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CC Resolution No. 4082 • ' , RESOLUTION N0. 4082 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ESTABLISHING A CITY OF CUPERTINO, CALIFORNIA DEFERRED COMPENSATION PLAN BETWEEN THE CITY OF CUPERTINO AND CERTAIN OF ITS OFFICERS AND EMPLOYE~S WHEREAS, the City as the employer has certain officers and employees ren- dering to it valuable services; and WHEREAS, the City is able to provide such officers and employees with certain benefits under such a Deferred Compensation Plan which assists those participating officers and employees in developing reasonable retirement security; and WHEREAS, the City receives benefits from said Plan by increasing its ability to attract and retain competent personnel. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cupertino that the City of Cupertino, California Deferred Compensation Plan, including the Deferred Compensation Plan Adoption Agreement, attached hereto and made a part hereof is hereby adopted, subject to receipt of written approval by the Internal Revenue Service. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 15Ch day of December, 1975, by the following vote: Vote Members of the City Council AYES: ~rolich, Meyers, N.ellis, S~arks, ~ackson NOES: ~one ~ ABSENT: None ABSTAIN: None APPROVED: fs/ James E. Jackson Mayor, City of Cupertino ATTEST: /s/ ~~~Wm. Ryder City Clerk Attachment _ Res. No. 4082 CITY OF CUPERTINO, CALIFORNIA DEFERRED COMPENSATION PLAN SECTION 1. NAME: The name of this Plan is the City of Cupertino, California Deferred Compensation Plan (hereinafter referred to as the Plan). SECTION 2. PURPOSE: The primary purpose of the Plan is to attract and hold key personnel by permitting them to enter into agreements with the City of Cupertino which will provide future payments in lieu of deferred current income upon death, disability, retirement, or other termination of employment with the City of Cupertino, California. SECTION 3. DEFINITIONS: For the purposes of this Plan certain words or phrases used herein will have the following meanings: 3.1 "City" shall be the City of Cupertino, California. 3.2 "Employee" shall mean the City Attorney and the City Councilmen, and such permanent employees in full time positions as designated by the City of Cupertino. 3.3 "Participant" shall mean any employee who fulfills the require- ments of enrollment into this plan. 3.4 "Participation Agreement" shall mean the agreement 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 to December 31, except that the first year of an employee hired in mid-period shall be a short period beginning with the date of employment and ' ending on December 31. 3.7 "Disability" means the inability of a participant to engage in his usual occupation by reason of a medically determinable physical or mental impairment as determined by the City on the basis of advice from a physician or physicians. 3.8 "Normal Retirement" shall mean a retirement from service with the ~ City which becomes effective on the first day of the calendar month after Participant meets the age and service requirements for normal retirement specified in the Retirement Plan for the employees of the City. 3.9 "Late Retirement" shall mean a retirement from service with the City which becomes effective after the Participant has extended the normal retirement specified in the Retirement Plan for the employees of the City. DEFERRED COMPENSATION PLAN - Page 2 SECTION 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 (a) filing it with the City no later than the day before the beginning of any employment period; or (b) for the first year in which a new employee is eligible, 30 days after the hiring date of the new employee. 4.2 A Participation Agreement shall be effective for the first employment period following its execution and filing, except when it is executed and filed pursuant to Section 4.1 (b), in which case it shall be effective for that part of the employment period following its execution and filing. In either situation, the Participation Agreement shall continue from 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 City 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 become a participant in subsequent employment periods. No amounts shall be payable to an employee upon terminating his participation in the Plan unless otherwise due pursuant to Section 7. 4.4 A participant may select pursuant to Section 6, one or more in- vestment objectives provided that the amount deferred for each objective equals or exceeds the minimum of not less than $10 per bi-weekly pay period or $20 per month if otherwise paid. SECTION 5. DEFERRAL OF COMPENSATION: During each employment period in which the employee is a participant in the Plan, the City shall not pay the employee his full compensation but shall defer payment of such part of his compen- sation as is specified by the employee in the Participation Agreement which he has executed and filed with the City. Compensation may be de- ferred in equal amounts over each pay period, or in total in either pay period so designated by the participant. SECTION 6. ADMINISTRATION OF THE PLAN: 6.1 The Plan shall be administered by the City, 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. The City shall determine the time, manner, and amount of payments of bene- fits pursuant to Section 7 and shall determine all questions arising out of the administration, interpretation, and application of the Plan, which determinations shall be conclusive and binding on all persons; provided that the City, unless there is a good reason to DEFERRED COMPENSATION PLAN - Page 3 the contrary, will seek to accommodate participant's wishes in rendering such determinations. 6.2 The City shall establish a deferred compensation fund to which all deferred compensation will be credited at such times as the compensation would have been payable to individual employees if not a participant of the Plan. Separate book accounts will be established for each employee participant which will show all amounts of deferred compen- ~sation, investments made, shares acquired and earnings and gains on investments. Each book account will be valued at least annually on a method as outlined in Section 6.3. 6.3 On executing the Participation Agreement, tne employee shall designate his investment objective. The employer may, but is not required to, invest amounts of deferred compensation in mutual fund shares, or interest time deposits with a local savings and loan company or banking institution, or investments with a local stockbroker, or a fixed/variable annuity contract with an insurar.ce company, whichever in the employer's sole jue.gment will best achieve the employee's objectives. 6.3(a) If a mutual fund is selected as the investment vehicle, all dividends and capital gains distributions will be reinvested in shares of said mutual fund. The total of full or fractional mutual fund shares 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 the fund on the valuation date. 6.3(b) If interest time deposits in local savings 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 in- stitution. Annual valuation will include all interest earned, whether paid or accrued. 6.3(c) If investments are selected, dividends and interest earnings will be credited to the City of Cupertino Deferred Compensation Plan Investment Account wiCh the stockbroker. The market value of all investments and cash in the account shall be determined on December 31st each year and each participant's share of the account shall be valued by any cash income, plus or minus any market action. New participants may join the Account after existing participants values are determined. DEFERRED COMPENSATION PLAN - Page 4 6.3(d) If a variable annuity contract is selected as the investment vehicle, the value of participant's individual 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 Variable Con- tract Account. At retirement, the amount of annuity payments 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 City 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 in- vested by the City, shall at all times be and remain an asset of the City. Any and all dividends, capital gains distributions, interest or other income payable on any of the City investments of deferred compensation also shall be an asset of the City. The City shall have the sole right 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 on behalf of or for the benefit of any participant of the Plan or his beneficiaries. No participant of the Plan or his bene- ficiaries shall have, by reason of the Plan, Participation Agreement, or book account, any secured or preferred interest in or to any assets of the City. The City shall have only a nontractual obligation to pay the benefits due the participant under the Plan. SECTION 7. DISTRIBUTION OF BENEFITS: 7.1 Retirement - In event of normal retirement or late 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, shall be distributed to him in any one or more of the following ways: 7.1(a) In a lump sum. 7.1(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 the City not greater than the life expectgncy of the partici- pant. Life expectancy shall be determined once by the City, 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. , DEFERRED COMPENSATION PLAN - Page 5 Participant's book account balances will continue to be invested until in the employer's sole judgment cash is to be with- drawn for payment of benefits. Payment of benefits will commence not later than sixty (60) days frollowing termination of employ- ment. ~ 7.2 Disability - In event of termination of employment by reason of disability distribution of benefits will be as provided in Sec- tion 7.1. 7.3 Other Termination - In event of termination of employment for reason other than those specified in Sections 7.1 and 7.2, 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 distrib- uted.to him in any one or more of the following ways: 7.3(a) In a lump sum. 7.3(b) In monthly, quarterly, semi-annual, or annual install- ments of substantially equal payments over a period not to exceed seven (7) years from date distribution began, but no payment shall have a vlue of less than (the smaller of) $50 or the balance credited to the participant's book account. 7.3(c) Postpone payments under 7.3(a) and (b) above until partici- pant reaches his 50th, 60th, 65th birthday. Participant's book account balances will continue to be invested until - in the City's sole judgment - cash is to be withdrawn for payment of benefits. Payment of lump sums or installments shall be made not later than the first week of the calendar years suc- ceeding the year of termination of employment. 7.4 Death - In event of the death 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 distributed to his beneficiaries in the manner designated in the participant's Participation Agree- ment. The City shall make payment in lump sums not later than 60 days after death of the participant. 7.5 Other Distributions - Notwithstanding any other provisions of the Plan, the City, in its discretion, may at any time discharge in full its obligations under the Plan to any Participant by distrib- uting to the Participant, or, following the death of the Parti- cipant by distributing to his Beneficiary, in cash or in kind, all amounts credited, contingently or otherwise, to the Parti- cipant's Investment Account. ~ DEFERRED COMPENSATION PLAN - Page 6 7.6 Future Payment of Benefits - Notwithstanding the date of actual termination of employment set forth in Sections 7.1, 7.2 and 7.3, the City may specify that payments of benefits shall commence at a future date, which is not later than participant's age sixty- five (65)• or, if earlier, at the date of his death. 7.7 Method of Distribution - Where alternative methods of distribution are available, the method of distribution shall be selected by the . Participant at the time the Participation Agreement is executed. SECTION 8. CITY PARTICIPATION: Notwithstanding any other provisions of this P1an, the City may make additional deposits in the deferred compensation fund as additional compensation for the services rendered by the employee to the City during an employment period. SECTION 9. NONASSIGNABILITY: Subject to Section 10, to the fullest extent per- mitted by law, the interest of a participant in the contractual ob- ligation of the City, established by the Plan, shall not be assignable in whole or in part, directly or by operation of law or otherwise, in any manner and no right or interest of a participant in the City's contractual obligation shall be liable for or subject to any obliga- tion or liability of such participant. SECTION 10. FACILITY OF PAYMENT: If any participant terminates his employment with an unpaid debt owing to the City, and neglects or refuses to liqui- date the debt by any other means when due and upon demand, the City shall be entitled to collect the amounts due from the deferred compensation owed to the participant under the Plan. SECTION 11. MISCELLANEOUS: 11.1 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 giving to any participant or other person any legal or equitable right against the City except 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. 11.2 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 City for the payment of any benefit to which he is entitled under the Plan. 11.3 Governing Law - This Plan shall be construed, administered and enforced according to the laws of the State of California. 11.4 Designation of Beneficiaries - Each participant shall have the right, by written notice to the City, 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 benefits. If no such designation is in effect on a participant's death, his beneficiary shall be his estate or if no executor or administrator is appointed within six (6) months after the part- icipant's death, the City shall direct said benefits to be paid to the heirs at law of the participant. f. • . M DEFERRED COMPENSATION PLAN - Page 7 SECTION 12. AMENDMENT AND TERMINATION 12.1 The City 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 modifi- cation, amendment, or termination or of a notice that it ceases deferring compensation; provided,.however, the City 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 Upon complete termination of the Plan the City may at any time discharge in full its obligation under the Plan to all partici- pants by distributing to such participants, or, following the death of a participant, to his beneficiary, all amounts credited to the participant's book account. 12.3 In the event of the termination of the Plan by the City under Sec- tion 12.1, the value of each participant's book account shall be distributed to the participants or their beneficiaries no later than 60 days after termination of the Plan. The amount, method, and time of payment shall be determined as provided in Section 7.