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City of Rancho Palos Verdes Deferred Compensation Plan (1977) r •• y • 1 CITY OF RANCHO PALOS VERDES, CALIFORNIA DEFERRED COMPENSATION PLAN SECTION 1. NAM E: The name of this Planis the City of Rancho Palos Verdes 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 Rancho Palos Verdes which will provide for deferral of payment, of a portion of their current compensation until death, disability, retirement, termination of employment, or other event as provided herein, in accordance with 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 Rancho Palos Verdes. 3.2 "Employee" shall mean all officials and full-time employees and con- tracted personnel of the City of Rancho Palos Verdes. 3.3 "Participant" shall mean any employee who fulfills the requirements 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 through December 31 of the same year, except that the first year of an employee hired in mid-period shall be the 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 employer on the basis of advice from a physician or physicians. -1- • • • • •• E 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 hiscompensation 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 thirty (30) days after commencement of employment. 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 by a new employee pursuant to Section 4.1, 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 employer an executed written notice of termination at least thirty (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 investment objectives provided that the amount deferred for each objective equals or exceeds the minimum of not less than $10 per pay period. SECTION 5. 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. • SECTION 6. ADMINISTRATION OF THE PLAN: 6.1 The plan shall be administered by the Advisory Committee 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 determine all the 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 deferred compensation shall be credited at such times as the compensa- tion would have been payable to individual employees if not a participant of the Plan. Separate accounts will be established for each employee participation which will show all amounts of deferred compensation, investments made, and earnings, gains or losses on investments. Each account will be valued at least annually on a method that fairly and. accurately reflects the value of those investments. -2- 44 • •• • • 6.3 On executing the Participation Agreement, the employee shall designate his investment objective prospectively only. The employer is not required to invest any amount it may receive, but may invest amounts of deferred compensation in any investment permitted by state law. The employer is the sole owner and beneficiary of all funds, investments and other assets under this plan. All dividends, capital gains distributions, interest earnings and other income payable on any of the employer's investments may be reinvested in those investments. 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 gains distributions, interest or other income payable on any of the employer's investments or deferred compensation, also shall be an asset of the employer. The employer shall have the sole right to vote any shares which it may acquire by such investment. 6.5 Neither this Plan nor any Participation Agreement nor any account shall be deemed to create a trust or custodian account on behalf of or for the benefit of any participant of the Plan or his beneficiaries. No participant of the Plan or his beneficiaries shall have, by reason of the Plan, Participation Agreement or account, any secured or preferred interest in. or to any asssets of the employer. 6.6 The employer shall have only a contractual obligation to pay the benefits due the participant under the Plan. SECTION 7. 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 partic- ipant's account, plus or minus any subsequent investment gains or losses, but less any Federal or State Income Taxes required to be withheld, may 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 the employer not greater than the life expectancy of the participant. Life expectancy shall be determined once by the employer, 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 account. -3- • • ' 7 Participants' account balances may 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 on the first day of the second month following termination of employment. 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 - In event of termination of employment by reason other than those specified in Sections 7.2 and 7.3, then the full benefits credited to participant's account plus or minus any 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 a 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 account. 7.4 (c) Postpone payments under 7.4(a) and (b) above until participant reaches his 50th, 55th, 60th or 65th birthday. The employee shall elect the method of distribution at the time of signing each Participation Agreement. Participants' account balances may continue to be invested until - in the employer's sole judgment - cash is to be withdrawn for payment of benefits. Payment of benefits under Section 7.4 (a) and 7.4 (b) will commence on the first day of the second month following termination of employment. Payment of benefits under. Section 7.4(c) will commence on the first day of the month following the participant's birthday. 7.5 Death - In the event of the death of any participant, either before or after termination of employment, then the full benefits credited to his account, less any Federal or State Withholding Taxes required by law, shall be distributed to his beneficiaries in the manner designated in the partici- ' pant's Participation Agreement. The employer shall in the case of Lump Sum payment make payment ninety (90) days after notification of death of the participant, incompliance with any State laws governing the payments of death benefits. 7.6 Financial Catastrophe - In the event of 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 participant is only the amount necessary to meet that financial catastrophe, and is not reimbursed by insurance, a participant may apply to the employer for withdrawal of.such amount from the Plan prior to retirement or to termination of participant's employment with the City. -4- . • Examples of such need under the foregoing criteria may be catastrophic illness, flood, fire, earthquake, death in the family, or disabling injury, and examples of similar import. Withdrawals for expenditures normally budgetable, such as down payment on a home or purchase of an automobile, or college expenses, will not be permitted. Any amount so approved hereunder for withdrawal shall be paid to participants in a lump sum. The withdrawal shall be effective at the later of the dates specified in the participant's application or the date approved by the employer. SECTION 8. EMPLOYER PARTICIPATION: Notwithstanding any other provisions of this Plan, the employer maymake additional deposits in the deferred compensation fund as additional compen- sation for the services rendered by the employee to the employer during an employment period, provided the employee has elected to have such additional compensation deferred, and distributed, pursuant to this Plan, prior to the employment period in which the compensation will be earned. SECTION 9. NON-ASSIGNABILITY: To the fullest 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 law or otherwise, in any manner and no right or interest of a participant in the employer's con- tractual obligation shall be liable for or subject to any obligation or liability of such participant. SECTION 10. MISCELLANEOUS: 10.1 Status of Participants - Neither the establishment of the Plan nor any modification thereof, nor the establishment of any account, nor the pay- ment of any benefits, shall be construed as giving to any participant or other person any legal or equitable right against the employer 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. 10.2 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 employer for the payment of any benefit to which he 'is entitled under the Plan. 10.3 Governing Law - This Plan shall be construed, administered, and enforced according to the laws of the State of California. 10.4 Designation of Beneficiaries - Each participant shall 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 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 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 participant. -5- • SECTION 11. AMENDMENT AND TERMINATION: 11.1 The employer may at any time and from time to time modify or terminate the Plan in whole or in part (including retroactive amendments) or cease deferring compensation pursuant to the Plan, by delivering to each par- ticipant a written copy of such modification, amendment, or termination, or of a notice that it ceased deferring compensation; provided however, the employer shall not have the right to reduce or affect the value of any participant's account or any rights accrued under the Plan prior to such • modification, amendment, termination or cessation. 11.2 In the event of the termination of the Plan by the employer under Section 11.1, the value of all participant's accounts may, at the employer's option, be distributed to the participants or their beneficiaries in lump sums on the sixtieth (60th) day after termination of the Plan. 11.3 If the employer does not elect to pay accrued benefits on termination of the Plan, the employer shall cease all deferrals of compensation, but payments shall be made pursuant to the applicable provisions of Section 7 of the Plan and the irrevocable election of the various participation agreements then in effect. SECTION 12. EM PLOY ER NOT RESPONSIBLE: The employer may, but is not required to, invest funds held pursuant to agree- ments between participants and the employer in accordance with the requests made by each participant at the time of enrollment or change in enrollment, prospectively only. The employer shall retain the right to approve or dis- approve such investment requests. Any action by the employer in investing funds, or approving of any such 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 suitability of any invest- ment for the purpose of meeting future obligations as provided in Section 7 of this Plan. ATTEST: CITY OF R ' NCHO PALOS VERDES, CALIFORNIA BY: ' J DATE: t7-1301'77 Robert . 'y:n Mayor Title -6-