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CC Resolution No. 5339 ~ s ~ RESOLUTION N0. 5339 ; A RESOLUTION AMENDING RESOLUTION N0. 4082 i OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ' WHEREAS, the City Council of the City of Cupertino has previously adopted the Deferred Compensation Plan of the City of Cupertino by Resolution No. 4082; and ~ WHEREAS, the City wishes to expand the investment vehicles availabe to the City under the Plan; WHEREAS, the City wishes to revise certain definitional sections of the Plan; to increase the minimum amount deferred, per semi-monthiy pay period, by a Participant; and to establish a committee for administration, enforcement, and operation i of the Plan; ; NOW, THEREFORE, BE IT RESOLVED by the City Council of ~ the City of Cupertino that the amended Deferred Compensation Plan of City of Cupertino, attached hereto and made a part here- of is hereby adopted, subject to receipt of written approval, , if necessary, by the Internal Revenue Service. PASSED AND ADOPTED by the City Council of the City of ' Cupertino, this 7th day of July , 1980, by the following vote: MEMBERS OF THE CITY COUNCIL AYES: Gatto, Plungy, Sparks, Rogers NOES : None ABSENT: ;Ione ~ ABSTAIN: :Ione APPROVED: A Mayor, C.t of C p ino^^ ATTEST: G' , City Clerk ~ I ~ ~ I ~ CITY OF ~ CUPERTINO~ CALIFORNIA DEFERRED COMPEN ATION PLAN SECTION 1. NAME: The name of this Plan is the City of Cupertino, CaIifornia Deferred Compensation Plan (hereinafter referred to as the Plan). I ~ ~ SECTION 2. PURPOSE: The primary purpose of the Plan is to attract an 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 followinq 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 a full-time (40-hour week) as designated by the City of Cupertino. 3.3 "Participant" shall mean any employEe who fulfills the requirements of enrollm~nt into this plan. 3.4 "Participation Agreement" shall mean the agreement executeci 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(a) "Compensation" shall mean the total amount of annual remuneration for employement or contractual services received by the participant from the City. 3.5(b) "Includable compensation" shall mean the remuner- ation for services performed for the City which is currently includable in gross income. 3.5(c) "Deferred compensation" shall mean the amount of compensation not yet earned which the participant and the City shall mutually agree as designated in the participation agreement shall be deferred in accordance with the provisions of this plan subject to the following limitations: (1) The maximum that may be deferred under this plan for the taxable year (except as provided in subparagraph c.(2) of Section 3.5) is the lesser of 57,500.00 or 33 1/3$ of the participant's includable DEFERRED COMPENSATION ~AN - Page 2 ~ compensation. ' (2) For any one or more of the participant's last taxable years ending prior to his or her retirement, as defined in Section 3.8, the limitations set forth in Section ~ 3.5 c.(1) shall be the lesser of 515,000.00 ' or the sum of the limitations set forth in Section 3.5 c.(1) and so much of that limitation which has been underutilized since January 1, 1979. 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 medi- cally determinable physical or mental impairments 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 afte_ 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 tt~e Participant has extended the normal retirement specified in the Retirement Plan for the employees of the City. 3.10 "Deferred Compensation Plan Administration Committee" shall mean a committee designed to administer, en- force, and operate the Plan in accordance with its terms. 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 compensa- tion 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 ; ~ ' ~ ~ ~ DEFERRED COMPENSATION PLAN - Page 3 filing, except when it is executed and Eiled pursuant to Section 4.1 (b), in which case it shall be effec- tive 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 termina~e further deferral of his compensation by filing with the City an executed written notice of terminatian at least 30 days prior to effective date of termination. Once terminated, a former pazticipant cannot rejoin the Plan during I the employment period in which termination occurred; ~ however, he may elect to become a participant in , subsequent employment periods. No amounts shall be i payable to an employee upon terminating his partici- pation in the Plan unless otherwise due pursuant to Section 7. ' 4.4 A participant may select, pursuant to Section 6, one or more investment objectives, provided that the ' amount deferred for each objective equals or exceeds the minimum of not less than 525.00 per semi-monthly pay period, 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 compensation as is specified by the employee in the Participation Agreement ' which he has executed and filed with the City. Compensa- tion may be deferred in equal amounts over each pay period, or in total in either pay period so designaced by the participant. SECTION 6. ADMINISTRATION OF THE PLAN: 6.1 The Plan shall be administered by a committee known as the Deferred Compensation Plan Administration Committee which s11a11 be composed of three (3) to five (5) members. The City Manager shall be chair- man of the committee and the Director of Finance of the City of Cupertino shall also be a member of the committee. The remaining committee member(s) shall be appointed by the City Manager and shall be representative of the participants in the Plan. The Deferred Compensation Plan Administration Committee 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 Committee shall determine the time, manner, and , . O ~ DEFERRED COMPENSATION PLAN - Page 4 amount of payments of benefits pursuant to Section 7 and shall determine all gu@stions arising out of . the administration, interpretation, and application of the Plan, which determinations shall be con- clusive and binding on all persons; provided that ' the Committee, unless there is a good reason to the contrary, will seek to~accomodate participant's ~ wishes in rendering such determinations. i 6.2 The City shall establish a deferred compensation fund i 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 estab- lished for each employee participant which will show all amounts of deferred compensation, 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 Oa executing the Participation Agreement, the employee ' shall designate his investment objective. The employ- ' er 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 investments with a local mortgage broker, or a fixed/variable annuity contract with an insurance company, whichever in the employer's ' sole judgment 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) Zf investments are selected, dividends and interest earnings will be credited to the City of Cupertino Deferred Compensatiun Plan Investment Account with • ~ DEFERRED COMPENSATION PLAN - Page 5 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 par'ticipants may join the ' Account after existing participants values are i determined. i 6.3(d) If a variable annuity contract is selected as the investment vehicle, the value of participant's individual account durinq 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 Contract Account. At retirement, the amount of annuity payments shall be determined by the insurance Company's last Annuity Unit, which is a statistical 1 index of the net investments results of the Variable Contract Account. 6.3(e) If a Trust Deed should be selected as the investment vehicle, the value of the participant's individual ' account during the employment period shall be de- termined by the balance which has been returned in interest payment to the participant's book ' account up to that month in which the participation terminated, plus the balance due on the Trust Deed. At that point, the deferred compensation account would become the shareholder in the Trust Deed to receive future interest payments and pre-payment penalties. The deferred compensation general account would credit the participant's book account with the remaining value of the Trust Deed, ' 6.4 The City may, but is not required to, invest deferred compensation at least monthly in the investment vehicles provided foz in this Plan. All amounts of , deferred compensation, whether or not invested 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 compensa- ' tion 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. ~ ~ DEFERRED COMPENSATION PLAN - Page 6 No participant of the Plan or his beneficiaries 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 contractual obliqation to pay the ' benefits due the participant under the Plan. SECTZON 7. DISTRIHUTION OF BENEFITS: ~ i 7.1 Retirement - In event of normal retirement or late retirement, the full benefits credited to partici- pant's book account plus or minus subsequent invest- ment gains or losses, but less any Federal or State Income Taxes required to be withheld, shall te distributed to him in any one or more of the fol- I lowing ways: ''i 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 expectancy of the participant. Life expectancy shall be determined once by the City, on the date of the initial installment distribution. In~tall- ment distributions will be made in substantially equal payments, but no payment shall have a value of less than (the smaller of) S50 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 sole judgment cash is to be withdrawn for payment of benefits. Payment of benefits will commence not later than sixty (60) days following termination of employment. 7.2 ~Disabil~i~t - In event of termination of employment y rb eason of disability distribution of benefits will be as pruvided in Section 7.1. 7.3 Other Termination - In event of termination of employ- ment or reason other than those specified in Sections 7.1 and 7.2, then the full benefits credited to participant's book account plus ar 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: 7.3(a) In a lump sum. ; ~ ~ DEFERRED COMPENSATION PLAN - Page 7 ' 7.3(b) In monthly, quarterly, semi-annual, or annual ~ installments of substantially equal payments j 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) S50 or the balance credit to the partici- pant's book account. i . 7.3(c) Postpone payments under 7.3(a) and (b) above until participant reaches his SOth, 60th, I 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 :irst week of the calendar years succeeding the year of termination of employment. ' 7.4 Death - In event of the death of any participant, ' e-it~ier 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 Partici- pation Agreement. 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 distributing to the Participant, or, following the death of the Participant by distributing to his Beneficiary, in cash or in kind, all amounts credited, contingently or otherwise, to the Participant's Investment Account. 7.6 Future Pa ent of Benefits - Notwithstanding the date o actua 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, the date of his death. 7.7 Method of Distribution - Where alternative methods o istribution 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 t is P an, t e City may make additional deposits in the deferred compensation fund as additional compensation ~ ~ DEFERRED COMPENSATION PLAN - Page 8 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 permitted by law, the interest of a participant in the contractual obligation 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 i~ manner and no right or interest of a participant in the City's contractual obligation shall be liable for or subject to any obligation or liability of such i participant. i . , SECTION 10. FACILITY OF PAYMENT: If any participant terminates his employment with an unpaid debt owing to the City, and I neglects or refuses to liquidate the debt by any other I 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. MISCELLANEOIIS: 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 equit- able 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, an eac 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, admin- istered and enforced according to the laws of the State of California. 11.4 Designation of Beneficiaries - Each participant s all have the r ght, 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 complate 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 participant's death, the City shall direct said benefits to be paid to the heirs at law of the participant. ~ ~ DEFERRED COMPENSATION PLAN - Page 9 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 modification, 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 I 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 participants 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 terminatior. of the Plan by the City under Section 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.