

The Proposer must be able to adhere to client-specified portfolio constraints. ____(Initial) The firm must have (i) at least three (3) existing U.S. based, public retirement plan clients

utilizing the International Small Cap Equity mandate and (ii) one (1) existing portfolio active in this mandate with over $100 million, or two (2) existing portfolios active in this mandate with each over $50 million. ___(Initial)

Results must have closely tracked or exceeded the performance of the MSCI ACWI ex USA Small Cap Index (USD), annualized, over the five years ending 12/31/2018. ____(Initial)

The proposer must have all firm and product information, including characteristics and performance uploaded in eVestment.com by time and date of submission. ____(Initial)

Certification By signing below, an authorized representative of the Proposer warrants that the Proposer shall meet all of the REQUIRED MINIMUM QUALIFICATIONS and understands the PREFERRED CRITERIA, as detailed above. Authorized Signature

(Print Name)

Title

Date

Company

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IV. REQUIRED PROPOSAL DOCUMENTS

Any proposal that does not provide the information requested below or does not meet all the requirements will be rejected. All responses must be valid and shall remain in effect for at least 180 days to allow for contract negotiations. A. Sequence of Events

Event Date Date

Provide written notification (prefer email) to the Plan of intent to submit proposal

01/11/2019

Deadline for any questions the Proposer may have regarding the information presented in this Request for Proposal. Requests must be made in writing (prefer email). Include contact information and name of the lnternational Small Cap Equity product(s) or composite(s)

01/18/2019

Deadline for submission of proposals 02/08/2019

Complete proposal evaluation by Staff and Consultant

TBD

Expected presentations by finalist(s) TBD

Expect to complete due diligence, contract negotiations, contract execution, etc.

TBD

Contract Start Date TBD

B. Cover Letter A cover letter should accompany the proposal and include the following: the company name and address; the name(s), title(s) or position(s), and telephone number(s) of the person(s) authorized to bind the organization to all commitments made in the proposal. The letter must be signed by the person(s) authorized to bind the Proposer contractually. The letter must also include the following statement: “We have read the Request for Proposals (RFP) for pension fund investment management services and fully understand its intent. We warrant that all information and statements in this RFP are complete and true. We certify that we have adequate personnel, equipment and facilities to provide the Plan’s requested services. We understand that our ability to meet the criteria and provide the required services shall be judged solely by the Retirement Board. We have thoroughly examined the RFP requirements and our proposed fees cover all the services that we have indicated we can meet. We acknowledge and accept all terms and conditions included in the RFP. We acknowledge the receipt of any and all amendments made to this RFP.”

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C. Signed Minimum Qualifications Certification

Proposers must sign the Minimum Qualifications Criteria Certification page (Section III), as directed and include it as part of the response to be mailed to the Plan’s staff. D. Request for Proposal (RFP) Questionnaire

Proposers must complete and return all sections of the Proposal Questionnaire (Section VII). The information requested must be provided in the presented format. E. Insurance Requirements

It is the policy of the Department and the Plan that, upon the award of a contract, the selected Proposer must provide evidence of insurance that conforms to the insurance requirements of the proposal. Insurance requirements are explained in detail in Appendix A - “Contract Requirements.” For your information and use, “Special Endorsement Forms,” “Guidance for Submitting Evidence of Insurance” and information on our insurance program for small vendors are available on our website. When and if you are awarded a contract/agreement, acceptable evidence of required insurance, from insurers acceptable to the Department, will be required to be submitted within 30 days of the date of award and maintained throughout the term of the contract. Said evidence of insurance must be on file with the Risk Management Section of the Department in order to receive payment under any contract for services rendered, and in order to commence work under your contract. For further information regarding these requirements, please contact: Los Angeles Department of Water and Power Risk Management Section Phone: (213) 367-4007 Fax: (213) 367-0214 Email: riskmanagement.risky@ladwp.com Web: http://www.ladwp.com The selected Proposer will be required to comply with the insurance terms and conditions of the Plan and the City of Los Angeles, as discussed and enumerated in Appendix A of this RFP. F. Other Relevant Items

Proposers must include their firm’s most recent annual report and/or statement of financial condition, as well as Certificate(s) of Insurance with endorsements proving coverage as required by the Board and the City of Los Angeles (see all Appendices). Proposers must complete and return all other attachments as specified in these Appendices.

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V. PROPOSAL EVALUATION CRITERIA

The factors to be utilized in evaluating the proposals will include, but are not limited to, the following:

1) Experience (both quality and quantity) of the investment management organization and its staff in providing pension fund services with assets under management for other public pension funds with similar investment portfolios.

2) Qualifications of professional staff to be assigned to the account, with particular attention paid to relevant experience with public pension funds.

3) The ability of the firm to provide the requested services as evidenced by a historical track record of performance that reflects superior, risk-adjusted returns, for at least the past five (5) years.

4) A philosophy of money management and a decision-making process that result in the International Small Cap Equity platform having a close fit with the desired mandate.

5) The quality, conciseness and completeness of the proposal. 6) Reasonable fees.

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VI. SUBMISSION PROCEDURES

A. Deadline

THE DEADLINE FOR SUBMISSION OF RESPONSES IS 02/08/2019. ALL MATERIAL MUST BE RECEIVED BY 3:00 P.M. PST ON THAT DAY. THIS DEADLINE WILL BE STRICTLY ENFORCED. FACSIMILE, EMAIL OR CD-ROM COPIES WILL NOT BE ACCEPTED FOR DEADLINE PURPOSES. HARD COPIES SUPPLEMENTED WITH A CD-ROM COPY ARE REQUIRED FOR CONSIDERATION FOR THE INTERNATIONAL SMALL CAP EQUITY MANAGER SEARCH. Responses must be signed by an individual with authority to bind the firm and the authority of the individual signing must be stated thereon. Please submit one (1) hard copy and one (1) electronic copy on a CD-ROM (both required) of the completed response in PDF format to this RFP by the above mentioned deadline and mail it to: Los Angeles Department of Water and Power Employees’ Retirement Plan Carlo Manjikian, Senior Investment Officer 111 North Hope Street, Room 357 Los Angeles, California 90012-4207 Copies must be sealed in an envelope or wrapping, which shall be clearly marked: Name of Firm International Small Cap Equity RFP If you are selected as a finalist, please be prepared to provide TEN (10) additional hard copies of your RFP response. In addition, please submit one (1) electronic copy via email of the completed RFP to: Ryan Sullivan RVK, Inc. 1211 SW 5th Avenue, Suite 900 Portland, OR 97204 LADWP.IESC.2018@rvkinc.com B. Contact Information

Carlo Manjikian, Senior Investment Officer Fax: (213) 367-1623 Email: investments@ladwp.com

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C. Preparation of Proposal

Each proposal shall be prepared simply and economically avoiding the use of elaborate promotional materials beyond those sufficient to provide a complete, accurate and reliable presentation. The Proposer understands and agrees that the Plan shall not have financial responsibility for any costs incurred by the Proposer in responding to this RFP. The responses become the property of the Plan and are subject to public inspection, consistent with California Open Meeting and Public Records jurisprudence. D. Withdrawal

Should your firm no longer satisfy the criteria or wish to decline further consideration please notify the Plan by emailing Carlo Manjikian at investments@ladwp.com. A proposal may be withdrawn or modified at any time prior to the deadline date and time. E. Contract Negotiations

This RFP in no manner obligates the Plan to the eventual procurement of services until confirmed by a contract. The Board reserves its exclusive right to reject any or all proposals with or without reason. After a review of the proposals and final presentations, the Board intends to enter into contract negotiations with one to two investment manager(s). The negotiations could include all aspects of services and fees. The firm awarded the contract will be required to enter into a written contract with the Board in a form approved by the Board and Los Angeles City Attorney, including the standard contract requirements and language outlined in this RFP. This RFP and the proposal, or any part thereof, may be incorporated into and made part of the final contract. F. Confidential or Proprietary Information

All information submitted in response to this RFP, regardless whether it is marked or otherwise designated as “confidential,” shall be considered a public record and subject to disclosure in response to applicable requests pursuant to the California Public Records Act (Government Code Section 6250 et seq.). Proposer must identify any material claimed to be exempt from disclosure under the Public Records Act. In the event such exemption is claimed, the Proposer must state in the response that it will defend any action brought against the Board, the Plan, and/or the City for its refusal to disclose such material to any party making a request thereof. Failure to include such a statement shall constitute a waiver of Proposer’s right to exemption from disclosure.

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VII. RFP QUESTIONNAIRE

In order to be evaluated for this mandate, all responses must be completed using the format presented in the RFP. This includes question numbers, section titles, labels, etc. Do not reorder questions, change titles or in any way change the formatting of the RFP. PART 1: ORGANIZATION

1. Provide the following information:

Specific (proper) name of organization

Company’s address

Specific (proper) name of product (as shown in eVestment

Inception date of product

Suggested benchmark

Proposed vehicle type (i.e., separate account, institutional mutual fund, commingled fund)

Are derivatives used in managing this product?

2. If selected for this mandate, what is the name of the legal entity that will be represented

on the contract(s)?

3. Briefly narrate (five (5) sentences or less) a description of your firm’s overall product offerings (such as public and/or private, equity and/or debt, domestic and/or international, separate accounts and/or commingled fund, open end and/or closed end etc.) and services (financial services, insurance, investment management, credit services, etc.).

4. Provide a brief history of your firm’s involvement in the management of International Small Cap Equity portfolios. How many years has your firm provided International Small Cap Equity management to public pension plans? Other institutional investors?

5. Describe your firm’s history. Detail any ownership and/or firm structural changes.

6. Is the organization involved in any other business other than asset management? If yes, please explain.

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7. Complete the information in the table below as of 12/31/2018. Year founded Year firm became SEC registered # of firm employees (in total) # of investment professionals (in total) % of firm owned by employees # of employees with ownership stake Parent Company (or equivalent)

8. Please provide a listing of the total number of personnel for International Small Cap Equity, as of 12/31/2018. If the person has multiple responsibilities, include the person in the primary job description. Do not double count employees.

9. List all current owners of the firm and % ownership.

Name/Company Relationship to firm (if any) % Owned

If your organization is a subsidiary, affiliated with another firm or there is outside ownership, please address the nature of the relationship, method of communication, hierarchy of decision making and degree of influence.

10. Furnish an organizational chart.

11. Insert response as indicated to the following questions as of 12/31/2018. If answer yes

(Y) to row C or D please provide a brief explanation.

A. Registered Investment Advisor? (Y/N) B. Exempt from SEC registration? (Y/N) C. Pending litigation or investigations?* (Y/N) D. Previous judgment(s) in last five (5) yrs?* (Y/N) E. Crime insurance? (Y/N) F. Error & Omission insurance? (Y/N) G. Fidelity Bond? (Y/N) H. GIPS compliant? (Y/N) I. Attestation firm/auditor

*Please answer question directly. Do not refer us to your ADV or other SEC filings.

12. Describe your plans for managing the future growth of your firm in terms of:

i. Total number of accounts that will be accepted. ii. Total assets that will be accepted. iii. Plans for additions to professional staff and approximate timing in relation to

anticipated growth in the number of accounts or assets.

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PART 2: PROFESSIONALS

13. Who should be contacted regarding any questions about the information contained in your response to this RFP?

Name/Title/Address Phone Email

RFP Contact

Portfolio Manager

Client Service

14. Indicate the number of personnel as designated below as of 12/31/2018. Count

individuals only once when completing columns B and C (do not duplicate).

A B C Total Firm

Wide # Involved in the

Strategy # Dedicated to the

Strategy* Strategic/Executive Advisors Portfolio Managers Analysts Traders Client Servicing/Marketing Reporting/Compliance * not involved in other firm products

15. Do portfolio managers have client/marketing duties?

16. Complete the following table with information for key personnel associated with the International Small Cap Equity mandate. Please order the individuals in terms of Product-specific relevance (most key decision makers). If titles are different than portfolio manager or analyst, please indicate which individuals are functionally portfolio managers and which are functionally analysts. Please add additional lines to the table as necessary.

Name (include

designations) Title

Highest Level of

Education Institution

Years with Firm

Years Involved

with Product

Years in Current

Capacity

Years of Investment Experience

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17. Provide biographies and/or résumés of all personnel listed in question 16.

18. Are the portfolio managers or investment professionals responsible for building the track record still managing the International Small Cap Equity strategy?

19. Describe your firm’s succession plan for key personnel working on this strategy.

20. List all professionals for the International Small Cap Equity strategy gained and lost over

the last three (3) years including reasons for departure (please include office where employed as well as responsibilities).

21. What policies are in effect to control the workload as it relates to the number of clients

serviced by each account manager? E.g., is there a limit on the number of accounts that an account manager may handle?

22. Describe compensation and incentive structures for the product’s portfolio managers and research analysts directly associated with the investment strategy. Please discuss how bonus/performance pools are allocated among portfolio managers, analysts, and other functional areas.

23. Has any employee associated with this product offering been party to any investigations,

litigation (including any settled out of court), or regulatory action during the past five (5) years (ending 12/31/2018) while at this or any other firm? If so, please provide (i) a brief synopsis, (ii) the current status, and (iii) a comment on the action’s merits.

24. Explain any legal judgments within the last five (5) years pertaining to any current or

former employee associated with this strategy while at this or any other firm. Specify whether the employee is involved in any pending litigation or investigations. If so, please provide a brief synopsis of the case.

PART 3: INVESTMENT STRATEGY

25. Describe your firm’s investment philosophy. Specify objective, approach and strategy.

26. Describe how your approach to this product differentiates your philosophy and process from your competitors.

27. What is the most appropriate benchmark for your product? Why?

28. Does this strategy make investments outside the benchmark MSCI ACWI ex USA Small

Cap Index (USD)? If so, what is your current exposure to non-benchmark securities within the strategy? What has been the historical range of investments in non-benchmark issues been?

29. Describe the decision-making process, detailing the roles and responsibilities of each type of investment professional involved (i.e., analysts, portfolio managers, committee members, advisory staff, traders etc.).

a) Describe and explain the overall investment process (research, security selection,

trading, monitoring, rebalancing, etc.).

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b) How do portfolio managers process information from analysts?

c) Detail efforts or decisions made on a team (or consensus) basis.

d) What latitude or degree of autonomy in decision-making is given to portfolio managers within the product team?

e) Describe who has ultimate decision making authority and accountability (portfolio

manager, investment committee, etc.).

f) Where is the team located? If members of the team are located in more than one office, please provide details.

g) Describe how the analyst team is organized. Does the analyst team support multiple

products? If so, approximately how much of their time is focused on this product?

h) Are there dedicated traders for this product? If not, approximately how much of their time is focused on this product?

30. Provide a description of the portfolio construction process for this strategy.

a) List each stage explicitly.

i. Discuss the quantitative and qualitative processes utilized in constructing the portfolio.

ii. Discuss process and sources of research in detail.

b) How are sector, region, country, and individual security weightings determined? Please explain.

c) Does the firm engage in currency hedging as a part of the proposed strategy? If yes, is currency hedging viewed as a risk mitigation technique or a source of alpha?

d) Is there a model portfolio which is the basis for a new investor’s portfolio? Please describe how the model portfolio process is applicable and how a new investor’s portfolio would be able to deviate from the base model portfolio.

e) How important are income/dividend characteristics when selecting securities for this

mandate? Please explain the firm’s strategy. f) Explain the investment process with respect to investment pacing. Initially, are

securities purchased simultaneously or gradually based on different factors?

g) What is the firm’s sell discipline with respect to the subject strategy? Please explain.

31. Have there been any compliance issues with remaining within stated allocations (i.e. sector exposures, concentration levels, risk targets, etc.)?

32. How are security reclassifications from one index to another implemented in the portfolio?

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33. Describe any changes (or events) during the product’s tenure impacting performance

results.

34. What is the expected tracking error to the MSCI ACWI ex USA Small Cap Index (USD)? List any incidents of significant discrepancies in realized tracking error relative to expected tracking error for this product during its tenure and describe the reason(s) for each discrepancy. What factors contribute to the tracking error of the performance of the composite?

35. Describe the market environment that would cause the portfolio’s performance to

significantly deviate, positively and negatively, from the benchmark.

36. Please detail the use, if any, of derivative instruments in your strategy. Are their uses intrinsic to your management style?

37. Does the firm have model(s) to capture counterparty exposure? If so, briefly describe.

PART 4: RISK CONTROL

38. Please provide the following. a) The internal investment guidelines for the proposed mandate’s strategy; and

b) Complete the tables below.

General Policy Limits Guidelines

(Y or N) Maximum or Range

How Established (Absolute or Index Relative)

Max Cash Position Min Market Capitalization ($millions)

Max Market Capitalization ($millions)

Max Position Size Max Sector Exposure Max Beta Minimum # of Countries

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Geographic Limits Guidelines

(Y or N) Maximum or Range

How Established (Absolute or Index Relative)

United States United Kingdom EU Countries Non EU Countries Far East & Australasia Other Emerging Markets (Aggregate)

Frontier Markets (Aggregate)

39. Describe your firm’s risk philosophy (i.e., benchmark relative or absolute loss aversion).

40. Describe the risk models/controls used in portfolio construction. Is cash used as a method of risk control?

41. How do you monitor the product’s adherence to its investment style and process?

Specify who is responsible.

42. Describe how you evaluate and monitor liquidity risk, specifically commenting on how you would handle an “illiquidity event”.

43. How do you monitor portfolio parameters with respect to client guidelines? What

compliance systems/tools are used? PART 5: CLIENT BASE AND SERVICES

44. Please provide your firm’s total assets under management as well as total International

Small Cap Equity assets under management, as of 12/31/2018. Please describe a summary of your firm’s International Small Cap Equity investment offerings including separate accounts, commingled funds and other vehicles.

45. Provide the following (as of 12/31/2018).

Firm International Small Cap Equity By Client Type Assets ($mil) # of Accounts Assets ($mil) # of Accounts Total Institutional Assets Corporate Public Fund Union/Multi-Employer Foundation & Endowment Health Care Insurance High Net Worth Wrap Accounts Sub-Advisor Other

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46. List your five (5) largest clients in the product by order of assets under management (AUM) with the following information as of 12/31/2018. If you are unable to provide both client name and AUM, we would prefer you provide AUM (and Client Type). This information will be used to verify the minimum qualifications criteria.

Name Client Type Date

Retained AUM ($mil)

US Tax Exempt Client

(Y or N) 1. 2. 3. 4. 5.

47. What is the minimum, average, and maximum account size for this mandate as of 12/31/2018?

48. Please provide the names, addresses, phone numbers, contacts, and 12/31/2018 market values of the three (3) largest US public pension plans (or closest equivalent) for which you manage this Product. Please also secure permission from your clients to permit reference checking prior to submitting your proposal.

49. State the asset capacity limit for the proposed strategy. Please provide an explanation for how that capacity limit was determined.

50. Complete the following tables indicating accounts and market value of assets gained and lost for each of the last four (4) calendar years. Please provide reasons for each client loss, and for any meaningful changes in firm wide and/or product assets.

Firm Wide 2014 2015 2016 2017

Gain Loss Gain Loss Gain Loss Gain Loss Total # of Accounts

Total Assets

# of Public Fund Accounts

Public Fund Assets

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Product 2014 2015 2016 2017

Gain Loss Gain Loss Gain Loss Gain Loss Total # of Accounts

Total Assets

# of Public Fund Accounts

Public Fund Assets

PART 6: PERFORMANCE / QUANTITATIVE CHARACTERISTICS

51. Provide monthly rates of return (for both NET of fees and GROSS of fees return streams) since inception, ending 12/31/2018 with respect to both a commingled vehicle and a separate account composite, if available. Also provide portfolio statistics for the proposed strategy. Provide these by submitting this information to eVestment.com and by using an Excel spreadsheet. Performance for each should be monthly, in ascending chronological order, and in one (1) column, with no spaces or separations for aggregation (such as each quarter or by calendar year). Label each column by specific (proper) name, vehicle type, and NET or GROSS of fees.

52. Please provide the annualized gross and net performance for the proposed strategy. Please provide only actual returns (no back-tested). Must provide returns through 12/31/2018 (1 year, 2 year, 3 year, 4 year, 5 year and since inception).

53. Provide the portfolio statistics (beta, standard deviation, tracking error, Sharpe ratio, information ratio, alpha, up market & down market capture ratios) for the proposed strategy versus the MSCI ACWI ex USA Small Cap Index (USD) (1 year, 2 year, 3 year, 4 year, 5 year and since inception).

54. At what level of GIPS compliance are the performance numbers reported? Include all

performance-related disclosures regarding composites. GIPS composite reporting formats are encouraged.

55. Describe how you analyze and evaluate the performance of the product. Include a discussion of your performance attribution analysis and any models or tools used. How do you incorporate the results of the performance attribution analysis in the management of the product?

56. Provide sector and region attribution for your strategy over the latest one- (1-), three-

(3-), and five- (5-) year periods ending 12/31/2018.

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57. Please provide the following portfolio characteristics as of 12/31/2018 for the last six (6) calendar years:

2012 2013 2014 2015 2016 2017 Number of issues

Average Holding Period

Annual Turnover

Weighted Avg. Market Cap (Mil)

Dividend Yield

P/E

P/B

5 Year ROE

Earnings Growth (Next 5 Yrs)

Average Cash Position

% of Portfolio in Cap Range (by percent held) 2012 2013 2014 2015 2016 2017 > $10 billion

$5 billion - 10 billion

$2.5-5 billion

$1-2.5 billion

< $1 billion

Top Ten (10) Holdings (include weighting)

2012 2013 2014 2015 2016 2017

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Total Total Total Total Total Total

PART 7: FEES

58. Please provide your standard fee schedule for all vehicles offered (separate account, commingled fund, institutional mutual fund, etc.) for this product? Include specific (or proper) names for each product as delineated by vehicle. For each, indicate minimum asset size or fee requirements and any other differentiating factors. If investment vehicle is not offered, please indicate “not offered”. In addition to providing this information in your response, please also submit this information to eVestment.com.

Separate Account Institutional

Commingled Fund Other Product Name

Minimum Asset Level

Minimum Fee

Fee Schedule

59. The Plan may elect to utilize either a separate account or commingled vehicle structure

with regards to this search. Please provide your proposed separate account and commingled vehicle fee schedules for this search. (These fee schedules are what will be used for evaluation purposes.)

60. Will the assets for the two (2) plans be aggregated for fee calculation purposes?

61. Are your “proposed fee” schedules negotiable?

Retirement Plan

(approximately $250 million) Health Plan

(approximately $50 million) Separate Account Proposed Fee Schedule Proposed Fee in Dollars Commingled Vehicle Proposed Fee Schedule Proposed Fee in Dollars

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PART 8: LEGAL

62. Do you maintain an in-house legal staff? If yes, describe its role, staff profile, and the number of employees assigned to the department. If not, list the names of the external firms you use.

63. Has the firm, its principals or any affiliate over the last five (5) years been: (a) the focus of a non-routine SEC inquiry or investigation or a similar inquiry or investigation from any similar federal, state or self-regulatory body or organization; (b) been a party to any litigation concerning fiduciary responsibility or other investment related matters; or (c) submitted a claim to your errors & omissions, fiduciary liability and/or fidelity bond insurance carrier(s)? If yes to any, please provide details.

PART 9: COMPLIANCE

64. Do you maintain an in-house Compliance Department?

65. Do you maintain a front-end and/or back-end compliance system for client guideline monitoring?

66. Describe how your internal control procedures effectively prevent conflicts of interest in employee, proprietary and client discretionary trading.

67. Discuss your firm-wide compliance training and education initiatives.

68. Describe how your organization communicates compliance and regulatory policies/procedures.

69. Describe your firm’s soft dollar policy and how soft dollar activity is monitored/controlled.

70. Do you have a Code of Ethics? Do you require all employees to follow it? How is it enforced?

71. List and describe any relationships and/or contacts the firm has had with any of the Plan’s Board members, Investment Staff, and/or Consultant (RVK, Inc.) working with the Plan within the last twelve (12) months.

72. Describe any potential conflicts of interest your firm may have in the management of this account. Include any activities of affiliated or parent organizations, brokerage activities or investment banking activities. Include any other pertinent activities, actions, or relationships not specifically outlined in this question.

PART 10: TRADING OPERATIONS

73. Please outline your internal trading capabilities for this mandate: a) Number and experience of trading staff

b) Current actual trading volume

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c) Current capability for trading volume and asset levels d) Experience in trading an International Small Cap equity portfolio. Where are traders

located?

74. Describe the decision-making process of determining which broker/dealer will execute client transactions.

75. Describe the process of how you ensure and monitor best execution and minimize trading costs.

76. Describe your process for reconciling client transactions. How often do you reconcile

your records of client positions and position records maintained by client custodians? How often do you review cash positions in your client accounts?

PART 11: AUDIT

77. Provide the name, address and contact of your independent auditor(s) or accounting firm. In addition, explain the nature of the services they provide to your firm.

78. Provide electronic copies of the latest ADV Part I and Part II, and Statement of Auditing Standards No. 70 or Statement on Standards for Attestation Engagements (SSAE) 16, if available, for the most recent year-end.

79. Does your firm have an internal audit department?

80. What procedures do you have that ensure adequate internal controls are in place?

81. Please summarize any SEC, securities industry Self-Regulatory Organizations (SROs) or other governmental or regulatory enforcement proceedings or action taken with respect to your firm or its employees for the past five (5) years.

82. Is your firm in compliance with Sarbanes Oxley? Have you implemented changes to be in compliance with these obligations?

PART 12: MBE/WBE/OBE (Information provided in this section will be recorded for information-gathering purposes, but it will not be used in any way to evaluate or recommend potential candidates.)

83. Please describe the ownership structure of the organization by completing the table below (as of 12/31/2018):

Minority/Female Ownership Structure % % African American Owned % Asian Owned % Hispanic Owned % Other Owned % Minority Female Owned % Non-Minority Female Owned

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% Total Minority & Female Ownership

84. Please describe the composition of the firm’s workforce at the total firm level and for the product proposed for this mandate by completing the following table (as of 12/31/2018):

Minority/Female Workforce

Firm-wide Product Proposed

# of Employees % of Total Employees # of Employees

% of Total Employees

African American Asian Hispanic Other Minority Minority Female Non-Minority Female % Total Minority & Female Workforce

85. Supply information on any programs and initiatives that the firm has in place that support

minority and/or women in the workplace.

86. Identify any minority and/or women owned businesses that are utilized in the management of the proposed product. Please describe these relationships in detail and provide an indication of the volume of business conducted through these firms. (i.e. brokers, research firms).

87. Will your firm indemnify 100% of losses incurred by an emerging broker conducting trades on behalf of the Plan’s account? Please comment on whether or not your firm could meet this commitment. Also, please comment on whether your firm provides indemnification against activities of its mainline brokers.

88. Does your firm sub-contract/outsource any other specific services to emerging firms? Please describe.

89. Please provide any additional information that your firm believes might prove relevant to

the Plan’s efforts to collect MBE/WBE/OBE data. PART 13: OTHER

90. Describe proxy services offered by your firm and procedures followed. Discuss your company’s ability to support the voting process. List any major voting services with which your institution has linkages. Does your firm automatically file for class actions on a client’s behalf?

91. Provide a sample quarterly client report.

92. Does your firm utilize/compensate one (1) or more external placement agents in any of your institutional investment offerings? If so, please provide details on (i) amount of assets and under what mandates the placement agent(s) was/were utilized and (ii) the compensation structure agreed upon between your firm and each placement agent (iii) in what capacity they are used in relation to the International Small Cap Equity mandate.

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93. Has your firm paid any unregistered third-parties such as placement agents to solicit government business? If so, please provide detailed information.

94. Has your firm, any employees of your firm, or any associate of your firm made any campaign contribution to any elected officials, and/or candidate for an elected office, or candidate for any elected office in the State of California in the last five (5) year period?

95. Please verify your firm will accept the indemnification language stipulated in Appendix A?

96. Has your firm verified the insurance requirements (as described in Appendix A) with your Risk Manager or legal counsel? If so, were any issues identified?

97. Will your firm list the Los Angeles Water and Power Employees’ Retirement, Disability and Death Benefit Plan, including the Retiree Health Benefits Fund as an Additional Insured in the schedule of the appropriate insurance policy on the appropriate endorsement form to accompany the certificate(s) of insurance?

98. Is your firm able to meet all the required insurance policy endorsements and coverage levels? If not, please specify.

99. Is your firm able to meet the Affirmative Action Mandatory Provisions (Appendix B)?

VIII. COMPLIANCE DOCUMENTS

1. Appendix A contains the following documents: a) Contract Requirements, including information on Insurance and Minority/Women

Owned Business Enterprises.

2. Appendix B contains the following documents: a) Non-Discrimination, Equal Employment Practices, Affirmative Action (Construction

and Non-construction Contractors – Vendors, Suppliers, Consultants) b) Service Contract Worker Retention and Living Wage Ordinance Forms c) Certification of Compliance with Child Support Obligations d) W-9 Form e) Tax Registration Certificate and/or Vendor Registration Number and Office of

Finance Tax and Permit Division Contacts

3. Appendix C contains the following documents: a) Information and Vendor Questionnaire Package Contents (Exhibits A-M)

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APPENDIX A

Contract Requirements

1. CONFIDENTIALITY/CONFIDENTIAL INFORMATION

a. For purposes of this Contract, confidential information shall consist of any information disclosed by either party to the other relating to the Account, the Portfolio or this Contract that is clearly marked “confidential and propriety” and that constitutes a trade secret or is otherwise protected from public disclosure by California law (“Confidential Information”). For the avoidance of doubt, Confidential Information shall include all Portfolio or Account- specific reports created by the Contractor for the Board and/or the Plan under this Contract. Any such Portfolio or Account-specific reports shall be the property of the Board and shall be subject to the confidentiality provisions contained herein. Furthermore, all information furnished by the Board or the Plan to the Contractor under this Contract shall be regarded as Confidential Information by the Contractor, unless written authority to the contrary has first been secured from the Board or the Plan, as applicable, and the Contractor shall maintain the confidentiality of such Confidential Information according to all applicable federal, state, county and local laws, regulations, ordinances and directives relating to confidentiality. The Contractor shall inform all employees performing services under the Contract of the confidentiality provisions of this Contract.

b. In addition, except as required by law or regulatory authorities:

(i) The Contractor agrees to maintain in strict confidence all personal

and financial information regarding the Plan that the Plan furnishes to the Contractor (except that the Plan may consent to disclose its identity as a client of the Contractor through written request by the Contractor), and

(ii) The Plan agrees to maintain in strict confidence all investment

advice and information the Contractor furnishes to the Plan, and shall not use any of this advice or information to manage any assets other than the Assets in the Portfolio.

(iii) The Contractor shall not disclose any confidential Plan related

information to other clients or third parties, except as required by applicable law or regulatory authority, unless specifically requested, in writing, by the Plan. However, if the Plan engages a third party consultant with respect to the Account, Contractor shall assume that the information concerning the Account may be shared with this third party consultant unless specifically directed otherwise by the Plan in writing.

c. With the exception of reports provided to the Contractor to the Board for

discussion during public session of the Investment Committee or Board meeting at which the Contractor and/or the Plan’s investment consultant presents, all Confidential Information furnished by the Contractor to the Board and/or the Plan hereunder, including Confidential

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Information furnished to the Plan’s agents and employees, shall not be disclosed to third parties, except as required by law. Notwithstanding the foregoing, the Contractor hereby acknowledges that the Plan is a public agency subject to state laws, including, without limitation, (i) the California Public Records Act (California Government Code §6250, et seq.) (the “Public Records Act”), which provides generally that all records relating to a public agency’s business are open to public inspection and copying unless otherwise exempted under the Public Records Act, and (ii) the Ralph M. Brown Act (California Government Code §54950, et seq.) (“Brown Act”) (collectively, “Open Records Laws”), which provides generally for open meetings for local legislative bodies, and that, as a result, the Plan may be required by law to disclose certain information publicly.

2. INDEMNIFICATION

The Contractor shall indemnify, hold harmless and, at the option of the Department, the Board of Water and Power Commissioners of the City of Los Angeles (“Commissioners”) or the Plan, defend the Department, the Commissioners, the Plan and all of their officers, fiduciaries (excluding the Contractor), employees and agents, from all claims, damages, losses, liabilities, suits, costs, charges, expenses (including, but not limited to, reasonable attorneys’ fees and court costs), judgments, fines and penalties, of any nature whatsoever arising from or relating to any bad faith, negligence, willful misconduct, improper or unethical practice that results in a violation of a governing law, statute, or regulation, infringement of intellectual property rights, breach of fiduciary duty, breach of confidentiality, breach of contract, or violation of any legal requirements by the Contractor or any of its agents acting in connection with this Contract. This indemnification obligation shall survive the expiration or termination of this Contract.

3. GENERAL CONTRACT AND INSURANCE REQUIREMENTS

a. General Requirements. It is the policy of the Plan that upon the award of a contract, the selected bidder/proposer must provide evidence of insurance that conforms to the insurance requirements of the bid/proposal. Insurance requirements are explained in detail in item k below, which specifically outlines the types and amounts of coverage required for this Contract.

(i) Acceptable evidence of required insurance, from insurers

acceptable to the Department, will be required to be submitted within 30-days of the date of award and maintained current throughout the term of this Contract. Said evidence of insurance must be on file with the Risk Management Section in order to receive payment under any contract for services rendered, and in order to commence work under this Contract.

(ii) For further information regarding the evidence of insurance,

please contact: Ms. Josephine Herrera

Los Angeles Department of Water and Power Risk Management Section Phone: (213) 367-4007

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b. Additional Insured Status Required. The Contractor shall procure at its own expense, and keep in effect at all times during the term of this Contract, the types and amounts of insurance specified. The specified insurance shall also, by provisions in the policies, by the City's own endorsement form or by other endorsements to such policies, include the Department, the Plan, and all of its officers, employees and agents, their successors and assigns, as additional insureds (except for Professional and Workers’ Compensation, if required) against the area of risk described herein as with respect to the Contractor's acts or omissions in its performance of the Contract or other related functions performed under the Contract. Such insurance shall not limit or qualify the liabilities and obligations of the Contractor assumed under the Contract.

c. Severability of Interests and Cross Liability Required. Each specified

insurance policy (General Liability and Excess or Umbrella, if required) shall contain a Severability of Interest and Cross Liability clause and a Contractual Liability Endorsement which shall also apply to liability assumed by the Contractor under this Contract with the City and the Plan.

d. Primary and Non-Contributory Insurance Required. All such insurance shall be Primary and Noncontributing with any other insurance held by the Department or the Plan where liability arises out of or results from the acts or omissions of the Contractor, its agents, employees, officers, assigns, or any person or entity acting for or on behalf of the Contractor. Any insurance carried by the Department or the Plan, which may be applicable, shall be deemed to be excess insurance and the Contractor’s insurance is primary for all purposes despite any conflicting provision in the Contractor’s policies to the contrary.

e. Proof of Insurance for Renewal or Extension Required. At least ten (10) days after the expiration date of any of the policies required on the attached Contract Requirement page, the Contractor shall file with the Department documentation showing that the insurance coverage has been renewed.

f. Submission of Acceptable Proof of Insurance and Notice of Cancellation. Contractor shall provide proof to the Department’s Risk Manager of all specified insurance and related requirements by use of Department's own endorsement form(s), by other written evidence of insurance acceptable to the Risk Manager, but always in a form acceptable to the Risk Manager. The documents evidencing all specified coverages shall be filed with the Department prior to Contractor beginning operations or occupying the premises hereunder. Said proof shall contain at a minimum, the applicable policy number, the inclusive dates of policy coverages, the date the protection begins for the Plan and the insurance carrier's name. It shall provide that such insurance shall not be subject to cancellation, material reduction in coverage or non-renewal except after written notice by certified mail, return receipt requested, to the Risk Management Section at least thirty (30) calendar days prior to the effective date thereof. The notification shall be sent by registered mail to: The LADWP Risk Management Section, Post Office Box 51111, JFB Room 465, Los Angeles, California 90051-0100.

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g. Claims-Made Insurance Conditions. Should any portion of the required insurance be on a "Claims Made" policy, the contractor shall provide evidence that the "Claims Made" policy has been renewed or replaced with the same limits, terms and conditions of the expiring policy, or that an extended discovery period has been purchased on the expiring policy at least for the contract under which the work was performed.

h. Failure to Maintain and Provide as Cause for Termination. Failure to maintain and provide acceptable evidence of the required insurance for the required period of coverage shall constitute a breach of contract, upon which the Department or the Plan may immediately terminate or suspend the Contract.

i. Sub-Contractor Compliance. The Contractor shall be responsible for all subcontractors' compliance with the insurance requirements in amounts and types consistent with the scope of work being performed by each sub-contractor.

j. Specified Insurance Requirements

(a) CRIME INSURANCE OR FIDELITY BOND

($10 million per occurrence)

( b ) PROFESSIONAL LIABILITY

(2.5% OF Plan ASSETS UNDER MANAGEMENT (“2.5% PAUM”) The Contractor shall maintain Professional Liability Insurance limits of liability the greater of $1,000,000, or 2.5% of the actual Plan Assets Under Management. Such amount will be determined semi-annually. For such limits, and only for such limits, the Contractor will be required to alter such policies in order to provide specific protection to the Plan. Such alteration will have the purpose of confirming that the policy or policies have Contractual Liability protection, providing coverage for liability assumed under contract, or equivalent protection. Such policies shall also have a commitment that the Plan is provided with firm Notice of Cancellation/Non-renewal, in the event the policy is cancelled and/or non-renewed.

4. MAXIMUM PROTECTION TO BE PROVIDED

It is the specific intent of this provision that all available Professional Liability limits of insurance that the Contractor procures in its normal course and scope of its business operations be made available to the Department, the Board and the Plan. The Contractor will be required to disclose those limits of insurance in its response to any Request for Information, and will be subsequently required to provide proof of insurance confirming those limits. However, for any limits in excess of those required in the above section (3.j.b), those policies are not required to be altered in order to provide specific protection for the Department, the Board or the Plan, as noted above.

5. DISCLOSURE

(a) The Contractor will promptly contact and provide a written statement to the Board whenever there are material changes in its financial condition or whenever there are

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significant changes in its business, including, but not limited to, ownership and key personnel responsible for the management of the Accounts or the Portfolio.

(b) The Contractor will promptly notify the Board in writing of any material litigation or regulatory proceedings commenced by it or to which the Contractor is a named party that could have a material impact on the Accounts or the Portfolio.

(c) The Contractor shall submit a copy of their most recent annual

consolidated financial report of Manager, Inc., within ten (10) days of the signing of this Contract and every year thereafter, within thirty (30) days of publication, for the duration of this Contract.

(d) The Contractor shall provide the Board with their written policy

addressing their investment professionals and other key personnel trading practices concerning investing for personal benefit.

(e) The Contractor agrees to promptly report in writing to the Board President

and/or to the Retirement Plan Manager, any contact by any one including members of the Plan’s staff (unless their contact is for routine business purposes), the Board, the Commissioners, Mayor's Office, DWP Union staff, or City Council, either endorsing, suggesting, requesting any specific contract, the Contractor, or product as part of the Contract to be included, excluded or otherwise.

6. NON-DISCRIMINATION CLAUSE

(a) The Contractor agrees and obligates itself not to discriminate during the performance of this Contract against any employee or applicant for employment because of the employees’ or applicants’ race, color, religion, national origin, ancestry, sex, sexual orientation, age, or physical handicap. All subcontracts awarded under this Contract shall contain a like non- discrimination clause.

(b) The Contractor shall comply with the applicable nondiscrimination and

affirmative action provisions of the laws of the United States of America, the State of California, and the City of Los Angeles. The Contractor shall comply with the provisions of the Los Angeles Administrative Code Sections 10.8 through 10.13, to the extent applicable hereto. The Affirmative Action Program of this Contract shall be the mandatory contract provisions set forth in the Los Angeles Administrative Code Section 10.8.4, and said provisions are incorporated herein by this reference. The Contractor shall also comply with all rules, regulations, and policies of the City of Los Angeles, Office of Contract Compliance relating to nondiscrimination and affirmative action, including the filing of all forms required by said Office. Any subcontract entered into by the Contractor relating to this Contact, to the extent allowed hereunder, shall be subject to the provisions of this paragraph.

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7. PROHIBITION AGAINST ASSIGNMENT OR DELEGATION

Board:

The Contractor may not, unless it has first obtained the written permission of the

to payment; or

(a) Assign or otherwise alienate any of its rights hereunder, including the right

(b) Delegate, subcontract, or otherwise transfer any of its duties hereunder with respect to investment management duties. Notwithstanding the preceding sentence, Contractor is authorized, at its own expense and its sole discretion, to employ agents to advise or assist it in the performance of its duties or activities necessary to support the provision of its investment management services (i.e., back office and administration duties which are not related to Contractor’s investment management duties).

8. NO WAIVER OF BOARD’S LEGAL RIGHTS

The federal securities laws impose liabilities under certain circumstances on persons who act in good faith. Therefore, nothing herein shall in any way constitute a waiver or limitation of any rights that the Board may have under applicable state of federal securities laws.

9. APPLICABLE LAW, INTERPRETATION AND ENFORCEMENT

(a) Each party’s performance under this Contract shall comply with all applicable laws of the United States of America, the State of California, and the City of Los Angeles. This Contract shall be enforced and interpreted under the laws of the State of California and the City of Los Angeles.

(b) Any state court of the State of California or the U.S. federal court of the

Central District of California, in the City of Los Angeles, has exclusive jurisdiction to settle any dispute between the parties, and neither party hereto waives its right to trial by jury.

(c) If any part, term or provision of this Contract shall be held void, illegal,

unenforceable, or in conflict with any law of a federal, state or local government having jurisdiction over this Contract, the validity of the remaining portions or provisions shall not be affected thereby.

10. LOS ANGELES CITY BUSINESS TAX REGISTRATION CERTIFICATE

The Contractor represents that it will obtain a City of Los Angeles Business Tax Registration Certificate (s) required by the City of Los Angeles Business Tax Ordinance (Article 1, Chapter 2, Sections 21.00 and following, of the Los Angeles Municipal Code). For the term covered by this Contract, the Contractor shall maintain, or obtain as necessary, all such Certificates required of it under said Ordinance and shall not allow any such Certificate to be revoked or suspended.

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11. SOLICITATION OF CONTRIBUTIONS

(a) Fiduciaries of the Plan are prohibited from soliciting, directing, or receiving any contribution from Contractor. This prohibition applies to members of Retirement staff, Retirement Board, Board of Commissioners, Mayor's Office, Union staff, City Council, or other person engaged in business for gain, seeking to engage in business for gain, or who has a proceeding pending before the Board or has had such a matter pending during the preceding twelve (12) months. The Board shall be responsible for providing the Contractor an updated and accurate list of persons covered by this section.

Definitions:

i. “Fiduciary” is defined as a member of the Board, and executive and senior

management staff.

ii. “Person” means a natural person or business entity of any type, and includes all directors, partners, officers and agents of such business entity.

iii. “Business for gain” is defined as any contract for goods or services, and

any investment related contract.

iv. “Proceeding pending” means all ministerial, administrative and legislative matters, potential contracts, current contracts and contracts with the Board that have expired or terminated within the past twelve (12) months.

(b) In the event any member of the Board or any executive or senior staff of

the Board, or any person claiming to represent or to have influence with either the Board or with any member of the Board, contacts the Contractor with respect to a contribution, the Contractor shall promptly report by telephone and in writing such contact to the President of the Board and the Retirement Plan Manager.

(c) The Contractor further agrees to furnish an annual certification, attested to

by a responsible officer of Contractor’s firm. The certification shall describe each contact reportable under the foregoing paragraph, listing the date(s) of such contact, the person making the contact and the subject matter of the contact. The certification shall state that except as specifically described in the certification, no member of either the Board, executive or senior management staff of such Board, any Commissioner, any member of the City Attorney's Office, the Mayor, Vice mayor, Union staff, City Council, any active or inactive person employed by the Department of Water and Power, and no person claiming to represent or have influence with the Board has contacted Contractor with respect to soliciting, directing or receiving any contribution. Such certification shall be filed, with the President of the Board or with the Retirement Plan Manager, annually by January 30th of each year for the preceding calendar year.

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12. CHILD SUPPORT ASSIGNMENT ORDERS

This Contract is subject to Section 10.10, Article 1, Chapter 1, Division 10 of the Los Angeles Administrative Code, Child Support Assignment Orders. Contractor is required to complete a Certification of Compliance with Child Support Obligations, which is incorporated herein by this reference.

13. STATE LAW REQUIREMENTS – PROTECTION OF PERSONAL

INFORMATION

(a) State law (See Civil Code Sections 1798.29, 1798.81.5 and 1798.82, as amended) requires a person or entity that owns or licenses computerized data that includes personal information, of a California resident, to disclose any breach of the data base security system and to implement and maintain procedures and practices to protect personal information from unauthorized access, destruction, use, modification, or disclosure and, shall require by contract, that non-affiliated third recipients of such personal information, implement and maintain security procedures and practices to protect the personal information. Accordingly, if the Board entrusts the Contractor with any personal information that concerns a California resident, the Contractor agrees that it will implement and maintain such security procedures and practices, in conformance with Civil Code Sections 1798.29, 1798.81.5 and 1798.82, with respect to any personal identification information received under this Contract, as well as to notify the Plan management and the Board of any breach in security. In addition, the Contractor shall not share, disclose, or in any way transfer the personal identification information without the written approval of the Plan management, or the Board.

(b) The Contractor shall be responsible for any and all liabilities, including

but not limited to those stated below in this paragraph, that result from any violation of Civil Code Sections 1798.29, 1898.81.5 and/or 1798.82 that the Contractor, its employees, agents, or subcontractors may cause pursuant to the activities performed by any of them under this Contract. Accordingly, the Contractor agrees to indemnify and hold harmless the City of Los Angeles, its respective agencies and commissioners, the Department, the Commissioners, the Board, the Plan and all its officers, employees, and authorized agents and, at the option of the City, to provide a defense, reasonably acceptable to the City, for the Department and/or the Board against any and all suits and causes of action, claims, charges, damages, demands, judgments, civil fines and penalties, or losses of any kind or nature whatsoever caused or brought by any person, including any aggrieved party, as defined in Civil Code Sections 1798.29 and 1798.82, arising out of the Contractor’s breach of any of its duties and obligations under Civil Code Sections 1798.29, 1798.81.5 and/or 1798.82,. The indemnification herein includes all awards, damages, interest, costs and attorney’s fees, if any. Such defense will be consistent with the City Charter of the City of Los Angeles, Sections 271, 272 and 273.

(c) The Contractor hereby agrees the definition of the “Personal Information”,

above includes medical information and health insurance information.

(d) Medical information is further defined as any information regarding an individual’s medical history, mental or physical condition, or medical treatment or diagnosis by a

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health care professional, and health insurance information is further defined to include an individual’s health insurance policy number or subscriber information number, any unique identifier used by a health insurer to identify the individual, or any information in an individual’s application and claims history, including any appeals records.

14. SIGNATORIES OF CONTRACT, NOTICES, COMMUNICATIONS,

AMENDMENTS

The individuals whose signatures appear below warrant that they have full authority to execute this Contract on behalf of the party on whose behalf they have affixed their signatures to this Contract.

The parties recognize any notices and other communications on behalf of the

Board or Contractor shall be made by the following individuals (whether verbally or in writing as applicable under the terms of this Contract):

Form OCC/ND-EEP-1 (7/11)

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CITY OF LOS ANGELES

NONDISCRIMINATION � EQUAL EMPLOYMENT PRACTICES CONSTRUCTION & NON-CONSTRUCTION CONTRACTOR

Los Angeles Administrative Code (LAAC), Division 10, Chapter 1, Article 1, Section 10.8 stipulates that the City of Los Angeles, in letting and awarding contracts for the provision to it or on its behalf of goods or services of any kind or nature, intends to deal only with those contractors that comply with the non-discrimination and Affirmative Action provisions of the laws of the United States of America, the State of California and the City of Los Angeles. The City and each of its awarding authorities shall therefore require that any person, firm, corporation, partnership or combination thereof, that contracts with the City for services, materials or supplies, shall not discriminate in any of its hiring or employment practices, shall comply with all provisions pertaining to nondiscrimination in hiring and employment, and shall require Affirmative Action Programs in contracts in accordance with the provisions of the LAAC. The awarding authority and/or Office of Contract Compliance of the Department of Public Works shall monitor and inspect the activities of each such contractor to determine that they are in compliance with the provisions of this chapter.

I. Los Angeles Administrative Code Section 10.8.2 All Contracts: Non-discrimination Clause Notwithstanding any other provision of any ordinance of the City of Los Angeles to the contrary, every contract which is let, awarded or entered into with or on behalf of the City of Los Angeles, shall contain by insertion therein a provision obligating the contractor in the performance of such contract not to discriminate in his or her employment practices against any employee or applicant for employment because of the applicant’s race, religion, national origin, ancestry, sex, sexual orientation, age, disability, marital status, domestic partner status, or medical condition. All contractors who enter into such contracts with the City shall include a like provision in all subcontracts awarded for work to be performed under the contract with the City. Failure of the contractor to comply with this requirement or to obtain the compliance of its subcontractors with such obligations shall subject the contractor to the imposition of any and all sanctions allowed by law, including but not limited to termination of the contractor’s contract with the City.

II. Los Angeles Administrative Code Section 10.8.3. Equal Employment Practices Provisions

Every non-construction contract with or on behalf of the City of Los Angeles for which the consideration is $1,000 or more, and every construction contract for which the consideration is $1,000 or more, shall contain the following provisions, which shall be designated as the EQUAL EMPLOYMENT PRACTICES provision of such contract:

A. During the performance of this contract, the contractor agrees and represents that it will provide equal employment practices and the contractor and each subcontractor hereunder will ensure that in his or her employment practices persons are employed and employees are treated equally and without regard to or because of race, religion, ancestry, national origin, sex, sexual orientation, age, disability, marital status or medical condition.

1. This provision applies to work or service performed or materials manufactured or assembled in the United States.

2. Nothing in this section shall require or prohibit the establishment of new classifications of employees in any given craft, work or service category.

3. The contractor agrees to post a copy of Paragraph A hereof in conspicuous places at its place of business available to employees and applicants for employment.

B. The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to their race, religion, ancestry, national origin, sex, sexual orientation, age, disability, marital status or medical condition.

C. As part of the City’s supplier registration process, and/or at the request of the awarding authority, or the Board of Public Works, Office of Contract Compliance, the contractor shall certify in the specified format that he or she has not discriminated in the performance of City contracts against any employee or applicant for employment on the basis or because of race, religion, national origin, ancestry, sex, sexual orientation, age, disability, marital status or medical condition.

D. The contractor shall permit access to and may be required to provide certified copies of all of his or her records pertaining to employment and to employment practices by the awarding authority or the Office of Contract Compliance for the purpose of investigation to ascertain compliance with the Equal Employment Practices provisions of City contracts. On their or either of their request the contractor shall provide evidence that he or she has or will comply therewith.

E. The failure of any contractor to comply with the Equal Employment Practices provisions of this contract may be deemed to be a material breach of City contracts. Such failure shall only be established upon a finding to that effect by the awarding authority, on the basis of its own investigation or that of the Board of Public Works, Office of Contract Compliance. No such finding shall be made or penalties assessed except upon a full and fair hearing after notice and an opportunity to be heard has been given to the contractor.

Form OCC/ND-EEP-1 (7/11)

2

F. Upon a finding duly made that the contractor has failed to comply with the Equal Employment Practices provisions of a City contract, the contract may be forthwith canceled, terminated or suspended, in whole or in part, by the awarding authority, and all monies due or to become due hereunder may be forwarded to and retained by the City of Los Angeles. In addition thereto, such failure to comply may be the basis for a determination by the awarding authority or the Board of Public Works that the said contractor is an irresponsible bidder or proposer pursuant to the provisions of Section 371 of the Charter of the City of Los Angeles. In the event of such a determination, such contractor shall be disqualified from being awarded a contract with the City of Los Angeles for a period of two years, or until the contractor shall establish and carry out a program in conformance with the provisions hereof.

G. Notwithstanding any other provision of this contract, the City of Los Angeles shall have any and all other remedies at law or in equity for any breach hereof.

H. The Board of Public Works shall promulgate rules and regulations through the Office of Contract Compliance, and provide necessary forms and required language to the awarding authorities to be included in City Request for Bids or Request for Proposal packages or in supplier registration requirements for the implementation of the Equal Employment Practices provisions of this contract, and such rules and regulations and forms shall, so far as practicable, be similar to those adopted in applicable Federal Executive orders. No other rules, regulations or forms may be used by an awarding authority of the City to accomplish the contract compliance program.

I. Nothing contained in this contract shall be construed in any manner so as to require or permit any act which is prohibited by law.

J. At the time a supplier registers to do business with the City, or when an individual bid or proposal is submitted, the contractor shall agree to adhere to the Equal Employment Practices specified herein during the performance or conduct of City Contracts.

K. Equal Employment Practices shall, without limitation as to the subject or nature of employment activity, be concerned with such employment practices as:

1. Hiring practices;

2. Apprenticeships where such approved programs arefunctioning, and other on-the-job training for non-apprenticeable occupations;

3. Training and promotional opportunities; and

4. Reasonable accommodations for persons with disabilities.

L. All contractors subject to the provisions of this section shall include a like provision in all subcontracts awarded for work to be performed under the contract with the City and shall impose the same obligations, including but not limited to filing and reporting obligations, on the subcontractors as are applicable to the contractor. Failure of the contractor to comply with this requirement or to obtain the compliance of its subcontractors with all such obligations shall subject the contractor to the imposition of any and all sanctions allowed by law, including but not limited to termination of the contractor’s contract with the City.

Equal Employment Practices Provisions Certification – The Contractor by its signature affixed hereto declares under penalty of perjury that:

1. The Contractor has read the Nondiscrimination Clause in Section I above and certifies that it will adhere to the practices in the performance of all contracts. 2. The Contractor has read the Equal Employment Practices Provisions as contained in Section II above and certifies that it will adhere to the practices in the performance of any construction contract or non-construction contract of $1,000 or more.

COMPANY NAME AUTHORIZED SIGNATURE

ADDRESS NAME AND TITLE (TYPE OR PRINT)

CITY, COUNTY, STATE, ZIP TELEPHONE/E-MAIL

City of Los Angeles Department of Public Works

Bureau of Contract Administration Office of Contract Compliance

1149 S. Broadway, Suite 300, Los Angeles, CA 90015 Phone: (213) 847-2625 E-mail: bca.eeoe@lacity.org

AFFIRMATIVE ACTION PLAN

NON-CONSTRUCTION CONTRACTOR The following contracts are subject to the City of Los Angeles Affirmative Action Program as required by the Los Angeles Administrative Code (LAAC) Section 10.8.4 et seq.:

• Every non-construction contract of $100,000 or more;

• Every construction contract of $5,000 or more.

Purpose - An affirmative action program is a management tool designed to ensure equal employment opportunity. A central premise underlying affirmative action is that, absent discrimination, over time a contractor's workforce, generally, will reflect the gender, racial and ethnic profile of the available labor pools. Therefore, as part of its affirmative action program, a contractor monitors and examines its employment decisions and compensation systems to ensure equal employment practices, and takes steps to correct underutilization of women and minorities.

Contractors are subject to all provisions contained in LAAC Section 10.8.4 et seq. which can be found at http://bca.lacity.org. The excerpts below are provided to serve as a starting point for satisfying these requirements: LAAC Section 10.8.4 (B) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to their race, religion, ancestry, national origin, sex, sexual orientation, age, disability, marital status or medical condition. LAAC Section 10.8.4(K) The plan shall be subject to approval by the Office of Contract Compliance prior to award of the contract. LAAC Section 10.8.4(M) The Affirmative Action Plan required to be submitted shall, without limitation as to the subject or nature of employment activity, be concerned with such employment practices as:

1. Apprenticeship where approved programs are functioning, and other on-the-job training for non-apprenticeable occupations;

2. Classroom preparation for the job when not apprenticeable;

3. Pre-apprenticeship education and preparation;

4. Upgrading training and opportunities;

5. Encouraging the use of contractors, subcontractors, and suppliers of all racial and ethnic groups, provided, however that any contract subject to this ordinance shall require the contractor, subcontractor or supplier to provide not less than the prevailing wage;

6. The entry of qualified women, minority and all other journeymen into the industry; and

7. The provision of needed supplies or job conditions to permit persons with disabilities to be employed, and minimize the impact of any disability.

LAAC Section 10.8.4(Q) All contractors subject to the provisions of the section shall include a like provision in all subcontracts awarded for work to be performed under the contract with the City and shall impose the same obligations, including but not limited to filing and reporting obligations, on the subcontractors as are applicable to the contractor.

OCC-AA-1 (Rev 6-26-12) 1 of 2

CONTRACTOR DECLARATION

In pursuit of accomplishing the intent of the City’s Affirmative Action Program, the contractor certifies and agrees to immediately implement good faith efforts, measures to recruit and employ minority, women, and other potential staff in a nondiscriminatory manner including, but not limited to, the following actions. The contractor shall:

(a) Recruit and make efforts to obtain such employees. (b) Continually evaluate personnel practices to assure that hiring, upgrading, promotions, transfers,

demotions and layoffs are made in a nondiscriminatory manner so as to achieve and maintain a diverse work force.

(c) Utilize training programs and assist minority, women and other employees in locating, qualifying for and engaging in such training programs to enhance their skills and advancement.

(d) Maintain such records as are necessary to determine compliance with equal employment and affirmative action obligations, and make such records available to City, State and Federal authorities upon request.

(e) Said policies shall be provided to all employees, subcontractors, vendors, unions and all others with whom the contractor may become involved in fulfilling any of its contracts.

By its execution hereof, the contractor accepts and submits the foregoing as its Affirmative Action Plan. I certify under penalty of perjury under the laws of the State of California that I have read and understood the foregoing requirements of LAAC Section 10.8 et seq. and agree to comply with them while under contract as set forth therein.

Executed this day of , in the year 20 , at , . (City) (State)

COMPANY NAME TELEPHONE/E-MAIL

AUTHORIZED SIGNATURE ADDRESS

NAME AND TITLE (TYPE OR PRINT) CITY, COUNTY, STATE, ZIP

OCC-AA-1 (Rev 6-26-12) 2 of 2

DEPARTMENT OF WATER AND POWER WATER AND POWER EMPLOYEES RETIREMENT PLAN

Instructions to Complete and Submit the Service Contract Worker Retention & Living Wage Ordinance (LWO) Forms:

NOTE: LWO Forms must be completed by Successful Bidder Only.

• Employee Information (Form CAO/LW-6) Submit within 10 days following award date of contract • Subcontractor Information (Form CAO/LW-18) Submit within 10 days following award date of contract, if applicable • Living Wage Ordinance OCC Exemption Application (Form OCC/LW-10) or Departmental Exemption Application (Form OCC/LW-13) Submit only if expressly covered under the Living Wage Ordinance Statutory Exemptions • Return Address: Director of Corporate Purchasing Services

Department of Water & Power 111 N. Hope Street, Room 1114 Los Angeles, CA 90012-2694 P.O. BOX 51111 Los Angeles, CA 90051-0100 Attention: Living Wage Coordinator

LWO/SCWRO RFP Language (06/09)

Living Wage Ordinance and Service Contractor Worker Retention Ordinance Unless approved for an exem ption, contractors under contracts primarily for the furnishing of services to or for the City an d that involve an expenditure in excess of $25,000 and a contract term of at least thre e (3) months, lessees and licens ees of City property, and certain recipients of City fi nancial assistance, shall comply with the provisions of Los Angeles Adm inistrative Code Sections 10.37 et seq., Li ving Wage Ordinance (LWO) and 10.36 et seq., Service Contractor Worker Retention Ordinanc e (SCWRO). Bidders/Proposers shall refer to Attachment/Appendix ___, “Living Wage Ordinance and Service Contractor Worker Retention Ordinance” for further information regarding the requirements of the Ordinances.

Bidders/Proposers who believe that they meet the qual ifications for one of the exemptions described in t he LWO List of Statutory Ex emptions shall apply for exemption from the Or dinance by submitting with their pr oposal the Bidder/Contractor Application for Non-Coverage or Exemption (Form OCC/LW-10), or the Non-Profit/One-Person Contractor Certification of Exem ption (OCC/LW-13). The List of Statutory Exemptions, the Application and the Certification are included in t he Attachment/Appendix.

Living Wage Ordinance Summary – 06/09 Page 1

CITY OF LOS ANGELES LIVING WAGE ORDINANCE

(Los Angeles Administrative Code Section 10.37 et seq.) 1. What is the Living Wage Ordinance? The Living Wage Ordinance (LW O) requires employers who have agreements with the City to pay their employees at least a mini mum “living wage” and to provide certain benefits. If the agreement is subject to the LWO, the employer must do the following:

• Pay employees working on the subject agr eement a wage rate t hat is at least equal to the “liv ing wage” rate. The “living wage” is adjusted annually and becomes effective July 1 of eac h year. Employers can obtain information about the living wage rate currently in effect by going to Department of Public Works, Bureau of Contract Administration, Office of Contract Compliance (OCC) website at www.lacity.org/bca/OCCmain.html.

• Provide employees with at least 12 pai d days off per year for sick leave , vacation, or personal necessity; and at least 10 unpaid sick days off per year.

• Tell employees who make less than $12.00 per hour that they may qualify for the federal Earned Income Tax Credit and provide them with the forms required to apply for the credit.

• Cooperate with the City by providing access to the wo rk site and to payroll and related documents so that the City can det ermine if the employ er is complying with the LWO.

• Pledge to comply with f ederal laws prohibiting an employer from retaliating against employees for union organizing.

• Not retaliate against any employee w ho makes claims about non-compliance with the LWO.

2. When was the Ordinance adopted? The LWO was adopted in May, 1997 and amended in January, 1999. 3. What types of agreements are subject to the Ordinance? Generally, the LWO covers the following types of agreements:

• An agreement in an amount over $25,000. 00 and for at least three months in which an employer will provide services to or for the City.

• An agreement for the l ease or license of City proper ty if the service being performed on the property is something that City employees would otherwise do.

• An agreement for the lease or license of City property that is in a location where a substantial number of the general public might visit.

• An agreement in which the Cit y gives fi nancial assistance fo r the purpose of promoting economic development or job growth.

• An agreement in whic h the City determines that apply ing the LWO would be in the best interest of the City.

Living Wage Ordinance Summary – 06/09 Page 2

4. Is an agreement subject to the LWO if it was entered into before May, 1997? Agreements executed after May, 1997 are subject to the LWO. An agreement entered into before May, 1997 may become subject to LW O if it is later amended or modified in order to add time or money to the original agreement. 5. Are there any requirements that would apply to an employer who does not have an agreement with City that is subject to the LWO? All employers are required to comply with the LWO’s prohibition against retaliation, even if the employer does not hav e an agreement with the City that is subject to the Ordinance. 6. Are all employees covered by the Ordinance?

Intentionally left blank 8/18/06

7. Are an employer’s subcontractors subject to the requirements of the Ordinance? A subcontractor may be covered by the Ordi nance if the subcontractor performs work on the subject agreement. If so, the subc ontractor must also comply with the requirements of the LWO, includ ing all reporting requir ements. The prime contractor is responsible for the making sure that the subcontractor complies with the LWO. 8. What happens if an employer is found to be in violation of the Ordinance? Payments due may be withheld. Also, the empl oyer may be deemed to be in material breach of the agreement. When that happens, the City may take the following steps:

• Terminate the agreement and pursue all available contractual remedies. • Debar the employer from doing business with the City for three (3) years or until

all penalties and restitution have been fully paid, whichever occurs last. • Bring a lawsuit against the employer for all unpaid wages and health benefit

premiums and/or seek a fine of up to one hundred dollars ($100.00) for each day the violation remains uncorrected.

9. What if a subcontractor is found to be in violation of the Ordinance? Because the prime contractor is responsible for making sure that all its subcontractors comply with the LWO, the sanctions listed in answer #8 may be applied to the prim e contractor if the subcontractor does not correct the violation(s). 10. What can an employee do if an employer is in violation of the Ordinance?

Living Wage Ordinance Summary – 06/09 Page 3

The employee can submit a complaint to t he Office Contract Co mpliance which will investigate the complaint. Also, the employee can bring his or her own lawsuit agains t the employer for:

• Back pay for failing to pay the correct wages or correct health benefit premiums. • Reinstatement and back pay for retaliation. • Triple the amount of the back pay that is owed if t he violation was found by the

court to be willful. 11. Are there any exemptions available under the Ordinance? An employer may apply for an exemption based on the following categories:

• Service agreements that are less than 3 months or $25,000 or less. • Agreements for the purchase of goods, property, or the l easing of property (with

City as the lessee). • Construction contracts that do not meet the definition of a service agreement. • Employees who are required to have an occupational license in order to provide

services to or for the City are exempt. • Employers who are party to a collectiv e bargaining agreement (CBA) that has

language stating that the CBA shall supersede the LWO. • Financial assistance r ecipients who meet the requir ements stated in Section

10.37.1(c) of the LWO. • Employers (contractors, subcontractor s, financial assistance recipients)

organized under IRS Code, Section 501( c)(3) whose chief executive officer’s hourly wage rate is less than eight times the hourly wage rate of the lowest paid worker are be exempt. However, this exemption does not apply to child care workers.

• Lessees or lic ensees who have no more than a total of seven employees and who have annual gross revenue of less than $454, 016 (e ffective July 1, 20 09). The qualifying annual gross revenue is adjusted every July.

• One-person contractors, lessees, licensees or financial assistance recipients who employ no workers.

• Agreements that involve other governmental entities. 12. Who is responsible for the administration and enforcement of the Ordinance? The Department of Public Works, Bureau of Contract Admini stration, Office of Contrac t Compliance, located at 1149 S. Broadway Street, Suite 300, Los Angeles, CA 90015. For additional information, please call (213) 847-2625, or go to the Offi ce of Contract Compliance website at http://bca.lacity.org.

Form OCC/LW-10 (Rev. 6/09) 1

LIVING WAGE ORDINANCE STATUTORY EXEMPTIONS

Living Wage Ordinance (LWO) statutory exemptions are now divided into the following three categories: 1. Exemptions that do n ot require approval from the Department of Public Wor ks, Bureau of Contract

Administration, Office of Contract Compliance (OCC). 2. Exemptions that do not require OCC approval but require a Contractor Certification of Exemption. 3. Exemptions that require submission of an Application for Exemption and OCC approval of the Application. 1. The following exemptions do not require OCC approval or any Contractor Certification: Departments

only need to indicate the exemption in the appropriate category on the LWO Departmental Determination of Coverage Form.

a. Less than three months OR less than $25,000 (LAAC 10.37.1(j)). Service contracts or Authority for Expenditures that do not meet these thresholds are not covered by the LWO.

b. Other governmental entities (LAAC 10.37.1(g)). Agreements with ot her governmental entities such as Los Angeles County, the State of California, or the University of California, ar e not covered by the LWO. Subcontractors to these entities are also not covered by the LWO.

c. Purchase of goods, property, or the leasing of property, with the City as lessee (LAAC 10.37.1(j)). Such contracts are ca tegorically exempt from the LW O unless the y include a service component that is more than just incidental (re gular and recurring services is required). Exa mples of such categorically exempt contracts include co ntracts to purchase office supplies or to lease sp ace to be occupied by City departments.

d. Construction contracts, not conforming to the definition of a service contract (LAAC 10.37.1(j)). Such contracts are categorically exempt from the LWO. Examples include construction of buildings and infrastructure.

e. City financial assistance not meeting thresholds (LAAC 10.37.1(c)). Agreements to pr ovide a contractor with City financial assistance (which typically mean grants or loans provided at interest rates that are lower than the Applicable Federal Rate) are ca tegorically exempt from the LWO if th ey meet both of the following: (1) The assistance given in a 12-month period is below $1,000,000 AND less than $100,000 per year. (2) The assistance is not for economic development or job growth.

f. Business Improvement Districts (BID) (LWO Regulation #11). Service agreements are categorically exempt from the LWO if the services are funded with the BID’s assessment money collected by the City after the formation of the BID. Service contracts in which City mone y is used to hire firms to help in forming the BID remain subject to the LWO unless the contractor otherwise qualifies for an exemption.

2. The following exemption categories do not require OCC approval, but the contractor must still

submit a Contractor Certification of Exemption from Living Wage (OCC/LW-13). No OCC approval is required for the exempti on to be val id. However, the department must include the Contractor Certification of Exemption with the contract.

a. 501(c)(3) Non-profit organizations (LAAC 10.37.1(g)): Employers (contractors, subcontractors, financial assistance recipients) organized under IRS Code Section 501(c)(3) are exempt from the LWO if the hourly wage rate of the corpo ration’s highest paid employee is le ss than eight times the hourly wage rate of the corporation’s lowest paid worker. However, the exemption does n ot extend to Child Care Workers as defined in the LWO Rules and Regul ations (an employee “whose work on an agreement involves the care or sup ervision of children 12 years of age and under.”).A copy of the IRS 501(c)(3) Exemption Letter will be required.

b. One-person contractors with no employees (LAAC 10.37.1(f)): Contractors, lessees, licensees or financial assistance recipients who employ no workers are exempt from the LWO.

Form OCC/LW-10 (Rev. 6/09) 2

LIVING WAGE ORDINANCE STATUTORY EXEMPTIONS (Continued) 3. The following exemption categories require submission of an application for exemption and OCC

approval of the application to be valid..

a. Collective bargaining agreements (CBA) that supersede the LWO (LAAC 10.37.12): Contractors whose employees are covered by a CBA that supersede the requireme nts of the LWO are not subject to the LWO. A copy of the CBA with the superseding language or a lette r from the union indicating that the union h as agreed t o allow the CBA to supersede the LWO will be required to be sub mitted. Example: Labor agreement betwe en parking contractor and a labor union with language that wages and benefits in the CBA shall supersede the LWO. Contractors must use the LWO Application for Non-Coverage or Exemption form (Form OCC/LW-1 0) and submit a copy of the CBA or a letter from the union.

b. Occupational license (LAAC 10.37.1(f)): Employees required to possess an occupational license in order to provide the services under the City agreement are not subje ct to the LWO. However, only the individual employees who are required to possess an occupational license are exempt. Employees who work on the City contract and are not required to possess an occupational license remain subject to the LWO. Example: Under California Labor Code Sections 7375 – 7380, a person must be licen sed by the State of California in order to inspect and certify cranes and derricks u sed in lifting services. Contractors must use the LWO App lication for Non-Coverage or Exemption form (Form OCC/ LW-10) and submit a listing of the employees who possess occupational licenses and a copy of the licenses.

c. Small business exemptions for Public Lessees/Licensees (LAAC 10.37.1(i)): Small business th at lease property from the City may apply for OCC approval for LWO exe mption if the lessee or licensee: (1) employs no more th an a total of seven employees; and (2) has annual gross revenues of less than $454,016 (adjusted July 1, 2009). T his applies only to lessees with lease agreeme nts executed after February 24, 2001, and to amendments executed after February 24, 20 01 that add monies or extend term. Use the Applica tion for “Small Business” Exempt ion (Form OCC/LW-20 ) and sub mit the application with the documents requested on that form.

d. City financial assistance agreements that exceed the LWO monetary thresholds may apply for one of the exemptions below. Applicants and departments should refer to Regulation #3(c) f or the requirements and the d ocuments that must be submitted with the LWO Application for Non-Coverage or Exemption (OCC/LWO-10). (1) The City financial assistance recipient (CFAR) is in its first year of operation (LAAC 10.37.1(c)). (2) The CFAR employs fewer than five employees (LAAC 10.37.1(c)). (3) The CFAR would face undue hardship because it employs the long-term unemployed or provides

trainee positions to prepare employees for pe rmanent positions (LAAC 10.37.1(c)). REQUI RES COUNCIL APPROVAL.

LWO –DEPARTMENTAL EXEMPTION APPLICATION EXEMPTIONS THAT REQUIRE AWARDING DEPARTMENT APPROVAL

This application for exemption must be submitted along with your bid or proposal to the AWARDING DEPARTMENT. INCOMPLETE SUBMISSIONS WILL BE RETURNED.

Los Angeles Administrative Code 10.37, the Living Wage Ordinance (LWO), presumes all City contractors (including service contractors, subcontractors, financial assistance recipients, lessees, licensees, sublessees and sublicensees) are subject to the LWO unless an exemption applies.

TO BE FILLED OUT BY THE CONTRACTOR:

1. Company Name: __________________________________________________ Phone Number: _________________________

2. Company Address: ________________________________________________________________________________________

3. Are you a Subcontractor? Yes No If YES, state the name of your Prime Contractor: _______________________________________________________________________________________________________

4.Type of Service Provided: ___________________________________________________________________________________ ________________________________________________________________________________________________________

EXEMPTION INFORMATION:

CHECK OFF ONE BOX BELOW THAT BEST DESCRIBES THE TYPE OF EXEMPTION YOU ARE APPLYING FOR AND ATTACH THE SUPPORTING DOCUMENTATION LISTED ON THE RIGHT:

EXEMPTION SUPPORTING DOCUMENTATION REQUIRED

501(c)(3) Non-Profit Organizations: A corporation organized under 501(c)(3) of the IRS Code

qualifies for an exemption from the LWO if the highest paid employee makes less than eight times the hourly wage of the lowest paid employee.

The exemption is valid for all employees except Child Care Workers.

Therefore, even if a 501(c)(3) organization meets the salary test, Child Care Workers performing work on the City agreement must still be provided with the LWO required wage and time off benefits.

Under the LWO’s Rules and Regulations, a Child Care Worker is an employee “whose work on an agreement involves the care or supervision of children 12 years of age and under.”

This is read broadly so that the term would include, for example, tutors working with children 12 or under.

1. ATTACH a copy of your 501(c)(3) letter from the IRS.

2. ANSWER the following questions: A. STATE the hourly wage of HIGHEST paid employee

in the organization: $ ______________________ B. STATE the hourly wage of LOWEST paid employee

in the organization: $ ______________________ C. MULTIPLY B by 8: $ ___________

3. Based on Question 2 above, is A less than C? YES NO

If NO, your company is NOT eligible for an exemption. If YES, sign and submit this application for final approval.

4. Will there be any Child Care Workers (as defined by the LWO Regulations) working on this Agreement?

YES NO 5. Fill & Submit LW-18 Subcontractor Information Form.

One-Person Contractors: Contractors that have no employees are exempt from the LWO. If you have employees in the future, you must comply with the Ordinance.

Fill and Submit the LW-18 Form.

I declare under penalty of perjury under the laws of the State of California that: (1) I am authorized to bind the entity listed above; (2) the information provided on this form is true and correct to the best of my knowledge; and (3) the entity qualifies for exemption from the LWO on the basis indicated above. By signing below, I further agree that should the entity listed above cease to qualify for an exemption because of a change in salary structure, non-profit status, the hiring of employees, or any other reason, the entity will notify the Awarding Department and the OCC of such change and comply with the LWO’s wage and time off requirements.

Print Name of Person Completing This Form

Signature of Person Completing This Form

Title Phone # Date

ANY APPROVAL OF THIS APPLICATION EXEMPTS ONLY THE LISTED CONTRACTOR FROM THE LWO DURING THE PERFORMANCE OF THIS CONTRACT. A SUBCONTRACTOR PERFORMING WORK ON THIS CONTRACT IS NOT EXEMPT UNLESS THE OFFICE OF CONTRACT COMPLIANCE HAS APPROVED A SEPARATE EXEMPTION FOR THE INDIVIDUAL SUBCONTRACTOR.

AWARDING DEPARTMENT USE ONLY:

Dept: __________________ Dept Contact: ___________________________ Contact Phone: _________________Contract #: ______________

Approved / Not Approved – Reason: ________________________________________________________________________________________

By Analyst: _______________________________________________________________ Date: ________________________________________

LW-13

OFFICE OF CONTRACT COMPLIANCE, EEOE SECTION: (213) 847-2625Form OCC/LW-13, Rev. 06/09

LWO – OCC EXEMPTION APPLICATION EXEMPTIONS THAT REQUIRE OCC APPROVAL

This application for exemption must be submitted along with your bid or proposal to the AWARDING DEPARTMENT. INCOMPLETE SUBMISSIONS WILL BE RETURNED.

Los Angeles Administrative Code 10.37, the Living Wage Ordinance (LWO), presumes all City contractors (including service contractors, subcontractors, financial assistance recipients, lessees, licensees, sublessees and sublicensees) are subject to the LWO unless an exemption applies.

TO BE FILLED OUT BY THE CONTRACTOR:

1. Company Name: __________________________________________ Phone Number: ___________________

2. Company Address: _________________________________________________________________________

3. Are you a Subcontractor? Yes No If YES, state the name of your Prime Contractor: _________________________________________________________________________________________

4.Type of Service Provided: ____________________________________________________________________ _________________________________________________________________________________________

EXEMPTION INFORMATION:

CHECK OFF ONE BOX BELOW THAT BEST DESCRIBES THE TYPE OF EXEMPTION YOU ARE APPLYING FOR AND ATTACH THE SUPPORTING DOCUMENTATION LISTED ON THE RIGHT:

EXEMPTION

SUPPORTING DOCUMENTATION REQUIRED

Collective bargaining agreement with supersession language - (LAAC 10.37.12): Contractors who are party to a collective bargaining agreement (CBA) which contains specific language indicating that the CBA will supersede the LWO may receive an exemption as to the employees covered under the CBA.

A copy of the CBA with the superseding language clearly marked

OR

A letter from the union stating that the union has agreed to allow the CBA to supersede the LWO.

Occupational license required - (LAAC 10.37.1(f)): Only the individual employees who are required to possess an Occupational license to provide services to or for the City are exempt.

A listing of the employees required to possess occupational licenses to perform services to or for the City

AND

Copies of each of these employees’ occupational licenses.

Service contracts / Public Licenses / Lessees NOT Subject Grant Funded Services CFAR

A memorandum explaining the basis for the request for application for exemption.

By signing, the contractor certifies under penalty of perjury under the laws of the State of California that the information submitted in support of this application is true and correct to the best of the contractor’s knowledge.

Print Name of Person Completing This Form

Signature of Person Completing This Form

Title Phone # Date

ANY APPROVAL OF THIS APPLICATION EXEMPTS ONLY THE LISTED CONTRACTOR FROM THE LWO DURING THE PERFORMANCE OF THIS CONTRACT. A SUBCONTRACTOR PERFORMING WORK ON THIS CONTRACT IS NOT EXEMPT UNLESS THE OFFICE OF CONTRACT COMPLIANCE HAS APPROVED A SEPARATE EXEMPTION FOR THE INDIVIDUAL SUBCONTRACTOR.

AWARDING DEPARTMENT USE ONLY:

Dept: _____________ Dept Contact: _______________________ Contact Phone: _________________Contract #: ____________

OCC USE ONLY:

Approved / Not Approved – Reason: ______________________________________________________________________________ ______________________________________________________________________________________________________________

By OCC Analyst: ___________________________________________________________ Date: _______________________________

LW-10

OFFICE OF CONTRACT COMPLIANCE, EEOE SECTION: (213) 847-2625 Form OCC/LW-10, Rev. 06/09

Service Contractor Worker Retention Ordinance Summary (06/09) Page 1

CITY OF LOS ANGELES SERVICE CONTRACTOR WORKER RETENTION ORDINANCE

(Los Angeles Administrative Code Section 10.36 et seq.)

1. What is the Service Contractor Worker Retention Ordinance? The Service Contractor Worker Retention Ordinance (SCWRO), effective May, 1996, requires a successor contractor and its subcontra ctors to retain for a 90-day period certain employees who worked for the terminated contract or or its subcontractors for at least 12 months. (See also Question #7 regarding which employees are covered.) 2. What is a successor contractor? A successor contractor is one who has been aw arded an agreement to provide services to or for the City that are similar to those that were provided under a recently terminated agreement. 3. What types of agreements are covered by the Ordinance? The SCWRO covers the following types of agreements: • For services in an amount over $25,000.00 and for at least three months. • In which the primary purpose is to provide se rvices to or for the City (including leases

and licenses). • In which the City provides financial assi stance for the purpose of promoting economic

development or job growth. 4. What does the Ordinance require a terminated contractor to do? The SCWRO requires the terminat ed contractor to provide t he awarding authority with the names, addresses, dates of hire, hourly w age, and job classes of each employee who worked on the City agreement for that terminated contractor or its subcontractor. The awarding authority will provide the information to the successor contractor. 5. What does the Ordinance require a successor contractor to do? The Ordinance requires the successor contractor to: • Offer employment and retain for a 90-day period the employees who worked for at least

12 months for the terminated contractor or its subcontractors. • Not discharge the employees retained under the SCWRO without cause during the 90-

day period. • Perform a written performance evaluat ion of each employee retained under the

SCWRO at the end of the 90-day period.

Service Contractor Worker Retention Ordinance Summary (06/09) Page 2

6. Do the employees retained under the Ordinance receive any additional protection? Employees retained under the SCWRO are em ployed under the terms and conditions of the successor contractor or as required by law. However, if the agreement the employees are working under is subject to Living W age Ordinance (LWO), t he employees must be paid the wage rate and be provided the benefits required by LWO. 7. Does the successor contractor have to retain all the prior contractor’s employees? The SCWRO covers only employees who meet all of the following requirements: • Earn less than $15.00 per hour. • Primary job is in the City working on or under the City agreement. • Worked for the terminated contractor or it s subcontractor for t he preceding 12 months

or longer. • Not a managerial, supervisory, or confident ial employee; or an employee required to

possess an occupational license. 8. What if the successor contractor determines that fewer employees are required to provide the services than were required by the prior contractor? The names of the affected employees will be pl aced in order by seni ority within each job classification. The successor contractor is required to retain employees based on seniority. The names of employees not retained will be placed on a preferential hiring list from which the successor contractor must use for subsequent hires. 9. What happens if an employee is discharged in violation of the Ordinance? The employee may bring a lawsuit against the successor contractor. The employee can also submit a complaint to the Department of Public Works, Bureau of Contract Administration, Office of Contract Compliance which will investigate the complaint. 10. What if a contractor is found to be in violation of the Ordinance? The City may terminate the agreement or pursue other legal remedies. 11. Who is responsible for administering and enforcing the Ordinance? The Department of Public Wor ks, Bureau of Contract Admini stration, Office of Contract Compliance, located at 1149 S. Broadway S t., Suite 300, Los Angeles, CA 90015. For additional information, please call (213) 847- 2625, or go to the Offi ce of Contract Compliance web site at http://bca.lacity.org.

LWO – EMPLOYEE INFORMATION FORM REQUIRED DOCUMENTATION FOR ALL CONTRACTS SUBJECT TO LWO

This form must be submitted to the AWARDING DEPARTMENT within 30 DAYS of contract execution. INCOMPLETE SUBMISSIONS WILL BE RETURNED.

THE LIVING WAGE ORDINANCE (LWO) REQUIRES THAT SUBJECT EMPLOYERS PROVIDE TO EMPLOYEES: As of July 1, 2009 a wage of at least $10.30 per hour with health benefits of $1.25 per hour, or $11.55 per hour

without health benefits (to be adjusted annually) (Regulation #4); At least 12 compensated days off per year for sick leave, vacation or personal necessity at the employee’s request

(pro-rated for part-time employees) (Regulation #4); and At least 10 additional days off per year of uncompensated time off for personal or immediate illness only (pro-rated for

part-time employees) (Regulation #4). Refer to the LWO Rules and Regulations, available from the Department of Public Works, Bureau of Contract Administration, Office of Contract Compliance (OCC) website, for details regarding the wage and benefit requirements of the Ordinance.

Making less than $12.00 per hour information of their possible right to the federal Earned Income Tax Credit (EITC) and make available the forms required to secure advance EITC payments from the employer (Regulation #4).

THE LIVING WAGE ORDINANCE (LWO) ALSO REQUIRES EMPLOYERS: Not to retaliate against any employee claiming non-compliance with the provisions of these Ordinances and to comply

with federal law prohibiting retaliation for union organizing (Regulation #4).

TO BE FILLED OUT BY THE CONTRACTOR:

1. Company Name: ______________________________________ Email Address:

2. STATE the number of employees working ON THIS CITY CONTRACT: ___________

3. **ATTACH a copy of your company’s 1st PAYROLL under THIS CITY CONTRACT.

4. **INDICATE (highlight, underline) on the payroll which employees are working ON THIS CITY CONTRACT.

5. **Do you provide health benefits (such as medical, dental, vision, mental health, and disability insurance) to your employees? Yes No If YES:

5a. SUBMIT a copy of the most recent health benefit premium statement(s) showing which employees receive health benefits. 5b. STATE how much, if any, employees pay for co-premiums: $_______________

**NOTE: Payrolls and health benefits information need not be submitted if ALL employees working on this City agreement earn an hourly wage of at least $15 per hour. If so, check the box below and then CONTINUE TO #6 & #7.

I certify under penalty of perjury that I do not have any employees earning less than $15 per hour working on this City contract.

6. SUBMIT a copy of your company’s current PAID time off policy for the employees working on the City contract. 7. SUBMIT a copy of your company’s current UNPAID time off policy for the employees working on the City contract.

FAILURE TO COMPLY WITH THESE REQUIREMENTS WILL RESULT IN WITHHOLDING OF PAYMENTS BY THE CITY CONTROLLER, OR A RECOMMENDATION TO THE AW ARDING AUTHORITY FOR CONTRACT TERMINATION. ALL INFORMATION SUBMITTED IS SUBJECT TO VERIFICATION, AND FALSE INFORMATION MAY RESULT IN CONTRACT TERMINATION. I understand that the employee information provided herein is confidential and will be used by the City of Los Angeles, Office of Contract Compliance for the purpose of monitoring the Living Wage Ordinance.

Print Name of Person Completing This Form

Signature of Person Completing This Form

Title

Phone # Date

AWARDING DEPARTMENT USE ONLY:

Dept: _____________ Dept Contact: _______________________ Contact Phone: _________________Contract #: ____________

LW-6

OFFICE OF CONTRACT COMPLIANCE, EEOE SECTION: (213) 847-2625Form OCC/LW-6, Rev. 6/09

LWO – SUBCONTRACTOR INFORMATION FORM REQUIRED DOCUMENTATION FOR ALL CONTRACTS SUBJECT TO LWO

This form must be submitted to the AWARDING DEPARTMENT within 30 DAYS of contract execution. INCOMPLETE SUBMISSIONS WILL BE RETURNED.

SECTION I: CONTRACTOR INFORMATION

1) Company Name: _________________________ Contact Person: ____________________ Phone Number: _______________ 2) Do you have subcontractors working on this City contract? Yes No

If NO, This form is now complete – SIGN THE BOTTOM OF PAGE 2 AND SUBMIT TO THE AWARDING DEPARTMENT. If YES, a) STATE the number of your subcontractors ON THIS CITY CONTRACT: ___________

b) Fill in PART A for EACH subcontractor in Section II, continue to Section III & IV (if applicable), AND SIGN Section V.

SECTION II: SUBCONTRACTOR INFORMATION PART B

CHECK OFF ONLY ONE BOX (I-VI) FOR EACH SUBCONTRACTOR (IF APPLICABLE) THEN CONTINUE ONTO SECTION III:

PART A

I

501 (c)(3)1

II One-

Person Contractor

2

III CBA3

IV Occupational

License4

V Small

Business5 VI

Gov. entity6

1. Subcontractor Name: ___________________________________________ 2. Contact Person:____________________ Phone #: __________________ 3. Address:_____________________________________________________ 4. Purpose of Subcontract: ________________________________________ 5. Amount of Subcontract: $________________ 6. Term: Start Date _____/_____/_____ End Date _____/_____/_____ 7. Does the subcontract exceed $25,000? Yes No 8. Is the length of the subcontract over three (3) months? Yes No

If you checked off YES for Questions 7 AND 8, this subcontract IS SUBJECT TO THE LWO. Continue onto Part B. If you checked off NO for any questions 7 OR 8, this subcontract IS NOT SUBJECT TO THE LWO. Continue to fill in Part A for additional subs below.

1. Subcontractor Name: ___________________________________________ 2. Contact Person:____________________ Phone #: __________________ 3. Address:_____________________________________________________ 4. Purpose of Subcontract: ________________________________________ 5. Amount of Subcontract: $________________ 6. Term: Start Date _____/_____/_____ End Date _____/_____/_____ 7. Does the subcontract exceed $25,000? Yes No 8. Is the length of the subcontract over three (3) months? Yes No

If you checked off YES for Questions 7 AND 8, this subcontract IS SUBJECT TO THE LWO. Continue onto Part B. If you checked off NO for any questions 7 OR 8, this subcontract is NOT SUBJECT TO THE LWO. Continue to fill in Part A for additional subs below.

1. Subcontractor Name: ___________________________________________ 2. Contact Person:____________________ Phone #: __________________ 3. Address:_____________________________________________________ 4. Purpose of Subcontract: ________________________________________ 5. Amount of Subcontract: $________________ 6. Term: Start Date _____/_____/_____ End Date _____/_____/_____ 7. Does the subcontract exceed $25,000? Yes No 8. Is the length of the subcontract over three (3) months? Yes No

If you checked off YES for Questions 7 AND 8, this subcontract IS SUBJECT TO THE LWO. Continue onto Part B. If you checked off NO for any questions 7 OR 8, this subcontract is NOT SUBJECT TO THE LWO. Continue to fill in Part A for additional subs below.

LW-18

OFFICE OF CONTRACT COMPLIANCE, EEOE SECTION: (213) 847-2625 Form OCC/LW-18, Rev. 10/08

1

SECTION II: SUBCONTRACTOR INFORMATION (continued) PART B

CHECK OFF ONLY ONE BOX (I-VI) FOR EACH SUBCONTRACTOR (IF APPLICABLE) THEN CONTINUE ONTO SECTION III:

PART A

I

501 (c)(3)1

II One-

Person Contractor

2

III CBA3

IV Occupational License4

V Small

Business5 VI

Gov. entity6

1. Subcontractor Name: ___________________________________________ 2. Contact Person:____________________ Phone #: __________________ 3. Address:_____________________________________________________ 4. Purpose of Subcontract: ________________________________________ 5. Amount of Subcontract: $________________ 6. Term: Start Date _____/_____/_____ End Date _____/_____/_____ 7. Does the subcontract exceed $25,000? Yes No 8. Is the length of the subcontract over three (3) months? Yes No

If you checked off YES for Questions 7 AND 8, this subcontract IS SUBJECT TO THE LWO. Continue onto Part B. If you checked off NO for any questions 7 OR 8, this subcontract is NOT SUBJECT TO THE LWO. Continue to fill in Part A for additional subs below.

1. Subcontractor Name: ___________________________________________ 2. Contact Person:____________________ Phone #: __________________ 3. Address:_____________________________________________________ 4. Purpose of Subcontract: ________________________________________ 5. Amount of Subcontract: $________________ 6. Term: Start Date _____/_____/_____ End Date _____/_____/_____ 7. Does the subcontract exceed $25,000? Yes No 8. Is the length of the subcontract over three (3) months? Yes No

If you checked off YES for Questions 7 AND 8, this subcontract IS SUBJECT TO THE LWO. Continue onto Part B. If you checked off NO for any questions 7 OR 8, this subcontract is NOT SUBJECT TO THE LWO.

SECTION III: SUBCONTRACTS SUBJECT TO THE LWO (AND MAY BE ELIGIBLE FOR EXEMPTIONS) 1) If you checked off any boxes in Part B, your Subcontractor(s) is subject to the LWO, but may qualify for an LWO exemption.

Review the exemptions below, and have your subcontractor fill out the form in the corresponding right-hand column. Continue to Section V, and submit this form and all supporting documentation to the Awarding Department for approval. 2) If you did NOT check any boxes in Part B or your subs DO NOT qualify for an exemption, Continue to Section IV.

EXEMPTION SUPPORTING DOCUMENTATION REQUIRED One-person contractors, lessee, licensee 501(c)(3) non-profit organization

LW 13 – Departmental Exemption Form http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lwo_forms.cfm

Occupational license required Collective bargaining agreement w/supersession language

LW 10 – OCC Exemption Form http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lwo_forms.cfm

Small Business

LW 26 – Small Business Exemption Form (English & Spanish) http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lwo_forms.cfm

Governmental Entity NONE REQUIRED.

SECTION IV: SUBCONTRACTS SUBJECT TO THE LWO (AND NOT ELIGIBLE FOR EXEMPTIONS)

Please have EACH of your Subcontractors that ARE SUBJECT to the LWO fill out the three forms below. Submit LW-6 and LW-18 ONLY to the Awarding Department (and supporting documentation, where applicable) and RETAIN LW-5 in your office. 1) Employee Information Form 2) Subcontractor Information Form

3) Subcontractor Declaration of Compliance Form (retain)

LW 6 - http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lwo_forms.cfm LW 18 - http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lwo_forms.cfm LW 5 - http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lwo_forms.cfm

SECTION V: SIGNATURE

I understand that the Subcontractor Information provided herein is confidential and will be used by the City of Los Angeles, Office of Contract Compliance for the purpose of monitoring the Living Wage Ordinance.

Print Name of Person Completing This Form

Signature of Person Completing This Form

Title Phone # Date

AWARDING DEPARTMENT USE ONLY: Dept: _____________ Dept Contact: _______________________ Contact Phone: _________________Contract #: ____________

OFFICE OF CONTRACT COMPLIANCE, EEOE SECTION: (213) 847-2625Form OCC/LW-18, Rev. 10/08

LW-18

2

ENDNOTES FOR LWO SUBCONTRACTOR INFORMATION FORM 1 Non-Profit 501(c)(3) Organizations: A corporation claiming exemption under Section 10.37.1(g) of the LWO as a corporation organized under Section 501 (c)(3) of the United States Internal Revenue Code must provide the following additional documents in support of the application for exemption: (A) A copy of the most recent IRS letter indicating that the contractor has been recognized as a non-profit corporation organized under section 501 (c)(3) of the United States Internal Revenue Code. (B) An application for non-coverage or exemption, including the non-profit salary certification on the form referred to in Appendix A. The salary certification must list the salary of the corporation’s chief executive officer (CEO), computed on an hourly basis, and the hourly wage rate of the lowest paid worker in the corporation. The salary of the CEO, when computed on an hourly basis, must be less than 8 times what the lowest paid worker is paid on an hourly basis. For purposes of this exemption, the ”chief executive officer (CEO)” means the CEO of the 501(c)(3) corporation that entered into the agreement 2 One-Person Contractor: A contractor may apply for exemption under Section 10.37.1(f) of the LWO if that contractor has no employees. The one-person contractor shall submit an application for non-coverage or exemption to the awarding authority on the form referred to in Appendix A with the appropriate one-person contractor certification. If, subsequent to the approval of the exemption application, the contractor hires any employees, the exemption is no longer valid. Any employee the contractor hires becomes covered by the LWO to the extent that the employee performs work on the City agreement. In such cases, the contractor shall notify the awarding authority of the change in circumstances and submit to the awarding authority all the necessary forms to comply with the LWO reporting requirements, including the employee and subcontractor information forms. 3 Exemption by Collective Bargaining Agreement – LAAC 10.37.12: An employer subject to provisions of the LWO may, by collective bargaining agreement (CBA), provide that the CBA, during its term, shall supersede the requirements of the LWO for those employees covered by the CBA. The provisions of the LWO should not be interpreted to require an employer to reduce the wages and benefits required by a collective bargaining agreement. All parties to the CBA must specifically waive in full or in part the benefits required by the LWO. An employer applying for this exemption shall submit a copy of the CBA. If the CBA does not specifically indicate that the LWO has been superseded, the employer shall submit written confirmation from the union representing the employees working on the agreement that the union and the employer have agreed to let the CBA supersede the LWO.

(A) Provisional Exemption from LWO during negotiation of CBA: An employer subject to the LWO may apply for Provisional Exemption from the LWO if the employer can document that: (1) the union and the employer are currently engaged in negotiations regarding the terms of the CBA; and (2) the issue of allowing the CBA to supersede the LWO has been proposed as an issue to be addressed during the negotiations. If granted, Provisional Exemption status is valid until the end of the negotiation process, including, if applicable, impasse resolution proceedings. During the negotiation process, the employer shall provide, upon request from the OCC, status reports on the progress of negotiations. At the end of the negotiation process, the employer shall provide the OCC with a copy of the final CBA to verify whether the LWO has been superseded, and the effective dates of the CBA.

(i) If the final CBA signed by the employer and the union supersedes the LWO, the employer shall be considered to be exempt from the LWO’s wage and benefits provisions for the time period covered by the effective dates of the superseding CBA. The employer remains subject to all applicable provisions of the LWO for the time period not covered by the superseding CBA. If the employer has not complied with the LWO requirements during the time period not covered by the superseding CBA, the employer shall be required to make retroactive corrections for any period of non-compliance, which may include making retroactive payments to affected employees for the relevant periods of non compliance.

(ii) If the final CBA signed by the employer and the union does not supersede the LWO, the employer shall be required to comply with all applicable LWO requirements, including the wage and benefits provisions. Compliance shall also be required retroactively to the date that the employer first became subject to the LWO. If necessary, the employer shall provide retroactive payments to affected employees for any time period during which the employer did not comply with the LWO. 4 Occupational license - LAAC 10.37.1(f): Exemptions for Employees Requiring Occupational Licenses: If an employer claims that the LWO does not apply to an employee pursuant to section 10.37.1(f) because an occupational license is required of the employee to perform the work, the employer shall submit to the awarding authority, along with the application for non-coverage or exemption, a list of the employees required to possess an occupational license, the type of occupational license required, and a copy of the occupational license itself. An exemption granted under this provision exempts only the employee who must possess an occupational license to perform work on the City agreement. If an occupational license is not required of an employee to perform the work, the employee remains covered by the LWO. 5 Small Business Exemptions for Public Lessees and Licensees – LAAC 10.37.1(i): A public lessee or licensee claiming exemption from the LWO under section 10.37.1(i) shall submit the small business application for exemption form referred to in Appendix A along with supporting documentation to verify that it meets both of the following requirements:

(A) The lessee’s or licensee’s gross revenues from all business(es) conducted on the City premises for the calendar year prior to the date of the application for exemption do not exceed the gross annual revenue amount set by the LWO in Section 10.37.1(i). That gross revenue amount shall be adjusted annually according to the requirements of the LWO. The gross revenue amount used in evaluating whether the lessee or licensee qualifies for this exemption shall be the gross revenue amount in effect at the time the OCC receives the application for exemption.

A public lessee or licensee beginning its first year of operation on a specific City property will have no records of gross annual revenue on the City property. Under such circumstances, the lessee or licensee may qualify for a small business exemption by submitting proof of its annual gross revenues for the last tax year prior to application no matter where the business was located, and by satisfying all other requirements pursuant to these regulations and the LWO. A lessee or licensee beginning its first year of operation as a business will have no records of gross annual revenue. Under such circumstances, the lessee or licensee may qualify for a small business exemption by satisfying all other requirements pursuant to these regulations and the LWO.

(B) The lessee or licensee employs no more than seven (7) employees. (i) For purposes of this exemption, a lessee or licensee shall be deemed to employ a worker if the worker is an employee of a company or entity that is owned or controlled by the lessee or licensee, regardless of where the company or entity is located; or if the worker is an employee of a company or entity that owns or controls the lessee or licensee, regardless of where the company or entity is located.

Whether the lessee or licensee meets the seven (7) employee limit provided for in Section 10.37.1(i) of the LWO shall be determined using the total number of workers employed by all companies or businesses which the lessee or licensee owns or controls, or which own or control the lessee or licensee. Control means that one company owns a controlling interest in another company.

(ii) If a business operated by the lessee or licensee is part of a chain of businesses, the total number of employees shall include all workers employed by the entire chain of businesses unless the business operated by the lessee or licensee is an independently owned and operated franchise.

(iii) A public lessee or licensee shall be deemed to employ no more than seven (7) employees if its entire workforce (inclusive of those employees falling within the guidelines stated in subsections (i) and (ii) immediately above) worked an average of no more than 1,214 hours per month for at least three-fourths of the time period that the revenue limitation provided for in section 10.37.1(i) is measured.

Until the OCC approves the application for exemption, the lessee or licensee shall be subject to the LWO and shall comply with its requirements. If the OCC approves the application, the lessee or licensee shall be exempt from the requirements of the LWO for a period of two years from the date of the approval. The exemption will expire two years from the date of approval, but may be renewable in two-year increments upon meeting the requirements. 6 Governmental Entities – LAAC 10.37.1(g): Agreements with governmental entities are exempt from the requirements of the LWO. If an agreement is exempt from the LWO because the contractor is a governmental entity, subcontractors performing work for the governmental entity on the agreement are also exempt.

City of Los Angeles

Department of Water and Power CERTIFICATION OF COMPLIANCE WITH CHILD SUPPORT

OBLIGATIONS

This document must be returned with the Proposal/Bid Response

The Undersigned hereby agrees that ____________________________________ will: Name of Business 1. Fully comply with all applicable State and Federal employment reporting

requirements for its employees. 2. Fully comply with and implement all lawfully served Wages and Earnings

Assignment Orders and Notices of Assignment. 3. Certify that the principal owner(s) of the business are in compliance with any Wage

and Earnings Assignment Orders and Notices of Assignment applicable to them personally.

4. Certify that the business will maintain compliance with Child Support Obligations

Ordinance provisions. I declare under penalty of perjury that the foregoing is true and was executed at: City/County/State Date

Please check if company has already submitted to DWP certification relative to Child Support Obligations Ordinance.

Name of Business Address Signature of Authorized Officer or Representative Print Name Title Telephone Number

Form W-9(Rev. August 2013)Department of the Treasury Internal Revenue Service

Request for Taxpayer Identification Number and Certification

Give Form to the

requester. Do not

send to the IRS.

Pri

nt

or

typ

e

See

Sp

ec

ific

In

str

uc

tio

ns o

n p

age

2.

Name (as shown on your income tax return)

Business name/disregarded entity name, if different from above

Check appropriate box for federal tax classification:

Individual/sole proprietor C Corporation S Corporation Partnership Trust/estate

Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=partnership)

Other (see instructions)

Exemptions (see instructions):

Exempt payee code (if any)

Exemption from FATCA reporting code (if any)

Address (number, street, and apt. or suite no.)

City, state, and ZIP code

Requester’s name and address (optional)

List account number(s) here (optional)

Part I Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. The TIN provided must match the name given on the “Name” line to avoid backup withholding. For individuals, this is your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN on page 3.

Note. If the account is in more than one name, see the chart on page 4 for guidelines on whose number to enter.

Social security number

– –

Employer identification number

–

Part II Certification

Under penalties of perjury, I certify that:

1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and

2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and

3. I am a U.S. citizen or other U.S. person (defined below), and

4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions on page 3.

Sign Here

Signature of

U.S. person Date

General InstructionsSection references are to the Internal Revenue Code unless otherwise noted.

Future developments. The IRS has created a page on IRS.gov for information about Form W-9, at www.irs.gov/w9. Information about any future developments affecting Form W-9 (such as legislation enacted after we release it) will be posted on that page.

Purpose of Form

A person who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) to report, for example, income paid to you, payments made to you in settlement of payment card and third party network transactions, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA.

Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN to the person requesting it (the requester) and, when applicable, to:

1. Certify that the TIN you are giving is correct (or you are waiting for a number to be issued),

2. Certify that you are not subject to backup withholding, or

3. Claim exemption from backup withholding if you are a U.S. exempt payee. If applicable, you are also certifying that as a U.S. person, your allocable share of any partnership income from a U.S. trade or business is not subject to the

withholding tax on foreign partners’ share of effectively connected income, and

4. Certify that FATCA code(s) entered on this form (if any) indicating that you are exempt from the FATCA reporting, is correct.

Note. If you are a U.S. person and a requester gives you a form other than Form W-9 to request your TIN, you must use the requester’s form if it is substantially similar to this Form W-9.

Definition of a U.S. person. For federal tax purposes, you are considered a U.S. person if you are:

• An individual who is a U.S. citizen or U.S. resident alien,

• A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States,

• An estate (other than a foreign estate), or

• A domestic trust (as defined in Regulations section 301.7701-7).

Special rules for partnerships. Partnerships that conduct a trade or business in the United States are generally required to pay a withholding tax under section 1446 on any foreign partners’ share of effectively connected taxable income from such business. Further, in certain cases where a Form W-9 has not been received, the rules under section 1446 require a partnership to presume that a partner is a foreign person, and pay the section 1446 withholding tax. Therefore, if you are a U.S. person that is a partner in a partnership conducting a trade or business in the United States, provide Form W-9 to the partnership to establish your U.S. status and avoid section 1446 withholding on your share of partnership income.

Cat. No. 10231X Form W-9 (Rev. 8-2013)

Form W-9 (Rev. 8-2013) Page 2

In the cases below, the following person must give Form W-9 to the partnership for purposes of establishing its U.S. status and avoiding withholding on its allocable share of net income from the partnership conducting a trade or business in the United States:

• In the case of a disregarded entity with a U.S. owner, the U.S. owner of the disregarded entity and not the entity,

• In the case of a grantor trust with a U.S. grantor or other U.S. owner, generally, the U.S. grantor or other U.S. owner of the grantor trust and not the trust, and

• In the case of a U.S. trust (other than a grantor trust), the U.S. trust (other than a grantor trust) and not the beneficiaries of the trust.

Foreign person. If you are a foreign person or the U.S. branch of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).

Nonresident alien who becomes a resident alien. Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the payee has otherwise become a U.S. resident alien for tax purposes.

If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items:

1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.

2. The treaty article addressing the income.

3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions.

4. The type and amount of income that qualifies for the exemption from tax.

5. Sufficient facts to justify the exemption from tax under the terms of the treaty article.

Example. Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years. However, paragraph 2 of the first Protocol to the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to Form W-9 a statement that includes the information described above to support that exemption.

If you are a nonresident alien or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233.

What is backup withholding? Persons making certain payments to you must under certain conditions withhold and pay to the IRS a percentage of such payments. This is called “backup withholding.” Payments that may be subject to backup withholding include interest, tax-exempt interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, payments made in settlement of payment card and third party network transactions, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding.

You will not be subject to backup withholding on payments you receive if you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return.

Payments you receive will be subject to backup withholding if:

1. You do not furnish your TIN to the requester,

2. You do not certify your TIN when required (see the Part II instructions on page 3 for details),

3. The IRS tells the requester that you furnished an incorrect TIN,

4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or

5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only).

Certain payees and payments are exempt from backup withholding. See Exempt payee code on page 3 and the separate Instructions for the Requester of Form W-9 for more information.

Also see Special rules for partnerships on page 1.

What is FATCA reporting? The Foreign Account Tax Compliance Act (FATCA) requires a participating foreign financial institution to report all United States account holders that are specified United States persons. Certain payees are exempt from FATCA reporting. See Exemption from FATCA reporting code on page 3 and the Instructions for the Requester of Form W-9 for more information.

Updating Your Information

You must provide updated information to any person to whom you claimed to be an exempt payee if you are no longer an exempt payee and anticipate receiving reportable payments in the future from this person. For example, you may need to provide updated information if you are a C corporation that elects to be an S corporation, or if you no longer are tax exempt. In addition, you must furnish a new Form W-9 if the name or TIN changes for the account, for example, if the grantor of a grantor trust dies.

Penalties

Failure to furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

Misuse of TINs. If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.

Specific Instructions

Name

If you are an individual, you must generally enter the name shown on your income tax return. However, if you have changed your last name, for instance, due to marriage without informing the Social Security Administration of the name change, enter your first name, the last name shown on your social security card, and your new last name.

If the account is in joint names, list first, and then circle, the name of the person or entity whose number you entered in Part I of the form.

Sole proprietor. Enter your individual name as shown on your income tax return on the “Name” line. You may enter your business, trade, or “doing business as (DBA)” name on the “Business name/disregarded entity name” line.

Partnership, C Corporation, or S Corporation. Enter the entity's name on the “Name” line and any business, trade, or “doing business as (DBA) name” on the “Business name/disregarded entity name” line.

Disregarded entity. For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a “disregarded entity.” See Regulation section 301.7701-2(c)(2)(iii). Enter the owner's name on the “Name” line. The name of the entity entered on the “Name” line should never be a disregarded entity. The name on the “Name” line must be the name shown on the income tax return on which the income should be reported. For example, if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a U.S. person, the U.S. owner's name is required to be provided on the “Name” line. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded entity's name on the “Business name/disregarded entity name” line. If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9. This is the case even if the foreign person has a U.S. TIN.

Note. Check the appropriate box for the U.S. federal tax classification of the person whose name is entered on the “Name” line (Individual/sole proprietor, Partnership, C Corporation, S Corporation, Trust/estate).

Limited Liability Company (LLC). If the person identified on the “Name” line is an LLC, check the “Limited liability company” box only and enter the appropriate code for the U.S. federal tax classification in the space provided. If you are an LLC that is treated as a partnership for U.S. federal tax purposes, enter “P” for partnership. If you are an LLC that has filed a Form 8832 or a Form 2553 to be taxed as a corporation, enter “C” for C corporation or “S” for S corporation, as appropriate. If you are an LLC that is disregarded as an entity separate from its owner under Regulation section 301.7701-3 (except for employment and excise tax), do not check the LLC box unless the owner of the LLC (required to be identified on the “Name” line) is another LLC that is not disregarded for U.S. federal tax purposes. If the LLC is disregarded as an entity separate from its owner, enter the appropriate tax classification of the owner identified on the “Name” line.

Other entities. Enter your business name as shown on required U.S. federal tax documents on the “Name” line. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on the “Business name/disregarded entity name” line.

Exemptions

If you are exempt from backup withholding and/or FATCA reporting, enter in the Exemptions box, any code(s) that may apply to you. See Exempt payee code and Exemption from FATCA reporting code on page 3.

Form W-9 (Rev. 8-2013) Page 3

Exempt payee code. Generally, individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends. Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions.

Note. If you are exempt from backup withholding, you should still complete this form to avoid possible erroneous backup withholding.

The following codes identify payees that are exempt from backup withholding:

1—An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2)

2—The United States or any of its agencies or instrumentalities

3—A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities

4—A foreign government or any of its political subdivisions, agencies, or instrumentalities

5—A corporation

6—A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States

7—A futures commission merchant registered with the Commodity Futures Trading Commission

8—A real estate investment trust

9—An entity registered at all times during the tax year under the Investment Company Act of 1940

10—A common trust fund operated by a bank under section 584(a)

11—A financial institution

12—A middleman known in the investment community as a nominee or custodian

13—A trust exempt from tax under section 664 or described in section 4947

The following chart shows types of payments that may be exempt from backup withholding. The chart applies to the exempt payees listed above, 1 through 13.

IF the payment is for . . . THEN the payment is exempt for . . .

Interest and dividend payments All exempt payees except for 7

Broker transactions Exempt payees 1 through 4 and 6 through 11 and all C corporations. S corporations must not enter an exempt payee code because they are exempt only for sales of noncovered securities acquired prior to 2012.

Barter exchange transactions and patronage dividends

Exempt payees 1 through 4

Payments over $600 required to be

reported and direct sales over $5,0001Generally, exempt payees

1 through 52

Payments made in settlement of payment card or third party network transactions

Exempt payees 1 through 4

1 See Form 1099-MISC, Miscellaneous Income, and its instructions.2 However, the following payments made to a corporation and reportable on Form

1099-MISC are not exempt from backup withholding: medical and health care payments, attorneys' fees, gross proceeds paid to an attorney, and payments for services paid by a federal executive agency.

Exemption from FATCA reporting code. The following codes identify payees that are exempt from reporting under FATCA. These codes apply to persons submitting this form for accounts maintained outside of the United States by certain foreign financial institutions. Therefore, if you are only submitting this form for an account you hold in the United States, you may leave this field blank. Consult with the person requesting this form if you are uncertain if the financial institution is subject to these requirements.

A—An organization exempt from tax under section 501(a) or any individual retirement plan as defined in section 7701(a)(37)

B—The United States or any of its agencies or instrumentalities

C—A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities

D—A corporation the stock of which is regularly traded on one or more established securities markets, as described in Reg. section 1.1472-1(c)(1)(i)

E—A corporation that is a member of the same expanded affiliated group as a corporation described in Reg. section 1.1472-1(c)(1)(i)

F—A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any state

G—A real estate investment trust

H—A regulated investment company as defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940

I—A common trust fund as defined in section 584(a)

J—A bank as defined in section 581

K—A broker

L—A trust exempt from tax under section 664 or described in section 4947(a)(1)

M—A tax exempt trust under a section 403(b) plan or section 457(g) plan

Part I. Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see How to get a TIN below.

If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. However, the IRS prefers that you use your SSN.

If you are a single-member LLC that is disregarded as an entity separate from its owner (see Limited Liability Company (LLC) on page 2), enter the owner’s SSN (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN. If the LLC is classified as a corporation or partnership, enter the entity’s EIN.

Note. See the chart on page 4 for further clarification of name and TIN combinations.

How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration office or get this form online at www.ssa.gov. You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at www.irs.gov/businesses and clicking on Employer Identification Number (EIN) under Starting a Business. You can get Forms W-7 and SS-4 from the IRS by visiting IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

If you are asked to complete Form W-9 but do not have a TIN, apply for a TIN and write “Applied For” in the space for the TIN, sign and date the form, and give it to the requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester.

Note. Entering “Applied For” means that you have already applied for a TIN or that you intend to apply for one soon.

Caution: A disregarded U.S. entity that has a foreign owner must use the appropriate Form W-8.

Part II. Certification

To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if items 1, 4, or 5 below indicate otherwise.

For a joint account, only the person whose TIN is shown in Part I should sign (when required). In the case of a disregarded entity, the person identified on the “Name” line must sign. Exempt payees, see Exempt payee code earlier.

Signature requirements. Complete the certification as indicated in items 1 through 5 below.

1. Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during 1983. You must give your correct TIN, but you do not have to sign the certification.

2. Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker accounts considered inactive during 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form.

3. Real estate transactions. You must sign the certification. You may cross out item 2 of the certification.

4. Other payments. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. “Other payments” include payments made in the course of the requester’s trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments made in settlement of payment card and third party network transactions, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations).

5. Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529), IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions. You must give your correct TIN, but you do not have to sign the certification.

Form W-9 (Rev. 8-2013) Page 4

What Name and Number To Give the Requester

For this type of account: Give name and SSN of:

1. Individual The individual2. Two or more individuals (joint

account)The actual owner of the account or, if combined funds, the first individual on the account 1

3. Custodian account of a minor (Uniform Gift to Minors Act)

The minor 2

4. a. The usual revocable savings trust (grantor is also trustee) b. So-called trust account that is not a legal or valid trust under state law

The grantor-trustee 1

The actual owner 1

5. Sole proprietorship or disregarded entity owned by an individual

The owner 3

6. Grantor trust filing under Optional Form 1099 Filing Method 1 (see Regulation section 1.671-4(b)(2)(i)(A))

The grantor*

For this type of account: Give name and EIN of:

7. Disregarded entity not owned by an individual

The owner

8. A valid trust, estate, or pension trust Legal entity 4

9. Corporation or LLC electing corporate status on Form 8832 or Form 2553

The corporation

10. Association, club, religious, charitable, educational, or other tax-exempt organization

The organization

11. Partnership or multi-member LLC The partnership12. A broker or registered nominee The broker or nominee

13. Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments

The public entity

14. Grantor trust filing under the Form 1041 Filing Method or the Optional Form 1099 Filing Method 2 (see Regulation section 1.671-4(b)(2)(i)(B))

The trust

1 List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person’s number must be furnished.

2 Circle the minor’s name and furnish the minor’s SSN.

3 You must show your individual name and you may also enter your business or “DBA” name on the “Business name/disregarded entity” name line. You may use either your SSN or EIN (if you have one), but the IRS encourages you to use your SSN.

4 List first and circle the name of the trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Also see Special rules for partnerships on page 1.

*Note. Grantor also must provide a Form W-9 to trustee of trust.

Note. If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

Secure Your Tax Records from Identity Theft

Identity theft occurs when someone uses your personal information such as your name, social security number (SSN), or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund.

To reduce your risk:

• Protect your SSN,

• Ensure your employer is protecting your SSN, and

• Be careful when choosing a tax preparer.

If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number printed on the IRS notice or letter.

If your tax records are not currently affected by identity theft but you think you are at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Theft Hotline at 1-800-908-4490 or submit Form 14039.

For more information, see Publication 4535, Identity Theft Prevention and Victim Assistance.

Victims of identity theft who are experiencing economic harm or a system problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059.

Protect yourself from suspicious emails or phishing schemes. Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common act is sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.

The IRS does not initiate contacts with taxpayers via emails. Also, the IRS does not request personal detailed information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.

If you receive an unsolicited email claiming to be from the IRS, forward this message to phishing@irs.gov. You may also report misuse of the IRS name, logo, or other IRS property to the Treasury Inspector General for Tax Administration at 1-800-366-4484. You can forward suspicious emails to the Federal Trade Commission at: spam@uce.gov or contact them at www.ftc.gov/idtheft or 1-877-IDTHEFT (1-877-438-4338).

Visit IRS.gov to learn more about identity theft and how to reduce your risk.

Privacy Act Notice

Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons (including federal agencies) who are required to file information returns with the IRS to report interest, dividends, or certain other income paid to you; mortgage interest you paid; the acquisition or abandonment of secured property; the cancellation of debt; or contributions you made to an IRA, Archer MSA, or HSA. The person collecting this form uses the information on the form to file information returns with the IRS, reporting the above information. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their laws. The information also may be disclosed to other countries under a treaty, to federal and state agencies to enforce civil and criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You must provide your TIN whether or not you are required to file a tax return. Under section 3406, payers must generally withhold a percentage of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to the payer. Certain penalties may also apply for providing false or fraudulent information.

Wpa#A3:vrnAPPL AN EQUAL OPPORTUNITY – AFFIRMATIVE ACTION EMPLOYER

CITY OF LOS ANGELES CALIFORNIA

ERIC GARCETTI MAYOR

IMPORTANT NOTICE

Dear City of Los Angeles Vendor: Re: Tax Registration Certificate (TRC) and/or Vendor Registration Number (VRN) On October 14, 1987, the City of Los Angeles Controller’s Office implemented a program designed to ensure that all businesses (hereafter referred to as vendors), which contract to provide goods or services to the City, have fully complied with all business tax requirements. As such, each vendor must provide the Controller’s Office with a registration account number issued by the Los Angeles Office of Finance, prior to being paid for any goods or services provided. The Office of Finance is responsible for the collection of various taxes, fees, and charges as required under the Los Angeles Municipal Code. Section 21.03 L.A.M.C. (Imposition of Tax) requires persons engaged in any business or occupation within the City of Los Angeles to register and pay the required tax due. Businesses, including vendors, owing a business tax are issued a Tax Registration Certificate (TRC). However, in some cases businesses are not required to pay a business tax, depending on the nature and location of that business. In those cases, the vendor is issued a Vendor Registration Number (VRN). In order to be paid under contract with the City, a Tax Registration Certificate Number (TRC) or Vendor Registration Number (VRN) must be provided to the Controller’s Office. In order to obtain the required registration number, please complete and return the enclosed application (Exhibit A), along with the appropriate attachments, based on your business activity. Applications are reviewed by Office of Finance personnel and the appropriate registration number will be issued. An annual business tax is due upon issuance of a Tax Registration Certificate Number (TRC). All Vendor Registration Numbers (VRN) will be reviewed on an annual basis. Additionally, non-profit organizations may apply for an exempt Tax Registration Certificate. Applications for exemption of the City of Los Angeles business tax are reviewed by the Office of Finance and/or the Los Angeles Police Department, Commission Investigation Division, Charitable Services Unit to determine if an exemption should be granted. The determination is generally completed in approximately thirty (30) days from the date all required documentation is submitted. If you require non-profit tax exemption information, please contact the Tax Exemption Unit at (213) 978-3050, or if you have questions regarding Vendor Registration, please contact the Special Desk Unit at (213) 473-5901. Enclosures (Revised 11/05)

ANTOINETTE CHRISTOVALE

DIRECTOR OF FINANCE

OFFICE OF FINANCE CITY HALL

200 NO. SPRING ST., ROOM 101 LOS ANGELES, CA 90012-5701 (USE MAIN ST. ENTRANCE)

___

(213) 473-5901 FAX (213) 978-1548

WWW.CITYOFLA.ORG/FINANCE

Office of Finance (Main Office)

City Hall 200 North Spring Street

Room 101 Los Angeles, CA 90012

(213) 473-5901

Hours: 8:00 a.m. – 5:00 p.m. Monday – Friday

BRANCH OFFICES TELEPHONE NUMBERS HOURS Van Nuys Civic Center 6262 Van Nuys Blvd #110

(818) 374-6850

Monday – Friday 8:00 a.m. – 5:00 p.m.

West Los Angeles 1828 Sawtelle Bl., Room 102

(310) 575-8888

Monday – Friday 8:00 a.m. – 5:00 p.m.

Hollywood 6501 Fountain Ave.

(213) 485-3935

Monday – Friday 8:00 a.m. – 5:00 p.m.

Figueroa Plaza Bldg. One Stop Ctr. 201 N. Figueroa St., 3rd Floor (Counter 17)

(213) 482-7032

Mon. Tue. Thu. Fri. 7:30 a.m.– 4:30 p.m. Wed. 9:00 a.m.- 4:30 p.m.

(Revised 11/05) C:ia/cr

INFORMATION AND VENDOR QUESTIONNAIRE PACKAGE CONTENTS

EXHIBIT A APPLICATION

EXHIBIT B SELLING GOODS, WARES, OR MERCHANDISE AT WHOLESALE OR RETAIL EXHIBIT C PROFESSIONAL OR OCCUPATIONAL/MISCELLANEOUS SERVICES EXHIBIT D CONTRACTOR EXHIBIT E LEASING OR RENTING TANGIBLE PERSONAL PROPERTY EXHIBIT F LEASING OR RENTING COMMERCIAL PROPERTY EXHIBIT G LEASING OR RENTING HOTEL ROOMS, APARTMENTS OR

RESIDENTIAL UNITS EXHIBIT H TRUCKING OR HAULING

EXHIBIT I TRANSPORTING PERSONS FOR HIRE EXHIBIT J CERTIFICATION OF EXEMPTION –

CONSTITUTIONAL/GOVERNMENT EXEMPTIONS EXHIBIT K CERTIFICATE OF EXEMPTION – ONE TIME PURCHASE OVER $200 EXHIBIT L CONDUCTING, OPERATING, OR PROMOTING ANY ENTERTAINMENT, SHOW

OR EXHIBITION EXHIBIT M CERTIFICATE OF EXEMPTION – VENDORS DEEMED CITY OF LOS ANGELES

EMPLOYEES (Revised 11/05) C:ia/cr

EXHIBIT A

APPLICATION FOR TAX REGISTRATION CERTIFICATE OR VENDOR REGISTRATION NUMBER

In order to obtain the required Tax Registration Certificate or a Vendor Registration Number, please complete the following information: LEGAL NAME OF OWNER: (Individual, Partnership, or Corporation) BUSINESS NAME: (DBA or Fictitious Name of Business) BUSINESS ADDRESS: (Do Not Use a P.O. Box) Residential Non-residential MAILING ADDRESS: (If Different from Business Address) C/O: DESCRIPTION OF BUSINESS: BUSINESS START DATE WITHIN THE CITY OF LOS ANGELES: MONTH DAY YEAR Please circle the exhibit(s) you are submitting with EXHIBIT A: B C D E F G H I J K L M SOCIAL SECURITY NUMBER (SSN), if there FEDERAL EMPLOYER IDENTIFICATION ARE NO business related employees: NUMBER (FEIN), if there ARE related employees: OR SSN FEIN NOTE: SSN/FEIN is confidential, not part of public record. Signature: Title: Telephone: ( ) Date: Return this application and the applicable exhibits to the Office of Finance, Special Desk Unit, 200 N. Spring St, Room. 101, Los Angeles, California 90012. ---------------------------------------------------------------------------------------------------------------------------------------------------

FOR OFFICE USE ONLY (Revised 11/05) C:ia/cr

EXHIBIT B SELLING GOODS, WARES, OR MERCHANDISE AT WHOLESALE OR RETAIL YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ (If Yes, (If No, Answer #2) Answer #3) You are engaged in business within the City of Los Angeles when, through the physical presence of yourself, your employees, your agents, or your equipment, you carry on activities within the City of Los Angeles which are designed to solicit, promote, stimulate, or otherwise encourage the sale of goods, wares, or merchandise seven (7) or more days per calendar year. This includes the delivery of your merchandise within the City of Los Angeles in vehicles owned and operated by you or your employees. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________ 3. If your answer to Question No. 1 is “NO”, but you do have customers within the City of Los Angeles, please indicate below the method or methods by which activities in Question No. 1are accomplished: YES NO a. Advertising ____ ____ b. Telephone orders ____ ____ c. Bid by mail ____ ____ d. Independent Commission Brokers/Sales Representative ____ ____ If method (d) is used, please provide: Name______________________________________________________________________________________ Address____________________________________________________________________________________ City______________________________________________________State _____________________________ Telephone __________________________________________________________________________________ e. Deliveries are made by means other than vehicles operated by you. ____ ____ Signature Title (Revised 11/05) C:ia/cr

EXHIBIT C

PROFESSIONAL OR OCCUPATIONAL/MISCELLANEOUS SERVICES YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ (If Yes, (If No, Answer #2) Answer #3) You are engaged in business within the City of Los Angeles when, through physical presence, you carry on any trade, calling, occupation, vocation, profession or other means of livelihood, as an independent contractor, and when the gross receipts are derived from or attributable to activities engaged in within the City of Los Angeles for seven (7) or more days per calendar year. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________ 3. If your answer to Question No. 1 “NO”, but you do have gross receipts derived from activities within the City of Los Angeles, please indicate below the nature of your activity.

Signature Title (Revised 11/05) C:ia/cr

EXHIBIT D

CONTRACTOR YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ (If Yes, (If No, Answer #2) Answer #3) You are engaged in business within the City of Los Angeles when, as a contractor or subcontractor, you or your employees undertake any job or project upon land located within the City of Los Angeles including the erection, alteration, improvement, or repair of any type of structure; plumbing, plastering, sheet metal, electrical, cement or tile work; excavating; erection of scaffolding; construction of roads, railroads, pipe lines for seven (7) or more days per calendar year. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________ 3. If your answer to Question No. 1 is “NO”, but you do have contracts with the City of Los Angeles, please provide the Los Angeles City job site addresses below.

___________________________________________________________________________________________ ___________________________________________________________________________________________ Signature Title (Revised 11/05) C:ia/cr

EXHIBIT E

LEASING OR RENTING TANGIBLE PERSONAL PROPERTY YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ (If Yes, (If No, Answer #2) Answer #3) You are engaged in business within the City of Los Angeles when, through the physical presence of yourself, your employees, your agents, or your equipment, you carry on activities within the City which are designed to solicit, promote, stimulate or otherwise encourage the leasing or rental of tangible personal property for seven (7) or more days per calendar year. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________ 3. If your answer to Question No. 1 is “NO”: YES NO a. Is the property installed at a location within the City of Los Angeles? ____ ____

b. Is there a provision in the lease or rental agreement that use of ____ ____

property is to take place within the City of Los Angeles?

Signature Title (Revised 11/05) C:ia/cr

EXHIBIT F

LEASING OR RENTING COMMERCIAL PROPERTY YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ You are engaged in business within the City of Los Angeles when you rent or let a building, or structure, or any space therein of any kind on land located in the City of Los Angeles to a tenant for purposes other than dwelling for seven (7) or more days per calendar year. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________ 3. Please provide the location(s) of the leased property within the City of Los Angeles.

___________________________________________________________________________________________ Signature Title (Revised 11/05) C:ia/cr

EXHIBIT G

LEASING OR RENTING HOTEL ROOMS, APARTMENTS OR RESIDENTIAL UNITS YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ You are engaged in business within the City of Los Angeles when you conduct or operate in the City of Los Angeles a hotel, rooming house, apartment house, house court or bungalow court, any public camp, trailer camp, park or lot where the public may rent camping, trailer or tent space, and renting or letting rooms, apartments or other accommodations for dwelling in any such place for seven (7) or more days per calendar year. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________ 3. If the answer to Questions No. 1 is “Yes” and you do not have a valid City of Los Angeles Tax Registration

Certificate, please answer the following:

a. Do you rent four (4) or more units within the City of Los Angeles? ____ ____ c. Does your total gross receipts from the activity exceed $20,000 per ____ ____

calendar year?

Signature Title (Revised 11/05) C:ia/cr

EXHIBIT H

TRUCKING OR HAULING Supporting documentation identified by the Office of Finance may be required.

YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____

You are engaged in business within the City of Los Angeles when you, your employees or your agents operate a motor vehicle within the City for hire or compensation seven (7) or more days per calendar year.

2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

3. Do you operate as a for hire motor carrier of property required to pay a fee to the State Under the Household Goods Carriers Uniform Business License Tax Act or the Motor Carriers of Property Uniform Fee Act? ____ ____ If your answer to questions 2 and 3 is “NO”, please contact the Office of Finance, Call Center at (213) 473-5901 for instructions on completing the following:

Please provide the following information for all vehicles: NO. OF DAYS

YEAR UNLADEN WEIGHT VEHICLE DAYS OPERATED 20 _______________ 20 _______________ 20 _______________ Signature Title (Revised 11/05) C:ia/cr

EXHIBIT I

TRANSPORTING PERSONS FOR HIRE Supporting documentation identified by the Office of Finance may be required.

YES NO

1. Are you or do you plan to engage in business within the City of Los Angeles? ____ ____

You are engaged in business within the City of Los Angeles when you, your employees or your agents operate a motor vehicle within the City for transportation of persons for hire or compensation seven (7) or more days per calendar year.

2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ If yes, please provide your Tax Registration Certificate account number: ____________________

3. Do you operate a charter party limousine(s) and have a business address outside the City of Los Angeles where all your vehicles are limousine(s) or luxury sedan(s) only, with a seating capacity of no more than 9 including the driver? _____ _____

4. Do you have a franchise granted by the City Department of Transportation? _____ _____

5. Do you operate your vehicle exclusively in Interstate Commerce? _____ _____

6. Do you operate a vehicle(s) that meets all of the following: (1) Operated exclusively between fixed termini or over regular routes in passenger stage operations. (2) Operated as indicated in (1) under certificate issued by the Public Utilities Commission, AND (3) Operation has been issued a certificate of public convenience and necessity by the Interstate Commerce Commission. _____ _____ If your answer to questions 2, 3, 4, 5 or 6 is “NO”, please contact the Office of Finance, Tax Exemption Unit at (213) 473-5901 for instructions on completing the following information for all vehicles:

SEATING CAPACITY NO. OF DAYS YEAR (including driver) VEHICLE DAYS OPERATED 20 _________________ __________________ _________________

20 __________________ _________________ 20 __________________ __________________ _________________ Additionally, please provide the following information for all vehicles that are operated within the City.

Vehicle Make

(e.g. Lincoln, Ford, Chevrolet, etc.)

Model (e.g. Towncar, Excursion, Express, etc.)

Body Style (e.g. Sedan, SUV, Van,

etc.)

Seating Capacity (including Driver)

Print Name ___________________________________________ Date: ____________________________ Signature Title

EXHIBIT J CERTIFICATION OF EXEMPTION

CONSTITUTIONAL/GOVERNMENTAL EXEMPTION The following entities are exempted from paying Business Taxes by the Constitution of the United States, the Constitution of the State of California or the Los Angeles Municipal Code: 1. Banks 2. Insurers – Insurance related activities which “In Lieu” taxes are paid to the State of California 3. Foreign governments – Agencies exempt from Domestic Taxation by Treaty, International Law or Custom 4. United States Government and Agencies 5. State of California 6. University of California 7. California State Universities and Colleges 8. Community Redevelopment Agency of the City of Los Angeles 9. Housing Authority of the City of Los Angeles 10. County of Los Angeles 11. Los Angeles Convention and Exhibition Center 12. Los Angeles Memorial Coliseum Commission 13. Districts and Political Subdivisions under the Laws of the State of California (such as):

a. Los Angeles Unified School District b. Los Angeles Community College District c. Los Angeles County Flood Control District d. Metropolitan Water District e. Metropolitan Transit Authority f. Mosquito Abatement Districts g. Wilmington Cemetery District h. Sanitation Districts

I declare, under penalty of perjury under the laws of the State of California, that to the best of my knowledge I/we are one of the entities described above and is/are exempted from paying the City of Los Angeles Business Tax. Name of Agency Nature of Business/Type of Agency Address Printed Name of Authorized Representative or Agent Phone Number Signature Title PLEASE RETURN THIS FORM TO THE DEPARTMENT TO WHICH YOU ARE PROVIDING SERVICES AND A COPY TO THE OFFICE OF FINANCE, 200 N. SPRING ST, RM. 101, LOS ANGELES, CALIFORNIA 90012, MAIL STOP 170 – ATTN: TAX EXEMPTION UNIT. (Revised 11/05) C:ia/cr

EXHIBIT K

CERTIFICATION OF EXEMPTION FOR

ONE TIME PURCHASE OR SERVICE RENDERED OVER $200*

The hereby certifies that a one time (Name of Department/Bureau) purchase of (Type of Product/or Service) costing was made from the (Cost of Purchase) following business: (Name of Company) (Address) (Company Representative) (Title) (Phone Number) I/we further certifiy that to the best of our knowledge, the business is NOT LOCATED IN THE CITY OF LOS ANGELES, does not solicit or conduct business in the City for seven (7) or more days during a calendar year, and does not deliver the goods or merchandise in its own vehicles within the City for seven (7) or more days during a calendar year. Based on the information provided, this business would not appear to owe a Business Tax. (Department/Bureau Representative) (Title) (Phone Number) (Date) c: Office of Finance 200 N. Spring St., Rm. 101 Los Angeles, CA 90012 Mail Stop 170 Attn: Tax Exemption Unit (Revised 11/05) C:ia/cr

EXHIBIT L

CONDUCTING, OPERATING, OR PROMOTING ANY ENTERTAINMENT, SHOW OR EXHIBITION

YES NO 1. Are you engaged in business within the City of Los Angeles? ____ ____ (If Yes, (If No, Answer #2) Answer #3) You are engaged in business within the City of Los Angeles when, through physical presence, you conduct, operate or promote any entertainment, show or exhibition, where an admission fee is charged, collected or received, or where no admission fee is charged, collected or received but donations of any kind or character are solicited or accepted seven (7) or more days per calendar year. 2. If yes, do you have a valid City of Los Angeles Tax Registration Certificate? ____ ____ Account Number

If you do not have a valid City of Los Angeles Tax Registration Certificate, please report your City of Los Angeles gross receipts for the previous three calendar years or from the date you began conducting business within the City of Los Angeles.

YEAR GROSS RECEIPTS 20____ $_______________ 20____ $_______________ 20____ $_______________

3. If your answer to Question No. 1 is “NO” and you do not have a valid City of Los Angeles Tax Registration

Certificate, but you have conducted, operated, or promoted any entertainment, show or exhibition within the City of Los Angeles, please provide the name, location and dates of the shows/exhibitions below.

NAME OF SHOW/EXHIBITION LOCATION DATE

(If additional space is needed, please use a separate sheet)

Signature Title (Revised 11/05) C:ia/cr

EXHIBIT M

VENDORS DEEMED CITY OF LOS ANGELES EMPLOYEES EMPLOYEE STATEMENT: I certify that I

(Name of employee) am currently working for

(Name of City Department/Bureau) and that I am under contract with this department in the capacity of an employee as defined in Section 21.00 (Definitions), Subsection (k), Los Angeles Municipal Code and therefore not subject to payment of business taxes. (Signature of employee) (Date)

EMPLOYER STATEMENT: I certify that to the best of my understanding and belief, the above-named individual is deemed to be an employee of this City Department, based on Section 21.00 (Definitions), Subsection (k), Los Angeles Municipal Code, which I have reviewed, and therefore not subject to payment of business taxes.

(Department/Bureau Representative) (Signature and Title) (Phone Number) (Date) c: Office of Finance 200 N. Spring St., Rm. 101 Los Angeles, CA 90012 Mail Stop 170 Attn: Tax Exemption Unit (Revised 11/05) C:ia/cr

STATEMENT OF INVESTMENT OBJECTIVES, GOALS, AND GUIDELINES REVISED: 2018-12-12

Table of Contents Page

I. General Investment Goals ........................................................................................................................ 1

II. Policies and Procedures .......................................................................................................................... 2 2.1 Asset Allocation Policy .............................................................................................................. 2 2.2 Asset Class and Portfolio Component Definitions ..................................................................... 4 2.3 Responsibilities and Delegations ............................................................................................... 6 III. Investment Management Policy .............................................................................................................. 9 3.1 Manager Selection .................................................................................................................... 9 3.2 Manager Authority ..................................................................................................................... 9 3.3 Proxy Voting .............................................................................................................................. 9 3.4 Derivatives .............................................................................................................................. 10 3.5 Rebalancing ............................................................................................................................ 10 IV. Selection, Termination, and Monitoring of Investment Managers .................................................... 12 4.1 Selection Process of Investment Managers ............................................................................ 12 4.2 Process for Investment Manager Termination ........................................................................ 12 4.3 Monitoring Investment Managers ............................................................................................ 12 V. Policy for the Use of Placement Agents and Third-Party Marketers ................................................. 17 VI. Securities Lending Cash Collateral Investment Guidelines ............................................................... 21 VII. Domestic Equity Guidelines ................................................................................................................... 24 7.1 Passive Domestic Equity ........................................................................................................ 26 7.2 Active Large Cap Value Domestic Equity ............................................................................... 27 7.3 Active Large Cap Growth Domestic Equity ............................................................................. 28 7.4 Active Small Cap Value Domestic Equity ................................................................................ 29 7.5 Active Small Cap Growth Domestic Equity ............................................................................. 30 VIII. International Equity Guidelines ............................................................................................................. 31 8.1 Passive International Equity .................................................................................................... 33 8.2 Active Growth International Equity .......................................................................................... 34 8.3 Active Value International Equity ............................................................................................ 36 8.4 Active Small Cap International Equity ..................................................................................... 38 8.5 Active Emerging Markets Equity ............................................................................................. 40 IX. Global Equity Guidelines ......................................................................................................................... 42 9.1 Active Global Equity ................................................................................................................ 43

X. Fixed Income Guidelines ......................................................................................................................... 45 10.1 Active Principal Protection ...................................................................................................... 47 10.2 Active Extended Global Credit ................................................................................................ 49

10.3 Active U.S. Bank Loans .......................................................................................................... 53

XI. Real Return Guidelines ........................................................................................................................... 54 11.1 Global Inflation-Linked Securities ............................................................................................ 57 11.2 Commodities ........................................................................................................................... 60 11.3 Timber ..................................................................................................................................... 63 11.4 Guidelines for Investment Evaluation ...................................................................................... 66 XII. Hedge Fund Guidelines .......................................................................................................................... 67 12.1 Custom Fund of Hedge Fund .................................................................................................. 73 12.2 Guidelines for Investment Evaluation ...................................................................................... 76 XIII. Real Estate Investment Policy ............................................................................................................... 77 13.1 Designated Responsibilities and Tasks .................................................................................. 89 13.2 Guidelines for Initial Manager Evaluation ................................................................................. 91 13.3 Guidelines for Ongoing Manager Evaluation............................................................................ 92 13.4 Global Real Estate Investment Trust Guidelines ...................................................................... 93 XIV. Private Equity Investment Policy .......................................................................................................... 95 14.1 Designated Responsibilities and Tasks ................................................................................ 104 14.2 Guidelines for Fund of Funds Evaluation .............................................................................. 106 14.3 Direct Partnership Guidelines and Investment Criteria .......................................................... 107

Appendix A. Glossary of Terms ...................................................................................................................................... 109 B. Proxy Voting Policy .................................................................................................................................... 111

WATER AND POWER EMPLOYEES’ RETIREMENT PLAN STATEMENT OF INVESTMENT OBJECTIVES, GOALS, AND GUIDELINES

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I . General Investment Goals The following broad investment goals are adopted by the Board, consistent with generally accepted standards, Plan Document, City Charter, and California State Constitution: 1. The overall goal of the Water and Power Employees’ Retirement Plan’s (“The Plan”)

investment assets is to provide Plan participants with post-retirement benefits as set forth in the Plan documents, including the Retiree Health Benefits Fund. This will be accomplished through a carefully planned and executed investment program.

2. A secondary objective is to achieve an investment return which will allow the percentage of

Department revenues necessary to fund the Plan to be maintained consistent, or reduced, and which will provide for a full funding of the Plan's liabilities.

3. The Plan assets will be managed on a total return basis. While the Plan recognizes the

importance of the preservation of capital, it also adheres to the principle that varying degrees of investment risk are generally rewarded with compensating returns. The Board’s Investment Policy has been designed to produce the most favorable long-term total portfolio return consistent with reasonable levels of risk. Consequently, prudent risk-taking is warranted within the context of overall portfolio diversification. As a result, investment strategies are considered primarily in light of their impact on the Plan’s total assets with consideration of the Board's responsibility as established by the City Charter and by Article 16, Section 17 of the California State Constitution.

4. The Plan’s investment program shall at all times comply with existing and future applicable

City, State, and Federal regulations. 5. All transactions undertaken will be for the sole benefit of the Plan’s participants and

beneficiaries and for the exclusive purpose of providing benefits to them and defraying reasonable administrative expenses associated with the Plan.

6. The Plan has a long-term investment horizon, and utilizes an asset allocation which

encompasses a strategic, long-run perspective of capital markets. It is recognized that a strategic long-run asset allocation plan, implemented in a consistent and disciplined manner will be the major determinant of the Plan’s investment performance.

7. Investment actions are expected to comply with "prudent person" standards as described:

"...with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims".1

1 ERISA 404(a) (1) (B)

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I I . Policies and Procedures The policies and procedures of the Board’s investment program are designed to maximize the probability that the investment goals will be fulfilled. Investment policies may evolve as fund conditions change and as investment conditions warrant. The Board will review the Investment Policy Statement for any amendments as needed, but no less than triennially. 2.1 Asset Allocation Policy The Board adopts and implements an asset allocation policy that is predicated on a number of factors, including:

A projection of actuarial assets, liabilities, benefit payments and required contributions; Historical and expected long-term capital market risk/return behavior; An assessment of future economic conditions, including inflation and interest rate levels; The current and projected funding status of the Plan; and The results of an Asset/Liability Study completed at a minimum every 5 years.

This policy provides for diversification of assets in an effort to maximize the investment return of the Plan consistent with market conditions. Asset allocation modeling identifies asset classes the Plan will utilize and the percentage that each class represents of the total fund. Due to the fluctuation of market values, positioning within a specified range is acceptable and constitutes compliance with the policy. It is anticipated the Plan’s asset allocation policy may be subject to periodic revisions. The Board will periodically monitor and assess the actual asset allocation versus policy and will rebalance as appropriate. The Board implements its asset allocation policy through the use of full discretion investment managers who invest the assets of the portfolios assigned to them, subject to specific investment guidelines provided by the Board. In accordance with Board Resolution 16-23, adopted by the Board September 23, 2015, the Long-Term Asset Allocation Target for the investment of the Plan's assets is shown below. Also on October 21, 2015, under Board Resolution 16-31, the Board adopted an Interim Asset Allocation Target to allow for a smooth transition to the Long-Term Asset Allocation Target. On November 8, 2017, under Board Resolution 18-40, the Board adopted an updated Interim Asset Allocation Target given the current funding level of the Plan’s alternative investments. The Interim Asset Allocation Target will be evaluated annually at fiscal year-end as the Plan works towards the approved Long-Term Asset Allocation Target. The Long-Term and Interim Asset Allocation Targets are as follows:

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Long-Term Interim

Domestic Equity 24.70% 33.00% International Equity 20.40% 19.00% Global Equity 2.90% 0.00% Fixed Income 25.00% 26.00% Real Return 5.00% 5.00% Hedge Funds 5.00% 5.00% Real Estate 8.00% 6.00% Private Equity 8.00% 5.00% Cash Equivalents 1.00% 1.00%

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2.2 Asset Class and Portfolio Component Definitions The Board will utilize the following portfolio components to fulfill the Long-Term Asset Allocation Target and total fund performance goals established in this document. 1. Domestic Equities – The Board expects that over the long run, total returns on domestic

equities will be higher than the returns of fixed income securities, understanding such returns may be subject to substantial volatility over shorter periods of time. For purposes of further investment diversification the Board adopted five components of the Plan’s domestic equity holdings as follows (see Board Resolutions 03-23 of October 9, 2002 and 03-19 of September 18, 2002):

Index Funds / Core Stocks – This portfolio will provide broadly diversified, core exposure

through index funds to the US equity market, primarily in large capitalization companies. Index funds provide primary liquidity for asset allocation rebalancing. The target index fund to be tracked by this segment shall be the Russell 1000 Index.

Large Value Stocks – Large Cap Value stocks, covering the upper range of market

capitalization, are expected to outperform the broad market during periods when the market prefers companies with a large margin of safety, such as downturns, or when the market rewards undervalued companies during rebounds. Value stocks typically exhibit higher dividend yield, lower P/E ratios, or lower Price/Book ratios.

Large Growth Stocks – Large Cap Growth stocks, covering the upper range of market

capitalization whose valuations are more directly tied to future earnings prospects. Often, growth stocks sell at higher prices relative to expected or historical earnings growth in anticipation of sustained or accelerating growth. Growth stocks typically exhibit above average levels of positive earnings momentum, long-term earnings growth or return-on-equity. Strategies targeting growth stocks can range from those that focus on more volatile speculative growth stocks or more defensive sustainable growth stocks.

Small Value Stocks – The principal characteristic of the small value stock component is

its emphasis in stocks with market capitalization generally ranging from $200 million - $2.0 billion which are undervalued due to a short-term event or issue which has caused the market to depreciate its value. Managers targeting small cap value stocks seek to invest where issues are less significant or less persistent than the market estimates. Value stocks typically exhibit higher dividend yield, lower P/E ratios, or lower Price/Book ratios.

Small Growth Stocks – The principal characteristic of the small growth stock component is its emphasis in stocks with market capitalization from $200 million - $2.0 billion which are generally characterized by faster growth and higher long-term returns during rising markets. Growth stocks typically exhibit above average levels of positive earnings momentum, long-term earnings growth or return-on-equity. Strategies targeting growth stocks can range from those that focus on more volatile speculative growth stocks or more defensive sustainable growth stocks.

2. Non-U.S. Equities – The Board expects that over the long run, total returns of Non-U.S.

equities will be similar to the returns of domestic equities and will provide diversification to the domestic equity asset class, as well as to the aggregate investment portfolio. The following two components of the Plan’s International equity holdings were adopted by the Board (see Resolution 03-22 of October 9, 2002):

Core International Stocks – This portfolio component provides exposure to broadly

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diversified equity markets outside the U.S. and consequently plays a significant role in diversifying the Board’s portfolio. This segment will concentrate on larger companies in established developed equity markets around the world.

Emerging Markets – This portfolio component is made up of equity positions in

companies located in emerging, rapidly growing countries around the world. Because these are countries which are typically in the early development stages of economic growth, the returns in these countries are expected to be higher and more volatile on a year-to-year basis.

3. Fixed Income – The primary role of the fixed income portfolio is to provide a more stable

investment return and to generate income while diversifying the Plan’s investment assets. The following three components of the Plan’s fixed income holdings were adopted by the Board (see Resolution 13-91 of June 26, 2013):

Principal Protection – This segment will provide exposure to U.S. fixed income securities

that contain relatively low levels of risk and exhibit lower volatility than other fixed income sectors or strategic classes. The portfolio will be entirely investment grade, and predominately consist of U.S. Treasuries, U.S. Agencies, and Securitized issues. Duration will be shorter than the broad fixed income market. Marginal allocations to outside benchmark securities (e.g. Foreign Sovereigns, Supranationals, etc.) will also be permitted, but subject to the investment grade rating requirement.

Extended Global Credit – This segment will provide exposure to fixed income securities

that contain various levels of credit risk, and thus provide higher income and volatility than other fixed income sectors or strategic classes. The portfolio will primarily include fixed-rate instruments, but floating-rate securities will also be allowed. The portfolio will include both investment grade and non-investment grade rated securities, with an emphasis on Corporate Debt. Allocations to other entities, such as Non-U.S. Agencies, Local Authorities, Foreign Sovereigns, and Supranationals will also be included. Tactical allocations to sectors with less-or-no credit risk, such as U.S. Treasuries, will be allowed at the manager’s discretion. Exposure to this segment is meant to provide additional income and return to the fixed income portfolio, consistent with its higher risk profile compared to the Principal Protection segment.

U.S. Bank Loans – This segment will provide exposure to relatively illiquid floating-rate

securities that provide a high level of income. The portfolio will emphasize non-investment grade issuers. Exposure to this segment is meant to provide additional income and return to the fixed income portfolio, as well as partially insulate the fixed income portfolio from interest rate risk. This segment will exhibit a higher risk profile compared to the Principal Protection segment.

4. Private Equity – This portfolio is expected to provide portfolio diversification and additional

return over and above the Plan’s public markets portfolio, consistent with its higher risk profile compared to other segments of the Plan’s portfolio. Examples of Private Equity Investment holdings will include venture capital, leveraged buyouts, distressed debt, and special equity funds.

5. Real Estate – This portfolio is expected to provide portfolio diversification due to real estate's

low correlation with the returns of publicly traded equities and fixed income. 6. Real Return – This portfolio is expected to provide a consistent return in excess of inflation.

Stable real returns should provide diversification versus other strategic classes. The real

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return class can contain numerous asset segments that, and when combined, is expected to produce the desired investment return and volatility outcome.

Global Inflation Linked Securities (“GILS”) – This segment is designed to provide

inflationary adjusted income through exposure to the GILS market including U.S and sovereign government issues. This segment is expected to match or outperform inflation over a market cycle.

Commodities – This segment will provide exposure to areas available in the U.S. commodities market including Energy, Livestock, Agriculture, Industrial Metals and Precious Metals. It is expected that Commodities will provide positive exposure to rapid changes in inflation and inflation expectations.

Timber – This segment is meant to provide low correlation to traditional public market segments. Exposure to this segment is also meant to provide additional income and return to the Real Return portfolio, consistent with its longer investment time horizon, compared to the other Real Return class segments.

7. Hedge Funds – This portfolio is expected to provide portfolio diversification with low correlation of returns to publicly traded equities and fixed income. It is designed to enhance the risk-adjusted performance of the Plan and add incremental diversification versus the other class segments.

2.3 Responsibilities and Delegations Responsibilities of the Board

The Board shall:

1. Act in a fiduciary capacity in the exercise of its duties. 2. Approve and amend the Investment Policy and Annual Strategic Policies. 3. Approve investment opportunities considered for the Plan. When evaluating investment

opportunities:

a. Review due diligence reports prepared by the Consultant(s)/Investment Staff. b. Interview management teams of proposed investments, as necessary. c. Approve or reject proposed investment opportunities.

4. Monitor the performance of the Consultant(s). 5. Receive and review performance reports from the Consultant(s)/Investment Staff.

Responsibilities of the Investment Staff

The Investment Staff shall:

Recommendations to the Board Assist Consultant(s) in developing recommendations regarding Investment Policies,

Strategies and Guidelines.

Investment Opportunity Sourcing Review investment referrals received from Board members, etc. As desired, perform initial gatekeeper functions by meeting with groups, and reviewing the

investment documentation.

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Perform preliminary due diligence prior to referring to the Consultant(s) for further due diligence.

Due Diligence

Forward contact information and materials to Consultant(s) for desired opportunities. Coordinate full due diligence review.

o Initiate outside legal review (recommended). o Communicate status of legal review to Consultant(s).

Review Consultant(s) due diligence report, analysis, and recommendations for qualitative and quantitative reasonableness.

Assist Consultant(s) with on-going monitoring and due diligence. Investment Administration

Execute documents for investments approved by the Board. o Review and execute contracts, modifications, and other documentation. o Manage day-to-day Plan operations including setting up communications, setting

up custodial accounts, data requirements and standard wire instructions. o Coordinate capital calls and distributions. o Review and process a variety of reports from Managers.

Keep Consultant(s) apprised of operations, as needed. Performance Monitoring

Receive and review quarterly reports from Managers. Receive and review full performance report (quarterly) and Strategic Plan (annually) from

Consultant(s). Consultant Evaluation

Review and assess: o Program performance. o Quality of analytical and technical work. o Responsiveness to requests from the Board and Investment Staff. o Availability to attend Board meetings and meetings with Investment Staff given

reasonable advance notice. o Ability to identify and mitigate risks. o Ability to proactively informing Investment Staff of new investment opportunities or

risks in the market place.

Responsibilities of the Consultant(s)

The Consultant(s) shall:

1. Act in a fiduciary capacity when exercising duties. 2. Report directly to the Board/Investment Staff on matters of policy. 3. Review the policy annually and notify the Board/Investment Staff if revisions are needed. 4. Bring non-conforming issues to the attention of the Board/Investment Staff. 5. Complete due diligence on potential investment opportunities. 6. Review proposed investments and make recommendations. 7. Complete manager and strategy due diligence on an as-needed basis. 8. Monitor the performance of the Plan and compliance with the Policy.

a. Consultant receives monthly and quarterly performance reports from Managers. b. Consultant verifies performance of the Managers and reconciles data of the

Manager and Custodian.

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9. Monitor and report on risk. 10. Prepare quarterly performance report and present to the Board/Investment Staff. 11. Provide the Board/Investment Staff with research items relevant to the Plan. 12. Provide ongoing education to the Board/Investment Staff.

Additionally, the Consultant(s) shall follow the procedures outlined below when conducting a Public Markets Manager search.

Investment Due Diligence Long List of Candidates - Analyze the following aspects:

o Investment Strategy o Organizational Structure o Background and Experience o Track record o Terms o Alignment of Interest

Upon completion, review findings with the Plan’s Board and recommend finalist

candidates.

Finalist Candidates o Conduct onsite visits as appropriate. o Upon completion, prepare and issue to the Plan’s Board a finalist book to

accompany finalist presentations. o Arrange meeting to review materials and performance interviews.

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I I I . Investment Management Policy The Board will retain external investment managers to manage portfolios using a specific style and methodology. Managers are expected to establish an account for the Retirement Fund and an account for the Retirement Health Benefits Fund (individually, the “Account” and collectively, the “Accounts”). The Accounts should be equivalent to each other in structure, holdings, and performance. In instances where equivalent accounts cannot be created due to different asset sizes of the accounts, available account structures, or restrictions on the type of funds the manager can receive, the Board shall determine an appropriate alternative product and account structure as similar to the original portfolio as possible. Managers will have authority for implementing investment strategy, security selection, and trade execution, subject to the specific Manager Guidelines, contract, and legal restrictions, or other Board direction. Performance objectives will also be developed for each manager. The performance of the portfolio will be monitored and evaluated on a regular basis relative to each portfolio component's benchmark return and, if available, relative to a peer group of managers following similar investment styles. Investment actions are expected to comply with "prudent person" standards. Each investment manager will be expected to act as a fiduciary and to know the Investment Guidelines of the Board and comply with those at all times. The Board will also review each investment manager's adherence to its investment policy, and any material changes in the manager's organization (e.g. personnel changes, new business developments, etc.). The investment managers retained by the Board will be responsible for informing the Board of such material changes. Investment managers under contract with the Board shall have discretion to prudently establish and execute transactions with securities broker/dealer(s) as a manager may select. The investment managers shall obtain best execution with respect to every portfolio transaction. The following transactions will be prohibited: short sales; selling on margin; "prohibited transactions" as defined under the Employee Retirement Income Security Act (ERISA); and, transactions that involve a broker acting as a "principal," where such broker is also the investment manager who is making the transaction. Authorized transactions shall be those specifically outlined in writing by the Board. The investments of the Board’s assets will be subject to the following general policies: 3.1 Manager Selection The selection of investment managers must be accomplished in accordance with Board Policy. Each investment manager is expected to operate under formal contract delineating responsibilities and appropriate performance expectations. The Board will monitor investment manager exposure in the pursuit of creating a diversified portfolio. Exposures will be monitored mindful of asset class, investment team structure (single relative to team), size of firm, account structure (separate account vs. commingled), liquidity, and other considerations as needed. 3.2 Manager Authority The Board’s investment managers shall direct and manage the investment and reinvestment of assets allocated to their accounts in accordance with this document, applicable Local, State and Federal statutes and regulations. Investment managers shall also be subject to specific investment policies and guidelines adopted by the Board, and executed contracts. 3.3 Proxy Voting

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Proxy voting rights will be managed with the same care, skill, diligence and prudence as is exercised in managing other assets. Proxy voting rights will be exercised in the sole interest of the Plan’s members and beneficiaries in accordance with all applicable statutes consistent with the Board proxy policies. (Please refer to the guidelines developed by the proxy advisor, contained in Appendix B, for specific policy language). 3.4 Derivatives The Board’s investment managers may be permitted, under the terms of specific individual investment guidelines (as approved by the Board, in writing, and consistent with the manager’s mandate), to use derivative instruments as set forth in such manager’s investment guidelines, to control portfolio risk. Derivatives are contracts or securities whose returns are derived from the returns of other securities or indices. Allowable derivative instruments include, but are not limited to, futures and forwards. Examples of appropriate applications of derivative strategies include hedging interest rate and currency risk, maintaining exposure to a desired asset class while effecting asset allocation changes; and adjusting portfolio duration for fixed income. In no circumstances can managers borrow funds to purchase derivatives. If authorized in writing by the Board, Managers must ascertain and carefully monitor the creditworthiness of any third parties involved in any authorized derivative transactions. 3.5 Rebalancing The allocation to each asset class and to investment styles within asset classes is expected to remain stable over most market cycles. As markets move over time, the actual asset mix of the Plan’s portfolios may diverge from the target allocations established by the Board through the asset allocation process. If Plan assets are allowed to deviate too far from the target allocations, there is a risk that the portfolio will fail to meet the objectives set by the Board. On the other hand, continual rebalancing may result in significant transaction costs. The Board is responsible for final approval of all rebalancing recommendations. The Board will not attempt to time rises or falls in equity or bond markets by moving away from long-term targets because (1) market timing often results in lower returns than longer term strategies, and (2) there is no evidence that one can adequately predict market returns and subsequently time the market. Plan Investment Staff are responsible for monitoring the portfolios and, with input from the investment consultant, making rebalancing recommendations to the Board. Plan Investment Staff are responsible for implementing rebalancing decisions made by the Board.

A. With respect to each asset class and to the sub-asset classes for which the Board has set a target allocation, the Board, in consultation with its investment consultant, will establish rebalancing range limitations.

B. Investment Staff will monitor the portfolio’s asset allocation relative to the target allocations

and report to the Board. If the actual allocations fall within the defined ranges rebalancing may occur, but no rebalancing will be required. If actual allocations to an asset class, or to a sub-asset class, fall outside the predetermined range, Investment Staff, in consultation with the investment consultant will develop recommendations for rebalancing, including the time-frame for accomplishing the proposed rebalancing. Upon approval by the Board, Investment Staff will implement the proposed rebalancing. Rebalancing will not wait for scheduled meetings, although rebalancing can occur at such meetings. In the

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event that market conditions generate a need to rebalance between meetings, the Investment Staff, in consultation with the investment consultant, will review the situation and recommend a course of action to the President of the Board. The President shall determine whether a special meeting of the Board shall be called to approve a rebalancing action.

C. In making its recommendations for any required rebalancing, Investment Staff, in consultation with the investment consultant should generally prioritize implementation procedures as follows:

1. Drawing cash out of the portfolio (for benefit payments and expenses) from asset

classes that are above their range limitations (using interest payments, rental revenues and dividends); and

2. Selling overweighted assets and/or buying underweighted assets.

Long-Term Asset Allocation Targets and Ranges –

Asset Class Target

(% of Total Portfolio)

Maximum (% of Total Portfolio)

Minimum (% of Total Portfolio)

Range +/- %

Equity 48.0% 55.2% 40.8% +/-15% Domestic Equity 24.7% 28.4% 21.0% +/-15% Large Cap 22.5% 25.9% 19.1% +/-15% Large Cap Value 9.0% 10.4% 7.7% +/-15% Large Cap Passive 4.5% 5.1% 3.8% +/-15% Large Cap Growth 9.0% 10.4% 7.7% +/-15% Small Cap 2.2% 2.6% 1.8% +/-20% Small Cap Value 1.1% 1.3% 0.9% +/-20% Small Cap Growth 1.1% 1.3% 0.9% +/-20% International Equity 20.4% 24.5% 16.3% +/-20% Large Cap Developed Markets 13.0% 15.6% 10.4% +/-20% Small Cap Developed Markets 1.9% 2.3% 1.5% +/-20% Emerging Markets 5.5% 6.6% 4.4% +/-20% Global Equity 2.9% 3.5% 2.3% +/-20% Fixed Income 25.0% 28.8% 21.3% +/-15% Principal Protection 12.5% 14.4% 10.6% +/-15% Extended Global Credit 11.3% 12.9% 9.6% +/-15% Bank Loans 1.3% 1.4% 1.1% +/-15% Real Return 5.0% 7.5% 0% +50/-100% Global Inflation Linked Securities 3.2% 4.8% 0% +50/-100% Commodities 1.2% 2.4% 0% +50/-100% Timber 0.6% 1.2% 0% +50/-100% Hedge Funds 5.0% 7.5% 0% +50/-100% Real Estate 8.0% 12% 0% +50/-100% Private Equity 8.0% 12% 0% +50/-100% Cash Equivalents 1.0% 1.5% 0.5% +-/50% Note all targets and ranges rounded to the nearest decimal point.

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*Actual allocation may fall outside the Target Ranges during periods of implementation.

IV. Selection, Termination, and Monitoring of Investment Managers

4.1 Selection Process of Investment Managers The process of investment manager selection shall originate with the Board. Unless the Board decides otherwise, all searches shall be conducted by Investment Staff and the Board’s investment consultant. The first step shall involve the establishment of appropriate minimum criteria such as minimum asset base, performance history, special firm qualifications, years of experience, etc. that reflect an appropriate level of institutional investment service. Based upon these criteria, Investment Staff and/or consultant shall design the appropriate request for proposal (“RFP”) or request for information (“RFI”) to be delivered to the institutional marketplace. Investment Staff and/or consultant shall devise a scoring system to evaluate the qualifications of the RFP/RFI respondents. Their objective shall be to narrow the field to several firms for in-depth review and finalist selection. The finalists shall then be scheduled for Board presentations. Following the Board’s selection, Investment Staff shall negotiate final terms and conditions with the chosen manager(s) and complete the review and negotiation of all appropriate contracts and agreements. 4.2 Process for Investment Manager Termination The Board reserves the right to terminate an investment manager for any reason, including, but not limited to, any of the following:

Failure to comply with the guidelines agreed upon for management of the Board’s portfolio, including holding unauthorized issues.

Failure to achieve performance objectives specified in the manager's guidelines.

Significant deviation from the manager's stated investment style, philosophy, and/or process.

Loss of key personnel.

Evidence of illegal or unethical behavior by the investment management firm.

Unwillingness to cooperate with reasonable requests by the Board, such as information, meetings or other material related to its portfolios.

4.3 Monitoring Investment Managers

1. Background - Why Investment Manager Monitoring Is Important

The monitoring of the Plan’s investment managers is critical because it is part of the fiduciary responsibility of the Board on behalf of Plan participants and beneficiaries. As the fiduciary for the Plan, the Board is responsible for determining when and whether certain factors may be detrimentally impacting an investment manager’s ability to invest on behalf of the Plan. In cases where such factors are deemed to have an irreversible detrimental impact, the Board

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should have a formal mechanism for taking the appropriate action with respect to the investment manager(s) in question. The procedures and criteria below allow such a process to take place. For example, one key factor might be an investment manager’s investment personnel. What happens if key investment personnel managing a portfolio on behalf of the Plan leave the firm? Since institutional investing is (in a very strong sense) a service business, changes in personnel could significantly alter an investment manager’s ability to produce favorable long-term investment results. Another example would be deterioration of an investment portfolio’s performance versus a pre-assigned benchmark, or versus other similarly managed portfolios, which might signal a significant change in an investment manager’s style or investment process. If the change in process is, indeed, material, then an institution (such as the Plan) that utilizes that investment manager might elect to replace that investment manager with another firm that has a process that better matches the institutional user’s original intentions/objectives. Finally, for a variety of reasons, a portfolio’s investment performance simply may not prove satisfactory (i.e., consistent and/or prolonged underperformance versus a pre-assigned benchmark). In such cases, the Board may lose confidence in the respective investment manager’s ability to add value. The monitoring procedures and criteria provide the Board with a systematic process for taking specific action(s) if such circumstances arise.

2. How the Investment Manager Monitoring Procedures Will Work

As highlighted above, ongoing monitoring of the Plan’s investment managers is a necessary component of the Board’s fiduciary role. Specifically, these procedures allow the Board to take action if they are not satisfied with specific aspects of an investment manager’s activities and/or investment performance. In addition, investment monitoring helps an institution achieve consistent long-term investment success. These monitoring procedures are designed to take place in sequence in order to provide an ample amount of information and feedback to the Board before any significant changes are decided upon. It is expected that the Board shall delegate all or a portion of these tasks to its investment consultant. The Board may review and modify investment performance criteria (as outlined below) or other portions of this document periodically on an as needed basis. There are two major groups of monitoring activities: Ongoing Monitoring and Periodic Monitoring. Both the investment manager and the Board (and/or its investment consultant) conduct certain monitoring functions. A significant aspect of the Ongoing Monitoring activity is the measurement and assessment of investment performance. This procedure is described below.

3. Ongoing Monitoring Activities Investment Performance Review of Investment Manager(s) and its (their) Investment Portfolio(s) As part of the ongoing reporting process, the investment manager will report quarterly and trailing annualized performance of the respective portfolio(s) to the Plan and its consultant on a quarterly basis (i.e., every three months). In addition, the investment manager will provide performance attribution statistics that explain the causes of under- or out-performance relative to the established benchmarks.

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The investment manager will also report any changes in investment-related personnel, organization or investment approach/strategy that may potentially impact the investment results of the portfolio in question. Independent Evaluation of Investment Performance by the Plan The Plan (or its investment consultant) will evaluate investment performance on a quarterly basis using the investment performance criteria outlined below. Such evaluations will also be used to verify the quarterly performance information disclosed by the investment managers themselves (see above). If the investment manager(s) do(es) not meet one or more of the criteria below, the Board will place the specific investment manager(s) on watch status for investment performance reasons. The quarterly evaluation will indicate (i) whether an investment manager is on watch status; (ii) the reason for watch status, (iii) the approximate date the investment manager and the respective portfolio was placed on watch status, (iv) the length the investment manager has been on watch status, and (v) additional comments. If the investment manager/portfolio was placed on watch status for investment performance reasons, the status report will also include post-watch investment performance to gauge if the investment manager is addressing investment performance issues. Periodic Monitoring Activities As part of its ongoing fiduciary responsibilities, as well as in assessing the potential of an investment manager to produce future added value, the Plan and its investment consultant should regularly review several qualitative aspects of an investment manager’s management and practices. Key qualitative factors include, but are not limited to:

Compliance with the guidelines agreed upon for management of the Board’s portfolio, including holding unauthorized issues;

Review of the investment manager(s) investment strategy and style, especially the buy/sell disciplines;

Review of portfolio activity, specifically the turnover rate, number of holdings, and execution costs;

Risk profile relative to the portfolio’s benchmark; Review of organizational structure; Stability of investment manager personnel and organization; Review of investment manager contractual obligations to the Plan (including

management fees); Evidence of illegal or unethical behavior by the investment management firm; Unwillingness to cooperate with reasonable requests by the Board, such as

information, meetings or other material related to its portfolios. As discussed in the above two sections, certain investment manager(s) may (i) fail to meet pre-established investment performance criteria and/or (ii) may prove sub-standard across any number of qualitative factors. In such cases, the next step would be for the Plan (or the Plan’s investment consultant) to produce a document called a Portfolio Review. This Portfolio Review would explain those factors where the investment manager(s) and/or portfolio(s) are failing to meet specific criteria and provide a basis for putting investment manager(s) on watch status. The Portfolio Review would typically be in the form of a memo to the Board.

4. Watch Status of an Investment Manager/Portfolio

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The purpose of a watch list is to focus attention and discussion on the managers that need it – due to difficulties or changes. However, being placed on the watch list does not suggest termination is imminent, as all managers, even top performers, experience some periods of underperformance. An investment manager/portfolio attains watch status if at least one of two events occurs: (i) the portfolio’s rolling 60 month net return is less than the benchmark’s return at two consecutive calendar quarter end dates, or (ii) after the Portfolio Review is conducted, Investment Staff and/or the investment consultant recommends to the Board that an investment manager is a candidate for watch status. However, a manager with less than 60 months of performance with the Plan may be placed on watch for material underperformance relative to the benchmark. An investment manager/portfolio may also be placed on watch at any time as a result of qualitative factors, including but not limited to:

Violation of investment guidelines Deviation from stated investment style and/ or shifts in the firm’s philosophy or process Turnover of one or more key personnel Change in firm ownership or structure Significant loss of clients and/or assets under management Significant and persistent lack of responsiveness to client requests Litigation Failure to disclose significant information, including potential conflicts of interest Chronic violations of the Plan’s Investment Policy Any other issue or situation of which the Investment Staff, the Advisory Consultant

and/or Board become aware that is deemed material.

The Board then approves or disapproves the recommendation. If the Board approves the recommendation to place a specific investment manager on watch status, Investment Staff will issue a formal notification to the investment manager. This formal notification of watch status will include, but not be limited to, the following items:

Meeting date when the Board approved the recommendation to place the investment

manager on watch; Reason(s) for placing the investment manager on watch status; and Conditions for being released from watch status (see below).

Typically, once a manager is placed on watch status, it should exhibit improvement before being removed. However, there may be instances resulting from an organizational change/issue where a long watch period is warranted as there could be several material phases to the situation. For example, if a senior investment professional announces their plans to retire in the future in conjunction with the firm’s succession plan for their departure, the investment manager would attain watch status at the point of the retirement announcement through the transition period, and after the senior investment professional had left. Release from Watch Status Investment managers that show indications of an improvement, as reviewed by the investment consultant and determined by the Board, in one or more of the factors described earlier may be released from watch status. Examples of improvements warranting a change in status are:

Improved investment performance; Investment style characteristics return to, and remain at, levels originally agreed upon;

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Qualitative factors (such as organizational structure stabilizes, personnel adjustments, compliance requirements, etc.) are met/satisfied.

To release an investment manager from watch status, the Board must formally take action to do so. This action should be supported by documentation (produced by Investment Staff and/or investment consultant) similar in format to the Portfolio Review described above. This document would highlight original reasons for the watch status and discussion of how the investment manager has addressed these issues and warrants release from watch status. Replacement/Termination If an investment manager is not released from watch status within a reasonable time, then the investment consultant should recommend that the Board replace and/or terminate the investment manager. The Board then approves or disapproves the recommendation. To terminate and/or replace an investment manager, the Board must formally take action to do so. This action should be supported by documentation (produced by Investment Staff and/or investment consultant) similar in format to the Portfolio Review described above. This document would highlight original reasons for the watch status and discussion of continued developments during watch status that led to the termination/replacement recommendation.

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V. Policy for the Use of Placement Agents and Third-Party Marketers This Policy is intended to supplement any applicable provisions of City, State or Federal law. Purpose The goal of this Policy is to prevent impropriety or the appearance of impropriety, to provide transparency and confidence in the decision-making process of the Plan, to help ensure that the Plan’s investment decisions are made by the Board solely on the merits of the investment opportunity in accordance with the Board Members’ fiduciary responsibility and to help avoid the appearance of undue influence on the Board or illegal pay-to-play practices, in the award of investment related contracts. This Policy sets forth the circumstances under which the Plan requires the full and timely disclosure of payments to Placement Agents2 in connection with the Plan’s investments. This Policy is intended to apply broadly to all investment contracts. The Plan adopts this Policy to require specific, timely, and updated disclosure of all Placement Agent relationships, compensation, and fees. This Policy shall apply in addition to, and is intended to supplement, any applicable state and city ethics, campaign finance, and lobbying laws found in the Los Angeles City Charter, Governmental Ethics, Lobbying and Campaign Finance Ordinances, the California Political Reform Act, and the California Constitution. Notification of this Policy will be sent to all firms that currently provide services to the Plan and all firms considered by Investment Staff or Consultants to be potential interview candidates. The Plan’s Board Members, Investment Staff, and Consultants will accept no gifts of any kind from any such firms. Firms who currently have contracts with the Plan will be required to disclose any relationships and payments made to any Placement Agency in relation with the Plan’s investments. Objectives

Formalize the Plan’s practice regarding appropriate disclosure of the use of Placement Agents ensuring that the Plan’s investment decisions are consistent with the Plan’s Statement of Investment Objectives, Goals, and Guidelines and with the Board’s fiduciary duties.

Make additional information available to the Plan’s Board Members, Investment Staff and

Consultants when evaluating an investment opportunity to ensure that the use of Placement Agents is identified early during the due diligence process.

Provide transparency and confidence in the Plan’s investment decision-making through

maximum disclosure and avoidance of conflicts of interest.

Application This Policy will apply to each of the Plan’s Investment Management Agreements entered into after the date this Policy is adopted, as well as to the Plan’s existing Investment Management Agreements. 2 Any person or entity hired, engaged, retained by, or acting on behalf of an Investment Manager or on behalf of another Placement Agent as a finder, solicitor, marketer, consultant, broker, or other intermediary to market, solicit, obtain access to the Plan, and/or raise money or investments either directly or indirectly from the Plan.

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Responsibilities All investment proposals presented to the Plan shall state whether the Investment Manager (“Manager”) uses Placement Agents or third-party marketers, and, if so, shall identify any such Placement Agent or third-party marketer and describe his or her capacity used in relation to the specific mandate. Responsibilities of the Investment Managers At the time investment discussions are initiated between the Plan and a Manager, and prior to the Plan investing with any Manager, the Manager shall submit to the Plan’s Investment Staff a written statement of whether the Manager or any of its principals, employees, agents, or affiliates has compensated or agreed to compensate any person or entity to act as a Placement Agent or third-party marketer in connection with the Plan investments. If the Manager has used a Placement Agent in connection with any of the Plan investments, the statement should include the following information (Placement Agent Information):

A. The name of the Placement Agent;

B. Description of the amount paid or agreed to be paid to the Placement Agent; and description of the services rendered or the services expected to be performed by the Placement Agent or a third-party marketer, including payment to employees of the Manager who are retained in order to solicit, or who are paid based in whole or in part upon, an investment from the Plan;

C. Representation that the fee paid or payable to the Placement Agent is the sole obligation

of the Manager and not an obligation of the Plan or the limited partnership;

D. Clarification as to whether the Placement Agent is utilized by the Manager with all prospective clients or only with a subset of the Manager’s clients;

E. Copies of all agreements between the Manager and the Placement Agent and third-party

marketers;

F. Résumés of every officer, partner or principal of the Placement Agent or any employee of the Manager providing similar services; résumés shall include: education, professional designations, regulatory licenses and investment and work experience;

G. Full disclosure of any connection between the Placement Agent and the Plan, including

whether anyone receiving compensation or will receive compensation with respect to an investment in the Plan from the Placement Agent or the Manager is any of the following: (1) a current or former Plan Board Member, (2) a Plan employee, (3) a Plan consultant, (4) a member of the immediate family of anyone connected to the Plan, (5) a current or former elected or appointed official of the City of Los Angeles (“City”), (6) an employee of the City, (7) anyone seeking to be elected to public office of the City or a member of his/her campaign organization, or a political action committee;

H. Full disclosure of any contributions made by the Placement Agent or the Manager during

the prior 24-month period to any organization (including contributions to political campaign funds and donations to non-profits) in which any person listed in (G) is an officer, employee, or member of the Board or Advisory Board (or similar body). Additionally, any subsequent contributions made by the Placement Agent or Manager to any such organization during the time the Placement Agent or Manager is receiving compensation

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in connection with the Plan investment shall also be disclosed;

I. Full disclosure of the names of any current or former Plan Board Members, Plan employees, or Plan consultants who suggested the retention of the Placement Agent;

J. Name of the regulatory agencies the Placement Agent or any of its affiliates are registered

with, such as the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Association (“FINRA”), or any similar regulatory agency; proof and details of such registration shall be included, or an explanation as to why no registration is required;

K. Full disclosure of whether the Placement Agent or any of its affiliates is registered as a

lobbyist with the City of Los Angeles, or any state or national government; and L. If the Manager utilized the services of a person who would otherwise be a Placement

Agent but for an applicable exception provided in the California Government Code, a statement identifying the exemption being relied upon by the external manager and certifying that the external manager meets all of the applicable requirements of the exemption.3

The Manager shall notify the Plan’s Investment Staff of any changes to any of the information required above. Responsibilities of Investment Staff and Consultants At the time of the commencement of due diligence for a prospective investment commitment, the applicable Consultants shall provide the applicable Managers and Placement Agents with a copy of this Placement Agent Policy. Prior to the completion of due diligence and any recommendation to proceed with the engagement of a Manager or the decision to commit Plan assets to an investment, the applicable Consultant shall confirm that it has received all applicable disclosures pursuant to this Policy. For all new contracts and amendments to existing contracts as of the date of the adoption of this Policy, the Plan will:

A. Stop investment negotiations with a Manager who refuses to make all discloses required by this Policy;

B. Decline the opportunity to retain or invest with a Manager who has used or intends to use a Placement Agent who is not registered with the SEC, FINRA, or any similar regulatory agency and cannot provide an explanation acceptable to the Consultant and Investment Staff as to why no registration is required; and

C. Decline the opportunity to retain or invest with a Manager who has used or intends to use a Placement Agent or any of its affiliates that is required by applicable law to be registered as a lobbyist but is not so registered.

Investment Staff and Consultants will assist legal counsel as necessary in securing in the final contract terms and/or side letter agreements between the Plan and the Manager, pursuant to which the Manager:

A. Agrees to comply with this Policy. 3 i.e., California Government code Section 7513.8, subdivision (d) or 82047.3, which provides for certain exemptions to the definition of a “placement agent.”

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B. Represents and warrants that it will notify the Plan’s Investment Staff of any changes to

any of the information required above within 14 calendar days of when the Manager knows or should have known of the change(s).

C. Agrees that it shall not solicit new investments from the Plan for 24 months from the date of determination, in the event that the Plan’s Board, in its sole discretion, determines that the Manager has refused or failed to provide all required disclosures pursuant to this Policy, or provided information pursuant to this Policy which is determined by the Plan’s Board in its sole discretion to be materially inaccurate.

At any Board or Committee meeting in which the Board or Committee will consider an investment or whether to enter into or renew an investment management contract, the applicable Consultant shall advise the Board of (1) the identity of any Placement Agent used by the Manager in connection with the proposed investment or contract and all applicable Placement Agent Information, and (2) any campaign contributions and/or gifts reported by each Placement Agent. Investment Staff shall maintain records of all information disclosed to the Plan in accordance with this policy, and provide the Board with notice of any violation of this policy as soon as practicable. Responsibilities of the Board The Board shall review each violation reported by Investment Staff and determine whether such violation is material and, if so, whether to instruct Investment Staff not to consider any new investment opportunities for the Plan from that Manager and/or Placement Agent for a period of 24 months from the date of the determination. No Right of Confidentiality All disclosures made pursuant to this Policy, and all attachments thereto, shall be public records and subject to disclosure under the California Public Records Act and the Ralph M. Brown Act. No confidentiality restrictions shall be placed on any such disclosures or any information provided pursuant to this Policy.

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VI. Securities Lending Cash Collateral Investment Guidelines

In accordance with the Agreement between the Lender and Bank, Cash Collateral received by the Bank on behalf of the Lender shall be held and maintained in a separately managed Cash Collateral Account established and maintained by the Bank for the Lender (the “Cash Collateral Account”), the assets of which shall be invested and reinvested in one or more of the Approved Investments below. While the Cash Collateral Account will be operated on a cost basis, there is no guarantee that there will not be differences from time to time between the cost and the underlying fair market value of the assets held in the Cash Collateral Account. The cost or book value of the investment assets held in the Cash Collateral Account and their fair market value may differ from time to time. This difference may result in a loss, which is the responsibility of the Lender. All Approved Investment, Credit Quality, Concentration and Liquidity guidelines set forth herein shall be applicable only at time of purchase (i.e., trade date). Approved Investments may have fixed or floating interest rate provisions. Floating rate notes will reset no less frequently than quarterly. Bank and/or Bank Affiliates may provide services with respect to Approved Investments, and may receive compensation with respect to these services. Lender consents to the retention by Bank and Bank Affiliates of such compensation.

A. Approved Investments 1. Instruments

Obligations of the U.S. Treasury as well as agencies and instrumentalities and

establishments of the U.S. Government (“U.S. Government Securities”). Repurchase transactions (including tri-party repurchase transactions)

collateralized at 102% or greater at time of purchase and marked to market on each business day. Collateral will consist of one or more Approved Investments described herein without limitation on maturity, as well as equity securities.

Obligations issued by the central government of any OECD country and any of

their respective agencies, instrumentalities or establishments (“OECD Obligations”).

Obligations issued by ‘supranational organizations’, including but not limited to

African Development Bank, Asian Development Bank, Council of Europe, Eurofima, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, International Bank for Reconstruction and Development (“World Bank”), International Finance Corporation, and Nordic Investment Bank.

Commercial paper, notes, bonds and other debt obligations (including funding

agreements and guaranteed investment contracts), whether or not registered under the Securities Act of 1933, as amended.

Certificates of deposit, time deposits and other bank obligations.

Asset-backed securities, including asset-backed commercial paper.

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Shares of money market funds registered with the Securities and Exchange

Commission under the Investment Company Act of 1940, including affiliated funds of the Bank. (These shares shall be deemed to have a final maturity of one business day for the purposes of the Maturity Guidelines in paragraph D.)

Units of unregistered, collective investment vehicles sponsored or advised by the

Bank or a Bank Affiliate. (These units shall be deemed to have a final maturity of one business day for the purposes of the Maturity Guidelines in paragraph D.)

2. Currency

Shall be limited to the same currency in which the Cash Collateral being invested is denominated.

B. Credit Quality

Repurchase transaction counterparties must have executed a written repurchase

agreement and they, or their parent company, must have a short term rating of at least A-2, P-2 or F2 or equivalent by at least one nationally recognized statistical rating organization (“NRSRO”).

Obligations issued by ‘supranational organizations’ must be rated AAA or equivalent by at least one NRSRO.

OECD Obligations, bank obligations, commercial paper (including asset-backed commercial paper), notes, bonds and other debt obligations must be rated at least A-1, P-1 or F1 or equivalent by an NRSRO. Obligations rated by more than one NRSRO must be rated A-1, P-1 or F1 or equivalent by at least two NRSROs. Obligations without a short term rating must have a long term rating of at least A, A2 or A or equivalent by an NRSRO. Obligations that have a long term rating from more than one NRSRO (but no short term rating) must be rated A, A2 or A or equivalent by at least two NRSROs. Obligations that are not rated will be Approved Investments if the issuer of the obligation meets the above rating criteria.

Asset-backed securities (other than asset-backed commercial paper) must be rated AAA, Aaa or AAA by at least one of the following NRSROs: Standard & Poor’s, Moody’s or Fitch. Asset-backed securities (other than asset-backed commercial paper) rated by more than one of the foregoing NRSROs must be rated AAA, Aaa or AAA by at least two of: Standard & Poor’s, Moody’s and Fitch. Asset-backed securities (other than asset-backed commercial paper) that have only short term ratings must be rated A-1+, P-1 or F1+ by a NRSRO. Asset-backed securities (other than asset-backed commercial paper) that have only a short term rating from more than one NRSRO must be rated A-1+, P-1 or F1+ by at least two NRSROs.

Registered money market funds must be rated in the highest category available to such funds by one NRSRO.

Collective investment vehicles sponsored or advised by the Bank or a Bank

Affiliate do not require a rating by a NRSRO.

U.S. Government Securities do not require a rating by a NRSRO.

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C. Concentration Guidelines

Excluding U.S. Government Securities, repurchase agreements, shares of money

market funds and collective investment vehicles, concentration of any Approved Investment in the Cash Collateral Account will not exceed 5% per issuer.

A maximum of 25% of the Cash Collateral in the Cash Collateral Account may be invested in repurchase transactions with a single counterparty.

D. Maturity Guidelines

Approved Investments will have a maximum final maturity of 397 days, except U.S.

Government Securities, which shall have a final maturity not exceeding 762 days. The weighted average maturity of Approved Investments in the Cash Collateral

Account (based on the shorter of final maturity or days to reset for floating rate obligations) shall not exceed 60 days.

The weighted average life of Approved Investments in the Cash Collateral Account

based on final maturity shall not exceed 120 days.

E. Liquidity Guidelines

All Approved Investments shall be deemed to be liquid at time of purchase, with the exception of time deposits and repurchase agreements having a final maturity greater than 7 days, which shall be deemed to be illiquid for purposes hereof.

“Illiquid” Approved Investments shall not exceed 5% of the total amount of Approved

Investments in the Cash Collateral Account. No Approved Investment having a final maturity longer than one business day shall

be made if, immediately after such investment, the total amount of Approved Investments in the Cash Collateral Account would have less than 10% of total assets maturing in one business day.

No Approved Investments other than Weekly Liquid Assets (as defined below) shall

be made if, immediately after such investment, the Cash Collateral Account would have less than 30% of total assets invested in Weekly Liquid Assets. Weekly Liquid Assets are defined as cash, direct obligations of the U.S. Government (i.e., bills, bonds and notes), U.S. government agency discount notes with a remaining maturity of 60 days or less, and any other Approved Investments that will mature in, or have an unconditional put option of, five business days or less.

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VII. Domestic Equity Guidelines Domestic equity investment managers retained by the Board will follow specific investment styles and mandates and will be evaluated against specific market benchmarks which represent their investment style, (see Board Resolution 03-23 adopted October 9, 2002). The aggregate developed domestic equity segment will have as its benchmark the Russell 3000. The Board’s domestic equity portfolio structural design, with approved benchmarks, is summarized as follows:

Board Approved Domestic Equity Asset Class & Manager Structure

Segment/Style Active/Passive Benchmark % of Asset Class

Total Domestic Equity 82% Active / 18% Passive Russell 3000 100%

Large Cap Core Passive Russell 1000 18% Large Cap Value Active Russell 1000 Value 37% Large Cap Growth Active Russell 1000 Growth 37% Small Cap Growth Active Russell 2000 Growth 4% Small Cap Value Active Russell 2000 Value 4%

The percentage allocations to the various segments reflect the percentage weightings of these segments found in the broad market, as represented by the Russell 3000 Index. Additionally, investment results of active managers will be compared to the returns of a peer group of managers with similar investment styles. The Plan has appointed Manager(s) to manage a portion of the Plan’s assets. These assets will be managed in conformance with the objectives and guidelines delineated below and in accordance with the formal contract with the Retirement Board. General guidelines for domestic equity managers include the following (more specific guidelines for the different investment segments/managers are outlined in the below sections): 1. No securities shall be purchased on margin or sold short.

2. Managers shall not use derivatives within the Portfolio without the expressed written consent

of the Plan. If a Manager elects to use derivatives as part of its investment strategy, the Plan requires that the Manager provide written documentation of the rationale for using such instruments. Use of derivatives for speculation is prohibited. Only exchange-traded derivatives will be utilized.

3. Exchange listed futures and options on equity instruments may be used only if authorized in writing by the Board as a risk reducing strategy.

4. Convertible securities can be held in equity portfolios and will be considered equity holdings.

5. Unless stated otherwise below, managers shall not purchase stock (or securities convertible

into stock) of any single corporation if the purchase would cause their portfolio to include more than 5% of the outstanding voting stock of a company, or more than 2% in (the lesser of cost or market) value (assuming all shares are converted) of the assets of the Fund.

6. Managers shall invest in securities specifically authorized in these written guidelines.

Unauthorized investments include foreign securities listed and traded on U.S. exchanges, including American Depository Receipts (“ADRs”). Securities of all foreign companies, except for Benefit Driven Incorporations (“BDIs”) included in the Manager’s respective benchmark as outlined below, are unauthorized. Additional unauthorized investments

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include short sales, futures, direct investment in raw commodities, and the use of non-approved derivative securities (i.e. equity futures and forward contracts), and/or the purchase of securities on margin.

7. Other applicable plan and charter investment restriction must be complied with.

8. Any exemption or variation from these general guidelines requires prior written approval from the Board.

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7.1 Passive Domestic Equity Guidelines Portfolio Component Definition The Manager will manage a Russell 1000 Index Fund (“Fund”) for the Plan that will provide equity participation in industry sectors with market capitalization approximately in proportion to their share of the market as represented by the Russell 1000 Index. The focus of the portfolio will be the tracking of the equity market for large and mid-sized companies over both short-term and long-term horizons. The goal is to closely track the performance of the Russell 1000 Index within +/- 10 basis points annually. Portfolio Guidelines 1. The portfolio shall be equity securities of companies doing business in the United States. It is

expected that the portfolio will be fully invested (<1% cash). Equity securities shall be restricted to those issues listed on the New York, NASDAQ, or other nationally recognized United States stock exchanges.

2. The Board recognizes the Manager uses a computer-generated statistical data technique or statistical sampling technique/s in tracking the Russell 1000 Index.

3. For prudent diversification, no more than 5% of the lesser of cost or market value of the portfolio, shall be invested in any one issue, unless that issue represents more than 5% of the Russell 1000 Index. No issue shall be purchased in the portfolio if more than 10% of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

Performance Objectives On an annual basis, the Manager is expected to perform in-line with the Russell 1000 Index return, net of fees. It is expected that, on an annual basis, the portfolio will produce investment returns that vary no more than +/- 10 basis points from the investment performance of the Russell 1000 Index.

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7.2 Active Large Cap Value Domestic Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active value portfolio (“Portfolio”) for the Plan that will provide equity participation in industry sectors with market capitalization representative of the Russell 1000 Value Index. Given this orientation, the goal of the Portfolio is to provide superior performance versus the Russell 1000 Value Index over a complete investment cycle. Portfolio Guidelines 1. The Portfolio shall be equity securities of companies doing business in the United States. It is

expected that the Portfolio will be fully invested (<5% cash). Equity securities shall be restricted to those issues listed on the New York, NASDAQ, or other nationally recognized United States stock exchanges.

2. The Board recognizes the Manager is an active manager investing in a universe of securities that resembles the Russell 1000 Value Index. The Manager will adjust its Portfolio on an ongoing basis to attempt to outperform the investment results of the Russell 1000 Value Index.

3. For prudent diversification, no more than 5% of the lesser of cost or market value of the Portfolio shall be invested in any one issue, unless that issue represents more than 5% of the Russell 1000 Value Index. In such cases, the maximum amount allowed is 125% of the benchmark weight. At no time shall any specific issue represent more than 10% of the portfolio. In addition, no issue shall be purchased in the Portfolio if more than 10% of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

Portfolio Characteristics 1. It is expected that the Portfolio’s weighted average price/earnings ratio on a 12-month trailing

basis in general will be no greater than 1.5x the market as represented by Russell 1000 Value Index.

2. It is expected that the Portfolio’s weighted average dividend yield on a quarterly basis will

generally be no less than 2/3rds the market as represented by the Russell 1000 Value Index. 4. It is expected that the Portfolio’s weighted average market capitalization should generally be

no less than one-half of the Russell 1000 Value Index.

Performance Objectives On an annual basis, the Manager is expected to outperform the Russell 1000 Value Index return, net of fees, to be measured over a market cycle of three-to-five years.

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7.3 Active Large Cap Growth Domestic Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active growth portfolio (“Portfolio”) for the Plan that will provide equity participation in industry sectors with market capitalization representative of the Russell 1000 Growth Index. Given this orientation, the Manager is expected to provide superior performance versus the Russell 1000 Growth Index over a complete investment cycle. Portfolio Guidelines 1. The Portfolio shall be equity securities of companies doing business in the United States. It is

expected that the Portfolio will be fully invested (<5% cash). Equity securities shall be restricted to those issues listed on the New York, NASDAQ, or other nationally recognized United States stock exchanges.

2. The Board recognizes the Manager is an active manager investing in a universe of securities that resembles the Russell 1000 Growth Index. The Manager will adjust its Portfolio on an ongoing basis to attempt to outperform the investment results of the Russell 1000 Growth Index.

3. For prudent diversification, no more than 5% of the Portfolio at the lesser of cost or market value shall be invested in any one issue, unless that issue represents more than 5% of the Russell 1000 Growth Index. In such cases, the maximum amount allowed is 125% of the benchmark weight. At no time shall any specific issue represent more than 10% of the lesser of cost or market value of the portfolio. In addition, no issue shall be purchased in the Portfolio if more than 10% of the outstanding shares of that company are held by the Manager in the total of all of its accounts. See exception below.

Portfolio Characteristics 1. It is expected that the Portfolio's weighted average price/earnings ratio on a 12-month trailing

basis in general will be no less than 2/3rds of the market as represented by Russell 1000 Growth Index.

2. It is expected that the Portfolio's weighted average dividend yield on a quarterly basis will generally be no greater than 1.5x of the market as represented by the Russell 1000 Growth Index.

3. The Portfolio’s weighted average market capitalization should generally be no less than one-

half of the Russell 1000 Growth Index. Performance Objectives On an annual basis, the Manager is expected to outperform the Russell 1000 Growth Index return, net of fees, to be measured over a market cycle of three-to-five years. Exception 1. For T. Rowe Price Large Cap Growth, no issue shall be purchased in the Portfolio if more

than 15% of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

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7.4 Active Small Cap Value Domestic Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active value portfolio (“Portfolio”) for the Plan that will provide equity participation in industry sectors with market capitalization representative of the Russell 2000 Value Index. Given this orientation, the goal of the Portfolio is to provide superior performance versus the Russell 2000 Value Index over a complete investment cycle. Portfolio Guidelines 1. The Portfolio shall be equity securities of companies doing business in the United States. It is

expected that the Portfolio will be fully invested (<5% cash). Equity securities shall be restricted to those issues listed on the New York, NASDAQ, or other nationally recognized United States stock exchanges.

2. The Board recognizes the Manager is an active manager investing in a universe of securities that resembles the Russell 2000 Value Index. The Manager will adjust its Portfolio on an ongoing basis to attempt to outperform the investment results of the Russell 2000 Value Index.

3. For prudent diversification, no more than 5% of the Portfolio at the lesser of cost or market value shall be invested in any one issue, unless that issue represents more than 5% of the Russell 2000 Value Index. No issue shall be purchased in the Portfolio if more than 15 % of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

4. Exchange Trade Funds (“ETFs”) may be used to temporarily invest excess cash. Portfolio Characteristics 1. It is expected that the Portfolio’s weighted average price/earnings ratio on a trailing 12-month

basis in general will be no greater than 1.5x of the market as represented by Russell 2000 Value Index.

2. It is expected that the Portfolio’s weighted average dividend yield on a quarterly basis will generally be no less than 2/3rds of the market as represented by the Russell 2000 Value Index.

3. It is expected that the Portfolio’s weighted average market capitalization should generally be

no less than one-half of the weighted average market capitalization of the Russell 2000 Value Index.

Performance Objectives On an annual basis the Manager is expected to outperform the Russell 2000 Value Index return, net of fees, to be measured over a market cycle of three-to-five years.

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7.5 Active Small Cap Growth Domestic Equity Guidelines Portfolio Component Definition The Manager(s) will manage active growth portfolio (“Portfolio”) for the Plan that will provide equity participation in industry sectors with market capitalization representative of the Russell 2000 Growth Index. Given this orientation, the goal of the Portfolio is to provide superior performance versus the Russell 2000 Growth Index over a complete investment cycle. Portfolio Guidelines 1. The Portfolio shall be equity securities of companies doing business in the United States. It is

expected that the Portfolio will be fully invested (<5% cash). Equity securities shall be restricted to those issues listed on the New York, NASDAQ, or other nationally recognized United States stock exchanges.

2. The Board recognizes Managers are active managers investing in a universe of securities that resembles the Russell 2000 Growth Index. Managers will adjust their Portfolio on an ongoing basis to attempt to outperform the investment results of the Russell 2000 Growth Index.

3. For prudent diversification, no more than 5% of the lesser of cost or market value of the Portfolio shall be invested in any one issue, unless that issue represents more than 5% of the Russell 2000 Growth Index. No issue shall be purchased in the Portfolio if more than 10% of the outstanding shares of that company are held by Managers in the total of all of its accounts.

Portfolio Characteristics 1. It is expected that the Portfolio's weighted average price/earnings ratio on a 12-month trailing

basis in general will be no less than 2/3rds of the market as represented by Russell 2000 Growth Index.

2. It is expected that the Portfolio’s weighted average dividend yield on a quarterly basis will generally be no greater than 1.5x of the market as represented by the Russell 2000 Growth Index.

3. It is expected that the Portfolio’s weighted average market capitalization should generally be no less than one-half of the weighted average market capitalization of the Russell 2000 Growth Index.

Performance Objectives On an annual basis Managers are expected to outperform the Russell 2000 Growth Index return, net of fees, to be measured over a market cycle of three-to-five years.

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VIII. International Equity Guidelines Non-U.S. equity (International Equity) investment managers retained by the Board will follow specific investment mandates and will be evaluated against specific market benchmarks which represent their investment mandates, (see Board Resolution 03-22, adopted October 9, 2002). The aggregate international equity segment will have as its benchmark the MSCI ACWI ex-U.S. IMI ND Index. The Board’s International Equity structural design, with approved benchmarks, are summarized as follows:

Board Approved Non-U.S. Equity Asset Class & Manager Structure

Segment/Style Active/Passive Benchmark % of Asset Class

Total Non-U.S. Equity Active MSCI ACWI ex-U.S. IMI ND 100% Developed Non-U.S. Passive MSCI World ex-U.S. IMI ND 17% Developed LC Non-U.S. Active MSCI World ex-U.S. IMI ND 50% Developed SC Non-U.S. Active MSCI ACWI ex-U.S. Small ND 9% Emerging Markets Active MSCI Emerging Mkts IMI ND 27%

MSCI ACWI ex-US IMI ND = Morgan Stanley Capital International All Country World Equity Investable Market Index, Excluding the U.S. MSCI World ex US IMI ND = Morgan Stanley Capital World Equity Investable Market Index, excluding the U.S. MSCI ACWI ex-U.S. Small ND = Morgan Stanley Capital International All Country World Equity Small Capitalization Index, Excluding the U.S. MSCI Emerging Markets IMI ND = Morgan Stanley Capital International Emerging Markets Equity Investable Market Index.

The percentage allocations of the various segments reflect the percentage weightings of these segments found in the broad Non-U.S. equity market, as represented by the MSCI ACWI ex-U.S. Investable Market Index. Additionally, investment results of active managers will be compared to the returns of a peer group of managers with similar investment styles. The Plan has appointed Manager(s) to manage a portion of the Plan’s assets. These assets will be managed in conformance with the objectives and guidelines delineated below and in accordance with the formal contract with the Retirement Board. General guidelines for active Non-U.S. equity managers include the following (more specific guidelines for the different investment segments/managers are outlined in the below sections): 1. Portfolios shall be comprised of debt instruments convertible into equity securities, forward

foreign exchange contracts, and equity securities of companies domiciled outside the U.S. including established and emerging countries.

2. Although a fully invested position is encouraged, cash equivalents are also permissible as a transitional/temporary investment subject to permanent investment.

3. Managers shall not use (non-currency) derivatives within the Portfolio without the expressed

written consent of the Plan. If a Manager elects to use derivatives as part of its investment strategy, the Plan requires that the Manager provide written documentation of the rationale for using such instruments. Use of derivatives for speculation is prohibited. Only exchange-traded derivatives will be utilized.

4. Managers shall not purchase stock (or securities convertible into stock) of any single

corporation if the purchase would cause their portfolio to include more than 5% of the outstanding voting stock of a company, or more than 2% in (the lesser of cost or market) value (assuming all shares are converted) of the assets of the Fund.

5. No securities shall be purchased on margin or sold short.

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6. Other applicable plan and charter investment restriction must be complied with.

7. Any exemption or variation from these general guidelines requires prior written approval from the Board.

8. While the aggregate developed non-U.S. equity segment will have as its benchmark the MSCI ACWI ex-U.S. Investable Market Index ND, managers within this segment will be assigned more specific style-oriented performance benchmarks.

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8.1 Passive International Equity Guidelines The Plan’s assets will be invested in a commingled fund. As a result, these guidelines generally conform to the Manager’s guidelines for the existing commingled MSCI World ex-U.S. Equity Investable Market Index ND Index Fund. Portfolio Component Definition The Manager will manage a MSCI World ex-U.S. Equity IMI ND Index Fund (“Fund”) for the Plan that will provide equity participation in industry sectors with market capitalization approximately in proportion to their share of the market as represented by the MSCI World ex-U.S. Equity IMI ND Index. The focus of the portfolio will be the tracking of the equity market for large, mid, and small-sized companies over both short-term and long-term horizons. The goal is to closely track the performance of the MSCI World ex-U.S. Equity IMI ND Index within +/- 30 basis points annually. Portfolio Guidelines 1. The portfolio shall be equity securities of companies doing business outside the United States.

It is expected that the portfolio will be fully invested (<1% cash). Equity securities shall be those issues listed on the major local-country stock exchanges. At times when direct ownership is precluded, American Depository Receipts (“ADR’s”) may be substituted in order to maintain full exposure to the underlying index.

2. The Board recognizes the Manager uses a computer-generated statistical data technique or statistical sampling technique/s in tracking the MSCI World ex-US IMI ND Index.

3. For prudent diversification, the Manager shall seek to hold securities in the MSCI World ex-

U.S. IMI ND Index as precisely matching their market weight as possible on an ongoing basis. Performance Objectives On an annual basis, the Manager is expected to perform in-line with the MSCI World ex-U.S. IMI ND Index return, net of fees. It is expected that, on an annual basis, the portfolio will produce investment returns that vary no more than +/- 30 basis points from the investment performance of the MSCI World ex-US IMI ND Index.

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8.2 Active Growth International Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active international growth equity portfolio (“Portfolio”) for the Plan that is expected to invest in companies located in developed non-US markets that possess significant amounts of liquidity and capitalization. Emphasis shall be placed on medium and larger capitalized stocks. Portfolio Guidelines 1. The Portfolio shall be composed of cash equivalents and equity securities of companies doing

business outside the United States with minimum market capitalizations of $200 million. Equity securities shall be restricted to those issues listed on the major local-country stock exchanges. The markets that the Portfolio can invest in are those within the following indices:

a. MSCI World ex-U.S. Growth IMI ND

b. MSCI World ex-U.S. Equity IMI ND

SEC Rule 144A international equity instruments with registration rights are fully permissible. Those instruments without registration rights must not exceed 10% of the lesser of cost or market value of any single international equity portfolio.

American Depository Receipts (“ADRs”) are permissible up to 2.5% of the total portfolio.

Investing in Emerging Markets is prohibited. Emerging Markets shall be defined as those countries included in the MSCI Emerging Markets Investable Market Index ND.

In order to minimize transaction costs and market impact associated with country reclassification, and as MSCI reclassifies specific countries from one market to another (such as from emerging to developed or frontier to emerging), the Portfolio, with advance notification to the Retirement Plan Manager, may invest in such countries, subsequent to the announcement of MSCI’s formal reclassification and prior to its effective date.

2. Currency hedging up to a maximum of 25% of the portfolio value (notional) is permitted for

defensive purposes. Currency hedging shall be effected through the use of forward currency contracts and put and call options.

3. For prudent diversification the portfolio shall have a minimum of 30 issues quoted in at least

10 stock markets, although assets will not be specifically allocated to individual countries or markets. The maximum exposure to any individual issue will be no greater than the weight of the issue in the benchmark plus 3%. In addition, no issue shall be purchased in the portfolio if more than 15% of the outstanding shares of that company are held by the Portfolio in the total of all of its accounts. The Portfolio is required to identify to the Plan, on a quarterly basis, those holdings/issues in the portfolio where the Portfolio holds more than 10% of the outstanding shares in the total of its accounts.

5. The cash equivalent portion should not normally exceed 10% of the portfolio. Cash equivalents may be U.S. dollar or non-U.S. dollar denominated.

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Portfolio Characteristics 1. It is expected that the portfolio will invest across a broad array of countries within the MSCI

World ex U.S. Growth IMI ND and MSCI World ex U.S. Equity IMI ND. Regional and country weights, however, may vary significantly from the index.

2. It is expected that the portfolio's weighted average price/earnings ratio on a trailing 12-month basis in general will be within a +/- 0.5x range of the market as represented by MSCI World ex U.S. Growth IMI ND or MSCI World ex U.S. Equity IMI ND.

3. It is expected that the portfolio's weighted average dividend yield on a quarterly basis will generally be within a +/- 0.5x range of the market as represented by the MSCI World ex U.S. Growth IMI ND or MSCI World ex U.S. Equity IMI ND.

Performance Objectives On an annual basis the Portfolio is expected to outperform the MSCI World Growth ex U.S. IMI ND return, net of fees, to be measured over a market cycle of three-to-five years.

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8.3 Active Value International Equity Guidelines Portfolio Component Definition The Manager(s) will manage active international value equity portfolio (“Portfolio”) for the Plan that is expected to invest in companies located in developed non-US markets that possess significant amounts of liquidity and capitalization. Emphasis shall be placed on medium and larger capitalized stocks. Portfolio Guidelines 1. The Portfolio shall be composed of cash equivalents and equity securities of companies doing

business outside the United States (as defined using MSCI classification of issuer or issue) with minimum market capitalizations of $200 million. Equity securities shall be restricted to those issues listed on the major local-country stock exchanges. The markets that the Portfolio can invest in are those within the following indices:

a. MSCI World ex-U.S. Value IMI ND

b. MSCI World ex-U.S. Equity IMI ND

SEC Rule 144A international equity instruments with registration rights are fully permissible. Those instruments without registration rights must not exceed 10% of the lesser of cost or market value of any single international equity portfolio.

American Depository Receipts (“ADRs”) are permissible up to 2.5% of the total portfolio. Investing in Emerging Markets is prohibited. Emerging Markets shall be defined as those countries included in the MSCI Emerging Markets Investable Market Index ND.

In order to minimize transaction costs and market impact associated with country reclassification, and as MSCI reclassifies specific countries from one market to another (such as from emerging to developed or frontier to emerging), the Portfolio, with advance notification to the Retirement Plan Manager, may invest in such countries, subsequent to the announcement of MSCI’s formal reclassification and prior to its effective date.

2. Currency hedging up to a maximum of 25% of the portfolio value (notional) is permitted for

defensive purposes. Currency hedging shall be effected through the use of forward currency contracts and put and call options.

3. For prudent diversification the portfolio shall have a minimum of 30 issues quoted in at least

10 stock markets, although assets will not be specifically allocated to individual countries or markets. No more than 5% of the portfolio at the lesser of cost or market value shall be invested in any one issue. In addition, no issue shall be purchased in the Portfolio if more than 15% of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

4. The cash equivalent portion should not normally exceed 10% of the portfolio. Cash equivalents may be U.S. dollar or non-U.S. dollar denominated.

Portfolio Characteristics 1. It is expected that the portfolio will invest across a broad array of countries within the MSCI

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World ex U.S. Value IMI ND, and MSCI World ex U.S. Equity IMI ND. Regional and country weights, however, may vary significantly from the index.

2. It is expected that the portfolio's weighted average price/earnings ratio on a trailing 12-month basis in general will be within a+/- 0.5x range of the market as represented by MSCI World ex U.S. Value IMI ND, MSCI World ex U.S. Equity IMI ND.

3. It is expected that the portfolio's weighted average dividend yield on a quarterly basis will generally be within a +/- 0.5x range of the market as represented by the MSCI World ex U.S. Value IMI ND, MSCI World ex U.S. Equity IMI ND.

Performance Objectives On an annual basis the Portfolio is expected to outperform the MSCI World Value ex U.S. IMI ND return, net of fees, to be measured over a market cycle of three-to-five years.

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8.4 Active Small Cap International Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active international portfolio (“Portfolio”) for the Plan that is expected to invest in small companies located in non-US markets that possess significant amounts of liquidity. Given this orientation, the goal of the Portfolio is to provide superior performance versus the MSCI ACWI ex US Small ND Index over a complete investment cycle. Portfolio Guidelines 1. The Portfolio shall be composed of cash equivalents and equity securities of companies doing

business outside the United States (as defined using MSCI classification of issuer or issue) with minimum market capitalizations of $100 million. Equity securities shall be restricted to those issues listed on the major local-country stock exchanges. The markets that the Portfolio can invest in are those within the MSCI ACWI ex US Small ND Index.

SEC Rule 144A international equity instruments with registration rights are fully permissible. Those instruments without registration rights must not exceed 10% of the lesser of cost or market value of any single international equity portfolio.

American Depository Receipts (“ADRs”) are permissible up to 2.5% of the total portfolio. Investing in Emerging Markets is permitted but should be generally no greater than 1.5x of the market as represented by the MSCI ACWI ex US Small ND Index. Emerging Markets shall be defined as those countries included in the MSCI Emerging Markets Investable Market Index ND.

2. Currency hedging up to a maximum of 25% of the portfolio value (notional) is permitted for

defensive purposes. Currency hedging shall be effected through the use of forward currency contracts and put and call options.

3. For prudent diversification the portfolio shall have a minimum of 30 issues quoted in at least

10 stock markets, although assets will not be specifically allocated to individual countries or markets. No more than 5% of the portfolio at the lesser of cost or market value shall be invested in any one issue. In addition, no issue shall be purchased in the Portfolio if more than 15% of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

4. Use of Exchange Traded Funds (“ETFs”) is permitted if the manager deems that this vehicle

is the most effective way to obtain exposure to certain segments of the market. When investing in ETFs the manager shall rebate all investment management fees associated with use of these funds. Commingled fund allocations shall be included in the calculation of portfolio guideline limitations based on underlying commingled fund holdings.

5. The cash equivalent portion should not normally exceed 10% of the portfolio. Cash equivalents may be U.S. dollar or non-U.S. dollar denominated.

Portfolio Characteristics 1. It is expected that the portfolio will invest across a broad array of countries within the MSCI

ACWI ex US Small ND Index. Regional and country weights, however, may vary significantly from the index.

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2. It is expected that the portfolio's weighted average price/earnings ratio on a trailing 12-month

basis in general will be within a+/- 0.5x range of the market as represented by MSCI ACWI ex US Small ND Index.

3. It is expected that the portfolio's weighted average dividend yield on a quarterly basis will generally be within a +/- 0.5x range of the market as represented by the MSCI ACWI ex US Small ND Index.

4. It is expected that the portfolio’s weighted average market capitalization will generally be

within a +/- 0.5x range of the market as represented by the MSCI ACWI ex US Small ND Index.

Performance Objectives On an annual basis the Portfolio is expected to outperform the MSCI ACWI ex US Small ND Index return, net of fees, to be measured over a market cycle of three-to-five years.

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8.5 Active Emerging Markets Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active portfolio (“Portfolio”) for the Plan that will provide equity participation in companies that have a significant interest in developing markets. Given this orientation, the goal of the Portfolio is to provide superior performance versus the MSCI EM IMI ND over a complete investment cycle. Portfolio Guidelines 1. The Portfolio shall be composed of securities of non-U.S. domiciled companies doing

business in emerging markets with minimum market capitalizations of $100 million. Equity securities shall be restricted to those issues traded on recognized exchanges or traded over the counter. The markets that Manager(s) can invest in are those within the MSCI EM IMI ND. SEC Rule 144A international equity instruments with registration rights are fully permissible. Those instruments without registration rights must not exceed 10% of the lesser of cost or market value of any single international equity portfolio.

In order to minimize transaction costs and market impact associated with country reclassification, and as MSCI reclassifies specific countries from one market to another (such as from emerging to developed or frontier to emerging), the investment manager, with advance notification to the Retirement Plan Manager, may invest in such countries, subsequent to the announcement of MSCI’s formal reclassification and prior to its effective date.

2. Currency hedging up to a maximum of 25% of the portfolio value (notional) is permitted for defensive purposes. Currency hedging shall be effected through the use of forward currency contracts and put and call options.

3. Diversity shall be achieved both geographically and by industry sector. No more than 7% of the lesser of cost or market value of the portfolio shall be invested in any one issue. No issue shall be purchased in the portfolio if more than 10% of the outstanding shares of that company are held by Manager(s) in the total of all of its accounts.

4. The cash equivalent portion should not normally exceed 10% of the portfolio. Cash

equivalents may be U.S. dollar or non-U.S. dollar denominated.

5. Turnover in the portfolio shall not normally exceed 200% in any twelve month period. Turnover shall be defined as the total dollar value of the lesser of purchases or sales divided by the market value of the portfolio at the beginning of the period.

Portfolio Characteristics 1. It is expected that the portfolio will invest across a broad array of countries within the MSCI

EM IMI ND. Regional and country weights, however, may vary significantly from the index.

2. It is expected that the portfolio’s weighted average price/earnings ratio on a trailing 12-month basis, in general will be within a +/- 0.5x range of the market as represented by MSCI EM IMI ND.

3. It is expected that the portfolio’s weighted average dividend yield on a quarterly basis will be

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within a +/- 0.5x range of the market as represented by the MSCI EM IMI ND. Performance Objectives On an annual basis, the Manager(s) is expected to outperform the MSCI EM IMI ND return, net of fees, to be measured over a market cycle of three-to-five years.

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IX. Global Equity Guidelines Global equity investment managers retained by the Board will follow specific investment styles and mandates and will be evaluated against specific market benchmarks which represent their investment style, (see Board Resolution 03-23 adopted October 9, 2002). The aggregate global equity segment will have as its benchmark the MSCI ACWI IMI ND Index. Additionally, investment results of active managers will be compared to the returns of a peer group of managers with similar investment styles. The Plan has appointed Manager(s) to manage a portion of the Plan’s assets. These assets will be managed in conformance with the objectives and guidelines delineated below and in accordance with the formal contract with the Retirement Board. General guidelines for global equity managers include the following (more specific guidelines for the different investment segments/managers are outlined in the below sections): 1. Portfolios shall be comprised of debt instruments convertible into equity securities, forward

foreign exchange contracts, ADRs, and equity securities.

2. Although a fully invested position is encouraged, cash equivalents are also permissible as a transitional/temporary investment subject to permanent investment.

3. No securities shall be purchased on margin or sold short.

4. Managers shall not use (non-currency) derivatives within the Portfolio without the expressed written consent of the Plan. If a Manager elects to use derivatives as part of its investment strategy, the Plan requires that the Manager provide written documentation of the rationale for using such instruments. Use of derivatives for speculation is prohibited. Only exchange-traded derivatives will be utilized.

5. Exchange listed futures and options on equity instruments may be used only if authorized in writing by the Board as a risk reducing strategy.

6. Convertible securities can be held in equity portfolios and will be considered equity holdings.

7. Unless stated otherwise below, managers shall not purchase stock (or securities convertible

into stock) of any single corporation if the purchase would cause their portfolio to include more than 5% of the outstanding voting stock of a company (the lesser of cost or market) value (assuming all shares are converted).

8. Managers shall invest in securities specifically authorized in these written guidelines.

Additional unauthorized investments include short sales, futures, direct investment in raw commodities, and the use of non-approved derivative securities (i.e. equity futures and forward contracts), and/or the purchase of securities on margin.

9. Other applicable plan and charter investment restriction must be complied with.

10. Any exemption or variation from these general guidelines requires prior written approval from the Board.

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9.1 Active Global Equity Guidelines Portfolio Component Definition The Manager(s) will manage an active value portfolio (“Portfolio”) for the Plan that is expected to invest in companies across the globe that possess significant amounts of liquidity and capitalization. Given this orientation, the goal of the Portfolio is to provide superior performance versus the MSCI ACWI IMI ND Index over a complete investment cycle. Portfolio Guidelines

1. The Portfolio shall be equity securities of companies with minimum market capitalizations of

$100 million. It is expected that the Portfolio will be fully invested (<5% cash). Equity securities shall be restricted to those issues listed on the major local-country stock exchanges. The markets that the Portfolio can invest in are those within the MSCI ACWI IMI Index.

2. The Board recognizes the Manager is an active manager investing in a universe of securities that resembles the MSCI ACWI IMI Index. The Manager will adjust its Portfolio on an ongoing basis to attempt to outperform the investment results of the MSCI ACWI IMI Index.

3. Diversity shall be achieved both geographically and by industry sector. For prudent

diversification the portfolio shall have a minimum of 30 issues quoted in at least 10 stock markets, although assets will not be specifically allocated to individual countries or markets. The maximum exposure to any individual issue will be no greater than the weight of the issue in the benchmark plus 3%. In addition, no issue shall be purchased in the portfolio if more than 15% of the outstanding shares of that company are held by the Portfolio in the total of all of its accounts. The Portfolio is required to identify to the Plan, on a quarterly basis, those holdings/issues in the portfolio where the Portfolio holds more than 10% of the outstanding shares in the total of its accounts.

4. SEC Rule 144A international equity instruments with registration rights are fully permissible.

Those instruments without registration rights must not exceed 10% of the lesser of cost or market value of any single international equity portfolio.

5. Currency hedging up to a maximum of 25% of the portfolio value (notional) is permitted for

defensive purposes. Currency hedging shall be effected through the use of forward currency contracts and put and call options.

6. The cash equivalent portion should not normally exceed 5% of the portfolio. Cash equivalents

may be U.S. dollar or non-U.S. dollar denominated. Portfolio Characteristics 1. It is expected that the portfolio will invest across a broad array of countries within the MSCI

ACWI IMI ND. Regional and country weights, however, may vary significantly from the index.

2. It is expected that the portfolio's weighted average price/earnings ratio on a trailing 12-month basis in general will be within a +/- 0.5x range of the market as represented by MSCI ACWI IMI ND.

Performance Objectives On an annual basis the Portfolio is expected to outperform the MSCI ACWI IMI ND return, net of

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fees, to be measured over a market cycle of three-to-five years.

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X. Fixed Income Guidelines The fixed income portfolios will be managed on a total return basis, following specific investment mandates and evaluated against specific market benchmarks which represent a specific investment mandate or market segment (see Board Resolution 13-91 of June 26, 2013). The aggregate fixed income segment will have as its benchmark the custom benchmark described in the below table. The Board’s fixed income structural design, with approved benchmarks, is summarized as follows:

Board Approved Fixed Income Asset Class & Manager Structure

Segment/Style Active/ Passive Benchmark % of Asset

Class

Total Fixed Income Active

50% Barclays U.S. Intermediate Aggregate ex. Credit 30% Barclays Global Credit (hedged) 15% Barclays Global High Yield (hedged) 5% Credit Suisse Leveraged Loan Index

100%

Principal Protection Active Barclays U.S. Intermediate Aggregate ex. Credit 50%

Extended Global Credit Active 66.67% Barclays Global Credit (hedged) 33.33% Barclays Global High Yield (hedged)

45%

U.S. Bank Loans Active Credit Suisse Leveraged Loan Index 5%

The percentage allocations of the various segments reflect the strategic allocations as approved by the Board (see Board Resolution 13-91). Additionally, investment results of active managers will be compared to the returns of a peer group of managers with similar investment styles. The Plan has appointed Manager(s) to manage a portion of the Plan’s assets. These assets will be managed in conformance with the objectives and guidelines delineated below and in accordance with the formal contract with the Retirement Board. General guidelines for fixed income managers include the following (more specific guidelines for the different investment segments/managers are outlined in the below sections): 1. Any investments in securities (including, but not limited to, Build America Bonds, Recovery

Zone Economic Development Bonds, Tax Credit Bonds, et. al.) issued by the City of Los Angeles and/or any of its affiliates are not permitted and should not be held in the Plan’s portfolio.

2. Although a fully invested position is encouraged, cash equivalents are also permissible as a transitional/temporary investment, subject to permanent investment.

3. Managers are expected to have performed thorough due diligence on each security

purchased (which may include, but is not limited to, the analysis of company audited financial statements in the case of corporate holdings, relevant government reports and records, etc.), and such due diligence must be available for each investment in case of a Plan audit.

4. No securities shall be purchased on margin or sold short other than any initial and

maintenance margin required in connection with futures transactions which may be used only for risk management purposes.

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5. If a manager exceeds the portfolio produces characteristic limitations in these guidelines (or the below more specific guidelines), the manager is required to report these results to the Plan in a timely manner.

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10.1 Active Principal Protection Guidelines Portfolio Component Definition Manager(s) will manage an active portfolio (“Portfolio”) for the Plan that will utilize high quality fixed income securities, with a shorter duration portfolio positioning than the broad fixed income market. Given this orientation, the goal of the Portfolio is to provide superior performance versus the Barclays U.S. Intermediate Aggregate ex. Credit Bond Index over a complete investment cycle of three-to-five years. Portfolio Guidelines 1. The portfolio shall be composed of investment-grade fixed income securities as defined by

Barclays (the publisher of the Barclays Indices). Barclays defines an investment grade bond as follows: If a bond is rated by all three rating agencies (Moody’s, S&P, Fitch), then it must be rated investment grade (BBB- or Baa3) by two or more rating agencies. If a bond is rated by two rating agencies, the lowest rating determines investment grade status. If only one rating agency rates the bond, then that rating must be at least BBB- or Baa3. In the event of a downgrade below Baa3 or BBB-, Manager(s) must notify the Plan about the quality of the issue and make a recommendation on either the retention or deletion of the bond from the portfolio. There may be instances when debt issues convert into equity-oriented securities (i.e. preferred stock, common stock or warrants to purchase other equity securities). To handle these situations, managers are allowed to hold equity-oriented positions when received in exchange for, or conversion or cancellation of debt securities held in the portfolio. The manager(s) is required to inform the Plan 30 days prior to the conversion when they intend to hold the resulting equity-oriented positions. Equity-oriented securities can be held in the portfolio no longer than three months. The manager(s) is required to provide 30 days advance notice to extend the holding period beyond the original three month period. No more than 5% of the portfolio shall be invested in equity-oriented securities resulting from fixed-to-equity exchanges.

2. No more than 5% of the portfolio at the lesser of cost or market value will be invested in any one issuer, with the exception of U.S. Treasury, U.S. Agency and Government Sponsored Enterprises, or Government-Supported issuers (defined below).

3. Non-benchmark markets holdings (excluding cash) shall be limited to 20% of a single

manager portfolio. Benchmark markets are based on currency denomination and security type (e.g., USD U.S. Treasury bonds, USD U.S. Agency bonds, etc.). Security type is based on Barclays’ Class 2 sector classifications and instrument (e.g., bond versus loan). For example, a 30-year U.S. Treasury Bond would be considered a benchmark market security, even though it is not in the benchmark.

4. Permissible non-benchmark markets are limited to Government-Supported securities, agency mortgage-backed TBAs and dollar rolls, agency mortgage-backed CMOs, and 144a securities. Non-benchmark markets holdings are subject to the investment grade rating requirement. Corporate Debt is not permissible.

5. Government-Supported securities are defined as Supranationals, Local Authorities, sovereign

debt of OECD governments, and equivalently-rated agencies of OECD governments.

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6. Derivatives used for substitution, risk control, and arbitrage strategies are permitted. Use of derivatives for speculation is prohibited. For non-exchange traded derivatives, counterparty credit status shall be of the highest caliber with care taken to avoid credit guarantees extended through to parties less creditworthy than the primary counterparty in the transaction. Counterparty exposure is limited to firms with a short-term credit rating of at least A1/P1, single counterparty exposure limited to 5% of the cost value of the aggregate portfolio as well as any specific manager portfolio. Borrowed funds shall not be used.

7. For prudent diversification, the portfolio shall have a minimum of 25 issues. Additionally, the

combined allocation to ABS and CMBS cannot represent more than the greater of 10% or the benchmark weight plus 5% in the portfolio.

8. The cash equivalent portion should not normally exceed 10% of the portfolio. Portfolio Characteristics 1. The acceptable modified duration band around the Barclays U.S. Intermediate Aggregate ex.

Credit Index is ± 2 years. Performance Objectives On an annual basis, Manager(s) is/are expected to outperform the Barclays U.S. Intermediate Aggregate ex. Credit Index return, net of fees, to be measured over a market cycle of three-to-five years.

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10.2 Active Extended Global Credit Guidelines Portfolio Component Definition Manager(s) will manage an active portfolio (“Portfolio”) for the Plan that will provide participation in the higher return and higher volatility segments of the fixed income market. Given this orientation, the goal of the Portfolio is to provide superior performance versus the blended 66.67% Barclays Global Credit Bond Index (hedged) / 33.33% Barclays Global High Yield Index (hedged) over a complete investment cycle of approximately three-to-five years. Portfolio Guidelines 1. The portfolio shall be composed of securities throughout the credit risk spectrum, as defined

by Barclays (the publisher of the Barclays Indices). Barclays defines a non-investment grade bond as follows: If a bond is rated by all three rating agencies (Moody’s, S&P, Fitch), then it must be rated non-investment grade (BB+ or Ba1) by two or more rating agencies. If a bond is rated by two rating agencies, it must be rated below investment grade by at least one rating agency. If only one rating agency rates the bond, then a rating below BBB-or Baa3 is considered non-investment grade. The portfolio may contain investment grade, non-investment grade, and unrated bonds.

In the event of a downgrade below single C, or in the case of a default, Manager(s) must notify the Plan of the downgrade within two days of the date that the downgrade occurs. In the event of a downgrade below single C, or in the case of a default, if the Manager(s) elects to retain the bond in the portfolio the Manager(s) must inform the Plan of the downgrade within two days of the date that the downgrade occurs, and provide a rationale for continued retention of the holding.

There may be instances when debt issues convert into equity-oriented securities (i.e.

preferred stock, common stock or warrants to purchase other equity securities). To handle these situations, fixed income managers are allowed to hold equity-oriented positions when received in exchange for, or conversion or cancellation of debt securities held in the portfolio. The manager(s) is required to inform the Plan 30 days prior to the conversion when they intend to hold the resulting equity-oriented positions. Equity-oriented securities can be held in the portfolio no longer than six months. The manager(s) is required to provide 30 days advance notice to extend the holding period beyond the original six-month period. No more than 10% of the portfolio shall be invested in equity-oriented securities resulting from fixed-to-equity exchanges.

2. Non-benchmark markets holdings (excluding cash and excluding Government-Supported) shall

be limited to 50% of a single manager portfolio. Benchmark markets are based on currency denomination and security type (e.g., USD corporate industrial bonds, EUR corporate financial bond, etc.). Security type is based on Barclays’ Class 2 sector classifications and instrument (e.g., bond versus loan).

3. No more than 60% of a single manager portfolio may be invested in below investment grade

(Baa3 or BBB-) / unrated securities.

4. Non-benchmark Government-Supported markets holdings shall be limited to 40% of a single manager portfolio.

5. Government-Supported securities are defined as Supranationals, Local Authorities, U.S.

Treasuries, sovereign debt of OECD governments, U.S. Agencies and Government

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Sponsored Enterprises, and equivalently-rated agencies of OECD governments.

6. Minimum issuance size is $100 million.

7. Foreign net currency exposure shall be limited to 35%.

8. Foreign gross currency exposure shall be limited to 70%.

9. Currency exposure is measured as the absolute value of all country-level currency positions versus the U.S. dollar.

10. No more than 5% of the lesser of cost or market value will be invested in any one issuer, with

the exception of Government-Supported securities.

11. No more than 20% of the lesser of cost or market value will be invested in any one industry (as defined by Barclays), with the exception of Government-Supported securities.

12. Derivatives may be managed to protect market value and to maximize total returns, subject

to the following guidelines:

a. Eligible applications include but are not limited to the purchase, sale, exchange, conversion or other trade of exchange traded index option contracts, over-the-counter options, international fixed income futures, domestic fixed income futures and swaps.

b. The total relative economic impact risk of each derivative application will be monitored on a daily basis by the most appropriate risk management tools for the particular derivatives application.

c. In order to limit the financial risks associated with derivative applications, rigorous counterparty selection criteria and netting agreements shall be required to minimize counterparty risk. If utilized, the counterparty must be of an investment grade credit and the agreement must be marked to market no less frequently than monthly.

d. Borrowed funds shall not be used.

e. The maximum investment, as measured by net notional amount, in derivative instruments is 100% of the portfolio’s total market value.

f. The maximum amount, as measured by notional amount in a single type of swap

transaction, is 25% of the portfolio’s total market value excluding currency forwards.

g. The maximum investment, as measured by notional amount, in a single-name credit default swap is 5%.

h. The maximum aggregate individual counterparty exposure, measured as the net positive

mark to market of all outstanding derivative contracts with a counterparty, may not exceed 15% of the net asset value of the Managed Portfolio.

i. Individual counterparty exposure for each derivative instrument, measured as the net

positive mark to market of each outstanding derivative contract with a counterparty, may not exceed 10% of the net asset value of the Managed Portfolio.

j. When credit default swaps on an issuer or index are used to take credit exposure through

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selling protection, the portfolio should have full cash equivalent backing.

k. Derivatives can be used without cash backing to minimize risk; including the use of global interest rate futures and swaps.

l. Derivatives can be used to offset underlying portfolio risk without cash backing including

using interest rate futures to adjust duration risk, buying protection in the credit default swaps market to reduce existing portfolio credit risk, and to hedge currency risk by entering into currency futures and forwards.

m. Currency forwards and futures can be used for an overlay of FX on the portfolio.

n. The active currency exposure, measured as the difference between the actual exposure

in any one currency and the benchmark, should not exceed 25%. Currency short positions are allowed but should not exceed 25% of the benchmark (+/-25% versus benchmark per currency).

o. The term of any forward currency contract should not exceed two years.

p. The maximum for forward purchases and sales is 30% average calculated over a market cycle (typically 3-5 years) based on the portfolio’s total market value.

13. For prudent diversification, the portfolio shall have a minimum of 25 issues.

14. The cash equivalent portion should not normally exceed 10% of market value of the portfolio.

Cash equivalents held backing derivatives are excluded from the 10% limit. Exchange Traded Funds (“ETFs”) may be used to temporarily invest excess cash and provide short-term liquidity and/or market exposure. Investments in ETFs count toward the 10% cash equivalent limit. ETF allocations shall be included in the calculation of portfolio guideline limitations based on underlying ETF holdings. Cash equivalents are defined as follows:

a. For Delaware Investments cash equivalents are defined as short-term investment vehicles

(e.g., STIF accounts) or money market funds maintained by the custodian bank. Other high-quality, cash equivalent investments are permitted, including: commercial paper, certificates of deposit, discount notes, bankers acceptance notes, Treasury Bills, floating-rate notes, and collateralized repurchase agreements. To be considered high-quality, a security generally must carry a short-term rating of A2P2 or better.

b. For Neuberger Berman cash equivalents are defined as Treasury securities with a maturity of 3 months or less.

15. Use of commingled funds (including mutual funds) is permitted if the manager deems that this

vehicle is the most effective way to obtain exposure to certain segments of the market. When investing in commingled funds the manager shall rebate all investment management fees associated with use of these funds. Commingled fund allocations shall be included in the calculation of portfolio guideline limitations based on underlying commingled fund holdings.

Portfolio Characteristics 1. The acceptable modified duration band around the 66.67% Barclays Global Credit (hedged) /

33.33% Barclays Global High Yield (hedged) Index ± 4 years.

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Performance Objectives On an annual basis, Manager(s) is/are expected to outperform the 66.67% Barclays Global Credit (hedged) / 33.33% Barclays Global High Yield (hedged) Index return, net of fees, to be measured over an investment cycle of three-to-five years.

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10.3 Active U.S. Bank Loans Guidelines Portfolio Component Definition Manager(s) will manage an active portfolio (“Portfolio”) for the Plan that will provide participation in the higher return and higher volatility segments of the fixed income market. Given this orientation, the goal of the Portfolio is to provide superior performance versus the Credit Suisse Leveraged Loan Index over a complete investment cycle of three-to-five years. Portfolio Guidelines 1. Fixed-rate instruments shall be limited to 20% of a single manager portfolio.

2. Non-benchmark markets holdings (excluding cash) shall be limited to 40% of a single

manager portfolio. Benchmark markets are based on currency denomination and security type (e.g., USD corporate industrial loan, USD corporate utility loan). Security type is based on Credit Suisse Leveraged Loan Index classifications and instrument (e.g., bond versus loan).

3. No more than 5% of the lesser of cost or market value of any single manager portfolio will be

invested in any one issuer. 4. No more than 20% of the lesser of cost or market value of a single manager portfolio will be

invested in any one industry as defined by the Credit Suisse Leveraged Loan Index.

5. Managers are expected to have performed thorough due diligence on each security purchased (which may include, but is not limited to, the analysis of company audited financial statements in the case of corporate holdings, relevant government reports and records, etc.), and such due diligence must be available for each investment in case of a Plan audit.

6. A portfolio shall not use leverage nor purchase Collateralized Loan Obligations (CLOs). Portfolio Characteristics 1. The acceptable modified duration range of the portfolio is 0 to 2 years.

2. It is an objective of the portfolio that it will track the Credit Suisse Leveraged Loan Index

closely. The annual return dispersion between the Retirement Plan account and the Health Plan account should generally be no more than 15 basis points.

Performance Objectives On an annual basis, Manager(s) is/are expected to outperform the Credit Suisse Leveraged Loan Index return, net of fees, to be measured over a market cycle of three-to-five years.

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XI. Real Return Guidelines Strategic Objective The Real Return Class shall be managed to accomplish the following: 1. Prudently achieve long term results above inflation

2. Diversify the Plan’s investments

3. Hedge against inflation risks Performance Objective and Benchmark The Real Return Class shall have a benchmark index of the Consumer Price Index (CPI) + 3%. The performance objective is to outperform the benchmark, net of all fees, over a rolling five-year period. Investment Approaches and Parameters Prospective Real Return Class segment allocation ranges are listed in the table below. These segments may change, depending on Board preferences and tolerance for risk. In addition, several real return opportunities may present themselves over time that are not necessarily easily categorized into a specific asset class segment. These guidelines should reflect a reasonable level of flexibility to allow the Board to consider such opportunities. The segment allocation ranges are expressed as a percentage of the market value of the Plan Total portfolio.

Preliminary Segment Allocation Ranges* Segment Range GILS 2.0%-4.0% Commodities 1.0%-2.0% Timber 0.0%-1.0% *As a percentage of the total Plan Portfolio

Specific allocation targets are avoided to allow for flexibility in designing and implementing a risk/objective-oriented (not asset-based) strategic class. However, one near-term objective of the Real Return Class portfolio is to maintain core holding positions in GILS, Commodities, and Timber.

1. GILS Program

Strategic Objective The Program shall be managed to accomplish the following:

A. Meet the objectives for the broader Real Return Class. B. Hedge against inflation risks.

Performance Objective and Benchmark The GILS Program will utilize the Hedged Barclays World Government Inflation Linked Index.

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Investment Parameters Derivatives with risk and return characteristics substantially similar to bonds or bond indices included in the Program benchmark are permitted. Any use of derivatives shall be in compliance with the Plan’s Investment Policy Fixed Income Program Policy. Interest Rate Risk is the price volatility produced by changes in the overall level of interest rates as measured by option-adjusted duration. Duration shall be maintained at + or – one year of the benchmark duration. Currency Risk is the risk of having different weights in currency than the index. The hedged benchmark effectively eliminates currency risk. Managers will be allowed to take currency risk against the hedged benchmark as a form of active management. Restrictions and Prohibitions

A. Except for government issuers, investments in a single issuer shall not exceed 5% of

the Inflation Linked Bond Portfolio during the holding period for such an investment. For High Quality LIBOR and STIF, no single issuer limit exists.

B. Non-investment grade securities are not to exceed 5% of the total portfolio.

Local-Currency Debt of National Governments and All Debt of Corporation and Subnational governments (i.e. Provincial, State and Municipal)

A. Both the issuer and issuer’s national government (if the issuer is not the national

government) must be rated investment grade, at least BBB- by S&P or Fitch, and Baa3 by Moody’s. Even in the case of local-currency debt, this requirement must be satisfied by long-term foreign currency ratings instead of local currency ratings, which are generally higher because a country can easily print more of its own currency to meet its local debt obligations. This unconventional, very conservative application of the rating requirement will give extra protection against the special foreign-exchange valuation and retrieval risks of local currency.

B. The country must be part of the Barclays Global Aggregate Index, a widely followed index which includes only those local markets that are fairly liquid and fairly well-developed.

C. The country’s currency must be fully convertible in the spot market for foreign investors, so that Managers may retrieve Plan funds without limit or obstruction.

Global Debt Issued by National Governments Global bond issued by national governments must have a credit rating of BB- or higher from S&P or Fitch and Ba3 or higher from Moody’s.

2. Commodities Program

The Commodities Program will operate under the policies and guidelines set forth in Section 11.2.

3. Timber Program

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The Timber Program will operate under the policies and guidelines set forth in Section 11.3.

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11.1 Global Inflation Linked Securities Guidelines The Plan has appointed Manager(s) as Active GILS Manager(s) to manage a portion of the Plan's assets. These assets will be managed in conformity with the objectives and guidelines delineated below and in accordance with a formal contract with the Retirement Board. Portfolio Component Definition Manager(s) will manage an active portfolio (“Portfolio”) for the Plan that will provide participation in the broad Global Inflation Linked market. Given this orientation, the goal of the Portfolio is to provide superior performance versus the Hedged Barclays World Government Inflation Linked Index over a complete investment cycle. The Portfolio will be measured in USD. Portfolio Guidelines Eligible Securities Any of the following fixed income securities, individually or in commingled vehicles, subject to credit, diversification and marketability guidelines below, may be held outright and under resale agreement. 1. Inflation Indexed and Non-Inflation Indexed obligations issued or guaranteed by the U.S.

Federal Government, U.S. Federal agencies or U.S. government-sponsored corporations and agencies;

2. Inflation Indexed and Non-Inflation-Indexed obligations of U.S. and non-U.S. corporations

such as debentures, mortgage bonds, commercial paper, certificates of deposit and bankers acceptances issued by industrial, utility, finance, commercial banking or bank holding company organizations;

3. Inflation Indexed and Non-Inflation Indexed obligations denominated in U.S. dollars or foreign

currencies of international agencies, supranational entities and foreign governments (or their subdivisions or agencies), as well as foreign currency exchange-related securities, warrants, and forward contracts;

4. Inflation Indexed and Non-Inflation Indexed obligations issued or guaranteed by U.S. local,

city and state governments and agencies; and 5. Inflation Indexed securities defined under Rule 144A; 6. Foreign exchange contracts; and

7. Interest rate futures and options on Government securities issued by countries contained

within the benchmark traded on an exchange or actively traded in the Over-the-Counter market.

Duration Exposure The modified duration of portfolio security holdings is expected to range within +/- 30% of the benchmark.

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Futures and Options No more than 5% of the portfolio will be invested in original futures margin and option premiums, exclusive of any in-the-money portion of the premiums. Short (sold) options positions and all Futures positions will be hedged with cash, cash equivalents, current portfolio security holdings, or other options or futures positions. Derivatives positions will not be used to leverage the portfolio and are limited only to hedging and not for speculative purposes. Credit Quality In all categories, emphasis will be on high-quality securities and the weighted average of portfolio holdings will not fall below AA- or equivalent. Holdings are subject to the following limitations: 1. Rated Securities: 95% of the portfolio will be of "investment grade", i.e. rated as high as or

higher than the following standards or their equivalent by two or more nationally recognized statistical rating organizations (NRSRO):

Standard & Poor's BBB-, or A-2, or

Moody's Baa3, or Prime-2, or

Fitch BBB-, or F-2

2. Other Unrated Securities: Securities not covered by the standards in (1) above will normally

be, in the judgment of the Portfolio, at least equal in credit quality to the criteria implied in those standards. Obligations in unrated securities are limited to 10% of the total portfolio.

3. Downgraded Securities: Securities which fall below the stated minimum credit requirements

subsequent to initial purchase may be held at the Portfolio’s, discretion. The Plan should be notified of these securities.

4. Securities inside 270 Days: For securities with legal final maturities of 270 days or less, the

Portfolio may use the underlying credit’s short term ratings as proxy for establishing the minimum credit requirement.

Diversification 1. Maturity: Inflation Indexed and Non-Inflation Indexed securities covering the full range of

available maturities are acceptable. 2. Sector: subject to the following limitations:

a. Up to 25% of the portfolio may be invested in non-inflation indexed securities. 3. Issuer: Holdings are subject to the following limitations:

a. Obligations issued or guaranteed by the U.S. government, U.S. agencies or U.S. government-sponsored corporations and agencies are eligible without limit.

b. Obligations of other national governments are limited to 50% per issuer.

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c. Obligations of other issuers are subject to a 5% per issuer limit excluding investments in commingled vehicles.

4. Cash: The cash equivalent portion should not normally exceed 10% of the portfolio. 5. Currency: Both long and short currency exposures are permitted. However, the aggregate of

all active long exposures (local country bond plus currency position) will not exceed 5% of the portfolio. (For example, a 5% local bond position in a country combined with a short (-5%) position in that country’s currency is fully hedged and, therefore, has 0% active long currency exposure. A 5% local bond position in a country with an “additional” 5% currency position represents a 10% active long currency exposure).

Marketability All holdings will be of sufficient size and held in issues that are traded actively enough to facilitate transactions at minimum cost and accurate market valuation. Performance Objectives On an annual basis, the Portfolio is expected to outperform the Hedged Barclays World Government Inflation Linked Index return, net of fees, to be measured over a market cycle of three-to-five years.

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11.2 Commodities Guidelines Purpose This document sets forth the investment policy (“the Policy”) for the Plan’s Commodities Program (“the Program”). This Policy is designed to ensure that investment managers, consultants, and the Plan’s Board/Investment Staff take prudent and careful action while investing the Program. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling the investment risks and returns associated with this segment of the portfolio. The Program is designed to meet the Plan’s long-term actuarial target through the identification and participation in active Commodities opportunities that are expected to generate attractive real rates of return while also providing diversification benefits. Strategic Objective Broadening the opportunity set of the Plan’s Real Return for achieving consistent investment returns not available in traditional public markets investments is the strategic objective of investing in Commodities. The Program is expected to develop a diversified portfolio of Commodities capable of achieving targeted investment returns on a risk-adjusted basis that are complementary to Real Return class goals. Commodity investment returns are expected to provide diversification and inflation protection over equity markets over extended time periods. Total rates of return from Commodities investments are expected to enhance the risk-adjusted return of the Real Return class. The Program is expected to emphasize exposures to different geographic segments as well as different types of Commodity investments. A secondary benefit of including Commodities in the real return investment allocation is that they capture participation in unexpected inflation and major shifts in headline inflation. Commodity investments shall be selected solely in the interest of the Plan’s participants and their beneficiaries in accordance with applicable law, and shall be selected to accomplish the following (within the Real Return class): 1. Enhance the Plan’s long-term risk-adjusted total return. 2. Provide added diversification to the Plan’s overall investment program. 3. Produce Inflation hedging characteristics over extended periods. 4. Provide incremental diversification versus other Real Return segments. Performance Objective The long-term (3-5 years) expected performance objective of the Program, net of all fees, shall be greater than the annualized rate of return of Bloomberg Commodity index. The Program is expected to maintain a low correlation with the other segments of the Real Return class. Investment Approaches and Parameters

A. General Approach Investments in the Program shall be selected to achieve stated performance objectives. In addition, Program investments are expected to be complementary to other segments in the Real Return portfolio.

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B. Investment Selection

A Commodity investment consists of using derivative (future) contracts and cash collateral as margin. An allocation to Commodities shall be diversified by geography, Commodity type (Energy, Agriculture, Livestock, Precious Metals, and Industrial Metals), through a diversified investment vehicle. Commodities shall be selected to enhance the Program’s ability to achieve the overall investment objective.

1. Such strategies that might be implemented through a Commodities portfolio could include, but are not limited to:

a. Crude oil b. Bent Crude Oil c. Heating Oil d. Natural Gas e. Unleaded Gas f. Live Cattle g. Lean Hogs h. Feeder Cattle i. Corn j. Soybeans k. Wheat l. Soybean Oil m. Coffee n. Cocoa o. Sugar p. Cotton q. Aluminum r. Zinc s. Nickel t. Lead u. Copper v. Gold w. Silver x. Platinum

2. Selection guidelines for prospective Commodity managers shall be developed and

maintained. These criteria shall be subject to review by:

a. The Board, b. Investment Staff and Consultant

To ensure conformity to the return and risk expectations of the Program, the selection guidelines may include, but are not limited to the following: Minimum requirements with respect to the following:

c. General Partner Investment Experience

d. Basic Investment Vehicle Terms

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e. Investment Goals and Objectives

f. Performance Criteria

g. Other relevant parameters that may apply

C. Management of Investments The Program shall be continually monitored and refined as needed to obtain the most effective mix of investments. Investments shall be continually reviewed in the following areas: 1. Fit with the Program Goals and Objectives 2. Targeted performance according to stated objectives 3. Targeted risk according to stated objectives 4. Diversity of underlying Commodity investments 5. Strategy diversification 6. Growth of assets

7. Organizational changes

D. Quality Control Processes

The Program shall employ a quality control process, which includes both the Investment Staff and Consultant to monitor Program efficiency, track investment performance, and control risk. 1. Monitoring Portfolio Performance: Actual net returns and risk will be compared to

benchmark(s) as appropriate, and to the expected return for the Commodities investment.

2. Risk Control: Program standards are maintained through the following processes –

a. Assessing the level of diversification in the portfolio on a regular basis, including

the level of diversification across types of Commodities invested (i.e. Energy, Agriculture, Livestock, Precious Metals, and Industrial Metals), geographic location, and across other factors as appropriate.

b. Documenting due diligence activities.

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11.3 Timber Guidelines Purpose This document sets forth the investment policy (“the Policy”) for the Plan’s Timber Program (“the Program”). This Policy is designed to ensure that investment managers, consultants, and the Plan’s Board/Investment Staff take prudent and careful action while investing the Program. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling the investment risks and returns associated with this segment of the portfolio. The Program is designed to meet the Plan’s long-term actuarial target through the identification and participation in Timber opportunities that are expected to generate attractive real rates of return while also providing diversification benefits. Strategic Objective Broadening the opportunity set of the Plan’s Real Return for achieving consistent investment returns not available in traditional public markets investments is the strategic objective of investing in Timber. The Program is expected to develop a diversified portfolio of Timber capable of achieving targeted investment returns on a risk-adjusted basis that are complementary to Real Return class goals. Timber investment returns are expected to exhibit lower volatility than public investments for a given level of return while also being less correlated to the major asset classes. Total rates of return from Timber investments are expected to enhance the risk-adjusted return of the Real Return class. The Program is expected to emphasize exposures to different geographic segments as well as different types of Timber material. A secondary benefit of including Timber in the real return investment allocation is that they are long-term investments with inflation hedging benefits. Timber investments shall be selected solely in the interest of the Plan’s participants and their beneficiaries in accordance with applicable law, and shall be selected to accomplish the following (within the Real Return class): 1. Enhance the Plan’s long-term risk-adjusted total return.

2. Provide added diversification to the Plan’s overall investment program.

3. Produce Inflation Protected income/returns over extended periods.

4. Maintain a low correlation with traditional public markets. Performance Objective The long-term (7-10 years) expected performance objective of the Program, net of all fees, shall be greater than the annualized rate of return of NCREIF Timberland Index. The Program is expected to maintain a low correlation with the other segments of the Real Return class. Investment Approaches and Parameters

A. General Approach Investments in the Program shall be selected to achieve stated performance objectives. In addition, Program investments are expected to be complementary to other segments in the Real Return portfolio.

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1. The Program shall initially utilize Timber Private Partnerships to generate the attractive

risk-to-reward characteristics provided by these specialized and unique investment strategies.

2. The Program shall invest in funds through partnerships or other formation structures, e.g., limited liability companies (LLCs), where the general partner(s) or fund manager(s) have expertise in the specified mandates and in related areas material to the success of each investment type.

3. The inclusion of specified terms in Timber shall protect the interests of the Plan, and

shall address at a minimum the following issues:

a. Alignment of Interests: Vehicle terms shall be reviewed to assess the alignment of the General Partner’s interest with the Plan. The management fee, performance fee, performance objective, lock-up period, liquidity, General Partner investment, and other relevant terms to protect the Plan in the event of adverse performance results, shall be examined.

b. Leverage: Investments should only be made in investment vehicles (specific to Timber) which provide limited liability. The limited liability structure protects the Program from losing more than its invested capital. Leverage, as measured by the Loan-to-Value ratio (LTV) should be no greater than 30%.

B. Investment Selection

A Timber investment consists of productive land plus growing trees, and it can be in the form of natural forests or plantations. An allocation to Timber shall be diversified by geography, tree type (conifer/softwood vs. non-conifer/hardwood), and end-use (pulp, chip-n-saw, mature saw timber, and poles) through a diversified investment vehicle.

1. Selection guidelines for prospective Timber managers shall be developed and

maintained. These criteria shall be subject to review by: a. The Board, b. Investment Staff and Real Estate Consultant

To ensure conformity to the return and risk expectations of the Program, the selection guidelines may include, but are not limited to the following: Minimum requirements with respect to the following: a. General Partner Investment Experience b. Basic Investment Vehicle Terms c. Investment Goals and Objectives d. Performance Criteria e. Other relevant parameters that may apply

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C. Management of Investments The Program shall be continually monitored and refined as needed to obtain the most effective mix of investments. Investments shall be continually reviewed in the following areas: 1. Fit with the Program Goals and Objectives 2. Targeted performance according to stated objectives 3. Targeted risk according to stated objectives 4. Diversity of underlying Timber investments 5. Strategy diversification 6. Growth of assets 7. Organizational changes

D. Quality Control Processes

The Program shall employ a quality control process, which includes both the Investment Staff and Real Estate Consultant to monitor Program efficiency, track investment performance, and control risk. 1. Monitoring Portfolio Performance: Actual net returns and risk will be compared to

benchmark(s) as appropriate, and to the expected return for the Timber investment. 2. Risk Control: Program standards are maintained through the following processes –

a. Assessing the level of diversification in the portfolio on a regular basis, including

the level of diversification across types of Timber invested (i.e. Hardwood and Softwood), geographic location, and across other factors as appropriate.

b. Documenting due diligence activities.

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11.4 Guidelines for Investment Evaluation Organization: Firms considered for this Program are expected to include established, long-tenured firms in addition to potentially including recently formed organizations that may have relatively short track records. The principals shall be required to dedicate sufficient time and effort to the investment opportunity. The organization must have sufficient investment professionals and support staff to implement the proposed strategy. Alignment of interests (including ownership, compensation, general partner investment in fund/firm, etc.) will be important factors in the proposed investment opportunities. Investment Experience: The Program shall consider only Managers whose professionals have significant experience managing institutional assets. The principals shall demonstrate relevant experience and that they are specifically qualified to work in the market in which they propose to work. The Program shall not consider vehicles with less than three years of performance track record managing funds for institutional level investors. The experience of the investment professionals at the firm managing the proposed investment vehicle will be reviewed to ensure that experienced professionals are overseeing the investment. Performance: Proposed investment opportunities must have outperformed the Program return objectives, net of all fees, over long-term historical periods. The investment vehicle must also exhibit attractive risk characteristics having generated a Sharpe Ratio near 1.0 (or above) during such periods. Investment Strategy: The investment strategy of potential investment opportunities shall be assessed for appropriateness given the Program’s goals and objectives including risk tolerance and objectives. The proposed investment strategy and approach to portfolio construction shall provide reasonable assurance that the investment opportunity can produce the required return. Fund size: The Plan shall not represent more than 20% of a firm’s assets. Terms: At a minimum, investment terms are expected to be “in-line” with industry norms. In particular, the management fee, performance fee, utilization of a high water mark, and liquidity terms shall be examined to ensure appropriateness.

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XII. Hedge Fund Guidel ines Purpose This document sets forth the investment policy (“the Policy”) for the Plan’s Hedge Fund Program (“the Program”). This Policy is designed to ensure that investment managers, consultants, and the Plan’s Board/Investment Staff take prudent and careful action while investing for the Program. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling the investment risks and returns associated with this segment of the portfolio. The Program is designed to meet the Plan’s long-term actuarial target through the identification and participation in Hedge Fund opportunities that are expected to generate attractive absolute rates of return while also providing diversification benefits. Strategic Objective Broadening the opportunity set of the Plan’s investment portfolio for achieving consistent investment returns not available in traditional public markets investments is the strategic objective of investing in Hedge Funds. The Program is expected to develop a diversified portfolio of Hedge Funds capable of achieving targeted investment returns on a risk-adjusted basis that are complementary to overall Portfolio goals. Hedge Fund investment returns are expected to exhibit lower volatility than public investments for a given level of return while also being less correlated to the major asset classes. Total rates of return from Hedge Fund investments are expected to be absolute return oriented while also providing preservation of capital. The Program is expected to emphasize exposures to more conservative (lower volatility and less market directionality) investment strategies. A secondary benefit of including Hedge Funds in the alternative investment allocation is that they are commonly more liquid vehicles than private market investments, and therefore can also be utilized as a future funding source for private market commitments. Hedge Fund investments shall be selected solely in the interest of the Plan’s participants and their beneficiaries in accordance with applicable law, and shall be selected to accomplish the following: 1. Enhance the Plan’s long-term risk-adjusted total return. 2. Provide added diversification to the Plan’s overall investment program. 3. Maintain a low correlation with the public global equity markets. Performance Objective Given the absolute return/capital preservation orientation of Hedge Fund investments and the Board’s desire to emphasize more conservative, less directional segments of the market, the long-term (3-5 years) expected performance objective of the Program, net of all fees, shall be the annualized rate of return of T-Bills plus 300 basis points. Use of the T-Bills reflects the absolute return nature of hedge fund investments while the 300 basis point premium accounts for higher degrees of risk undertaken. Over the long term (3-5 years), program annualized volatility is expected to be less than one third that of global public equity markets (as represented by the MSCI ACWI). The Program is expected to exhibit correlation to global public equity markets of less than or equal to 0.50 over the same long-term time period. Investment Approaches and Parameters

A. General Approach

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Investments in the Program shall be selected to achieve stated performance objectives. In addition, Program investments are expected to be complementary to the private equity investments in the alternative investment allocation and to the traditional investment vehicles in the Total Portfolio.

1. The Program shall initially utilize Hedge Fund of Funds to generate the attractive risk-

to-reward characteristics provided by these specialized and unique investment strategies. Other absolute return strategies/structures may be considered at a future date, including multi-strategy managers, tactical asset allocation managers, and other single strategy hedge fund managers as the Program evolves and matures.

2. The Program shall invest in funds through partnerships or other formation structures, e.g., limited liability companies (LLCs), where the general partner(s) or fund manager(s) have expertise in the specified mandates and in related areas material to the success of each investment strategy.

3. The inclusion of specified terms in Hedge Funds shall protect the interests of the Plan,

and shall address at a minimum the following issues:

a. Alignment of Interests: Vehicle terms shall be reviewed to assess the alignment of the General Partner’s interest with the Plan. The management fee, performance fee, performance objective, lock-up period, liquidity, General Partner investment, and other relevant terms to protect the Plan in the event of adverse performance results, shall be examined.

b. Leverage: It is recognized that hedge fund strategies may expose the Plan’s assets to leverage, meaning that an underlying partnership’s market exposure may exceed the market value-adjusted capital commitment by the amount of borrowed capital. Therefore, investments should only be made in investment vehicles (specific to Hedge Funds) which provide limited liability. The limited liability structure protects the Program from losing more than its invested capital.

B. Investment Selection

Hedge Fund of Funds shall be selected to enhance the Program’s ability to achieve the overall investment objective. Hedge Fund of Funds invests in a portfolio of individual hedge funds applying different investment strategies. 1. Such strategies that might be implemented through a Hedge Fund of Funds could

include, but are not limited to:

a. Convertible Arbitrage b. Distressed Securities c. Fixed Income Arbitrage d. Long/Short Credit e. Long/Short Equity f. Market Neutral g. Merger Arbitrage h. Multiple Arbitrage i. Statistical Arbitrage j. Commodity Trading Advisors k. Global Macro

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l. Emerging Markets

Selected Hedge Fund of Funds are expected to emphasize less volatile investment strategies given the Program’s conservative orientation.

2. The Hedge Fund of Funds manager will employ hedge funds that enter into long and/or short positions using, but not limited to, any of the following instruments:

a. Equities:

i. Common or preferred corporate stock traded on principal U.S. exchanges ii. Convertible corporate bonds, notes, or debentures

iii. Global Depository Receipts (GDRs) and American Depository Receipts

(ADRs)

b. Fixed Income:

i. Marketable investment grade and non-investment grade debt securities ii. Marketable non-U.S. debt securities

c. Derivatives:

i. Exchange traded equity, fixed income and currency futures contracts ii. Index futures contracts

iii. Over-the-counter (“OTC”) option contracts

iv. OTC forward foreign exchange contracts

v. Swaps

vi. Cash and money market instruments

3. Selection guidelines for prospective Hedge Fund of Funds shall be developed and

maintained (see sections 12.2 and 12.3). These criteria shall be subject to review by: a. The Board,

b. Investment Staff and Consultant

To ensure conformity to the return and risk expectations of the Program, the selection guidelines may include, but are not limited to the following: Minimum requirements with respect to the following: a. General Partner Investment Experience b. Basic Investment Vehicle Terms

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c. Investment Goals and Objectives d. Performance Criteria e. Other relevant parameters that may apply

C. Management of Investments

The Program shall be continually monitored and refined as needed to obtain the most effective mix of investments. The Program shall initially invest in Hedge Fund of Funds investments. Investments shall be continually reviewed in the following areas: 1. Fit with the Program Goals and Objectives 2. Targeted performance according to stated objectives 3. Targeted risk according to stated objectives 4. Diversity of underlying hedge funds 5. Strategy diversification 6. Growth of assets

7. Organizational changes

D. Quality Control Processes

The Program shall employ a quality control process, which includes both the Investment Staff and Consultant to monitor Program efficiency, track investment performance, and control risk. 1. Process Monitoring: Investment Staff and Consultant shall monitor transaction

processing to insure timely decision-making and an effective process. 2. Monitoring Portfolio Performance: Actual net returns and risk will be compared to

benchmark(s) as appropriate, and to the expected return for the Hedge Fund of Funds investment.

3. Risk Control: Program standards are maintained through the following processes –

a. Assessing the level of diversification in the portfolio on a regular basis, including

the level of diversification across Hedge Fund of Funds managers, investment strategy, underlying hedge fund manager, and across other factors as appropriate.

b. Documenting due diligence activities.

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E. Specific Risk Parameters The Program may be exposed to specific risk parameters that are associated with investing in hedge funds, including, but not limited to: 1. Operating and Business Risk: Certain hedge funds entail above average operating

and business risk.

2. Country Risk: Political, economic, and currency risks associated with investing outside of the U.S.

3. Valuation Risk: Some underlying holdings may be illiquid and not marked to market

very frequently. Therefore, there is risk of lagged valuations as a holding is priced less often.

4. Financial Leverage Risk: Many hedge funds employ high amounts of leverage to

underlying portfolio investments increasing the risk of loss of capital.

5. Disclosure Risk: Hedge funds are commonly reluctant to provide transparency regarding their portfolio positions limiting an investor’s ability to aggregate exposures.

6. Regulation Risk: Hedge funds and their managers are unencumbered by any

government oversight or restrictions. However, regulators in many jurisdictions have begun to regulate hedge funds to varying degrees.

F. Guidelines for Evaluating Program Candidates

Proposed investment opportunities shall be evaluated relative to their fit with the Program’s Investment Policy. Section 12.2 contains minimum criteria to be utilized in the screening of candidates.

Benchmark The primary performance benchmark for the Program shall be the annualized rate of return of T-Bills plus 300 basis points. The secondary performance benchmark shall be the HFRI FoF Conservative Index. It may be useful to view the primary benchmark in the context of longer term annualized performance, while the secondary benchmark shall be used to gauge shorter term relative performance. As appropriate, individual managers may be benchmarked against specific customized benchmarks and hedge fund indices may be utilized for relative market comparisons. General Reporting 1. Reports received from Hedge Fund of Funds managers

Investment Staff and Consultant shall require periodic reports (i.e. monthly and/or quarterly) from Hedge Fund of Funds managers to facilitate monitoring.

2. Monitoring Investments

Consultant, assisted by Investment Staff, shall monitor individual Hedge Fund of Funds managers and the Program as a whole. Monitoring includes performance measurement

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addressed below and may include other unique aspects to Hedge Fund of Funds, such as:

A. number of underlying hedge fund managers

B. allocations across investment strategies

C. asset growth at both the firm level and the fund level

D. personnel changes 3. Performance

The Plan shall assess the net performance of Hedge Fund of Funds investments relative to the following areas: A. Established objectives at both the Program level and Hedge Fund of Funds manager level

(if appropriate)

i. Monthly, quarterly, annual, since inception, etc.

B. Risk undertaken (i.e. volatility) C. Correlation with public equity markets

4. Board Reports

Quarterly reports shall be provided to the Board. These reports will include, but shall not be limited to, performance reviews of individual Hedge Fund of Funds managers (net of all fees) and aggregate Program results.

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12.1 Custom Fund of Hedge Fund Guidelines The Plan has appointed Manager(s) to manage a portion of the Plan's assets. These assets will be managed in conformity with the objectives and guidelines delineated below and in accordance with a formal contract with the Retirement Board. Portfolio Component Definition Manager(s) will manage a portfolio for the Plan that will provide participation in a portion of the Hedge Fund universe. Given this orientation, the goal of the Portfolio is to provide superior performance with limited principal loss versus the 90-day T-Bill+3% benchmark over a complete investment cycle. Portfolio Guidelines

A. Approach (The Portfolio)

1. The Portfolio shall maintain medium to low-volatility of approximately 1/3 of global equities, as measured by annualized standard deviation, over a full market cycle (3-5 years).

2. The Portfolio shall maintain a correlation of 0.5 or less to the broad equity markets

(as defined by the MSCI ACWI) 3. The Portfolio shall maintain liquidity such that no less than 75% of the Net Asset

Value of the Portfolio be available for redemption in cash annually and without penalty, subsequent to the expiry of any initial investor lock-ups. The remaining 25% shall be available for redemption within 2-years.

4. The Portfolio shall remain fully invested with no additional required capital and no

leverage at the portfolio level except for short-term borrowing purposes.

5. With respect to underlying manager concentration, the portfolio is not allowed to have exposure to underlying portfolios at more than 10% at cost and 14% at market value.

6. Underlying investment in new or emerging managers is limited to 5% at cost and

7% at market value. Emerging or new hedge fund managers are defined as those with assets of $300 million or less and/or track records of three years or less.

7. Underlying Hedge Fund Investments may include exposure to leverage or short

selling of securities or both. The aggregate total gross leverage of the portfolio shall not exceed 400% of the net assets value of the portfolio.

8. The negotiation of terms in Hedge Funds shall protect the interests of the Plan,

and shall address at a minimum the following issues:

a. Alignment of Interests: Vehicle terms including fees shall be negotiated to ensure the alignment of interests with those of the Plan. The management fee, carried interest, performance objective, return of capital, lock-up period, clawbacks, and other relevant terms shall protect the Plan in the event of adverse performance results, while ensuring that the limited liability status is maintained. As appropriate, a return of committed capital shall be negotiated.

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b. Leverage: It is recognized that the underlying Hedge Funds may expose the Plan’s assets to leverage, meaning that a partnership’s market exposure may exceed the market value-adjusted capital commitment by the amount of borrowed capital. The partnership or LLC agreements shall detail the amount of leverage and monitor leverage on a case-by-case basis

c. Reporting Requirements: To appropriately account for fees, individual

expenses, invested capital, and any other items affecting the investment, monthly, quarterly and yearly reporting shall be conducted, at the Plan’s discretion, to keep the client materially informed. An audit of the portfolio shall be undertaken annually.

d. The Plan’s Investment Staff and Consultant shall continually review the

efficacy of Hedge Fund investment vehicles. Formal presentation to the Plan’s Board shall be required at minimum annually.

B. Investment Selection

1. Individual Hedge Funds will be selected if they enhance the overall investment

program and may include investments across a wide array of asset classes and strategies. Such strategies that might be implemented through the Portfolio could include, but are not limited to:

a. Convertible Arbitrage b. Distressed Securities c. Fixed Income Arbitrage d. Long/Short Credit e. Long/Short Equity f. Market Neutral g. Merger Arbitrage h. Multiple Arbitrage i. Statistical Arbitrage j. Emerging Markets

2. The Investment Staff, with the assistance of the Consultant, shall develop and

maintain selection guidelines for Hedge Fund Investment Advisors to include the following: a. Minimum requirements with respect to the following:

(1) General Partner Investment Experience (2) SEC registration as an investment Advisor (3) Basic Investment Vehicle Terms, including the management of at least

$500 Million (4) Investment Goals and Objectives (5) Degree of Leverage (6) Performance Criteria (7) Due Diligence Process (8) Legal Constraints or Requirements, including registration of the hedge

fund investment advisor under the Investment Company Act of 1940.

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(9) Reporting Requirements, including the reporting of holdings and transactions to a third party risk aggregator, reviewable by Investment Staff and the consultant.

(10) Quality control processes including, but not limited to, investment monitoring and risk control

(11) Other relevant parameters that may apply

Performance Objectives The Portfolio is expected to outperform the 90-day T-Bills+3% Index, net of fees, to be measured over a market cycle of three-to-five years. For short term performance evaluation, the Portfolio will be measured, net of fees and expenses, against the HFRI FoF Conservative Index.

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12.2 Guidelines for Investment Evaluation Organization: Firms considered for this Program are expected to include established, long-tenured firms in addition to potentially including recently formed organizations that may have relatively short track records. The principals shall be required to dedicate sufficient time and effort to the investment opportunity. The organization must have sufficient investment professionals and support staff to implement the proposed strategy. Alignment of interests (including ownership, compensation, general partner investment in fund/firm, etc.) will be important factors in the proposed investment opportunities. Investment Experience: The Program shall consider only Managers whose professionals have significant experience managing institutional assets. The principals shall demonstrate relevant experience and that they are specifically qualified to work in the market in which they propose to work. The Program shall not consider vehicles with less than three years of performance track record managing funds for institutional level investors. The experience of the investment professionals at the firm managing the proposed investment vehicle will be reviewed to ensure that experienced professionals are overseeing the investment. Performance: Proposed investment opportunities must have outperformed the Program return objectives, net of all fees, over long-term historical periods. The investment vehicle must also exhibit attractive risk characteristics having generated a Sharpe Ratio near 1.0 (or above) during such periods. Investment Strategy: The investment strategy of potential investment opportunities shall be assessed for appropriateness given the Program’s goals and objectives including risk tolerance and objectives. The proposed investment strategy and approach to portfolio construction shall provide reasonable assurance that the investment opportunity can produce the required return. Fund size: The Plan shall not represent more than 20% of a firm’s assets. Terms: At a minimum, investment terms are expected to be “in-line” with industry norms. In particular, the management fee, performance fee, utilization of a high water mark, and liquidity terms shall be examined to ensure appropriateness.

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XIII. Real Estate Investment Policy Purpose This document sets forth the investment policy (“the Policy”) for the Plan’s Real Estate Program (“the Program”). This Policy is designed to ensure that investment managers, consultants, and Board/Investment Staff take prudent and careful action while investing in the Program. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling the investment risks and returns associated with this segment of the portfolio. For purposes of this Policy, real estate shall be defined to include investments that are private or public, equity or debt positions in real property. Investments may be leveraged or unleveraged. As further set forth in this policy, the Plan will invest primarily in discretionary commingled funds through investment vehicles (e.g., limited liability companies, real estate investment trusts, and limited partnerships) owned with other suitable institutional investors (e.g., pension funds, endowments, foundations and sovereign funds). The investment and management of the Program shall be accomplished in a manner consistent with the “prudent man’s” standard of fiduciary care. This level of care requires that all the Plan’s fiduciaries act reasonably to accomplish the stated investment objectives and to safeguard the Program on behalf of the Plan’s participants and their beneficiaries. The implementation of this Real Estate Policy, including the selection of investment managers, shall be completed in a manner that enhances the Program’s diversification, thereby reducing risk by limiting exposure to any one investment, manager, real estate property type, geographic region, or other defined risk factor. The Program is designed to meet the Plan’s long-term actuarial target through the identification and participation in real estate opportunities that are expected to generate strong rates of return while also providing diversification benefits. The current allocation to real estate is 8% of the total portfolio. Strategic Objective The strategic objective of the Program is to develop a diversified real estate portfolio capable of achieving investment returns commensurate with Program targets. The portfolio will be invested in a diversified pool of real estate investments designed to capture the return and diversification (relative to the Plan’s equity, fixed income and other “alternative” investments) benefits of the real estate asset class. Real estate investments have a low correlation to other investment classes and therefore can contribute to reducing the risk and enhancing the returns of the total portfolio, as well as providing portfolio diversification. A diversified portfolio of attractive real estate opportunities is expected to be created by implementing a strategic “top down” assessment of attractive segments of the market for investment combined with a “bottom up” approach to manager identification. Consultant, with assistance from Investment Staff, shall proactively seek out the most attractive investment opportunities given current market conditions, while maintaining appropriate diversification. Portfolio weightings shall be a function of the specific risk and return profile of an investment opportunity and the Program’s overall needs.

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Real estate investments shall be considered solely in the interest of the Plan’s participants and their beneficiaries in accordance with applicable law, and shall be selected to accomplish the following: 1. Attractive Risk-Adjusted Returns. To obtain superior risk-adjusted returns by taking

advantage of the inefficiencies of real estate as compared to other asset classes. Active management, value creation and opportunistic strategies, as well as the prudent use of third-party debt, are approved methods for generating expected returns. The benchmarks for the Program will be 1) the NCREIF Property Index plus 50 basis points; and 2) custom benchmarks weighted quarterly on a risk/return basis based on the portfolio allocation.

2. Increased Program Diversification/Reduced Program Risk. To use real estate to enhance overall Program diversification and, in turn, reduce overall Program risk, given the historically low to negative return correlations that exist between real estate and other asset classes.

3. International Opportunities. To access international real estate markets through public and

private, and equity and debt real estate investments. By so doing, the Program will obtain exposure to diverse economies, populations and currencies.

4. Significant Current Cash Yields. To invest in real estate assets, which will generate a

significant cash return based primarily on current rental income. In general, as a portion of total investment return, higher levels of current income are expected from core and value than opportunistic investments; in contrast, higher levels of appreciation are expected from opportunistic than value and core investments.

5. Inflation-Hedge. To make investments primarily in real estate equity investments that are

likely to provide a reasonable hedge against price inflation.

6. Preservation of Principal. To achieve meaningful risk-adjusted returns without undue exposure to loss of investment principal.

7. Liability Hedge. To provide a hedge against changes in the Plan’s long-term liabilities. Responsibilities and Delegations The Plan will utilize the services of an In-Kind Distribution Manager to liquidate any in-kind distributions received from its private market managers.

Section 2.3 outlines specific responsibilities and tasks to be performed by the Board, Investment Staff, and Consultant(s). Performance Objective The real estate portfolio shall be benchmarked, on a net of fees basis, against the total rate of return of the National Council of Real Estate Investment Fiduciaries Real Property Index (“NCREIF Index”) plus 50 basis points over a rolling 5-year period as its benchmark. With respect to public real estate securities, the Consultant, the Investment Staff, and the Board shall use the FTSE EPRA NAREIT Global Developed Index (“NAREIT”). In the event that the Program includes both private and public real estate investments, the benchmark shall be a weighted benchmark based on the Program’s exposure to public and private real estate investments, weighted quarterly. Unlike public security asset classes, real estate asset class will take some time to invest. To reflect

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this properly in the Plan’s policy benchmark, the NCREIF Index will be phased in over time. Over the course of time, as the real estate allocation is being phased into, the total Plan Policy Benchmark will need to be adjusted to reflect the real estate component as a percentage of total Plan assets. Once the Program’s full allocation of 8% is achieved, real estate will maintain a 8% weighting to the Plan’s target blended benchmark. Investment Approaches and Parameters The Board shall review the Program annually via the Investment Policy and Annual Strategic Plan prepared by Consultant, with assistance from Investment Staff. The Annual Strategic Plan shall be based upon broad economic structural analyses, market conditions, and a review of the existing portfolio. The Annual Strategic Plan shall detail tactical priorities, strategy enhancements, and other objectives.

A. General Approach

A broad range of real estate investments shall be considered for the Program through the implementation of a disciplined investment strategy. The Plan’s investments may consist of a number of different investment strategies and investment vehicles. All investments in real estate assets are expected to adhere to the standards of fiduciary obligation to the beneficiaries of the Plan, and shall be considered in the context of the relevant risk/reward factors of this asset class.

B. Program Strategy

The Program Strategy shall be revised periodically as appropriate and updated through the Annual Strategic Plan. The Program Strategy shall contain the following elements: 1. Program goals and objectives 2. Structure of the Program 3. Strategic approach to the asset class

C. Management of Real Estate Investments The Program shall be continually refined to obtain the most effective mix of investments. Real estate investments shall be continually reviewed in the following areas: 1. Fit with the Annual Strategic Plan 2. Pace and timing of investment commitments, funding, and return of capital 3. Diversity of investment strategies (property type, geographic regions, and others as

appropriate) 4. Targeted performance according to stated objectives specific to the investment

D. Quality Control Processes

The Program shall employ a quality control process, which involves Consultant, with assistance from Investment Staff. The quality control process shall include: monitoring Program efficiency, tracking investment performance, and controlling risk. 1. Process Monitoring: Monitor transaction processing to ensure timely decision-making

and an effective process. 2. Portfolio Performance Monitoring: Compare actual returns to the benchmark(s) as

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appropriate, and to the expected return for the investment. 3. Risk Control: Program standards are maintained through the following processes-

a. Assessing the level of diversification in the portfolio on a continual basis, including the level of diversification across investment styles, property types, geographic distribution, and across other ranges as appropriate.

b. Documenting due diligence activities.

E. Guidelines for Evaluating Proposals

Proposed real estate opportunities shall be evaluated relative to their fit with the Program’s Investment Policy and Strategic Plan. Section 13.2 contains broad guidelines for initial real estate evaluation.

F. Portfolio Composition

The Program shall be divided into three segments, the Core Portfolio, the Value-Added Portfolio, and the Opportunistic Portfolio. Assignment of an investment to a particular portfolio shall be based on the investment’s risk and return characteristics.

Characteristics of Core Portfolio Investments: The Core Portfolio is expected to produce market level returns over time with a commensurate level of risk. Performance is expected to modestly outperform the composite NCREIF Property Index, on a net-of-fees basis. Income is expected to make up the majority of the total return for the Core Portfolio. To mitigate risk, the Core Portfolio shall be well diversified by property type, geography and, to the extent feasible, by manager. Usually, investments in the Core Portfolio shall be limited to office, retail, industrial and apartment properties. The Core Portfolio may also include limited investment in “other” property types that are generally considered non-core. All investments in the Core Portfolio will be U.S. based. Typical Core Portfolio properties shall exhibit “institutional” qualities. Generally, they are well located within their local and regional markets, of high-quality design and construction and have significant occupancy levels. Leverage may be used in the Core Portfolio on a limited basis to enhance investment returns. Leverage within the Core Portfolio will have a targeted guideline of 40% or less of the aggregate net assets. Consideration shall be given to the impact of debt financing on the risk and return characteristics of the leveraged investments as well as the total Core Portfolio.

Characteristics of Value-Added Portfolio Investments:

The Value-Added Portfolio is expected to produce above market level returns over time. Performance is expected to exceed the NCREIF Property Index, on a net-of-fees basis, by 200 basis points. While income is expected to be a part of the total return for the Value-Added Portfolio, appreciation is expected be the source for much of the total return.

The Value-Added Portfolio contains investments with expected returns in excess of investments contained within the Core Portfolio in addition to commensurately higher risk. Value-Added Portfolio investments involve efforts to increase property value such as

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releasing, repositioning, redevelopment, or development, as well as higher levels of debt, usually within the range of 40% to 70%. Value-Added investments may include traditional and non-traditional property types (e.g. hotels, mini-storage, senior housing, timber, etc.).

Characteristics of Opportunistic Portfolio Investments:

The Opportunistic Portfolio is expected to produce above market level returns over time. Performance is expected to exceed the NCREIF Property Index, on a net-of-fees basis, by 500 basis points or more. Opportunistic investments includes distressed assets, financial restructurings, and/or financial engineering opportunities (e.g., foreclosing on a mortgage and selling the equity interest) and potentially the purchase of REOCs. Investment may also be made in non-traditional property types which typically contain greater risk. Opportunistic investments typically have even greater appreciation potential than value investments (e.g., 50% of total returns); correspondingly, these investments offer a higher return potential and a higher risk profile than core or value investments. In many cases, since appreciation is the primary goal of opportunistic investing, many are originated with little, if any, in-place income and therefore less current income as a portion of total return. Higher leverage is used (i.e., up to 80% with some funds). The following table sets forth investment policy ranges for the above risk/return categories:

Investment Guidelines All investments will be managed as approved by the Board consistent with the objectives and policies of the Plan and subject to the investment guidelines outlined below. To the extent possible, Consultant, Investment Staff and the Board shall adhere to the following investment guidelines:

Alignment of Interests:

Preferred investments for the Program will be those that exhibit the highest degree of management accountability and the greatest alignment of interests. Consultant, with assistance from Investment Staff, will seek, but will not be limited to, dedicated management teams that: (i) co-invest or have substantial ownership interest in the investment entity, (ii) have controlling positions with provisions for liquidity, and (iii) have high levels of disclosure, as well as the mitigation of conflicts of interest.

Leverage: The Plan’s Real Estate Program may employ leverage. Consultant, with assistance from Investment Staff, shall be responsible for monitoring the use of leverage in the real estate portfolio in order to enhance investment returns. Such leverage may be at the manager or

Real Estate Program Risk/Return Diversification Guidelines

Risk/Return Strategy % of Asset Class Policy Range Core 70% 50%-100% Value 20% 0%-40%

Opportunistic 10% 0%-20%

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investment level. Because leverage also increases the volatility of the real estate portfolio, careful consideration will be given to the impact of leverage on investment and portfolio risk. In addition, limitations on the amount of leverage at the individual asset or investment entity level as well as debt service coverage requirements will be negotiated or arranged wherever possible. Leverage at the aggregate Real Estate Program level shall be limited to 50%. To preserve the character of the real estate asset class within the Plan’s composite investment portfolio, the aggregate asset class shall not be over-leveraged. This shall be measured by comparing the principal amount of debt secured by real estate investments in the portfolio annually to the gross market value of the real estate portfolio. Leverage for each strategy shall be limited, as shown in the table below:

Additionally, the Consultant shall monitor the Program’s leverage to evaluate compliance with the above stated guidelines through the quarterly performance report.

Valuations: The Investment Staff and Consultant shall review the manager’s proposed valuation policy and request that each investment be valued at least annually using internal valuations. Core and value-added funds may secure third party appraisals. Eligible Ownership Vehicles: The selection of appropriate investment ownership vehicles will focus on structural aspects that provide for (i) maximum liquidity and control, while mitigating risk, (ii) the highest level of accountability on the part of management, and (iii) alignment of interests. Such criteria are critical to the Plan’s ability to meet its objectives in the real estate asset class.

Real estate investments shall be made in commingled vehicles including, but not limited to: (i) closed-end funds and (ii) open-end funds. The table below profiles the Program’s investment structure diversification guidelines, specifically: (i) investment vehicle type; (ii) liquidity level; and (iii) the Policy range. More specific information on each type of investment vehicle is shown below the following table.

Real Estate Program Leverage Guideline

Investment Strategies Policy Range Core Up to 40% Value Up to 65% Opportunistic Up to 75% Total Up to 50%

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A. Closed-End Commingled Investments:

Investments in closed-end commingled vehicles shall have clearly articulated and viable exit strategies through which assets can be disposed of or liquidated upon termination of the investment and on an interim basis. The term of these investments shall also be limited to no more than seven to ten years and shall provide for a winding-up and orderly liquidation within this time period. Investment agreements for closed-end commingled vehicles shall include flexible provisions for early termination, removal of management by investors and interim liquidation of investor holdings.

B. Open-End Commingled Investments:

Open-end commingled fund investments shall include flexible redemption provisions, though such provisions often do not provide investors with liquidity at times when it is most needed. Therefore, it is critically important that such investments be made with the most proactive of managers.

In addition, to the extent possible, investments in closed and open-end commingled fund vehicles shall include an opportunity for investors to participate on advisory boards.

C. Public Real Estate Securities:

Public real estate related securities may comprise up to 20% of the Program’s allocation, on a buy and hold basis. These investments shall be paced over an appropriate time period as determined by the Consultant with the Managers to avoid a significant investment during a high valuation period.

D. Private Real Estate Separate Accounts

Private real estate separate account investments may comprise up to 20% of the Program’s allocation. These investments shall be paced over an appropriate time period as determined by the Consultant with the Managers. Examples of such assets are stand-alone real estate properties, such as office buildings.

Eligible Investment Types: Equity real estate investments may include direct or indirect equity investment in real estate (including all rights and interests incident thereto) such as: (i) interests in corporations, partnerships and other entities whose primary business is the acquisition, development and operation of real property, (ii) participating or convertible participating mortgages or other debt instruments convertible to equity interest in real property based on investment terms (and not merely by foreclosure upon default), (iii) options to purchase real estate, leaseholds, and sale-leasebacks, (iv) all other real estate related securities such as lower or unrated tranches of

Real Estate Program Investment Structure Diversification Guideline

Investment Vehicle Liquidity Level Policy Range

Commingled Funds-Open-End Moderate Up to 90% Commingled Funds-Closed-End Illiquid Up to 60% Public Real Estate Securities Liquid Up to 20% Private Real Estate Separate Accounts Illiquid Up to 20%

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pre-existing securities or structured debt instruments, which have equity features.

The following table sets forth the guidelines governing the Program’s investment structure.

Real Estate Program Investment Structure Diversification Guideline

Investment Structure Policy Range Private Equity Real Estate 70%-100% Private Debt 0%-20% Public Equity 0%-20% Public Debt 0%-10%

Diversification:

In portfolio theory, the principle of diversification is defined as the process of combining investment alternatives so that unique risk is reduced and the range of likely expected future returns is narrowed. This shall be accomplished in the real estate portfolio through the investment of capital among a number of different investment management organizations and in a variety of investment strategies and structures, property types and geographic regions, among other factors.

Diversification by Investment Manager: To reduce risk, the real estate portfolio shall be diversified by investment management organization. No single investment management organization shall manage more than 30% of the total committed capital of the Plan allocation (with the exception of within the first 12 months of the initial funding of the real estate portfolio). The Plan shall limit its exposure to any single Manager or investment, and be subject to other investment restrictions to reduce risk, as further defined below. 1. Maximum Manager Allocation. No single manager shall be allocated more than thirty

percent (30%) of the Program’s total allocation (including committed capital) at the time of the prospective investment commitment. The allocation amount calculation shall include all of the Program’s investment commitments remaining to the Manager plus the net asset value of the existing investments at the time of measurement or at the time of a prospective investment allocation.

2. Minimum Investment Size. The Program’s minimum investment commitment to a

commingled fund Manager shall be $10 million. 3. Maximum Investment Commitment. The Program’s maximum investment commitment

to a commingled fund Manager shall be shall be limited to fifteen percent (15%) of the Program’s allocation to real estate at the time of the prospective investment commitment.

4. Open-End Commingled Fund Guidelines. The Program shall not invest with a Manager

that has significant enterprise or platform risk unless the Program is adequately compensated for that risk. Accordingly, the Program’s investment in a single open-end commingled fund shall not exceed twenty percent (20%) of the total net market value of the commingled fund at the time of the prospective investment unless either (i) the Program receives adequate benefits to offset the associated risk (such as preferred fees and/or enhanced representation as a non-control investor) or (ii) it is determined that the Manager’s platform is viable and effective even without the Program’s commitment. The

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Plan shall not consider investments in an open-end commingled fund that has less than $100 million in net asset value, exclusive of the Program’s investment.

5. Closed-End Commingled Fund Guidelines. The Program shall not invest with a

Manager that has significant enterprise or platform risk unless the Program is adequately compensated for that risk. Accordingly, the Program’s investment in a single closed-end commingled fund shall not exceed twenty percent (20%) of the total investor commitments to the fund at the time of closing of the commitment period of the prospective investment unless either (i) the Program receives adequate benefits to offset the associated risk (such as preferred fees and/or enhanced representation as a non-control investor) or (ii) it is determined that the Manager’s platform is viable and effective even without the Program’s commitment. The Plan shall not consider investments in a commingled fund that has less than $100 million in net equity capital commitments, exclusive of the Program’s investment.

The Consultant and the Investment Staff shall be responsible for reviewing fund terms to ensure they are consistent with or have incorporated the applicable restrictions previously described. Even though a prospective commingled fund allocation may be in compliance with the Policy restrictions, the Consultant shall complete reasonable due diligence with respect to each prospective investment to determine whether it is appropriate for recommendation to the Investment Staff and the Board. The Consultant may consider a number of factors in determining whether investments are reasonable and appropriate for institutional investors, including the following: the level of investment by institutional investors (e.g., pension funds, endowments, foundations and sovereign funds); the size of the organization; the experience of key personnel; the track record of key personnel in investments comparable to the strategy to be undertaken; and the financial condition of the firm. Diversification by Geography: To reduce risk, investments in the real estate portfolio shall be well diversified by geography. The importance of location to the long-term value of real estate is based on local economic fundamentals and the other risk attributes (e.g., weather, earthquake and local government impact) of regional areas. The distribution of real estate investments by geographic region shall be monitored for compliance within the broad ranges set forth in the table below.

Real Estate Program Geographic Diversification Guidelines

Geographic Regions Policy Range West Up to 50% South Up to 40% Midwest Up to 40% East Up to 50% International Up to 20%

The Consultant shall include in each Annual Strategic Plan investment guidelines and targets related to the Program’s international allocation. Diversification by Property Sector: To reduce risk, the real estate portfolio shall be well diversified by property type and primarily invested in apartment, industrial, office and retail assets. The Value-Added and Opportunistic

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components of the Portfolio are likely to contain a broader array of non-traditional property types. Property type portfolio exposure levels have had a significant impact on institutional investor returns since property types have historically performed differently during economic cycles. The guidelines governing the Program’s property type exposure are shown in the following table. The Consultant shall monitor the Program’s real estate in its quarterly performance reports to indicate the level of compliance with these guidelines.

Real Estate Program Property Diversification Guidelines

Property Types Policy Range Residential Up to 40% Industrial Up to 35% Office Up to 40% Retail Up to 40% Hotel Up to 15% Other Real Estate1 Up to 20%

1Includes other property types not included within the NCREIF Index, including senior living, manufactured housing, student housing, healthcare, land and self storage.

Real estate investments may include investments other than the traditional property types, such as healthcare and manufactured housing. The Consultant shall include a section in each Annual Strategic Plan reviewing the Program’s property-type exposures and investment objectives relating thereto. Diversification by Investment Life Cycle: Investment life cycle refers to the stage of development of a real estate investment. The stages of development include the following: (1) land or pre-development (i.e., un-entitled or partially-entitled land); (2) development/redevelopment (i.e., in process of entitling or constructing improvements); (3) leasing (i.e., less than full or market occupancy); and (4) operating (i.e., greater than market occupancy). As a result of the risks associated with development, at no time shall the Program have an exposure exceeding 10% to total non-operating investments (i.e., the total of pre-development/land, and development/redevelopment). Also, the Consultant shall monitor the Program’s exposure to different life cycles through the quarterly performance report, which shall indicate the Program’s non-operating investment exposure and whether a non-compliance issue exists. Dollar Cost Averaging: To reduce market risk, the Plan shall employ dollar cost averaging, or buying into investments over a period of time rather than all at once. More specifically, with regard to higher risk investments such as Value-Added or Opportunistic investments, the Fund shall endeavor to own such investments that are diversified by vintage year.

General

1. Investment Manager Reports Investment Staff shall require periodic reports (i.e. quarterly) from investment managers to facilitate monitoring. 2. Monitoring Investments

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Consultant, with assistance from Investment Staff, shall monitor individual investments and the portfolio as a whole. Monitoring includes diversification across real estate strategies to assure an appropriate mix to reduce risk in the Program’s investments. 3. Performance

The Plan shall assess the performance of real estate investments relative to the following areas:

a. Objectives established by the manager b. Risk undertaken c. The long-term performance objective, with appropriate interpretation if applied to

the short-term. 4. Investment Reports

Quarterly reports shall be provided to the Board. These reports include, but shall not be limited to, reviews of individual investments and their performance. Other Specific Policy Considerations Manager Investment Guidelines:

1. Minimum Requirements/Investment Strategies a. The principals shall demonstrate relevant experience in or directly applicable to the

market in which they propose to work. b. The principals shall demonstrate that they are specifically qualified to pursue the

proposed strategy in the market in which they propose to work. c. The principals shall demonstrate the requisite skills and experience necessary to

execute successfully the proposed strategy, including evidence from similar endeavors.

d. The principals shall dedicate sufficient time and effort to the proposed opportunity and make, within the context of the particular investment, a meaningful personal financial commitment.

e. The proposed strategy and business plan shall be set forth in sufficient detail to permit substantive and meaningful review of the opportunity, verification of the investment concept, and of the risk factors.

f. The proposed strategy and business plan shall provide reasonable assurance that the investment opportunity can produce the required return.

g. The risk/reward trade-off in the particular market that is addressed by a partnership proposal shall be attractive, based on reasonable assumptions.

h. The principals/general partner shall have a significant co-investment in relation to their net worth.

i. The manager will have a minimum of $200 million of assets under management and a track record of at least three years, which may include years together as a team at a previous organization.

2. Evaluation Criteria

Primary emphasis will be on the quality and experience of the investment partners in a partnership investment. Additional factors may include, as appropriate:

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a. Fit with the Program Strategy, Investment Policy and Strategic Plan, and within the overall Program.

b. A unique strategy that is not competitive with existing investments. c. Integrity of the general partner, its employees, and other investors. d. Quality of overall partnership governance, management of the Partnership, including

controls and reporting systems. e. Specific objectives. f. Relationship with the relevant parts of the investment community. g. Relationship with limited partners. h. Nature of value added involvement. i. Past financial performance of the individual investment professionals. j. Reasonable ratio of committed capital per partner. k. Appropriateness of terms and conditions. l. Alignment of interests with limited partners. m. Capital at risk. 3. Due Diligence

A due diligence review by Consultant shall include, but not be limited to, the following:

a. Discussions with principals of the proposed investment. b. Review and analysis of all pertinent offering documents including: offering

memorandums, subscription agreements, and private placement memorandums. c. Consideration of potential conflicts of interest, if any, posed by the proposed

investment and prior investments and activities of the principals. d. Review and analysis of the investment concept, including entry and exit strategies and

terms including fees, principal participation, and structure. e. Review and analysis of the fit within the Program, including fit with the Strategic Plan,

other constraints and guidelines, and compliance with applicable investment policies. f. Review of news articles, principals, prior investments, and concepts. g. Reference checks of principals. h. Review and analysis of track record including performance of prior and current

investments. i. Consideration of relative size of the proposed investment. j. Investigation of special terms and side letter agreements with past or present

investors. k. Review of any lawsuits or litigation involving the general partner, its principals,

employees and prior funds. l. Due diligence visit to the Partners’ offices. m. Ensure that the manager is operating in compliance with the Water & Power

Placement Agent Policy, if applicable. 4. Legal Constraints Legal provisions to be considered include, but are not limited to: a. Registered Investment Advisor (RIA): investment advisors retained by the Board are

so registered or comparable procedure is established. b. Regulatory (i.e. FCC, SEC, FTC). c. Bankruptcy or other material litigation. d. Appropriate alignment of interests.

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13.1 Designated Responsibilities and Tasks Additional Responsibilities of Consultant Deal Flow Management

Sourcing Opportunities o Perform gatekeeper functions by meeting with groups, reviewing the investment

documentation including the Private Placement Memorandums and Offerings documents

o Receive and review opportunities forwarded from the Plan o Meet and interview potential investment management teams o Evaluate opportunities presented outside of the Plan’s relationship for

appropriateness for the Program o Maintain a database of opportunities considered for the Program

Investment Due Diligence

Desk Review o Review offering memorandum, limited partnership agreement, marketing

materials, etc. o Analyze:

Manager and fund Market opportunity Investment strategy Due diligence file provided by Consultant General Partner background and experience Track record Terms Alignment of interest

o Upon completion, review findings with Board/Investment Staff and recommend further review or rejection

Full Due Diligence Review

o Review completed due diligence questionnaire o Conduct reference checks o Conduct on-site visit as appropriate o Review economic and business terms of legal documents o Communicate status of Full Due Diligence Review to Board/Investment Staff o Upon completion, prepare and issue report to Board/Investment Staff with

recommendation for investment or rejection; include appropriate supporting documentation with the report

o Arrange meeting to review materials and recommendation o Provide copies of all Courtland due diligence materials to Investment Staff

Terms Negotiation

o Negotiate specific partnerships terms, if appropriate Performance Monitoring

Consultant o Receive copies of all notices of capital calls and cash distributions o Receive copies of all financial reports and other communications o Calculate performance and reconcile with the manager and master custodian, as

needed o Prepare quarterly evaluation reports, with information including, but not limited to:

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Partnership Commitment Contributions Distributions Fair Market Value TWR and IRR (where applicable) Performance by manager and strategy and risk/return classification Portfolio review of exposures/diversification Manager specific data/updates Real estate economic market overview

o Prepare Annual Strategic Plan and review of Investment Policy Duties of Manager

Adhere to GIPS-compliant reporting and performance measurement standards and comply with generally accepted accounting principles (“GAAP”) applied on a fair market value basis.

Execute and perform its duties under the terms of the investment vehicle documents. Provide timely requests for capital contributions. Provide quarterly financial statements, annual reports and other investment information

requested by the Investment Staff and/or the Consultant. Conduct annual meetings to discuss important developments regarding investment and

management issues. Provide quarterly questionnaires and compliance materials to the Consultant.

Duties of Legal Counsel

The legal counsel selected by the Plan will represent the Plan and will review all real estate related documents and provide advice for special investment situations as needed. Execute and perform its duties under the terms of the investment vehicle documents.

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13.2 Guidelines for Initial Manager Evaluation

Organization: Firms considered for this Program are expected to include established, long-tenured firms in addition to potentially including recently formed organizations that may be raising their first institutional investment vehicle. Alignment of interests (including ownership, compensation, general partner commitment, etc.) will be important factors in the proposed investment opportunities. An extensive review of these key factors and governance rights is to be conducted during the evaluation. Investment Experience: The general partners are expected to have significant investment experience and expertise relevant to their investment strategy. Depending on the investment, greater emphasis may be placed on the experience of the members of a specific team rather than the firm as a whole as opportunities may result from professionals splitting from more established firms raising their first institutional fund. This also pertains to analyzing performance track records. The track records of the team may need to be examined on its own merit rather than requiring a track record representative of the entire firm. Staffing: The organization must have sufficient investment professionals and support staff to implement the proposed strategy. The amount of targeted capital commitments, average investment size and anticipated number of transactions shall be reviewed to assess the appropriate staffing level. Investment Strategy: The investment strategy of potential investment opportunities shall be assessed for appropriateness given the Program’s goals and objectives. The investment strategy is required to be proposed in sufficient detail to allow for extensive review of the opportunity, verification of the investment concept (given existing market conditions) and of the potential risk factors. Fund size: Aggregate fund sizes for potential opportunities will range significantly. The proposed fund size will be examined to ensure appropriateness for the proposed investment strategy given the investment approach and market dynamics. In addition, the Plan’s ownership position will be determined to ensure that there is sufficient diversification of investors in the fund. Type of Investments: Opportunities to be reviewed for the Program are expected to span Core and Value-Added real estate. Core investments will typically include well-located properties of high-quality design and construction that have significant occupancy levels; however, a limited number of investments may also include “other” property types that are generally considered non-core. Value-Added investments may involve efforts to increase property value such as releasing, repositioning, redevelopment, or development, as well as traditional and non-traditional property types (e.g. hotels, mini-storage, senior housing, timber, etc.). All real estate investments will be U.S. based. Terms: At a minimum, partnership terms are expected to be “in-line” with industry norms. In particular, the “distribution waterfall” will be examined for appropriate prioritization of distributions and the clawback provision will be reviewed to ensure adequate mechanisms are in place to protect the Plan. Given the opportunity or need, Consultant will negotiate various terms (particularly governance terms) to be “limited partner friendly” in order to compensate the Plan for the unique risks associated with investing in real estate investments.

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13.3 Guidelines for Ongoing Manager Evaluation Applicable Investment Strategies/Structures

Open-End Core Commingled Funds Public Real Estate Securities

Investment Performance Review of Investment Manager(s) and its (their) Investment Portfolio(s) As part of the ongoing reporting process, the investment manager will report quarterly and trailing annualized performance of the respective portfolio(s) to the Plan and its Consultant on a quarterly basis (i.e., every three months). In addition, the investment manager will provide performance attribution statistics that explain the causes of under- or out-performance relative to the established benchmarks. The investment manager will also report any changes in investment-related personnel, organization or investment approach/strategy that may potentially impact the investment results of the portfolio in question. Independent Evaluation of Investment Performance by the Plan The Plan (or its Consultant) will evaluate investment performance on a quarterly basis using the investment performance Watch Status criteria found in Section 4.3. Such evaluations will also be used to verify the quarterly performance information disclosed by the investment managers themselves. If the investment manager(s) do(es) not meet one or more of the criteria in Section 4.3, the Board will place the specific investment manager(s) on watch status for investment performance reasons. The quarterly evaluation will indicate (i) whether an investment manager is on watch status; (ii) the reason for watch status, (iii) the approximate date the investment manager and the respective portfolio was placed on watch status, (iv) the length the investment manager has been on watch status, and (v) additional comments. If the investment manager/portfolio was placed on watch status for investment performance reasons, the status report will also include post-watch investment performance to gauge if the investment manager is addressing investment performance issues. Periodic Monitoring Activities As part of its ongoing fiduciary responsibilities, as well as in assessing the potential of an investment manager to produce future added value, the Plan and its Consultant should regularly review several qualitative and quantitative aspects of an investment manager’s management and practices. Key factors include, but are not limited to:

Compliance with the guidelines agreed upon for management of the Board’s portfolio, including holding unauthorized issues;

Review of the investment manager(s) investment strategy and style, especially the

acquisition/disposition (open-end core commingled funds) and buy/sell (public real estate securities) disciplines;

Review of portfolio valuation, including going-in cap rate, discount rate, and exit cap rate

(open-end core commingled funds);

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Review of portfolio leverage levels;

Growth in portfolio asset level/assets under management;

Risk profile relative to the portfolio’s benchmark;

Review of organizational structure;

Stability of investment manager personnel and organization;

Review of investment manager contractual obligations to the Plan (including management fees);

Evidence of illegal or unethical behavior by the investment management firm;

Unwillingness to cooperate with reasonable requests by the Board, such as information,

meetings or other material related to its portfolios.

As previously outlined, certain investment manager(s) may (i) fail to meet pre-established investment performance criteria and/or (ii) may prove sub-standard across any number of qualitative factors. In such cases, the next step would be for the Plan (or the Consultant) to produce a document called a Portfolio Review. This Portfolio Review would explain those factors where the investment manager(s) and/or portfolio(s) are failing to meet specific criteria and provide a basis for putting investment manager(s) on watch status. The Portfolio Review would typically be in the form of a memorandum to the Board. The watch status process will follow the same guidelines as outlined in Section 4.3. 13.4 Global Real Estate Investment Trust Guidelines The Plan has appointed Manager(s) to manage a portion of the Plan's assets. These assets will be managed in conformance with the objectives and guidelines delineated below and in accordance with the formal contract with the Retirement Board. Portfolio Component Definition The Manager has been designated as a global real estate investment trust (“REIT”) manager. As a global REIT manager, the Manager is expected to invest in companies located globally which invest in real estate-related activities, with an emphasis on generating cash flow from core investments. The goal of the Global REIT portfolio is to provide superior performance vs. the FTSE EPRA/NAREIT Global Developed Index over a complete investment cycle. Emphasis is also placed upon volatility compared to the Index. Portfolio Guidelines 1. The portfolio shall be composed of cash equivalents and equity securities of companies doing

business both in the United States and outside the United States with minimum market capitalizations of $200 million at purchase. Equity securities shall be restricted to those issues listed on the major local-country stock exchanges. The markets that the Manager can invest in are those within the FTSE EPRA/NAREIT Global Developed Index. SEC Rule 144A international equity instruments with registration rights are fully permissible. Those instruments without registration rights must not exceed 10% of the lesser of cost or

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market value of any single international equity portfolio. In order to minimize transaction costs and market impact associated with country reclassification, and as FTSE reclassifies specific countries from one market to another (such as from emerging to developed or frontier to emerging), the investment manager, with advance notification to the Retirement Plan Manager, may invest in such countries, subsequent to the announcement of FTSE’s formal reclassification and prior to its effective date.

2. The Manager shall not use (non-currency) derivatives within the portfolio without the

expressed written consent of the Plan. If the Manager elects to use derivatives as part of its investment strategy, the Plan requires that the Manager document the rationale for using such instruments. The Manager shall not invest in letter or restricted stock, naked options or future contracts, and uncovered short positions or commodities. Use of any derivative instrument for speculation is prohibited.

3. Currency hedging up to a maximum of 25% of the portfolio is permitted for defensive

purposes. Currency hedging shall be effected through the use of forward currency contracts.

4. For prudent diversification the portfolio shall have a minimum of 50 issues quoted in at least 10 countries/regions, although assets will not be specifically allocated to individual countries or markets. The maximum size of any single issue shall be the greater of 5% of the portfolio or 125% of the benchmark weight, except at no time shall any specific issue represent more than 10% of the lesser of cost or market value of the portfolio. In addition, no issue shall be purchased in the Portfolio if more than 10% of the outstanding shares of that company are held by the Manager in the total of all of its accounts.

5. The cash equivalent portion should not normally exceed 5% of the portfolio. Cash equivalents

may be U.S. dollar or non-U.S. dollar denominated.

6. Turnover in the portfolio shall not normally exceed 150% in any twelve month period. Turnover shall be defined as the total dollar value of the lesser of purchases or sales divided by the market value of the portfolio at the beginning of the period.

Portfolio Characteristics 1. It is expected that the portfolio will invest across a broad array of countries within the FTSE

EPRA/NAREIT Global Developed Index. Regional and country weights, however, may vary significantly from the index.

2. It is expected that the portfolio's weighted average dividend yield on a quarterly basis will be

within a +/- 0.5x range of the market as represented by the FTSE EPRA/NAREIT Global Developed Index.

Performance Objectives On an annual basis the Manager is expected to outperform the FTSE EPRA/NAREIT Global Developed Index, net of fees, to be measured over a market cycle of three-to-five years.

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XIV. Private Equity Investment Policy Purpose This document sets forth the investment policy (“the Policy”) for the Plan’s Private Equity Program (“the Program”). This Policy is designed to ensure that investment managers, consultants, and the Board of Administration of the Water and Power Employees’ Retirement, Disability and Death Benefits Plan and Board of Water and Power Employees’ Retiree Health Benefits Fund (hereinafter referred to as the “Board” of the “Retirement Plan” and “Health Fund”) and Investment Staff take prudent and careful action while investing the Program. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling the investment risks and returns associated with this segment of the portfolio. The Program is designed to meet the Retirement Plan and Health Fund’s long-term actuarial target through the identification and participation in private equity opportunities that are expected to generate high rates of return while also providing diversification benefits. Strategic Objective The strategic objective of the Program is to develop a diversified private equity portfolio capable of achieving investment returns commensurate with Program targets. Private equity investments are expected to achieve attractive risk-adjusted returns and, by definition, possess a higher degree of risk with a higher return potential than traditional investments. Accordingly, total rates of return from private equity investments are expected to be greater than those that might be obtained from conventional public equity or debt investments. They have a low correlation to other investment classes and therefore can contribute to reducing the risk and enhancing the returns of a total portfolio, as well as providing portfolio diversification. A diversified portfolio of attractive private equity opportunities is expected to be created by implementing a strategic “top down” assessment of attractive segments of the market for investment combined with a “bottom up” approach to manager identification. Consultant, with assistance from Investment Staff, shall proactively seek out the most attractive investment opportunities given current market conditions, while maintaining appropriate diversification. Portfolio weightings shall be a function of the specific risk and return profile of an investment opportunity and the Program’s overall needs. Private equity investments shall be considered solely in the interest of the Retirement Plan and Health Fund’s participants and their beneficiaries in accordance with applicable law, and shall be selected to accomplish the following: 1. Enhance the Retirement Plan and Health Fund’s performance by generating strong long-term

results. 2. Hedge against long-term liabilities. 3. Provide added diversification to the Retirement Plan and Health Fund’s overall investment

program.

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Responsibilities and Delegations The Plan will utilize the services of an In-Kind Distribution Manager to liquidate any in-kind distributions received from its private market managers. Section 2.3 outlines specific responsibilities and tasks to be performed by the Board, Investment Staff and Consultant(s). Performance Objective The long-term (5-10 years) expected performance objective of the Program shall be the return of the Russell 3000 Index plus a 300 basis point risk premium. Use of the Russell 3000 Index reflects the opportunity cost of investing in private equity versus publicly traded common stocks. This index is reported one quarter in arrears.

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Investment Approaches and Parameters

A. General Approach Direct partnership investments shall be emphasized. Fund of fund vehicles, investing in both the primary market and secondary market, shall also be considered on an opportunistic basis to access specific private equity exposures in the creation of a diversified private equity portfolio. Opportunities shall be sought with specific criteria appropriate for investment within a diversified private equity portfolio. Strategic reviews shall assess existing portfolio exposures, identify attractive segments of the market for opportunistic investment, and determine appropriate portfolio weightings. Based on these assessments, Retirement Plan and Health Fund and Consultant shall proactively seek out attractive investment opportunities, while maintaining appropriate diversification.

B. Program Strategy The Program Strategy shall be revised periodically as appropriate and updated through the Strategic Plan. The Strategic Plan shall contain the following elements: 1. Program goals and objectives 2. Structure of the program

3. Strategic approach to the asset class The Board shall review the Program annually via the Investment Policy and Strategic Plan prepared by Consultant with assistance from Investment Staff. The Strategic Plan shall be based upon broad economic structural analysis, market conditions, and a review of the existing portfolio. The Strategic Plan shall detail tactical priorities, strategy enhancements, and other objectives.

C. Management of Partnership Investments The Program shall be continually refined to obtain the most effective mix of investments. The Program shall invest primarily in private equity direct partnerships and secondarily, in opportunistic commitments to private equity fund of funds. Partnerships shall be continually reviewed in the following areas: 1. Fit with the Strategic Plan

2. Pace and timing of investment commitments, funding and return of capital

3. Diversity of sectors (industry, geographical, investment style, and others as

appropriate)

4. Targeted performance according to stated objectives specific to the investment

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D. Quality Control Processes The Program shall employ a quality control process, which includes Consultant, with assistance from Investment Staff, to monitor Program efficiency, track investment performance, and control risk. 1. Monitoring Portfolio Performance: Actual returns will be compared to the benchmark(s)

as appropriate, and to the expected return for the investment. 2. Risk Control: Program standards are maintained through the following processes –

a. Assessing the level of diversification in the portfolio on a continual basis, including

the level of diversification across investment style, geographic distribution, industry concentrations, and across other ranges as appropriate.

b. Documenting due diligence activities.

E. Specific Risk Parameters The Program will be exposed to specific risk parameters that are associated with investing in private equity, including, but not limited to: 1. Operating and Business Risk: Certain private equity investments entail above average

operating and business risk. 2. Liquidity Risk: Private equity investments lack liquidity and typically have time horizons

of 5-to-10 years. Secondary markets for such investments are limited; and, often, there is no current income.

3. Structural Risk: Specific fundamental rights and protections are negotiated, which

include mechanisms for taking remedial action. These basic protections may include advisory committee participation and specific termination provisions in partnership transactions.

4. Valuation Risk: Partnerships shall be evaluated to determine if the general partner

employs an appropriate valuation discipline.

F. Guidelines for Evaluating Proposals Proposed partnership opportunities shall be evaluated relative to their fit with the Program’s Investment Policy and Strategic Plan. Section 14.2 contains broad guidelines for initial partnership evaluation.

G. Types of Investments Partnerships with attractive return characteristics, that also enhance portfolio diversification and are not otherwise prohibited by the Retirement Plan and Health Fund, shall be considered for the Program. Fund of funds and direct partnerships will be considered for the Program. Fund of funds make commitments to a diversified portfolio of underlying private equity partnerships. This includes primary market fund of funds that commit capital to partnerships that are currently raising capital in addition to secondary market fund of funds that invest in existing partnerships that have already closed their fund and are investing capital. Fund of funds may invest in partnerships, and direct partnerships

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may be considered, that generally fall within the categories defined below. 1. Buyout and Corporate Restructuring Capital: Investments in leveraged buyouts,

management buyouts, equity buyouts, employee buyouts, buy-and-build, other acquisition strategies and restructurings, and related uses of capital.

2. Expansion Capital: Investments in established companies for the purpose of growing their businesses.

3. Venture Capital: Investments in relatively small, rapidly growing, private companies in various stages of development.

4. Energy and Natural Resources: Investments in the exploration, extraction, accumulation, generation, movement or sale of energy (e.g., oil, gas, coal, electricity), and other natural resources and related service companies.

5. Distressed Securities: Debt or equity securities investments in troubled companies, under the assumption that the securities will appreciate in value following a restructuring of the company’s obligations. This includes, but is not limited to, investments in companies that are insolvent or unable to pay their debts as they come due. This may include companies subject to the Bankruptcy Reform Act, specifically Chapter 7 (Liquidation) and Chapter 11 (Reorganization) and companies under-going restructurings outside of Bankruptcy Court.

6. Turnarounds: Investments in companies experiencing financial or operating difficulties. These companies may or may not be insolvent.

7. Mezzanine: Investments in unsecured or junior obligations that typically earn a coupon

or dividend payment and may have warrants on common stocks or conversion features to enhance returns.

8. Special Situations: This includes all other types of investments, e.g. active minority

positions, secondary investments, governance strategies, industry specific strategies, and unconventional investments.

9. International: Investments that are located in countries other than the United States,

or have significant portions of their operations outside of the United States shall be considered Aggregate exposure to investments outside the United States, on a market value basis, is not expected to exceed 35%.

Benchmark The long-term performance benchmark for the Program shall be the return of the Russell 3000 Index plus a 300 basis point risk premium. Given the nature of the asset class and the difficulty benchmarking shorter-term results, there may be significant deviations between Program results and benchmark performance over shorter time periods.

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General Reporting 1. Reports received from investment managers

Investment Staff shall require periodic reports (i.e. quarterly) from investment partners to facilitate monitoring.

2. Monitoring Investments Consultant, with assistance from Investment Staff, shall monitor the individual partnerships and the portfolio as a whole. Monitoring includes diversification across private equity investment types to assure an appropriate mix reducing risk in the Program’s investments. Given the opportunistic nature of the Program, specific areas may be emphasized over the short-term with the long-term goal of developing a diversified program. The following types of diversification should be monitored, including, but not limited to: A. Economic Sector Diversification - Private equity investments should be diversified among

sector groups;

B. Form of Investment - Private equity investments should be diversified throughout various forms and categories of investment (e.g., LBO’s, venture capital, distressed, mezzanine etc.);

C. Payback Diversification - Private equity investments can take significant time to pay back capital. The Retirement Plan and Health Fund should attempt to invest in partnerships across a spectrum of payback scenarios;

D. Geographic Diversification - The Retirement Plan and Health Fund should consider geographical diversification in investment selection; and

E. Time Diversification - The Retirement Plan and Health Fund should endeavor to invest in a consistent manner when appropriate risk adjusted return opportunities are available.

3. Performance

The Retirement Plan and Health Fund shall assess the performance of the partnerships relative to the following areas: A. Objectives established by the partnership

B. Risk undertaken

C. The long-term performance objective, with appropriate interpretation if applied to the short-

term. 4. Investment Reports

Quarterly reports shall be provided to the Board by the Consultant. These reports include, but shall not be limited to, reviews of individual investments and their performance.

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Other Specific Policy Considerations Partnership Investment Guidelines: 1. Minimum Requirements/Investment Styles

A. The principals shall demonstrate relevant experience in or directly applicable to the market

in which they propose to work.

B. The principals shall demonstrate that they are specifically qualified to pursue the proposed strategy in the market in which they propose to work.

C. The principals shall demonstrate the requisite skills and experience necessary to execute successfully the proposed strategy, including evidence from similar endeavors.

D. The principals shall dedicate sufficient time and effort to the proposed opportunity and make, within the context of the particular investment, a meaningful personal financial commitment.

E. The proposed strategy and business plan shall be set forth in sufficient detail to permit substantive and meaningful review of the opportunity, verification of the investment concept, and of the risk factors.

F. The proposed strategy and business plan shall provide reasonable assurance that the investment opportunity can produce the required return.

G. The risk/reward trade-off in the particular market that is addressed by a partnership proposal shall be attractive, based on reasonable assumptions.

H. The principals shall have a significant economic position in the partnership on an equal basis with Retirement Plan and Health Fund.

2. Evaluation Criteria

Primary emphasis will be on the quality and experience of the investment partners in a partnership investment. Additional factors may include, as appropriate:

A. Fit with the Investment Policy and Strategic Plan and within the overall Program

B. A unique strategy that is not competitive with existing investments

C. Integrity of the general partner, its employees, and other investors

D. Quality of overall partnership governance, management of the partnership, including

controls and reporting systems

E. Specific objectives

F. Relationship with the relevant parts of the investment community

G. Relationship with limited partners

H. Nature of value added involvement

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I. Past financial performance of the individual investment professionals

J. Reasonable ratio of underlying partnerships per partner

K. Reasonable ratio of committed capital per partner

L. Appropriateness of terms and conditions

M. Alignment of interests with limited partners

N. Capital at risk

3. Due Diligence

A due diligence review by Consultant shall include, but not be limited to the following:

A. Discussions with principals of the proposed investment.

B. Review and analysis of all pertinent offering documents including: offering memorandums,

subscription agreements, and private placement memorandums.

C. Consideration of potential conflicts of interest, if any, posed by the proposed investment and prior investments and activities of the principals.

D. Review and analysis of the investment concept, including entry and exit strategies and

terms including fees, principal participation, and structure.

E. Review and analysis of the fit within the Program, including fit with the Strategic Plan, other constraints and guidelines, and compliance with applicable investment policies.

F. Review of news articles, principals, prior investments, and concepts.

G. Reference checks of principals.

H. Review and analysis of track record including performance of prior and current

investments.

I. Consideration of relative size of the proposed investment.

J. Investigation of special terms and side letter agreements with past or present investors.

K. Review of any lawsuits, litigation involving the general partner, its principals, employees and prior funds.

L. Due diligence visit to the Partner’s offices.

4. Legal Constraints

Legal provisions to be considered include, but are not limited to:

A. Registered Investment Advisor (RIA): Investment advisors retained by the Retirement

Plan and Health Fund are so registered or comparable procedure is established.

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B. Regulatory (i.e. FCC, SEC, FTC).

C. Bankruptcy or other material litigation.

D. Appropriate alignment of interests.

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14.1 Designated Responsibilities and Tasks Additional Responsibilities of Consultant Deal Flow Management

Sourcing Opportunities o Receive and review opportunities forwarded from the Retirement Plan and Health

Fund o Meet and interview potential investment management teams o Evaluate opportunities presented outside of the Retirement Plan and o Health Fund relationship for appropriateness of the Program o Maintain a database of opportunities considered for the Program

Investment Due Diligence

Desk Review: o Review due diligence questionnaire, offering memorandum, limited partnership

agreement, marketing materials, etc. o Analyze:

Market opportunity Investment strategy General Partner background and experience Track record Terms Alignment of interest

o Upon completion, review findings with the Retirement Plan and Health Fund and recommend review or rejection

Full Due Diligence Review: o Conduct reference checks o Conduct onsite visit as appropriate o Extensively review economic and business terms of legal documents o Communicate status of Full Due Diligence Review to the Retirement Plan and

Health Fund o Upon completion, prepare and issue report to the Retirement Plan and Health

Fund with recommendation for investment or rejection; include appropriate supporting documentation with the report

o Arrange meeting to review materials and recommendation

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Terms Negotiation: o Negotiate specific partnerships terms, if appropriate

Performance Monitoring

Consultant o Receives copies of all notices of capital calls and cash distributions o Receives copies of all financial reports and other communications o Calculates performance and reconciles same with the manager and master

custodian, as needed o Prepares periodic reports

Quarterly: one-page status report listing: Partnership Commitment Contributions Distributions Fair Market Value IRR

Semi-Annual: full performance report Containing brief market overview Performance by manager, vintage year and segment Review portfolio exposures/diversification Provide manager specific data/updates

Annual: market overview, Investment Policy and Strategic Plan review

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14.2 Guidelines for Fund of Funds Evaluation Organization: Firms considered for this Program are expected to include established, long-tenured firms. However, recently formed organizations that may be raising their first institutional fund of funds may also be considered. Alignment of interests (including ownership, compensation, general partner commitment, etc.) will be important factors in the proposed investment opportunities. An extensive review of these key factors and governance rights is to be conducted during the evaluation. Investment Experience: The general partners are expected to have significant decision-making investment experience and expertise relevant to their investment strategy. Depending on the investment, greater emphasis may be placed on the experience of the members of a specific team rather than the firm as a whole as opportunities may result from professionals splitting from more established firms raising their first institutional fund. This also pertains to analyzing performance track records. The track records of the team may need to be examined on their own merit rather than requiring a track record representative of the entire firm. Staffing: The organization must have sufficient investment professionals and support staff to implement the proposed strategy. The amount of targeted capital commitments, average investment size and anticipated number of transactions shall be reviewed to assess the appropriate staffing level. Investment Strategy: The investment strategy of potential investment opportunities shall be assessed for appropriateness given the Program’s goals and objectives. The investment strategy is required to be proposed in sufficient detail to allow for extensive review of the opportunity, verification of the investment concept (given existing market conditions) and of the potential risk factors. Fund size: Aggregate fund sizes for potential opportunities will range significantly. The proposed fund size will be examined to ensure appropriateness for the proposed investment strategy given the investment approach and market dynamics. In addition, the Retirement Plan and Health Fund’s ownership position will be determined to ensure that there is sufficient diversification of investors in the fund (i.e. Retirement Plan and Health Fund should not represent more than 20% of any particular fund). Type of Investments: Fund of funds opportunities to be reviewed for the Program are expected to span the global private equity segments, including: buyout/corporate restructuring, expansion capital, venture capital, energy/natural resources, distressed securities, special situations, etc. Terms: At a minimum, partnership terms are expected to be “in-line” with industry norms. In particular, the “distribution waterfall” will be examined for appropriate prioritization of distributions and the clawback provision will be reviewed to ensure adequate mechanisms are in place to protect the Retirement Plan and Health Fund. Given the opportunity or need, PCA will negotiate various terms (particularly governance terms) to be “limited partner friendly” in order to compensate the Retirement Plan and Health Fund for the unique risks associated with investing in private equity investments.

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14.3 Direct Partnership Guidelines and Investment Criteria For consideration to be included in the Retirement and Health Fund’s private equity portfolio, a direct partnership opportunity shall meet the following characteristics: Organization: Firms considered for direct partnership investment are expected to be established, experienced firms. Alignment of interests (including ownership, compensation, general partner commitment, etc.) will be important factors in the proposed investment opportunities. An extensive review of these key factors and governance rights is to be conducted during the evaluation. Investment Experience: Firms must have exhibited significant and relevant decision-making experience through the investment of at least one prior institutional partnership implementing the proposed investment strategy. Track Record: Firms must have demonstrated the ability to generate top-quartile performance results relative to their vintage year and investment strategy peers. Staffing: Firms must have maintained significant organizational stability with proven retention of key investment professionals. The organization must have sufficient investment professionals and support staff to implement the proposed strategy. The amount of targeted capital commitments, average investment size and anticipated number of transactions shall be reviewed to assess the appropriate staffing level. Investment Strategy: The investment strategy of potential investment opportunities shall be assessed for appropriateness given the Program’s goals and objectives. The investment strategy is required to be proposed in sufficient detail to allow for extensive review of the opportunity, verification of the investment concept (given existing market conditions) and of the potential risk factors. Fund size: Aggregate fund sizes for potential opportunities will range significantly. The proposed fund size will be examined to ensure appropriateness for the proposed investment strategy given the investment approach and market dynamics. In addition, the Retirement Plan and Health Fund’s ownership position will be determined to ensure that there is sufficient diversification of investors in the fund (i.e. Retirement Plan and Health Fund should not represent more than 20% of any particular fund). Type of Investments: Direct partnership opportunities to be reviewed for the Program are expected to span the global private equity segments, including: buyout/corporate restructuring, expansion capital, venture capital, energy/natural resources, distressed securities, special situations, etc. Terms: At a minimum, partnership terms are expected to be “in-line” with industry norms. In particular, the “distribution waterfall” will be examined for appropriate prioritization of distributions and the clawback provision will be reviewed to ensure adequate mechanisms are in place to protect the Retirement Plan and Health Fund. Given the opportunity or need, PCA will negotiate various terms (particularly governance terms) to be “limited partner friendly” in order to compensate the Retirement Plan and Health Fund for the unique risks associated with investing in private equity investments.

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Risk Controls The incorporation of direct partnerships into Retirement Plan and Health Fund’s private equity portfolio is intended to be opportunistic in nature and provide complementary exposures to existing holdings providing the potential for higher returns in a cost-effective manner. Direct partnership investments are expected to be a primary component of the portfolio and are to be utilized in a risk-controlled manner. To that end: 1. A commitment to a single direct partnership is not to exceed 40% of annual targeted

commitments, as outlined in the Annual Investment Strategy.

2. The Retirement Plan and Health Fund may not represent more than 20% of the limited partnership interests in a fund.

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Appendix A: Glossary of Terms Commodities: A sub-set of the managed futures investment approach that mainly involves the trading of derivatives and forward markets in the commodity sector. Commodity Trading Advisers (CTAs), regulated by the Commodity Futures Trading Commission (CFTC), are commonly retained to implement such strategies. Convertible Arbitrage: Convertible arbitrage is the trading of related securities whose future relationship can be reasonable predicted. Convertible securities are usually either convertible bonds or convertible preferred shares, which are most often exchangeable into the common stock of the company issuing the convertible security. The managers in this category attempt to buy undervalued instruments that are convertible into equity and then hedge out the market risks. Fair value is based on the optionality in the convertible bond and the manager’s assumption of the input variables, namely the future volatility of the stock. Directional Strategies: These strategies do not fit cleanly in either of the two above strategies and are commonly a hybrid of the two Short Selling: The short selling discipline has an equity component as well as fixed income component. Short sellers seek to profit from a decline in the value of stocks. In addition, the short seller earns interest on the cash proceeds from the short sale of stock. Emerging Markets: Emerging market hedge funds focus on equity or fixed income investing in emerging markets as opposed to developed markets. This style is usually more volatile not only because emerging markets are more volatile than developed markets, but also because most emerging markets allow for only limited short selling and do not offer a viable futures contract to control risk. The lack of opportunities to control risk suggests that hedge funds in emerging markets have a strong long bias. Distressed Securities: Distressed securities funds invest in the debt or equity of companies experiencing financial or operational difficulties or trade claims of companies that are in financial distress, typically in bankruptcy. These securities generally trade at substantial discounts to par value. Hedge fund managers can invest in a range of instruments from secured debt to common stock. The strategy exploits the fact that many investors are unable to hold below investment grade securities. Diversified: A diversified fund-of-hedge fund is a multi-strategy, multi-manager product that has exposures spanning the spectrum of hedge fund investment strategies. The blend of underlying hedge fund strategies incorporated into a diversified fund-of-hedge fund (i.e., portfolio construction) is commonly a function of the specific risk and return characteristics of the product. Equity Market-Neutral: Equity market-neutral is designed to produce consistent returns with very low volatility and correlation in a variety of market environments. The investment strategy is designed to exploit equity market inefficiencies and usually involves being simultaneously long and short matched equity portfolios of the same size within a country. Market neutral portfolios are designed to be either beta or currency-neutral or both. Equity market-neutral is best defined as either statistical arbitrage or equity long/short with zero exposure to the market.

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Event Driven: This investment strategy class focuses on identifying and analyzing securities that can benefit from the occurrence of extraordinary transactions. Event-driven strategies concentrate on companies that are, or may be, subject to restructuring, takeovers, mergers, liquidations, bankruptcies, or other special situations. The securities prices of the companies involved in these events are typically influenced more by the dynamics of the particular event than by the general appreciation or depreciation of the debt and equity markets. For example, the result and timing of factors such as legal decisions, negotiating dynamics, collateralization requirements, or indexing issues play a key element in the success of any event-driven strategy. Fixed Income Arbitrage: Fixed income arbitrage managers seek to exploit pricing anomalies within and across global fixed income markets and their derivatives, using leverage to enhance returns. In most cases, fixed income arbitrageurs take offsetting long and short positions in similar fixed income securities that are mathematically, fundamentally or historically interrelated. The relationship can be temporarily distorted by market events, investor preferences, exogenous shocks to supply or demand, or structural features of the fixed income market. Global Macro: Macro hedge funds pursue a base strategy such as equity long/short or futures trend following to which large scale and highly leveraged directional bets in other markets are added a few times each year. They move from opportunity to opportunity, from trend to trend, from strategy to strategy. Long/Short Equity: Long/short strategies combine both long as well as short equity positions. The short positions have three purposes, which can vary over time or by manager. First, the short positions are intended to generate alpha. This is one of the main differences when compared with traditional long-only managers. Stock selection skill can result in doubling the alpha. A long/short equity manager can add value by buying winners as well as selling losers. Second, the short positions can serve the purpose of hedging market risk. Third, the manager earns interest on the short as he collects the short rebate. Merger Arbitrage: Merger arbitrage (also known as risk arbitrage) specialists invest simultaneously in long and short positions in both companies involved in a merger or acquisition. In stock swap mergers, risk arbitrageurs are typically long the stock of the company being acquired and short the stock of the acquiring company. In the case of a cash tender offer, the risk arbitrageur is seeking to capture the difference between the tender price and the price at which the target company’s stock is trading. Relative Value Strategies: This class of investment strategy seeks to profit by capitalizing on the perceived mispricings (in the manager’s opinion) of related securities or financial instruments. Generally, relative-value and market neutral strategies avoid taking a directional bias with regards to the price movement of a specific stock or market. This makes this style most appealing for investors who are looking for high and stable returns accompanied by low correlation to the equity market. Sharpe Ratio: This ratio is a risk-adjusted measure of a fund’s performance. It is calculated as follows [(annualized rate of return)-(annualized risk-free interest rate)] / annualized standard deviation. For example, a fund with a Sharpe Ratio greater than 1.0 is achieving more than one unit of excess return per unit of risk undertaken.

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Appendix B: Proxy Voting Policy Every year, the Board votes the proxies for the companies in which it holds common stock. Proxy statements include descriptions of proposals to be voted on by shareholders, such as election of directors, appointment of outside auditors, shareholder proposals and those management proposals which would be dilutive of the Board’s ownership, set up anti-takeover barriers, provide “greenmail” or “golden parachutes”, or otherwise impair (or potentially impair) the economic value of the Board’s equity position in the company. The Board has drafted proxy voting guidelines to guide the voting of these proxies which are voted by the Plan or its designee in a manner consistent with the guidelines. The proxy items are grouped under the general categories of corporate governance items, business-related items, and social-related items.

1. Corporate Governance

i. Cumulative Voting - The ability to vote all shares for one seat on the corporation’s board of directors. The Board has consistently voted against cumulative voting proposals or voted to remove cumulative voting where it is permitted. It has been the Board’s view that cumulative voting would allow a special interest to gain one or more seats on the corporate board and disrupt the efficient management of the company.

AGAINST

ii. Classified Board - The election of corporate directors for overlapping terms so that

only a fraction of the board of directors may be voted out of office in any year. The Board has consistently voted against classified board proposals and voted for repeal of classified board provisions because it has viewed a classified board of directors as one form of anti-takeover device because a majority of the corporate board of directors cannot be removed by a vote of the majority of the stockholders in any year. AGAINST

iii. Confidential Voting - The demand that the corporation provide for a secret ballot and contract with an outside organization to conduct its proxy count. The Plan votes for the adoption of confidential voting because confidential voting preserves the ability of shareholders, including employees, to vote in a way that does not subject them to influence by the board or management. FOR

iv. Pre-emptive Rights - Mandates that the corporation first offer to sell any new issue of stock or other convertible capital instruments to current stockholder before offering it to the public. The Board has voted against stock or convertible debt issuances with pre-emptive rights on the basis that such requirements slow down the corporation’s financing process and, if the Board’s advisors believe that the Board’s equity position should not be diluted, the additional shares can be purchased on the open market. Also, experience has shown that new issue prices are often higher than secondary market prices a short while later.

AGAINST

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v. Report Charitable Contributions - Report the company’s charitable contributions in

its annual report. The Board has consistently voted “no”. It is the Board’s view that it would increase costs and not provide meaningful information to the shareholders.

AGAINST

vi. Restrict Charitable Contributions - Restrict charitable contributions made by the

company. The Board has voted “no” consistently in the past three years.

AGAINST

vii. Political Contributions - The company would affirm political non-partisanship by avoiding practices such as distributing contribution cards during supervisory meetings. The Board has consistently voted “no”. It is the board’s view that employees have the right to participate in the political process as they see fit. It is not the company’s business to encourage or discourage employee’s political activities.

AGAINST

viii. Disclosure of Political Contributions Under Corporate Governance - It requires the

company to publish in major U.S. newspapers a statement of political contributions made during a specified time period. The Board has consistently voted against such proposals. It is the Board’s view that such disclosure unnecessarily adds to the company’s expense and serves no useful purpose for shareholders.

AGAINST

ix. Director Ownership of Stock - Directors of the company would be required to own

a minimum number of shares of the company’s stock. The Board has voted against this proposal. It is the Board’s view that a director’s personal financial status is not an indicator of his/her qualifications as a board member.

AGAINST

x. Nomination Statement by the Board of Directors Candidates - Candidates for the

company’s board would provide reasons why shareholders should vote for them. The Board has consistently voted for this proposal. It is the Board’s view that nomination statements would be useful for shareholders in casting their votes.

FOR

xi. Union Representation on Board - Mandate union members be put on the

company’s board of directors. The Board has consistently voted against such proposals. It is the Board’s view that such a member would represent a special interest group, and that the company’s board should represent the interest of all shareholders.

AGAINST

xii. Removal of Poison Pills - Removal of poison pills such as “shareholder rights”

including a “super majority” vote requirement. The Board has consistently voted

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for such proposals. The Board believes that poison pills allow company management to become entrenched and could reduce the market value of the stock.

FOR

xiii. Annual Meeting Location, Date, or Format - Rotate the annual meeting location

around major U.S. cities and/or change the date on which annual meeting is held. The Board has consistently voted “no”. It is the Board’s view that it would increase costs and not meaningfully benefit shareholders. Similarly, the Board is against a company holding shareholder meetings by virtual means only (e.g. only through the Internet). Virtual meeting technology can be a useful complement to a traditional, in-person shareholder meeting by expanding participation of shareholders who are unable to attend a shareholder meeting in person (i.e. a “hybrid meeting”). However, virtual-only meetings have the potential to curb the ability of a company’s shareholders to meaningfully communicate with the company’s management. The Board may vote against proposals to set a shortened notice period for shareholder meetings, in cases where it appears shareholders would be unreasonably disenfranchised as a result.

AGAINST

xiv. Governmental Service - The company will report to shareholders each year a list

of people employed by the company with the rank of Vice President or above, or as a consultant, lobbyist, legal counsel, investment banker or director, who in the previous five years have served in any governmental capacity, provided that information affecting the company’s competitive position may be omitted. The Board has consistently voted against such proposals. It is the Board’s view that such a report adds cost to the company without providing additional shareholder value. AGAINST

xv. Retaliatory measures against companies for changing or not changing their annual

meeting dates. A shareholder proposes retaliatory measures against the companies who do not schedule their annual meeting on dates that the shareholder finds desirable. An example of a retaliatory measure would be requesting any financial institution to stop making loans to companies that have changed their annual meeting dates to conflict with another company’s meeting date.

AGAINST

xvi. Provide Choice of Directors - Requires that for each directorship to be filled the

company submit two or more nominees, one of which would be elected by shareholders at annual meetings. The Board believes that this requirement would only complicate the nominating and electing process and that nominating committees of the company should be allowed to select and nominate the best candidates for directors.

AGAINST

xvii. Limit Term for Outside Directors - Limits terms of outside directors to an arbitrary

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number of years. The Board believes that arbitrary term limits would deprive a company of directors with valuable experience, knowledge and perspective.

AGAINST

xviii. Abolish Political Action Committee - Requires the elimination of political action

committees established by the company to encourage voluntary contributions to the employee’s chosen political candidates or parties. It is the Board’s view that employees have the right to participate in the political process as they see fit and that companies may provide convenience in exercising this right.

AGAINST

xix. Shareholder Oversight Committee - Proposals to form a committee of

shareholders whose job is to advise the Board of Directors on vital policy matters and make certain that the Board of Directors is doing its oversight function effectively. Our Board believes that the committee’s work would be duplicative, expensive and bureaucratic and would only hinder management’s ability to act quickly in responding to a problem or opportunity.

AGAINST

xx. Independence of Board and Committees - Proxies dealing with shareholder

proposals to require each member of the company’s board to satisfy certain criteria of independence. The proposals argue that the adoption of the criteria would ensure effective oversight of the executive department by the independent board. Some criteria prohibit directorship by any person connected to a firm that provides the company “significant” amount of business in consulting, legal, sale of goods or other services. Our retirement board agrees with the need for board independence but find some of the criteria too rigid, subjective, non-specific and difficult to implement. Our board believes that blind application of these criteria would prevent the hiring of the most qualified directors. Instead, our board believes that independence can also be achieved by increasing the proportion of the number of outside directors (who will have the presumption of independence) to the number of employee-directors (who will be presumed to be not independent). In the recent past, there have been numerous independence proposals. To simplify the determination of how to vote on these proposals, our board would determine quantitatively whether a company’s board and its key committees (nominating, audit and compensation) are “substantially independent”. The rule will be that whenever the existing number of employee-directors on the company’s board does not exceed 30% of all members, or conversely, if the number of outside directors is at least 70%, the company’s board and all its committees would be considered “substantially independent” and the independence proposal would automatically be voted against.

AGAINST

xxi. Ratification of Auditors / Accounts & Reports - Like directors, auditors should be

free from conflicts of interest and should assiduously avoid situations that require them to make choices between their own interests and the interests of the shareholders they serve. Therefore, the Plan will vote against ratification of an auditor where the non-audit fees exceed fees paid for audit services. In some markets outside the United States, companies will routinely propose approval of

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the company’s financial statements (“accounts and reports”) at annual shareholder meetings. The Board generally supports these proposals, unless they are lacking sufficient auditor review.

xxii. Performance of Audit Committee - The Board will withhold for all members of an audit committee who are up for election and who served on the committee at the time of the audit, if audit and audit-related fees total less than one-third of the total fees billed by the auditor.

xxiii. Majority Voting for Directors - The Board will vote in favor of proposals that

recommend or require that companies adopt a majority vote standard for election of directors unless the company has a by-law requiring majority voting.

FOR

xxiv. Election of Directors - The Board will withhold support for directors who fail to

attend more than 75% of board and committee meetings. The Plan will also withhold support from directors who serve on more than five public company boards and executives who serve on more than two public company boards.

xxv. Independence of Directors - In examining the independence of directors, the Board will apply the independence definition of the applicable stock exchange.

xxvi. Independence of Board - The Board will withhold for inside and/or affiliated

directors in order to satisfy a two-thirds board independence threshold.

xxvii. Leadership of Board - The Board will withhold for the nominating and corporate governance committee chair when the company has neither an independent chairman nor independent lead director. The Board will follow the recommendation of its proxy advisor in evaluating proposals regarding the independence of the board chair and the separation of the chair and CEO positions.

xxviii. Shareholder access to the proxy - The Board will support shareholder proposals

seeking shareholder access to the proxy in cases where there are sufficient safeguards built into the proposal limiting its use to shareholders with a specified minimum level of ownership that have held the shares for a specified minimum period of time.

xxix. Adoption of Exclusive Forum Provision - The Board will withhold for the nominating

and corporate governance committee chair when a company adopts an exclusive forum provision without shareholder approval outside of a spin-off, merger or Initial Public Offering.

xxx. Amendments to Company Articles or Bylaws - Management or shareholders

proposing to amend, modify or repeal company bylaws or articles of incorporation. The Board will follow the recommendation of its proxy advisor when evaluating these proposals. The proxy advisor typically believes changes to company articles or bylaws are best made at the discretion of management, except when such changes have a potentially negative impact on shareholder rights or responsible corporate governance.

xxxi. Bundled Proposals - Proposals bundled together with unrelated items on the

agenda. The Board may vote against such bundled items if the proposals in

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aggregate undermine shareholder rights or otherwise violate the Board’s guidelines.

2. Business Related

i. Arbitrary Cap on Executive Compensation - Limit executives’ total compensation to any arbitrary benchmark, such as 25 times the average employees’ salary, or 150 times the salary of the United States President. The Board has voted “no” consistently on such proposals. It is the Board’s view that any compensation cap based on arbitrary benchmarks does not take into consideration the company’s performance and would disadvantage the company’s ability to attract and retain key executives.

AGAINST

ii. Disclosure of Executive Compensation - Disclose the name and title of all executives who are contractually earning more than $100,000 in annual compensation. The Board has voted “no” consistently. It is the Board’s view that such disclosure serves no useful purpose for the shareholders and would increase administrative expense of the company.

AGAINST

iii. Mergers and Acquisitions - Shareholder proposals that required shareholders’ approval to consummate any merger, acquisition or sale of business units larger than an arbitrary dollar amount, such as 50 million or 2% of assets. The Board has consistently voted “no”. It is the Board’s view that it is management’s responsibility to manage and operate the company’s business including buying and selling business units, and that such shareholder approval would put the company at a competitive disadvantage.

AGAINST

iv. Split Stock - Shareholders requesting splitting the stock to lower the price of stock

and broaden the stock’s appeal to small investors. The Board has voted “no”. It is the Board’s view that such determination should be made by the Board of Directors.

AGAINST

v. Economic Conversion - The company could establish an economic conversion

plan which would convert military/defense business into non-military business. The Board has consistently voted against such proposals. It is the Board’s view that company management has the responsibility to see to it that the conversion from military to non-military business would have the least impact on the shareholder’s interest.

AGAINST

vi. Report on Impact of NAFTA - Shareholders requesting the company to prepare a

report on the impact of NAFTA on the company business. It is our Board’s view that a report is an unproductive use of company’s resource. Management has the responsibility of monitoring all trends, laws and regulations that may impact the

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company.

AGAINST

vii. Executive Compensation Review - Shareholders requesting the company to conduct a review of executive’s compensation, and how it may be linked to business, social and environmental goals. It is our Board’s view that such a review serves no useful purpose and would be a waste of company resource.

AGAINST

viii. Stock Based Compensation Plan - The Board will follow the recommendations of

its proxy advisor in evaluating stock-based compensation plans. The proxy advisor analysis is quantitative and is focused on the cost of a plan as compared to the operating metrics of the business. The analysis compares the program with both absolute limits that are key to equity value creation and with the practices of a carefully chosen peer group for each company. In general, the proxy advisor model seeks to determine whether the proposed plan is either absolutely excessive or is more than one standard deviation away from the average plan for the peer group on a range of criteria, including dilution to shareholders and the projected annual cost relative to the company’s financial performance.

ix. Option Backdating - The Board will withhold votes from compensation committee members who served on the compensation committee during a time a company backdated options.

x. Advisory Votes on Compensation - The Board will vote in favor of proposals calling

for annual non-binding votes on executive compensation. These proposals would allow shareholders to have real input on executive compensation practices. Furthermore, the Board will follow the recommendations of its proxy advisor in evaluating such non-binding advisory votes on executive compensation. The proxy advisor reviews each company’s compensation on a case-by-case basis, considering the context of industry, size, maturity, performance, financial condition, historic pay for performance practices, and any other relevant internal or external factors. The analysis has two main components: (i) a qualitative assessment of the structure of a company’s compensation program and the accompanying disclosure; and (ii) a quantitative assessment reflected in a proprietary pay-for-performance grade to address the relationship between relative executive compensation and relative performance among the company’s peers. In addition, qualitative factors such as an effective overall incentive structure, the relevance of selected performance metrics, significant forthcoming enhancements or reasonable long-term payout levels may result in support of a proposal even when there appears to be a quantitative disconnect between pay and performance.

xi. Linking Executive Pay with Performance - The Board will support shareholder

proposals seeking or requiring that companies link executive pay to performance as long as they do not seek to set specified amounts or seek to cap executive pay.

FOR

xii. Increase in Authorized Shares - The Board will vote in favor of proposals to increase authorized shares to effect a split as well as to reserve shares for specified future uses. Where a company has not provided a specific purpose for

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the increase, the Board would vote against an increase in authorized shares where the number of shares asked, if granted, would result in an increase in the ratio of unissued (reserved) shares to total authorized shares of more than three times.

xiii. Director Compensation Plans - The Board will follow the recommendations of its proxy advisor in evaluating director compensation plans as long as the plan does not allow stock options to be priced below 85% of fair market value on the grant date for non-employee directors, in which case the Board will vote against the plan. The analysis is based on a proprietary model comparing the cost of a plan compared to the plans of comparable companies with similar market capitalizations, as well as a case-by-case review by analysts.

xiv. Post-employment/Severance Agreements - The Board will follow the

recommendations of its proxy advisor in evaluating post-employment or severance plans (including so-called “Golden Parachutes.”) The proxy advisor uses a proprietary model to evaluate the value of such plans, as well as case-by-case review by analysts.

xv. Employee Stock Purchase Plan - The plan must be open to all or virtually all

employees. The plan is administered through payroll deduction. The price at which the stock may be purchased must be at least 85% of fair market value. The plan provides a maximum amount of payroll deduction and maximum number of shares per employee per payroll accumulation period.

FOR

xvi. Stock Plan For Non-Employee Directors In Lieu Of Fees - The plan may grant nonqualified stock options or restricted stocks to outside directors in lieu of the cash fees due to these directors. The exercise price must be at least 85% of the fair market value at the date of grant. There must be a limit to the number of options issued to each director. In restricted stocks, the period within which the directors are not allowed to transfer the stocks must be at least three years from exercise date. All options must expire five years after the date of grant.

FOR

xvii. Shareholder Approval of Executive Compensation - Require shareholder approval to allow the company to grant base compensation to executives in excess of an arbitrary amount or to grant bonuses, options and other compensations in excess of an arbitrary percentage of base compensation. The Board believes that arbitrary caps on executive compensation which do not consider company’s performance would intrude on management’s prerogative and would disadvantage the company’s flexibility and ability to attract and retain key executives.

AGAINST

xviii. Change of Company’s Name - All proposals by management to change the

company’s name as a result of or subsequent to a merger or acquisition or disposal of a portion of the company’s business or in every instance where the proposed new name would more aptly describe the type, nature, composition, geographical location or substance of the company’s existing business.

FOR

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xix. Elimination of Pension Benefits for Outside Directors - All proposals by either

shareholders or management not to grant pension benefits to outside directors hired in the future and to stop accruing further benefits for existing outside directors. This policy will not cover the cases where in the same proposal, management proposes a new director compensation plan designed to compensate for the elimination of pension benefits.

FOR

xx. Change of Control Triggering Unjustified Accrual of Benefits - Provision in incentive

plan that would automatically eliminate all restrictions on stock awards, allow immediate exercise of options or pay benefits when Change of Control is defined to include situations in which a person or a group acquires even less than 20% of the total number of shares outstanding that may be cast for the election of directors of the company. In most cases, incentive plan participants would not accrue benefits as a result of any acquisition of voting shares involving a percentage smaller than 20%, unless it is accompanied by management changes or an actual takeover of the company.

AGAINST

xxi. Outsiders Eligible for Benefits Under Employee Incentive Plans - Employee incentive plans that include as eligible participants those consultants and other persons not employed by the company or its subsidiaries.

AGAINST

xxii. Restricted Stock Neither Tied To Performance Nor Limited - Employee incentive

plans with awards of restricted stock not limited in number of shares, with no cost to the recipient, not tied to performance and given mainly to discourage resignations by restricting the sale or transfer of the stock during a time period. The cost to the company and to its shareholders of this type of awards can be controlled by clearly capping the number of restricted stock that can be granted to each individual or in the aggregate.

AGAINST

xxiii. Housekeeping and Maintenance of Certificate of Incorporation - Deletion of

obsolete materials from the certificate and the necessary updating of the certificate for routine matters such as current addresses of service agents, and the like.

FOR

xxiv. Elimination of Options and Stock Appreciation Rights - Shareholder proposing to

discontinue granting stock options and related rights, arguing that these are costly to administer and ineffective in retaining qualified people. However, the board believes that the company could be competitively disadvantaged without the ability to grant these incentives. Further, the board believes that options and SAR’s do contribute to shareholder value as long as the potential dilution they cause is not excessive.

AGAINST

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xxv. Suspension of Pay Raises and Options Grants on Cut of Dividend - Shareholder

proposing to force a company that cuts dividend to suspend giving raises or options, arguing that executives and directors are responsible for lack of dividends and should also suffer certain consequences. The board disagrees that a cut in dividends is always a direct result of poor management performance. In a cyclical business like the car business, for instance, such a restriction could lead management to maintain a dividend or dividend level despite the fact that it would be detrimental to the financial health of the company.

AGAINST

xxvi. Merger Increasing Shareholder Value - This will include all mergers in which the

acquiring company whose stock is in our portfolio has agreed to a merger price below the indicated value of the company being acquired or in which the acquired company whose stock is in our portfolio has agreed to a merger price above its indicated value. The indicated value of the company being acquired shall be determined based on the comparisons between the merging companies’ historical financial positions and results and based on the acquired company’s contributions to the merged companies’ financial position and results. The prospects for the merged companies’ earnings and stock price must also be considered. Both the staff and the investment advisor(s) must agree to the soundness of the mergers.

FOR

xxvii. Merger Decreasing Shareholder Value - This will include all mergers in which the

acquiring company whose stock is in our portfolio has agreed to a merger price above the indicated value of the company being acquired or in which the acquired company whose stock is in our portfolio has agreed to a merger price below its indicated value. The indicated value of the company being acquired shall be determined based on the comparisons between the merging companies’ historical financial positions and results and based on the acquired company’s contributions to the merged companies’ financial position and results. The prospects for the merged companies’ earnings and stock price must also be considered. Both the staff and the investment advisor(s) must agree that the merger would negatively impact the portfolio.

AGAINST

xxviii. Incentive Bonus Plans without Dollar Caps - Companies submit bonus plans to

shareholders for approval to secure exemption from the tax provision limiting the salary tax deduction to $1 million for each employee. Since the company is forced to seek shareholder approval, the tax provision provides a good opportunity for shareholders to vote against excessive compensation. In past cases, our board did not approve plans that determined the bonuses to individual employees by calculating the product of the net income or other earnings figure multiplied by a predetermined fixed percentage. Under this calculation and without a maximum limit, future bonuses could grow to huge sums as the earnings or the other variables used as bases grow. This could result in the payment of bonuses that are excessive and are not representative of the employee performances. Our board would automatically vote against any incentive bonus plan that does not provide for a maximum limit amount for each employee participant for each bonus year.

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AGAINST

xxix. Authority to Repurchase or Reissue Shares - Proposals requesting the authority

to conduct share buybacks or reissue treasury shares. The Board will follow the recommendations of its proxy advisor in evaluating proposals to re-purchase outstanding shares or to re-issue treasury shares. The proxy advisor uses a proprietary model to evaluate the potential effect of repurchases or reissuances on share value and whether such operations are in the best interest of shareholders.

xxx. Multi-class Share Structures – The Board believes that dual- or multi-class share structures are typically not in the best interests of common shareholders, and allowing one vote per share generally can protect common shareholders by ensuring that those who hold a minority of shares still have a voice on issues set forth by the board. With multi- or dual-class share structures, the voting power of one class of shareholders may be significantly different from that of the common shareholders, giving a small group of shareholders a significant amount of control over the affairs of the company. Furthermore, the economic stake of some shareholders could differ from the voting power, causing an uneven playing field. The Board will generally vote in favor of proposals to eliminate dual-class share structures. Similarly, we will generally vote against proposals to adopt a new class of common stock.

xxxi. Authority to Transact Other Business – Proposals requesting shareholder approval

to conduct additional undefined business at the shareholder meeting, which has not yet been disclosed in proxy materials ahead of the meeting. A typical proposal might read: “In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any and all adjournments thereof.” By giving wide-ranging approval for unspecified activity, shareholders voting electronically (or less-commonly through the mail) would inherently grant full discretion to the individual serving as the in-person proxy at the meeting, without advance notice of the matters addressed. The Board does not approve of giving its proxy to management to vote on such other business items that may arise during an annual or special meeting. Since shareholders cannot know details beforehand (at the time of voting by proxy), this is viewed as giving unwarranted discretion.

3. Social Related

i. Withdrawal from Nuclear Facilities - Withdraw from the nuclear weapons business. The Board has voted “no” consistently. It is the Board’s view that the determination of the types of business ventures undertaken by the company is best left to the management of the company and its Board of Directors.

AGAINST

ii. Military Contracts - Provide a report on military contract acceptance and execution

with proprietary information omitted. The Board has voted “no” consistently. It is the Board’s view that the report would add expense and not be pertinent since proprietary data would be excluded.

AGAINST

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iii. Animal Testing - Eliminate animal testing wherever possible. The Board has voted “no” consistently. It is the Board’s view that it should be management’s decision to use animal testing if necessary to ensure safety of its products.

AGAINST

iv. New Energy Policy - Expand energy conservation, reduce waste, utilize renewable

energy resources, and implement least-cost energy planning to minimize environmental damages. The Board has voted “no” consistently. It is the Board’s view that implementation of such a policy would be costly and would duplicate policies that have already been put into effect. There is also a concern that if the company cannot receive cooperation from regulatory agencies such as the state’s PUC, efforts to implement the shareholder’s policy could result in there being no policy at all.

AGAINST

v. CERES Principles - The CERES Principles is the previous Valdez Principles with

some modification. The proposal requests that the company endorse the Principles, make reports and pay fees on the report. The Board discussed the effect of the Principles over the past two years; at one point the Board began to abstain, but after reviewing specific companies’ environmental policies, it appeared that the Principles meddled too deeply in the companies’ business. It is the board’s view that CERES Principles do not address the environmental issues specific to a company’s business, and it would add to the company’s costs to implement it.

AGAINST

vi. MacBride Principles - The MacBride Principles address the issues of equal

employment opportunity and affirmative action in Northern Ireland. The Board has voted “no” consistently on such proposals.

AGAINST

vii. Sales to ESCOM - Provide a report on the company’s business relationships to

ESCOM in South Africa, provided proprietary information is omitted. ESCOM is a principal source of electrical power supplying more than 50% of the electricity used on the African continent, and it serves the entire South Africa. The Board voted “no” consistently. It is the Board’s view that such a report would add cost to the company and unnecessarily meddle in the business affairs to the company.

AGAINST

viii. Sales to SASOL - Provide a report on the company’s business relationship with

South Africa Coal, Oil and Gas Corporation (SASOL). The report would include 1) what is the current value of outstanding contracts awarded by SASOL, 2) what percentage of sales in South Africa comes from sales to SASOL, 3) what goods and services does the company provide to SASOL, 4) does the company sell goods and services to any government, 5) has South Africa government compelled the company to do business with it. The Board voted “no” in the last 2 years. It is the Board’s view that such a report would add cost to the company and unnecessarily meddle in the business affairs of the company.

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AGAINST

ix. Shareholder Proposals on Altering Company’s Business Directions Relating to

Tobacco, Alcohol and/or Firearms Businesses - Shareholders request the company to change the business direction and /or practices of the company. Examples of such proposals are as follows; 1) Conduct a report on consumer perceptions of cigarette advertisements to ensure company adherence to the Cigarette Advertising Code adopted in 1964, 2) Conduct a report on steps taken to discourage minors’ use of tobacco or alcohol, 3) Provide global health warning on cigarette sales worldwide, 4) Conduct a report on company’s promotion of lower priced cigarettes to African-Americans and lower-income persons, 5) Support the establishment of federal universal background checks for sales of guns and ammunition. The Board has consistently voted against these proposals. It is the Board’s view that such actions would increase costs to the company without providing pertinent information to shareholders.

AGAINST

x. Report on Maquiladora Operations - Requires the company to review and report

recommended changes on wages and benefits and environmental standards in Maquiladora operations in Mexico. The Board has consistently voted against any demands for more reports that would serve no purpose. It is the Board’s view that company’s management should make the decision as to wages and work conditions that would be fair, competitive and in compliance with local laws and regulations.

AGAINST

xi. Code of Conduct, EEO and Human Rights - Shareholder advocacy groups

recommending that the company review, change or expand and report their “code of conduct” or policies, guiding principles and objectives governing various sensitive areas including equal employment opportunity and worldwide labor and environmental protection laws, foreign investments and issues of human rights. The proposals’ predominant concern appear to be the wider political, religious, social or moral implications while the specific economic effects of the proposal on the company itself are given little or no emphasis. In some cases, the shareholder advocacy groups recommend a more direct action than producing reports, e.g. termination of business in a foreign region that does not observe human rights or a recitation of specific company commitments to address the proposal’s concern. The Board has consistently voted against shareholder demands for more reports that would serve no purpose. The Board has also expressed disfavor of uneconomic demands that would also intrude deeply into the management’s prerogative. However, the Board has required to see in the company’s supporting arguments some indications that there is a code of conduct for the areas in question or that the company has taken or committed to take actions to conform with its code of conduct, and that the company is in full compliance with all the appropriate laws of the U.S. and the foreign countries in which the company operates. AGAINST

xii. Other Reports Not Specifically Itemized in the Policy - Any proposal requesting

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that a company prepare a report on any subject. The Board recognizes the fiduciary responsibility of voting proxies in a manner that maximizes long-term return for plan participants while encouraging companies to identify and mitigate financial, legal and reputational risks that could affect the company financially. Therefore, the Board believes that, in limited cases, such reports can provide relevant information about current or future risks to a company, whether environmental, labor or otherwise. However, the expense of researching and creating reports must be balanced against the potential risk to the company and by extension, shareholders, and whether the information is already provided to shareholders. Therefore, the Plan will generally support proposals that seek reports from companies regarding undisclosed potential risks to the company, such as from environmental or employment practices, but will oppose prescriptive proposals that seek the implementation of certain policies and actions, the cessation of certain activities or the adoption of certain principles and codes of conduct.

xiii. Divestment in Countries Implicated in Human Rights Abuse - The Board will follow the recommendations of its proxy advisor in evaluating proposals regarding a company’s divestment of operations and the cessation of conducting business in certain countries where human rights abuse have occurred in consideration of potential financial risks, whether direct or reputational, as well as regulatory mandates regarding limitations on investing in companies doing business in certain countries.

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Reference Resolution Number

Approval Date Explanation

Part V, Section 5.1 03-60 2/26/2003 Adopted (A) general investment guidelines and objectives for the DWP Retirement Plan and (B) specific investment guidelines and objectives for the Plan's passive Russell 1000 investment manager.

Part VI, Sections 6.1, 6.2, 6.3

04-02 7/10/2003 Adopted general guidelines for the International Investments/Developed markets segment, and specific guidelines for the growth, core, and value investment manager styles.

Part V, Sections 5.1, 5.2, 5.3

04-32 9/17/2003 Adopted (A) specific guidelines for the Plan's domestic equity large cap growth and large cap value investment managers, and (B) amendment of investment guidelines and objectives for the Plan's passive Russell 1000 investment managers which were adopted in Reso 03-60 on 2/26/03.

Part V, Sections 5.1, 5.2, 5.3

04-57 12/17/2003 Amended the Plan's investment guidelines to provide specific guidelines for its active growth/value/core international equity segment of the portfolio.

Part V, Sections 5.4, 5.5

04-64 1/15/2004 Amended the Plan's investment guidelines to provide specific guidelines for its domestic small cap equity portfolio.

Part III, Section 3.3; Part IV, Section 4.2; Part VI, Section 6.2

04-82 2/18/2004 (A) Amended Fidelity Management Trust Company's benchmark from MSCI EAFE+Canada to MSCI EAFE, and (B) eliminated conflicting language in the investment guidelines re: fixed income (moved permissible securities from high yield to core fixed income section). Also attached copy of Board proxy policies as an exhibit.

Part III, Section 3.3; Part IV, Section 4.2; Part VI, Section 6.4

04-94 3/17/2004 1. Deleted reference to managers' proxy policies; 2. Clarified investment limits for diversification purposes in active large cap value domestic equity guidelines; 3. Provided guidelines for emerging markets equity managers; 4. Provided guidelines for active fixed income managers; 5. Expanded Table of Contents to include separate sections for above guidelines.

Part IV, Section 4.2 04-130 6/16/2004 Clarified language in the active high yield fixed income segment (notification in event of downgrade below single C).

Part VI, Section 6.2 05-13 7/21/2004 Accepted guidelines of Fidelity Management Trust commingled fund to supersede the Plan's approved guidelines for international equity mandate.

Part V, Section 5.4 Part VI, Sections 6.4, 6.5

05-28 05-29 05-30

9/15/2004 Changed language in active small cap value domestic equity segment (ETFs may be used to temporarily invest excess cash); accepting guidelines of T.Rowe Price's commingled fund to supersede the Plan's approved guidelines for emerging market mandate; accepting the guidelines of The Boston Company's commingled fund to supersede the Plan's approved guidelines for emerging market mandate.

Part IV, Section 4.2 05-42 10/20/2004 Amended the Plan's investment guidelines to add bank loans to the list of permissible investments in the active high yield fixed income manager guidelines.

Part IV, Section 4.2 05-57 12/15/2004 Amended the Plan's investment guidelines for the high yield fixed income mandate by changing certain language set forth in the guidelines.

Part IV, Section 4.2 05-89 6/22/2005 Amended the Plan's investment guidelines for the core and high yield fixed income mandates by changing certain language set forth in the guidelines.

Part IV, Section 4.2 Part VI, Section 6.3

06-18 10/19/2005 Amended the Plan's investment guidelines for fixed income mandates and for the international equity mandates by changing certain language set forth in the guidelines (recognition of Fitch bond ratings, clarified international benchmark MSCI EAFE + Canada Value net dividends index).

Part IV 06-25 12/7/2005 Amended the Plan’s investment guidelines to add section 4.0 - the investment manager performance monitoring procedures and criteria recommended by consultant.

Part IX, Section 9.2 Part X Part XI

07-61 07-62

4/4/2007 Updated the policy benchmark by incorporating benchmarks for real estate and alternative investments: for private equity, the new Cambridge Associates PE/VC blended index which includes an 85% allocation to the Cambridge Associates U.S. Private Equity Index and a 15% allocation to the Cambridge Associates U.S. Venture Capital Index benchmark; NCRIEF index for real estate asset class; T-Bills + 3% for hedge funds.

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Reference Resolution Number

Approval Date Explanation

Part V, Section 5.1.5 08-05 8/1/2007 Updated the investment policy to incorporate the reconstitution of the Russell indices to include Benefit Driven Incorporations (BDIs) and to better define American Depository Receipts (ADRs) and exclude them from the investment policy.

08-49 1/16/2008 Ratified the Board’s action in connection with the adoption of a new asset

allocation structure. Part V, Section 5.3 09-13 8/20/2008 Amended the investment policy to lower the R-squared value for Fred Alger

management.

Part III, Section 3.4 09-16 8/20/2008 Modified the derivatives language.

Part VI, Section 6.2.4

09-58 1/21/2009 Amended the investment guidelines for Pyramis Global Advisors on max exposure limits.

Part VII, Section 7.1.1, Section 7.2.1

09-92 4/15/2009 Changed to the investment guidelines to permit holding in equity securities resulting from debt restructuring.

Part VI, Section 6.2.1, Section 6.3.1, Section 6.4.1, Section 6.5.1

09-93 4/15/2009 Revised investment policy guidelines to allow 144a securities for international equity managers.

Part V, Section 5.1.5, Section 5.2.5, Section 5.3.5, Section 5.4.5, Section 5.5.5

09-94 4/15/2009 Modified investment policy language for domestic managers with respect to international securities.

Part IV, Section 4.6 10-04 7/1/2009 Revised the investment policy to add a provision for the use of placement agents and third-party marketers.

Part V, Section 5.5.1 (exceptions)

10-52 1/13/2010 Amended the investment guidelines by raising the cash limit from five percent to eight percent for Frontier’s small cap growth mandate.

Part IX, Section 9.1 10-56 1/27/2010 Adopted Western Asset Management Company’s global inflation-linked securities (GILS) investment policy.

Part VI, Sections 6.2.1,6.3.1,6.4.1, 6.5.1

11-01 7/14/2010 Changed the investment policy to address future index reconstitutions for international developed markets equity mandates and emerging markets equity mandates.

Part II, Section 2.1 11-03 7/14/2010 Implemented the Retirement Plan’s evolving investment policy allocation schedule on October 1, 2010; implemented the newly adopted evolving investment policy allocation schedule for the Retiree Health Benefits Fund effective July 1, 2010; allocated the $100 million contribution from DWP according to the newly adopted evolving investment policy allocation schedule for the Retiree Health Benefits Fund; and reallocate $40 million pro-rata from the BlackRock passive account to the Plan’s three international developed managers.

Part X 11-09 8/18/2010 Incorporated revisions approved in the Real Estate Policy into the Plan’s Statement of Investment Objectives, Goals, and Guidelines.

Part XIII, Section 1 11-39 11/10/2010 Restricted the purchase of bonds issued by the City of Los Angeles, DWP, and its affiliates.

Part IV, Section 4.3 11-70 2/23/2011 GILS: Real Return Watch criteria added under "Schedule 1: Managers Watch Criteria."

Part VII 11-82 4/13/2011 Restricted T. Rowe from purchasing an issue in the portfolio if the manager holds 15% of the outstanding shares of that issuer company in all of its accounts.

Part II, Section 2.1 11-96 11-97

6/22/2011 Amended Plan's investment allocation targets and investment policy allocations.

Part II, Section 2.0.7 Part XV

12-07 7/27/2011 Approved Covered Calls Policy to be incorporated in the investment policy and attached to the RFP for the Covered Calls mandate.

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Reference Resolution Number

Approval Date Explanation

Part XX 12-13 8/10/2011 Revised the Placement Agent Policy to better protect the Plan and reflect the market conditions that are representative of the Plan’s investment commitments.

Part VI & Part XVIII, Benchmark

12-26

12-27

9/28/2011 Adopted a restructuring plan for the International Equity asset class. Adopted Russell 3000 + 300 basis points as the benchmark the overall performance of the private equity portfolio.

Part XVII Part XVIII

12-62 2/22/2012 Moved the target date for the inclusion of Covered Calls in the investment policy from October 1, 2011 to April 1, 2012.

Part XXI, attachment C

12-64 3/14/2012 Approved Timber investment guidelines and incorporated it in the investment policy.

Part XXI, attachment B

12-69 3/28/2012 Approved Commodities investment guidelines and incorporated it in the investment policy.

Parts VI & VII 12-78

12-79

5/9/2012 Adopted passive developed international equity investment guidelines. Adopted active value international equity guidelines.

Part IV, Section 4.3, schedule 1

12-82 5/23/2012 Added watch criteria for active & passive covered calls and passive international equity mandates.

Part XVI 12-89 6/13/2012 Approved the use of interest rate futures and option on government securities in the Global Inflation Linked Securities (GILS) mandate.

Part VI, Section 6.3.4

13-06 7/11/2012 Granted MFS an increase in firm-wide ownership allowance of 15% per company from 10%.

Part IV, Section 4.5.4

13-07 7/11/2012 Revised the policy to provide active high yield fixed income managers higher threshold for watch criteria.

Part IV, Section 4.7 13-12 8/8/2012 Updated securities lending investment guidelines.

Part IX, Section 9.2 12-23 9/26/2012 Restructured the Real Return asset class to increase exposure in the Hedge Fund of Funds (HFoF) allocation. Revised guidelines to include managers that utilized Convergent and Divergent investment strategies.

Part VI, Sections 6.2, 6.3, 6.4 and 6.5

13-27 10/10/2012 Allowed Active International Equity managers the use of put and call options to hedge currency positions.

Part X, Part XI 13-54 1/23/2013 Allowed for the use of an in-kind manager to manage/liquidate in-kind distributions from the Plan’s private markets investment managers.

Part III 13-58 2/13/2013 Revised the IPS to include the investment manager’s responsibility to replicate, both in structure and holdings, the Plan’s portfolios in the Retirement Fund and Retiree Health Benefits Fund.

Part X 13-85 6/12/2013 Changed the target allocation range for Core real estate to 50-100%; widen the target allocation range for Value-Add real estate to 0-40; and widen the target allocation range for Opportunistic real estate to 0-20%.

Proxy Policy 14-05 8/14/2013 Amended the Proxy Policy to allow for automated proxy voting involving human rights issues, based on Glass Lewis’ recommendation.

Securities Lending Agreement

14-06 8/14/2013 Amended the Securities Lending Program agreement to incorporate equity non-cash collateral including indemnification provisions.

Part X, Section 10.3 14-18 10/9/2013 Added guidelines for Ongoing Real Estate Manager Evaluation for open-end commingled funds and REIT managers and incorporate them.

Part X, Section 10.4 14-20 10/9/2013 Adopted the Global REIT Investment Guidelines and incorporate them into in the Real Estate section.

Part VI, Section 6.2 14-21 10/9/2013 Revised the format of the international equity investment guidelines and established manager-specific guidelines for the active growth international equity portfolio managed by Pyramis.

Part IV, Section 4.5.4

14-22 10/9/2013 Enhanced the language on watch status monitoring process for the Public Market Managers regarding material organizational changes.

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Reference Resolution Number

Approval Date Explanation

Part II, Section 2.2.7 Part IX, Section 9.2

14-43 14-44

14-45

11/27/2013 Changed the allocation in the Covered Calls Investment Guidelines between Active and Replication accounts. Increased the allocation of the Covered Calls portfolios to 50% from 20% for the Active mandate and decreased the allocation for the Replication mandate to 50% from 80%. Adopted the revised manager specific Investment Guidelines for both the Convergent and Divergent Hedge Fund of Funds mandates.

Part IV, Section 4.5.4

14-60 1/22/2014 Added watch status criteria for Active Commodities.

Part IX, Section 9.2 14-63 2/12/2014 Adopted language to allow the Plan’s Convergent HFoF manager additional three months to provide a full redemption of the Plan’s investment, if not possible within 12 months.

Part XI, Section 11.3 Part IX, Section 9.2

14-70

14-73

3/26/2014 Changed the Private Equity guidelines to broaden the types of private equity investments the retirement Board can consider and reduce fees. Revised the guidelines for the Divergent HFoF mandate to reduce the lower the volatility range from 6%-9% to 4%-7% and clarified the language associated with the correlation requirement.

Part IV, Section 4.2 Part VII

15-41 12/10/2014 Revised the Fixed Income guidelines to reflect the structural changes made to the mandate.

Part IV, Section 4.2 Part VII

16-16 8/26/2015 Revised the Fixed Income guidelines to change the U.S. Bank Loans benchmark to the Credit Suisse Leveraged Loan Index from the Barclays U.S. Bank Loans Index. Revised the Fixed Income guidelines to allow for Principal Protection managers the ability to include 144a securities in their portfolios. Additionally, limit combined exposure to ABS and CMBS for these managers to 10%. Revised the Extended Global Credit Fixed Income guidelines to limit below investment grade holdings limit to 60% from 80%, to clarify allowable derivatives and limits, and to allow managers the ability to hold ETFs and Commingled Funds with specified limitations. Established portfolio guidelines for Bank Loan manager.

Part X, Section 10.4 16-32 10/28/2015 Revised the Global Real Estate Investment Trust guidelines to (1) limit the maximum size of a single security to the greater of 5% of the portfolio or 125% of the benchmark weight, expect in no case more than 10% of the portfolio; and (2) allow turnover up to 150%.

Part IX, Section 9.2 16-41 12/9/2015 Revised the GAM and Morgan Stanley guidelines to clarify that an underlying hedge fund investments cannot rely solely on commodities to take risk, but rather that commodity investments may be part of a more diversified strategy.

All Sections 17-12 17-13

9/14/2016 Comprehensive review of the SOIOGG with the objectives of simplification and redundancy reduction, clarification, and to ensure up-to-date industry best practices are being followed. Material changes include updates to the Long-Term Target Asset Allocation, updates to the watch list policy, and the addition of a separate hedge fund section. Section references prior to these changes may not be accurate.

Part IX, Section 9.2 18-17 9/13/2017 Revised the Active Extended Global Credit guidelines to (1) incorporate derivatives language that elaborates on the use of derivatives in certain situations and sets limits based on certain scenarios; and (2) removes the six month term limit for investing in the managers’ commingled fund to allow for strategic investment.

Part XI, Section 11.1 18-18 9/13/2017 Revised the Custom Fund of Hedge Funds guidelines to (1) modify the liquidity constraints for the underlying hedge fund managers; (2) clarify the use of leverage at the partnership level; and (3) slightly increase the aggregate total gross exposure and eliminate the weighted average borrowing restriction.

Part II, Section 2.1 18-40 11/8/2017 Revised the interim asset allocation targets given the current funding level of the Plan’s alternative investments.

Appendix B 18-63 1/24/2018 Revised the proxy voting policy to reflect the most reasonable approach to current proxy voting topics in 2018.

Part II, Section 2.1 Part III, Section 3.5 Part VII Part VIII, Section 8.4 Part IX, Section 9.1

19-09 7/25/2018 Revised the long term asset allocation targets to reflect the approved new target allocations for the global equity asset class. Added guidelines for the two new Board approved equity investment mandates: global equity and international small cap equity.

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Part II, Section 2.1 Part III, Section 3.1 Part III, Section 3.5

19-30 9/26/2018 Added/removed language to comply with the recommendations presented by the Ad Hoc Committee for the Investment-focused Management Audit recommendations.

Appendix B 19-45 12/12/2018 Revised the proxy voting policy to address issues noted during the annual review and to clarify new proxy voting topics for 2019.

All references in the above table refer to the version of the Investment Policy Statements in effect as of the stated approval date.