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Resolution 1988-42 . '~.. ~ ~ .,..,. l 1 . . . :! .'~: RESOLUTION NO. 88-42 RESOLUTION OF THE COUNCIL OF THE CITY OF GILROY ADOPTING A REVISED DEFERRED COMPENSATION PLAN WHEREAS, after study and consultation the Deferred Compensation Plan Advisory Committee and staff has prepared and recommended adoption of the attached Deferred Compensation Plan for the City of Gilroy in order to comply with tax code provisions, and good cause appearing therefor, NOW, THEREFORE, BE IT RESOLVED that the Council of the City of Gilroy approves the attached Deferred Compensation Plan consisting of thirteen pages, and adopts the same to define benefits and procedures for personnel of the City of Gilroy. PASSED AND ADOPTED this 20th day of June 1988, by the following vote: AYES: COUNCILMEMBERS: GAGE, HALE, KLOECKER, MUSSALLEM, VALDEZ AND PALMERLEE NONE HUGHAN NOES: ABSENT: COUNCILMEMBERS: COUNCILMEMBERS APPROVE~ iL n"-i:~em ATTEST: RESOLUTION NO. 88-42 '- '", . CITY OF GILROY DEFERRED COMPENSATION PLAN As Adopted By the City Council, City of Gilroy . , .. ' , , . . . DEFERRED COMPENSATION PLAN FOR CITY OF GILROY SECTION 1. NAME: The name of the Plan is the City of Gilroy Deferred Compensation Plan (hereinafter referred to as the Plan). SECTION 2. PURPOSE: The primary purpose of the Pl an is to attract and hol d personnel by permitting them to enter into agreements with the City of Gilroy which will provide for deferral of payment of a portion of their current compensation until death, disabil ity, retirement, termination of employment or other events as prov i ded herei n. The emp 1 oyer does not and cannot represent or guarantee that any particular federal or state income, payroll or other tax consequence will occur by reason of an Employee's participation in this Plan. A Participant should consult with his own attorney or other representative regarding all tax or other consequences of participation in thi s Pl an. SECTION 3. DEFINITIONS: For the purposes of this Pl an, certain words and phrases used herein wil 1 have the following meanings: 3.1 "Admi ni strator" shall mean the person appoi nted by the emp 1 oyer to admi ni ster the Pl an. 3.2 The term "Annuity Contracts" referred to in this Plan means an annu ity contract (fi xed and/or v ari ab 1 e) issued by an A.M. Best rated A+, A or B+ Life Insurance Company. 3.3 "Beneficiary" means any person designated by the Participant to receive a pension, annuity, death benefit, or other benefit under the provisions of this Plan, by reason for such Participant's death. 3.4 "Compensation" means all wages or salaries to be paid to an Employee for services rendered, without deduction for any portion thereof deferred under the provisions of this Plan or for any amounts contributed to any program estab 1 i shed pursuant to IRC Sections 403(b), 40Hk), 408(k)(6), or 50Hc)(18). 3.5 "Deferred Compensation" means that porti on of an Emp 1 oyee's com- pensation which said Employee has elected to defer in accordance with the provisions of this Deferred Compensation Plan. 1. , , ~ , . . 3.6 "Deferred Retirement Date" means the date beyond the Normal Retirement Date specified in 3.12 which is designated by the Participant. Such date shall not exceed the earl ier of (1) the attainment of the Employer's mandatory retirement age, if any, or (ii) the date on which the Participant incurs a Termination of Employment. 3.7 "Disability shall mean the complete and permanent inability of a participant to engage in his usual occupation by reason of a medically determinable physical or mental impairment as determined solely by the Employer on the basis of advice from a physician or physicians. 3.8 "Eligible Deferred Compensation Plan" has the meaning given it by the Internal Revenue Code Section 457 and the regul ations thereunder. 3.9 "Employer" means the City of Gilroy, a political subdivison. 3.10 "Employee" means any individual defined as eligible by standards set forth by the Employer. 3.11 "Includible Compensation" means the remuneration for services performed for the Employer which is currently includible in gross income. 3.12 "Norma 1 Ret i rement Date" means the 1 ast day of the month in w h i ch a Participant retires pursuant to the normal retirement practices of the Employer. (Such age may be no later than age 70-1/2 and no earlier than the earliest age at which a Participant has the right to retire under the Employer's basic pension plan, without consent of the Employer, and to receive immediate retirement benefits without actuarial or simil ar reduction.) 3.13 "Participant" means any payroll Employee who elects to participate in this Plan by filing a duly executed Participation Agreement with the Emp 1 oyer. 3.14 "Participation Agreement" means the contract by which the Employee and the Employer agree that some of the Employee's compensation will be deferred in accordance with the provisions of the Plan. 3.15 "Participation Account" means the book account to which there is credited the Participant's deferred compensation, together with any interest, dividends, gains, losses, or the like thereon. 3.16 "Plan Year" means the calendar year during which the Plan becomes effective, and each succeeding year during the existence of this Pl an. 3.17 "Termination of Employment" means a payroll Employee who has separated from employment with the City. 2. --.~ , " " . . . 3.18 "Unforeseeable Emergency" means severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Internal Revenue Code Section 152(a)) of the Participant, loss of the Participant's property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Unforeseeable Emergencies do not include any hardships which have not occurred or which are or may be relieved (A) by reimbursement for compensa- tion by insurance or otherwise, (8) by 1 iquidation of the Partici- pant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. SECTION 4. OPERATION OF THE PLAN 4.1 Participation. Any payroll Employee, an elected or appointed official may elect to become a Participant in the Plan and to defer payment of part of his compensation by executing a written Participation Agreement and filing it in the manner set forth in Article IV hereof. Part-time employees may participate with the approval of the Advisory Committee. The dollar amount deferred must equa 1 at 1 east $50.00 per pay period, or such 1 arger amount as may be designated by the Employer from time to time. In addition to a Participant's election to participate pursuant to the preceding paragraph, a Participant may transfer to this Plan amounts previously deferred under another Eligible Deferred Com- pensation Plan maintained by an Employer. Such amounts shall be treated as if they had originally been deferred under this Plan and all applicable provisions of this Plan shall apply. 4.2 Deferral of Compensation. Employer and Participant mutually acknowledge that the Compensation of eac~ Employee is as established by Contract or annual salary commitments of the Employer and that said Compensation includes the dollar amount of funds deferred under the terms of this Plan or set aside under any program establ ished under IRC Section 403(b), 40lCk), 408(k)(6), or 501(c)(18). Employee Compensation shall be paid monthly, or as otherwise provided, except that during each employment year in which the Employee is a Participant in the Plan, that portion of his said Compensation which is specified by the Employee in the Participation Agreement shall be deferred and paid in accordance with the provisions of this Plan. During each employment period in which the employee is a partici- pant in the Pl an, the emp 1 oyer sha 11 defer any payment of such part of his compensation as is specified by the employee in his Participation Agreement provided that, except as provided in this Section, the maximum that each participant may defer under this Plan for any taxable year shall not exceed the lesser of: a. $7,500.00, or b. 33-1/3% of the participant's Includible Compensation. 3. , ,:' . ' " . . 4.3 The maximum deferral described in SECTION 4.2 shall not be appli- cable for one or more of the participant's last three taxable years ending before the attainment of normal retirement age under this Plan. In that instance, the maximum shall be the lesser of: a. $15,000.00, or b. The sum of (1) The maximum deferral amount established for the purposes of SECTION 4.2 for the taxab 1 e year (determi ned without regard to this SECTION), plus (2) So much of the maximum deferral amount established for the purposes of SECTION 4.2 for taxable years before the taxable year as has not theretofore been used under SECTION 4.2 or under this SECTION. 4.4 Ownership of Deferred Amounts. The Employer shall establish and maintain a fund ("the investment fund") to provide a convenient method of setting aside sufficient of its assets to meet its future obligations under this Plan. The Employer shall at all times be the legal and beneficial owner of all assets in the investment fund and neither the existence of the Plan nor the investment fund shall be deemed to create a trust or limit use by the Emp 1 oyer of the funds therei n for general Emp 1 oyer pu rposes. The obligation of the Employer to make payments pursuant to this Plan is contractual only and no Participant or Beneficiary shall have a preferred claim or lien on or to the assets of this investment fund but shall have only the right to receive the benefits payable under the Plan. Interests of a Participant who changes employment may, under certain prescribed conditions, be transferred to the Eligible Deferred Compensation Plan of a new Employer. SECTION 5. ADMINISTRATION AND ACCOUTNING 5.1 Administration by Employer. This Plan shall be administered by an Advisory Committee appointed by the Employer, which shall pre- scribe such forms, and adopt such ru 1 es and regu 1 ations as are necessary to carry out the purposes of the Plan. The Employer may employ investment counsel to provide advice concerning categories of investment, investment guidelines and investment policy, pro- vi ded, however, that the adv ice or recommendations of any such investment counsel shall not be binding on the Employer, which shall make the final determination concerning investment categories, investment guidelines and policies. The Employer may contract with a financially responsible independent contractor to administer and coordinate the Plan under the direction of the Employer. The Administrator shall have the right to designate a Plan Coordinator or other party of its choice to perform such services under this agreement as may be mutually agreed to between 4. . . the Administrator and the Plan Coordinator or other party. Not- withstanding any other provisions to the contrary, the Administrator agrees that it shall be solely responsible to the Emp 1 oyer for any and all serv ices performed by a subcontractor, assignee, or designee under this agreement. 5.2 Election to Participate. An Employee's election to participate in this Deferred Compensation Plan shall be made by filing a duly executed Participation Agreement with the Employer, and not otherwise. 5.3 Enrollment Periods. An Employee shall have the right to elect participation during sp-ecified enrollment periods for the Plan which will be held monthly. Such election shall only be effective for pay periods commencing in the month subsequent to the month in which the Employee makes the election to participate in the Plan. 5.4 Participation A9reement. The Plan Administrator shall establish a form of Participation Agreement which shall contain, among other provisions, the following: a. A provision whereby the Participant specifies that portion of his/her Compensation which is to be deferred. b. A provision whereby the Participant shall indicate his investment preference. c. A provision whereby the Participant shall designate a Benefi- ciary or Beneficiaries, including one or more contingent Bene- ficiaries, to receive any benefits which may be payable under this Plan on death of the participant. d. A provision whereby the Participant shall acknowledge that his salary, wage or other compensation is as set forth in any salary ordinance or otherwise without deductions for amounts deferred under the provisions of this plan. e. A provision whereby the participant together with his heirs, successors, and assigns hol d harml ess the Employer from any 1 i ab i 1 ity hereunder for a 11 acts performed in good fa ith, including acts relating to the investment of deferred amounts and/or the Emp 1 oyee's investment preference hereunder. 5.5 Amendment of Participation A9reement. The Participant may revoke his election to participate and may change the amount of Compensa- tion to be deferred, or his investment preference, by signing and filing with the Employer a written revocation or amendment, on a form approved by the Plan Administrator. Any such revocation or amendment shall be effective prospectively only, beginning with the first pay period of the subsequent month. The Participant may amend his statement of investment preference by filing with the 5. ',:' . . . Employer a signed amendment on a form approved by the Plan Admini- strator. Such amendment will, unless specifically stated other- wise, apply only to future amounts deferred under the Plan. If a Participant requests that amounts then held in a Participant's Account also be invested in accordance with an amended investment preference, the Employer may, if it deems it in the best interest of the Participant to do so, approve such change. Any such change shall be governed by the provisions of Section 4.3 hereof. All contracts and other evidence of the investment of assets under this Pl an shall be registered in the name of the Employer which shall be the sole owner-benefici ary thereof. 5.6 Part i c i pat i on Accounts. A separate account ("Part i c i pati on Account") shall be maintained for each Participant. Each Partici- pation Account shall reflect the monies deferred, the investment of the monies, and all consequences of the investment. For convenience, and to facil itate an orderly administration of the Plan, individual Participation Accounts for all Participants will be maintained by the Employer showing the Participant's name with all appl icable debit and credit balances. The Participant's deferred account shall be credited each pay period with the amount deferred from the preceding pay period. A written report of the status of the Participation Account shall be furnished to Partici- pants at 1 east annua 11 y. All interest, d i v i dends, charges for premiums, capital gains, or market changes applicable to each Participation Account shall be credited or debited to the account as they occur. Credits to the Participant's Account shall be subject to the Participant's then effective investment preference. All reports to the Participant shall be based on the net fair market value of the assets as of the reporting date as if the deferred amount had been invested according to the investment preference. 5.7 On executing the Participation Agreement, the employee shall designate his investment objectives prospectively only. The emp 1 oyer may in vest amou nts of deferred compensat ion in mutu a 1 fund shares; or interest deposits with a savings and loan company or banking institutions, or trust deeds secured by real property, or investments with a stockbroker; or life insurance and/or fixed variable annuity contract with an insurance company, or other financial institutions as may be allowed by 26 U.S.C., Section 457, whichever, in the employe~s sole judgment will best achieve the employee's objectives. The employee's investment designations are intended to be an exp ress i on of mere investment preferences an d do not ob 1 i gate the emp 1 oyer to fo 11 ow the emp 1 oyee' s designations. 5.8 The employer may, but is not required to, invest deferred compen- sation at least monthly in the investment vehicles provided for in this Plan. All amounts of deferred compensation, whether or not invested by the employer, shall at all times be and remain an asset of the employer. Any and all dividends, capital gains 6. " ' . . distributions, interest or other income payable on any of the employer's investments of deferred compensation also shall be an asset of the employer. The employer shall have the sole right to vote any shares of stock which it may acquire by such investment. 5.9 Administrative Costs. The Employer shall determine, in a manner deemed fair and equitable, the administrative costs associated with the withholding of Deferred Compensation amounts pursuant to this plan or in making investments or otherwise administering or implementing the Plan. The Employer may withhold or collect, or have withheld or collected, such costs, in such manner as he deems equitabl e either (1) from the compensation deferred pursuant to the Plan, the income produced from any investment, whether or not augmented, or (2) from the organization receiving such investment where required by law to collect therefrom or, if not so required, where mutually satisfactory to such organization and the Administrator. The Administrator may remit or direct the remission of appropriate amounts so withheld or collected to the Employer. SECTION 6. BENEFITS 6.1 Benefits Generally. The Participant is entitled to have paid to him the benefits created by his participation in this deferred compensation plan, in accordance with the provisions of this Article. Generally, distributions must commence no later than the later of the April 1st next following the calendar year in which the Participant attains age 70-1/2 or the calendar year in which he retires. For plan years beginning on or after January 1, 1989, benefits must commence no later than the April 1st following the year in which the Participant attains age 70-1/2. Amounts paid to a Participant shall be reported on appropriate tax reporting forms to a Participant as wages subject to withholding for federal and state income tax pruposes. In the event of death of a Participant prior to the commencement of benefits as called for under the Plan, the named Beneficiary of Participant's Account shall have the right to designate that payments to such Beneficiary shall be in accordance with one of the available options provided under the Plan. Such selection must be made within ninety (90) days after the close of the plan year in which the Participant's death occurs. The entire amount payab 1 e must be di stributed over a period not to exceed 15 years except that if the beneficiary is the Participant's surviving spouse, payments may be made over a peri od that does not exceed the life expectancy of said surviving spouse. If the Beneficiary fails to make such selection, payments shall be made to the Beneficiary in accordance with the Option 2 over a 10 year period. 7. " ' . . A distribution beginning before the death of the Participant shall be in a form under which at least two-thirds of the total amount payabl e with respect to the Participant will be paid during the life expectancy of said Participant. In the event of death of a Participant after commencement of payments, the balance of a Participant's Account shall be paid to the Beneficiary in accordance with the payment option selected by the Partici pant. Any distributions made over a period extending beyond one year must be made in periodic payments not less frequently than annually. a. Retirement. Upon the Participant's reaching the Normal Retirement Age or the Deferred Retirement Date, he may receive the benefits provided under this Plan. Such benefits shall be paid in accordance with the payment Options 1, 2, 3, 4 or 5 as selected by the Participant pursuant to Subsection (f) of this section. Any credits remaining in the deferred account of a Participant receiving benefits under this paragraph who dies, shall be paid in accordance with Subsection (c) of this section. b. Termination of Employment. If the Participant incurs a Termination of Employment (other than for retirement) benefits shall be paid in accordance with payment Option 1 or 2 as irrevocably elected by the Participant not later than 90 days after such Termination of Employment pursuant to Subsection (f) of this section. However, a former Participant may elect to have prev i ous 1 y deferred amounts transferred to another Eligible Deferred Compensation Plan provided that (1) the other plan provides for accepting such amounts and (2) the former Participant has become a participant in the other Eligible Deferred Compensation Plan. A transfer of previously deferred amounts will automatically be made, at the time benefits would have commenced under Section 6.1 (f) if no transfer were being made, if a Participant incurs a Termina- tion of Employment in order to accept employment with another employer maintaining an Eligible Deferred Compensation Plan and the conditions of (1) and (2) above are met. Alternatively, a Participant who incurs a Termination of Employment and whose deferred amounts are not required to be transferred to another Eligible Deferred Compensation Plan may irrevocably elect, not later than 90 days after such Termination of Employment, to receive the benefits under this Pl an in accordance with Section 6.1 above. 8. y;. . ' '. . . c. Death. Benefits otherwise payable under this Plan will be paid to the Participant's Beneficiary as provided in (1) or (2) below, whichever is appl icable. Provided, however, that in the case of benefits payable to a Beneficiary, other than the spouse of the Participant, the entire amount payable shall be paid out over fifteen years. (1) Before benefits are paid for retirement, disability or termination of service. If the Participant dies while employed with the Employer and before the payment of retirement and disabil ity or Termination of Service benefits to him under this Plan, the benefits otherwise payable under this Plan shall be paid to his designated Beneficiary pursuant to payment Option 1, or 2, or, in the case of a spousal beneficiary, payment Option 1, 2 or 3 of Subsection (f) of this section. (2) After benefits are beinQ paid for retirement, disability or termination of service. If the Participant dies while benefits are being paid to him under this Plan pursuant to payment Option 2 or 4 and before such benefits have been exhausted, then the remaining benefits payable shall be paid to the Participant's designated Beneficiary in accordance with Subsection (3) of this section. 6.2 Designated beneficiary. The Participant has the right to name and file with the Employer, a written Beneficiary or change of Beneficiary form, designating the person or persons who shall receive the benefits payable under this Plan in the event of the Participant's death. The form for this purpose shall be provided by the Employer. It is not binding on the Employer until it is signed, filed with the Employer by the Participant, and accepted by the Employer. If the Participant dies without having a Beneficiary form on file, the payments shall be made to the properly appointed fiduciary of the Participant's probate estate. However, if a fiduciary has not been appointed and qualified within one hundred twenty (120) days after the death, the payment may be made first, to a surviving spouse, second, to a surviving child or children, and third, to a surviving parent or parents. The Participant accepts and acknow- ledges that he has the burden for executing and filing, with the Employer, a proper Beneficiary designation form. a. Commencement of Payment. The payment of benefits to the Participant shall begin on the first day of the month next following ninety (90) days after the occurrence of the event that gives rise to the beginning of the payment of benefits, 9. ':.. .' ., . . except that payment of benefits to an independent contractor on account of Termi nati on of Emp 1 oyment, for other than retirement, shall not commence until the first day of the month next following a twelve-month period after Termination of Emp 1 oyment and then on 1 y if the Part i c i pant has not performed serv ices for the Emp 1 oyer as an Emp 1 oyee or independent contractor within such period. b. Short-term or Lump Sum Settlement. Notwithstanding anything in this Section to the contrary, except Section 6.1 (e), if at any time the total amounts held under this Plan in the account maintained for the Participant or his Beneficiary, total to a credit of $5,000 or less and for any reason the Participant has incurred a termination of employment, the Employer is authorized to deviate from the restrictions imposed by the paragraphs in this Section and effect a lump sum settlement. c. Options. The following options are available for selection by Participant. However, any option selected must be such that benefits payabl e to a Participant wi 11 equal or exceed two- thirds of the maximum that could have been payable to the Participant if no provision were made for payment to a Benefi- ciary. If the Participant fails to select a payment option for any event which causes payment of benefits to begin, he shall be deemed to have elected to have the benefits payable upon occurrence of such event as if he had el ected payments for a specified period of ten (10) years as provided for in Option 2. (1) Payment Options. As provided in Subsections (a) through (d) of this sec- tion, Participant may select: Option 1. Lump sum payment The total benefits payable in one cash payment. Option 2. Payments for a specified period. Amounts payable in installments over a period of three (3) to th i rty (30) years. Option 3. Life annuity. An annuity payable during the lifetime of the Participant or his Beneficiary (if this option is sel ected under Section 5.01(c)(3) of this sec- tion). Option 4. Life annuity with period certain Quaranteed. An annuity payable during the 1 ifetime of the Partici- pant, or his Beneficiary, if this option is selected under Subsection (d) of this Section, with the guarantee that if at his death payments have not been made for the guaranteed period as elected, payments will continue to 10. ?;.. t . , " " . . the Beneficiary. The guaranteed period to be elected must be either ten (10), fifteen (15) or twenty (20) years. Option 5. Joint and survivor annuity. An annuity pay- ment during the 1 ifetime of the Participant and a secondary payee named by the Participant. (2) Method of payment options. If the Participant has selected a payment option requiring installment payments, the Participant may also elect to have such payment made either quarterly, semi- annua 1 1 y or annua 1 1 y. Monthly payments are available under the life insurance annuity options when provided by the annuity insurer. 6.3 Notwithstanding any other provisions herein, a Participant may make a withdrawal from the Plan prior to retirement or any other Termination of Employment as set forth below. A Participant may apply to the Employer to make a withdrawal from the Plan for "unforeseeable emergencies/financial hardship." If the application for withdrawal is approved by the Employer, the withdrawal shall be effected as of the first day of the month next following such approval being given. Benefits to be paid upon any withdrawal shall be limited strictly to that amount necessary to meet the unforeseeable emergency/financial hardship situation. Any remaining benefits shall be paid upon retirement, Termination of Employment, or death in accordance with Section 6.1 above. The decision of the Employer concerning Unforeseeable Emergencies shall be final as to all participants. SECTION 7. MISCELLANEOUS 7.1 Leave of Absence. If a Participant is on an approved leave of absence from the Employer with compensation, participation in this Plan will continue. If a Participant is on an approved leave of absence without compensation and such leave of absence continues for more than six (6) months, said Partictpantwll 1 be deemed to have terminated participation in the Pl an as of the end of such six (6) month period. Such termination of participation wi 11 not cause distribution of benefits. Upon return from such 1 eave of absence, the Participant's full compensation on a non-deferred basis will be thereupon restored. Such employee may again become a Participant by meeting the requirements for eligibility as herein provided. 7.2 Retirement System InteQration. Benefits payable by, and deduc- tions for Employee contributions to, any retirement system of the Employer shall be computed without reference to amounts deferred 11. , . , ,. ~ .. " . . pursuant to this Plan and shall instead be based upon gross compensation the Participant woul d receive if he had not el ected to participate in this Plan and to defer compensation. 7.3 Amendment. Th i s Pl an may be mod i f i ed, amended or termi nated in whole or in party by the Employer at any time. No amendment or termination of the Plan shall reduce or impair the rights of any Participant or his Beneficiary which have already accrue~ Upon termination of the Plan, the Employer shall distribute all amounts credited to each Participation Account in accordance with the Participant's payment option selected. 7.4 Creditors. A Participant may not assign, transfer, sell, hypothe- cate, or otherwise dispose of any or all of his investment account or any right which he may have under the Plan, and any attempt to do so shall be null and void. 7.5 Employment. Participation in the Plan shall not be construed as giving any Participant any right to continue his employment with the Emp 1 oyer. 7.6 Successors and Assigns. The Plan shall be binding upon and shall inure to the benefit of the Employer, its successors and assigns, all Participants and Beneficiaries and their heirs and legal representatives. 7.7 Written Notice. Any notice or other communication required or permitted under the Plan shall be in writing, and if directed to the Employer shall be sent to the designated office of the Employer, and, if directed to a Participant or to a Beneficiary, shall be sent to such Participant or Beneficiary at "his last known address as it appears on the Emp loyer's record. 7.8 Facility of Payment. If any Participant terminates his employment with an unpaid debt owing to the Employer, and neglects or refuses to liquidate the debt by any other means when due and upon demand, the Employer shall be entitled to collect the amounts due from the deferred compensation owed to the Participant under the Plan. 7.9 Employer Participation. Notwithstanding any other provisions of this Plan, the employer may make additional deposits in the defer- red compensation fund as additional compensation for services to be rendered by the employee to the employer during an employment period, provided: a. The employee has elected to have such additional compensation deferred, invested, and distributed, pursuant to this Plan, prior to the employment period in which the compensation will be earned, and b. That such additional deposit shall not exceed the maximum deferral permitted by Section 5. 12. .;.. " , ~ ~I . . I .' " . 7.10 Purchase of Annuity by Emplover. In connection with the financing of any distribution under Section 6.01 by an annuity not otherwise provided for as an eligible investment pursuant to Section 5.08 of this Plan, the Employer may cause to be purchased from an insur- ance company of Employer's choice a fixed or variable annuity policy at such time as the Participant becomes eligible for month 1 y d i stri buti ons. The Emp 1 oyer sha 1 1 be the owner of such annuity policy, and the rights of the Participant shall be limited to the right to receive monthly payments pursuant to such policy. All obligations of the Employer with respect to the Plan shall be frozen in amount at the time the annuity pol icy is del ivered to the Employer. ' 7.11 Withholdin9 of Taxes. Notwithstanding any other provision in this Plan, upon distribution of benefits the Employer shall not with- hold federal or state income taxes unless the Participant is subject to backup withholding. A form W-9 must be completed and on file for all Participants receiving distributions. 7.12 Total A9reement. This Pl an and the Participation Agreement, and any subsequently adopted amendment thereof, shall constitute the total agreement or contract between the Employer and the Partici- pant regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant. 7.13 Gender. As used herein the masculine shall include the neuter and the feminine where appropriate. 7.14 Controlling Law. This Plan is created and shall be interpreted under the 1 aws of the State of domici 1 e of the Emp 1 oyer as the same shall be at the time any dispute or issue is raised. In Witness Whereof, the Employer has executed this Plan document this 20th day of June , 19~. SEAL City of Gilroy (Name of Employer) by i2UJk<- Attest: j/lt4 Mayor Protempore <Titl e) City Clerk Title (Wi~~O~J 13. 'I" '.' " ,t . . f .' 1..l- . ~. I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 88-42 is an original resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 20th day of June , ]9~, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 23rd day of June 19 88. dUd~~ (City Clerk of the City of Gilroy (Seal)