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HomeMy WebLinkAboutRESO 50831· I I •• ' -~ . • • ORIGINAL RESOW'l'lON· 1'0,. 5083 RESOLUTION OP THE COUNC'l:r;· OF THE CITY OF PALO ALTO APPROVING AN DtPLOYEESt DEFERRED COMPENSATION PLAN AND AUTHORIZING ITS IMPLEMENTATION WHEREAS,. the City, of Palo.A-lto· desires. to provide a deferred compensation plan for its employees and officers; and WHEREAS; -Financial· Industries. Corporation· has submitted such a plan to the Council of the City of Palo Alto for its con- sideratfon and ·adoption1 NOW, THEREFORE., the. Council of the Ci.ty of Palo Alto does hereby RESOLW·as·follows: SECTI0N·1~ 'l'he Daferred Compensation Plan submitted to the Council of the City. of Palo.A-lto· on April· 14, 1975, by Financial Industries Corporation is adopted and the Council appoints Financial Industries Corporatiori' .as Plan A&ninistl:ator .. · The· C!i ty staff· is aut.ftorized·to·implement the: plan.. The C~ty. of ·Palo Alto assumes the-obligations to be performed on its part as set forth in the plan. · - INTROOu~· AND" PASSED: April 14, 1975 .. -. AYES: Clay, Coll&t:ock, Henderson, Nor'..;on, l"earson, Rosenbaum, Sher NOES: Beahrs, ~rwal.4 ABSENT: None ATTEST: APPROVED: . Cltif~ ~·c~ DeCOi p!·hnonneI APPROVBD1 APPROVED: ( . ' ·~ -;' . . • • : A G R E E M E N T DEFERRED COMPENSATION PLAN ADMINISTRATION THIS AGREEMENT, made and entered into this day of . , 1975, by and between the CITY OF PALO ALTO, a municipal corporation of California, hereinafter referred to as •city,• and FINA..~CIAL INDUSTRIES CORPORATION, a California corporation, duly licensed under the corporation laws of the State of California, with offices at 3325 Wilshire Boulevard, 7th Floor, Los Angeles,. California 90010, hereinafter referred to as "FIC": W I T N E S S E T H: ---------- WHEREAS, Resolution No. dated , 1975, authorizing a contract betweeii""CYTY and FIC for administration of a Deferred Compensation Plan, has passed :tflP.. Council of the City of Palo Altu, California, a copy of which· City Plan is marked Exhibit "A" and attached hereto and incorporated by reference as though fully set forth hereini and ,. WHEREAS, F!C is engaged in the business of administering deferred compensation plans, the functions of FIC under the Plan are purP-ly administrative, FIC will be subject to the control and supervision of CITY, and will have no active management functions under the Plan; FIC is not an investment advisor, investment manager, or investment company1 FIC will act in the capacity of a plan administrator and provide an unbiased pre- sentation of the Plan articles, funding options, settlement options, termination options, and other pertinent details at no cost to CITY; and FIC will not make recommendations con~erning such funding and options, but simply will provide the facts in an unbiased presentation so em~loyees can make sound judgments. NOW, TBEREFOP~, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. APPOINTMENT. CITY hereby appoints FIC as the Plan Administrator for CITY's Deferred Compensation Plan. 2. DUTIES OF FIC. FIC aqrees to perform the following services as Plan Adiliinistrator: a. Prepare a Plan Dig"i-st for distribution to the employees of CITY. b. Communicate the Plan and its provisions to the employees of CITY~ c. -Assist CITY in selecting various investment options to be made available to employees participating in the Plan, which shall consist of bank or savings and loan accounts, fixed and/or variable annuities, life in- suranc~, and mutual funds. d. Enroll into the Plan CITY employees who wiah to partici- pate by _means of a Joinder ~greement I'" -1- • • e. Cause the following administrative services to be i;>erformed: (1) A monthly statement to CITY showing the partici- pants and the amounts being deferred by each. (2) Make available centralized collection of contri- butions from CITY. (3) Direct the disbursement of contributions to the approved investment vehicles designed by the participating employees. (4) Report status of the account as a whole to CITY periodically showing amount deferred and present values. · (5) Report status of each participant's deferred amount and present value at six-month intervals. ·J. DUTIES OF CITY. CITY agrees to provide or cause to be provided the following: · a. Information requested by the Plan Administrator on a timely basis. CITY agrees to use its best efforts to assure the accuracy and completeness of all information provided. b. Payroll deduction procedures and facilities. c. Assistance in setting up timetables for and providing facilities for group meetings of CITY employees for distributing information about the plan. d. Facilities to be used for counseling and enrollment of CITY employees. e. Assistance in obtaining such other information as may be needed from time to time for efficient administra- tion of the Plan. 4. ACCURACY OF WORK. FIC agrees to use its best efforts to assure the accuracy of all work performed under this Agreement and will promptly correct all errors discovered from time to time. 5. INDEMNITY. a. FIC hereby agrees to indemnify and save harmless CITY, its officers, agents and employees from any and all ·claims and demands -for damage and liability of every nature, as well as costs of defending such claims or demands, .in connection with suits by CITY employees or any third party-resulting from or arising out of the performance of the services by FIC employees ex- cept where FIC is not found at fault and should not be held responsible. It is expressly agreed that in the performance of .the services hereunder, FIC shall at all· times be deemed an independent contractor and net an agent or employee of CITY. -2- • • b. CITY ~grees to indemnify and save harmless FIC from any and all liabilities which FIC may suffer or incur by reason of CITY's negligent failure to supply accurate data to FIC or other negligent acts or om- missions on the part of CITY, its officers, agents and employees which give rise to claims and demands for damage and liability of every nature in con- nection with suits against FIC and its employees. 6. MONTHLY CHARGE. FIC's maximum monthly charge to each participant for administration will be one dollar ($1.00). The monthly charge will be subject to downward adjus-tment, depending upon number of participants and investment options selected. 7. SUSPENSION; TERMINATION. a. This Agreement will remain in force until suspended or terminated· by either FIC or CITY for any reason, as hereinafter provided. Either party may terminate Agreement vn thirty (30) days' written notice to the other party. Upon receipt of such notice, performance of the services hereunder shall be discontinued immedi- ately. b. Upon termination of this Agreement, CITY may request .that FIC make applicable records and reports available for subsequent administration of the Plan at a fair and reasonable price. 8. INSPECTION. FIC shall furnish CITY wi.th every reasonable opportunity for CITY to ascertain that the services of FIC are being performed in accordance with the requirements and intentions of this Agreement. All work done and all materials furnished, if any, shall be subject to CITY's inspection and approval. The inspection of sucL work shall not relieve FIC of any of his obli- ga~ions to fulfill his agreement as prescribed. 9. INTEREST OF FIC. FIC covenants that he pres~ntly has no interest, and shall not acquire any inte~est, direct or in- direct, financial or otherwise, which would conflict in any manner or degree with the performance of the services hereunder~ FIC further covenants that, in the performance of this Agreement, no subcontractor or person having such an interest shall be employed. FIC certifies that no one who has or will have any ·financial interest under this agreement is an officer or employee of CITY. It is expressly agreed that, in the performance of the services hereunder, FIC ~hall at all times be deemed an independent contractor and not an agent or employee of CITY. All agreements by FIC with funding media, as provided in Section 19,to defray administrative.costs, are expressly agreed no~ to be in.conflict in any ·manner or·degree with·the ·performance 9f the services hereunder. 10. ASSIGNMENT1 SUBCONTRACTORS; EMPLOYEES. a. Assignment. Both parties shall give their personal attention to the faithful performance of this Agreement and shall not assign, transfer, convey, or otherwise dis- pose of this Agreement or any right, title, or interest in or to the same or any part thereof without the prior wri~ten consent of the other party, and then only subject to such terms and conditions as the other party may -3-' • • require. A consent to one assignment shall not be deemed to be a CQnsent to any subsequent assignment. Any assign- ment without such approval shall be void and, at the option of the other party, shall terminate this Agreement and any license or privilege granted herein. This Agree- ment and any interest herein shall ·n~t be assignable by operation of law without the prior written consent of the other party. b. Subcontractors. It is agreed that this Agreement is for the administrative services of FIC and cannot be per- formed by any other person or organization. c. Subcontractors; Ernfloyees. FIC shall be responsible for employing or engaging all persons nec~ssary to perform the services of FIC hereunder. No subcontractor of FIC will be recognized by CITY as such; rather, all sub- contractors are deemed to be employees of FIC, and FIC agrees to be responsible for their performance. FIC shall give its attention to the fulfillment of the provisions of this Agreementby all of its employees and subcontractors, if any, and shall keep the work under its control. If any employee or subcontractor of FIC fails or refuses to carry out the provisions of this Agreement or appears to be incompetent or to act in a disorderly or improper manner, he shall be discharged . immediately from the work under this Agreement on demand of CITY. . 11. WORKMEN'S COMPENSATION. FIC certifies that it is aware of the provisions of the Labor Code of the State of California, which require every employer to be insured against liability for workmen's compensation or to undertake self-insurance in accordance with the provisions of that code, and it certifies that it will comply with such provisions before commenctng the performance of the work of this agreement. 12. AGREEMENT BINDING. The terms, covenants, and conditions of this agreement shall apply to, and shall bind, the heirs, suc- cessors, executors, administrators, assigns, and subcontractors of both parties. 13. INSURANCE. Within fifteen (15) days following the date of execution of this agreement, FIC shall furnish CITY with satis- factory written certification of professional liability insurance • . 14. WAIVERS. The waiver by either party of any breach or violation of any term, covenant, or condition of this agreement or of any provision, ordinance, or law shall not be deemed to be a waiver of such term, covenant, condition, ordinance, or law or of _ ....... ~Y. sups_eguent breach or violation of the aame or of. any other term, covenant, condition, ordinance, or law. The subsequent ·acceptance by either party of any fee or other money which may become due hereunder shall not be deemed to be a waiver of any preceding breach or violation by the other party of any term, covenant, or condition of this agreement or of any applicable law or ordinance. 15. COSTS AND ATTORNEY'S FEES. The prevailing party in any action brought to enforce the terms of this agreement or arising out of this aqreement may recover its reasonable costs and attorneys' fees expended in connection with such an action from the other party. -·-r • • • 16. NONDISCRIMINATION. No discrimination shall be made in the employment of persons under this agreement because of the race, color, national oriqin, ancestry, sex, or religion o·f such person. 17. AGREEMENT CONTAINS ALL UNDERSTANDINGS. This document represents the entire and integrated agreement-between CITY and FIC and supersedes all prior negotiations, representations, or agreements, either written or oral. This document may be amended only by written instrument, signed by both CITY and FIC. All provisions of this agreement are expressly made conditions. This agreement shall be governed by the laws of the State of California. 18. CONFIDENTIAL NATURE OF WORK. All information supplied to and all work processed or completed by FIC (including outside processing, if any) will be held to be confidential and private and will not be disclosed to anyone other than those persons, corporations, or governmental agencies who have a lawful right to such information, and then only after permission to release such information has been given by CITY. 19. CITY APPROVAL OF REIMBURSEMENT COSTS. Al'! agreements by FIC with the Funding Media, made pursuant to or as a result of FI:C's duties hereunder, may be approved by CITY (or its authorized committee) as to form before enrollment and administration of the Plan will proceed. IN WIT.NESS WHEREOF, the parties hereto·have executed this Agreement on , 1975. ATTEST: City Clerk APPROVED AS TO FORM: Assistant City Attorney APPROVED: City Manager APPROVED: Director of Personnel Services APPROVED: City Controller ,.. CITY OF PALO ALTO FINANCIAL INDUSTRIES CORPORATION -s- 1· • ,· CITY OF PALO ALTO, CALIFORNIA DEFERRED COMPENSATION PLAN SECTION 1. NAME: The name of this Plan is the City of Palo Alto, California, Deferred Compensation Plan (hereinafter referred to as the Plan). SECTION 2. PURPOSE: The primary purpose of the Plan is to attract and hold personnel by permitting them to enter into·agreements with the City of Palo Alto, California, which will provide for deferral of payment of a p0rtion of their current compensation until death, disability, ·retirement, termination of employment, or other event as provided herein, in ac,-:ordancs with the provisions of Sections 5321~ - 53214 of the Government Code of the State of California, and the applicable provisions of ::he Internal Revenue Code. SECTION 3. DEFINITIONS: For the purposes of this plan certain words or phrases used herein will have the followinq meanings.: 3.1 "Employer• shall be the City of Palo Alto, California. 3.2 "Employee" shall mean all officers and employees of the City of Palo Alto, California. 3.3 "Participant• shall mean any employee who fulfills the requirements of enrollment into this plan. 3.4 •participation Agreement" shall mean the a9reement executed and filed by an employee with the employer pursuant to Section 4, in which the employee elects to become a participant in the plan. 3.5 •compensation .. shall mean the total of all amounts which would be paid by the employer to or for the benefit of an employee (if he were not a participant in the Plan) for actual services for the period that he is a :Participant. 3.6 •Employment.Period" means a period from January 1 through December 31 of the same year, except that the first year of an employee hired in mid-period shall be the period beqinninq with the date of employment and ending on December 31. i • I • •• DEFERRED COMPENSATION PLAN -Paqe 3 4.4 A participant may select pursuant to Section 6, one or more investment objectives provided that the amount def erred for each objective equals or exceeds the minimum of not less than $10 per pay period. SECTION 5. DBFBRltAL OP COMPENSATION: Durinq each employment perlOd in Which the employee is a participant in the Plan, the employer shall defer payment of such part of his compensation as is specified by the employea in the Participation Agreement which he has executed and filf.)d with the employer. SECTION 6. ADMilfl:STRATION OF THE PLAN: 6.1 The Plan shall be administered by the Colmldttee who shall have the sole authority to enforce the Plan and shall be responsible for the operation of the.Plan in accordance with its terms, and shall-deteimine all questions arising out of the administration, interpretation, and application of the Plan, which determinations shall be conclusive and binding on all persons. ' 6.2 The employer shall establish a deferred coapensation fund to which all deferred compensation shall be credited at such times as the compensation wonl.d have been payable to individual employess if not a participant of the Plan. Separate book accounts will be established-for each employee participant which will show all a:moll.nts of deferred compensation, investments made"' shares acquired and earninqs aJ"d. gains an investments. Each book account will be val\1Ed~t least annually on a method as out-lined in Section 6.3. 6.3 On executing the Participation Agreement:, the employee shall designate his investment objective, prospectively only. The employer will invest·amou~ of 4eferred compensation in 1111tual funCI shares, or interest deposiu with a 10cal aaviDCJ~ and loan company er bankinq ' ' • • ,· ClTY OF PALO ALTO, CALIFORNIA DEFERRED COMPENSATION PLAN SECTION 1. NAME:: The nam-e of this Plan is the City of Palo Alto, California, Deferred Compensation Plan (hereinafter referred to as the Plan). SECTION 2. PURPOSE: The primary purpose of the Plan is to attract and hold personnel by pertnitting them to enter into agreements with the City of Palo Alto, California, which will_provide for deferral of payment of a p0rtion of their current compensation until.death, disabili"ty, retirement, termination of employment, or other event as provided herein, in accordance with the provisions of Sections 53212 - 53214 of the Government Code of the State of California, and the applicable provisions of the Internal Revenue Code. SECTION 3. DEFINITIONS: For the purposes of this plan certain words or phrases used herein will have the following meanings: 3.1 •Employer• shall be the City of Palo Alto, California. 3.2 •Employee• shall mean all officers and employees of the City of Palo Alto, California. 3.3 •Participant• shall mean any e.-nployee who fulfills the requirements of enrolliuent into this plan. 3.4 •Participation Agreement" Rhall mean the aqreement executed and filed by an employee vitb the employer pursuant to Section 4, in which the employee elects to become a participant in the plan. 3.5 •compensation• shall mean the tot.al of all amounts which would be paid by the employer to or for the.benefit of an employee (if he were not a participant in the Plan) for actual services for the period that he is a participant. 3. 6 •Employment-Period• •ans a pe.T."iod frou January l throagh ~ember 31 of the same year, except that the first year· of an employe~ hired in mid-period shall be the period beqinning with the (late of employment and ending on December 31. • DEFERRED COMPENSATION PLAN -~age 2 3.7 •oisability" means the inability of a participant to engage in his usual occupation by reason of a medic~lly determinable phys~cal or mental impairment as determined by the employer on the basis of advice from a ph~sician.or physicians. 3.8 •committee• means the five persons elected for the purpose of administering the Plan. SEC'l'ION 4. PARTICIPATION IN THE PLAN: 4 .1 Each employee may elect to become a · participant of the Plan and· defer payment of part of his compensation by executing a written Participation Agreement and filing it with the employer no later than the day before the beginning of any employment period; or in the case of a new employee, not later than 30 days after commencement of employment. 4.2 A Participation Agreement shall be effective for the first employment period followinq its execution and filing, except when it is executed and filed by a new employee pursuant to Section 4.1, in which case it shall b~ effective ·for that part of the employmen_t . period£ollowin9 its execution and filing. In either situation,.the Par~icipation Agreezteiit shall continue fr?m periOd to period and remain in full force and effect unless terminated as provided in Section 4.3 below. 4.3 A participant may terminate his participation in the Plan and thereby terminate further deferral of his compensation by filing with the employer an executed written notice of termination at least 30 days prior to effective date of termination. Once terminated, ·a former participant cannot rejoin the Plan during the employment period in which termination occurred; however, he may elect to bec0me a participant. in subsequent employment periods. No amounts shall be payable to an employee upon terminatinq his participation in the Plan unless otherwise due pursuant to Sttction 7. ·, • • •• ,· DEFERRED COMPENSATION PLAN -Page 3 4.4 A participant may select pursuant to Section 6, one or more investment objectives provided that the aMOunt def erred for each objective equals or exceeds the minimum of not less than $10 per pay period. SECTION s. DEFERRAL OF COMPENSATION: During each employment periOd in which the employee is a participant in the Plan, the employer shall defer payment of such part of his compensation as is specified by the employee in the Participation Agreement which he has executed and filed with.the employer. SEC?ION 6. ADMINISTRATION OF THE PLAN: 6.1 The Plan shall be administered by the Committee who shall have the sole ~uthority to enforce the Plan and shall be responsible for th& operation of the _Plan in accordance with its terms, and shall· deteimine all questions arising out of the administration, interpretation, and application of the Plan, which determinations shall be conclusive and binding on all persons • . 6.2 The employer shall establish a deferred compensation fund to which all def erred compensation shall be credited at iJUch times as the compensation would have been payable to individual employess if not a participant of the Plan. Separate book accounts will ·be established for each employee participant which will show all amounts of deferred compensation, investments made, shares acquired and.earnings and 9ains on investm&nts. Each book account will be valued at least annually on a method as out-lined in Section 6.3. 6.3 On executin9 the Participation Aqreement, the employee shall designate his investment objective, prospectively only. 'l'he employer will invest·amounts of deferred compensation in mutual furd shares~ or. interest deposits with a l0cal saving~ and loan company or banking ' ..... • DEFERRED COMPENSATION PLAN -Page 4 SECTION • 6.3 CON'T institution, or investments with a local stockbroker, or life insurance and/or fixed/ variable annuity contract with an insurance company, whichever in the employer's sole judgment will best achieve the employee's objectlves. The employer is the sole owner and beneficiary of all funds, investments, or other assets under ~is plan. 6.3(a) If a mutual fund is selected as the investment vehicle, all dividends and capital qains distributions will be reinvested in shares of said mutual fund. The total of full or fractional mutual fund shar~~ purchased or acquired through reinvestment shall serve as a basis for measuring the value of the participant's book account. Value will be the total number of full and fractional shares held.times the net asset value per share reported by th;,. fund on the valuation date. 6.3(b) If interest time. deposits in local savinqs and loan or banking institutions is selected as the investment vehicle, interest earnings will be credited to the participant's book account when declared by the institution. Annual valuation will include all interest earned, whether paid or accru~~ · 6.3(c) If investments are selected, dividends and interest earninqa will be credited to the City of Palo Alto Deferred Compensation Plan Investment Account with the stockbroker. - The market value of all investments and cash in the account shall be determined on December 3ist eacb year and each participant's share of the· . I •• • DEFERRED COMPENSATION PLAN -Page 5 SECTJ:ON 6.3(c) CON'T account shall be valued by any cash income, plus or minus any market action. New participants may join the Account after existin9 participants values are determined. 6.3(d) If a variable annuity c~ntract is selected as the investment vehicle, the value of participant's individuals account during the Employment Period shall be determined by the Insurance Company's Accumulation Unit, which is a statistical index of the net investment results of. the variab~e contract Account. At retirement, the amount of annuity payme;.~t3 shall be determined by. the Insurance Company's last Annuity Unit, which is a statistical index of the net investments results of the variable Contract Account. 6.4 The employer may, but is not required to, invest deferred compensation 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 qains distributions, interest or other income payable on any of the em:ployer-'s investments or deferred compensation also shall be an asset of the employer. The employer shall have the sole riqht to vote any shares of stock which it may acquire by such investment. 6.5 Neither this Plan nor any Participation Agreement nor any book account shall be deemed to create a trust or custodial account o::i behalf of or ~or the henef it of any participant of the Plan or his beneficiaries~ No participant of the Plan or his-beneficiaries shall have, by reaeon of the Plan, Participation Agreement, or book aceouut, any secured or pref~ed interest in or tO.any assets of the employer. • DEFERRED COMPENSATION PLAN -Page 6 SECTION SECTJ:ON 7. 6.5 CON'T The employer shall have only a contractual obligation to pay the benefits due the participant under the Plan. DISTRIBUTION OF BENEFITS: 7.1 Election -Each participating employee m~st elect the payout options and the payout periods for each event stated in Sections 7.2, 7.3, 7.4 and 7.5, at the time of signing each P~rticipation Agreement. 7.2 Retirement -In event of retirement, the full benefits credited to participant's book account plus or minus subsequent investment gains or losses, but less any Federal or State Income Taxes required to be withheld, ehall be distributed to him in any one or more of the following ways: 7.2(a) In a lump sum. 7.2(b) In monthly, quarterly, semi-annual or annual installments over a period not to exceed ten (10) years from date distribution began or over a period established by ttie employer not greater than the life expectancy of the participant. Life expectancy shall be determined once by the employer by reference to the standard excepted Annuity Tables then in existence, on the date of the initial installment distribution. Installment distributions will be made in substantially equal payments, but no payment shall have a value of less- than (the smaller of) $50 or the balance credited to the participant's book account. Participant's book account balances will continue to be invested until --in the employer's Bole judgment --cash is to be withdrawn for payment of benefits. Payment of benefits will commence on the first day of the second month following termination of employment. ... . • DEFERRED COMPENSATION PLAN -Page 6 SECTJ:ON SEC'l'XON 7. 6.5 CON'T The employer shall have only a contractual obligation to pay the benefits due the participant under the Plan. DISTRIBUTION OF BENEFITS: 7.1 Election -Each participating employee must elect the payout options and the payout periods for each event stated in Sections 7.2, 7.3, 7.4 and 7.5, at the time of signing each Participation Agreement. 7.2 Retirement -In event of retirement, ·. the full benefits credited to participant's book account plus or ~inus subsequent investment gains or losses, but less any Federal or State Income Taxes required to be withheld, shall be distributed to him in any one or more of the following ways: 7.2(a) In a lump sum. 7.2(b) In monthly, quarterly, semi-annual or annual installments over a period not to exceed ten (10) years from date distribution began or over a period established by tlle employer not greater than the life expectancy of the participant. Life expectancy shall be determined once by the employer by reference to.the standard excepted Annuity Tables then in existence, on the date of the initial installment distribution. Installment distributions will be made in substantially equal payments, but no payment shall have a value of less· - than (the smaller of) $50 or the balance credited to the participant's book account. Participant's book ac~ount balances will continue to be invested until --in the employer's sole judq.ment --cash is to be withdrawn for payment of benefits. Payment of benefits will commence on the first day of the second _month following termination of employment. . · • DEFERRED COMPENSATION PLAN -Paqe 7 7.3 Disability -In event of termination of employment by reason of disability distribution of benefits~will be as provided in Section 7.2. 7.4 Other Termination -rn event of termination of employment for reason other than those specified in Sections 7.2 and 7"'3, then the full benefits credited to participant's book account plus or minus subsequent investment gains or losses, but less any Federal or state income taxes required to be withheld, shall be distributed to him in any one or more of the following ways:. · 7.4(a) In a lump sum. 7 .4.(b) In monthly, quarterly, semi-annual, or annual installments or substantially equal payments over a period not to exceed seven (7) years from date distribution began, but no payment shall have a value of less than (the smaller of) $50 or the balance credit to the participant's book account. 7.4(c) Postpone payments under 7.4(a) and (b) above until participant reaches his SOth, 55th, 60th, or 65th birthday. The employee shall elect the method of distribution at the time of signing each Participation Agreement. The employer shall make distribution by any of the foregoing methods or combinations thereof. Participant's book account balances will continue to be invested. until -in the employer's sole judgment -cash is to be withdrawn for payment of benefits. Payment of benefits under Sections 7.4(a) and 7.4(b) will commence on the first day of tbe second month follovinc~i termination of employment. Payment of benefits under Section 7.4(c) will· commence on the first day of the J110ntb following the participant's birthday. ; • DEFERRED COMPENSATION PLAN -Page 8 7.5 Death ~ In event of the deatr-of any participant, either before or after termination of employment, then the full benefits credited to his book account; less any Federal or State Withholding Taxes required by law, shall be distribu~ed to his beneficiaries in the manner designated in the participant's Participation Agreement. The employer shall in the case of Lump Sum payment make payment 90 days after notification of death of the participant, in compliance with any State laws governing the payments of death benefits. 7.6 Financial Catastro~ -In -the event of a financial catastrophe affecting a participant. where the withdrawal of funds would be necessary to prevent great hardship to the participant and the amount of withdrawal requested by the r~rticipant is only the amount necessary to meet that financial catastrophe, ~nd i• :nQt reimburs¢ by insurane~, a , . _ . pa~µc:t~nt_ may . apply :tQ, the.-empi9yer, ~o~. _ . , ... "1~~aw~l _ o~ $µcl). ~~~,-f~~--tjt~ ~!~P~ Pt:~9~,. i ~ 1:0. _ ~eUt-•~1: _qr_ ~. t~~IBatlon of partici~nt • s emplo~t with the Ciey~ '~ ~ ~tiiet ntstrii?Ud.otts ~-,!lo~ th~~~ain~ 'Jit _ Q~# ~ov~,l~n.;i .ot J$~-~1~~1 .. ~e~~le>Yer.J;u!Y-. ~~~g~'.­t:Jle ~ o~ method.• C:Sf benefit t>aymeitt.a i:>ursttartt to thi4 Plaii~ :_._ ~ ~itJ.t?A-ti°': N:~~~~att9 .~ny .. &~er:.: i<:i<$~ 9, .. _ ~Jir~Pi~th'~.e-rp~9fe~.-~Y-~-. --J<l4itlon,.l.. aepo•1ts _ 1b.. ., ~, ~--. ~~~ CQ~ne~. ,. ~P '~)$4._•~--~4onal ... ~~rt~~t!oli to~,. ~e _s~t~~-­~•*'•t-ed ~-~~-emg>l.Qy~e.t.o ~e ~pl9y~~ ~~ nq an ~~~.~ ~i~,_pro-vi~ed_t:f ~P~9Y .. ~-~ ·~~t.64.-.to.· -:~ve_#:q.ch_~a1~on __ .~Q~.,·~io.,_, ;._,:2 . if' · ,.,. ·· ·-· · ea· · " 41•tr1bu._ .. · · tt uant "" ~ .:~~ij~,Jit:; .~-. ~Jt~l:~~~~1J in ~te!i e ~tion ~111 be ea.rtted~ · .. , • • DEFERRED COMPENSATION PLAN -Paqe 9 SECTION 9. NONASSIGNABILITY: Subject to Section 10, to the lullest extent permitted by law, the interest of a participant-in the contractual obligation of the employer, established.by the Plan, shall not be assignable in whole or in part, directly or by operation of l~w or otherwise, in any manner and no right or interest of a participant in the employer's contractual obligation ~hall be liable for or subject to any obligation or liability of such participant. SECTION 10. FACILITY OF PAYMENT: If any participant terminates his employment, or dies or retires, 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 co~pensation owed to the participant under the Plan. SEC'l"ION 11. MISCELLANEOUS: SEC!'ION ll.l Status of Participants -Neither the establishment of the Plan nor any modification thereof, nor the establishment of any book account, nor the payment of any benefits, shall be construed as qivinq to any participant or.other person any legal or .equitable right aqainst the employer except 11.2 11.3 as herein provided; and, in no event, shall the terms of employment of any employee or participant be modified or in any way affected hereby. Condition of Plan -It is a condition of this Plan, and each employee by participating herein expressly agrees, that he shall look solely to the general assets of the ·employer for the payment of any benefit to which he is entitled under the Plan• GovernJ.nq Law -This Plan shall be construed, idiiilnister8a and enforced accor4in9 to the laws of the State of California. .. .. • . DEFERRED COMPENSATION PLAN -Page 10. 11.4 .. Desiination of Beneficiaries -Each participant shal have the right, by written notice to the employer, to designate beneficiaries to receive any benefit to which said participant may be entitled in the event of his death prior to the complete distribution of beneflts. If no such designation is in effect on a.participant's death, his beneficiary shall be his estate or if no ex4!!1cutor or administrator is appointed within six (6) months after the participant's ·death, the employer shall direct said benefits to be paid to the beneficiary or beneficiaries designated in his last will, or if there be no will, then to the heirs at law of the :r;>articipant. SECTION 12. AMENDMENT AND TERMINATION: SECTION 12.1 The employer may at any time and from time to time modify,. amend, or terminate the Plan in whole or in part (including retroactive amendments) or cease deferring compensation pursuant to the Plan, by delivering to each participant a written copy of such modification, amendment, or termination or of a notice.that it ceases deferring compensation; provided, however, the employer shall not have the right to reduce or affect the value of any participant's book account or any rights accrued under the Plan prior to such modification, amendment, termination or cessation. 12.2 Xn the event of the termination of the Plan by the emPloyer under Section 12 .. 1, the value of all participant's book accounts shall be distr~uted to the participants or their beneficiaries in lump sums on the. ·aixtie~ day after termination of t:be Plan. SBCTION 13. EMPLOYER MOT RBSPOIISZBLE: The employer :inay, but is not requJ:iid to, invest funds held pursuant to agreementa.hetwean·Pa.rticipants and the employer in accordance with the requests·ma4a by ·each participant at the time of enroll.mont or change in enrollment~ prospec!Uvely only. The a-..;>loyar· &ball retain the right to approve or disapprove such investment requests. Any action by the employer in investing funds, or approvinqof any. auch investment of funds, shall not be considered to be either an endorsement or guarantee of any investment, nor shall it be considered to attest to the financial soundness or the sui.tability of any inveat:llent for the purpose of -tin9 future obliqations as provided in Section 7 of tJU.s Pl.an.