Resolution - 6037RESOLUTION NO. 6037
A RESOLUTION OF THE CITY COUNCIL OF THE
• CITY OF WEST COVINA.AUTHORIZING THE
SIGNING OF A DEFERRED COMPENSATION PLAN.
•
WHEREAS, the City of West Covina wishes to provide a
Deferred Compensation Plan, which may reduce currently taxable
income for participating City employees; and
WHEREAS, by Resolution Number 4692 of the City
Council, adopted February 13, 1973, Resolution Number 5132 of
the City Council, adopted October 27, 1975, and by Minute
Action of March 12, 1979, the City respectively approved
certain agreements with the New York Life Insurance Company,
amended a deferred plan proposed by Financial Kinetics
Corporation, approved a certain agreement with Glendale Federal
• Savings and Loan Association, all concerning the investment
and administering by the City of amounts deferred;
• NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF WEST COVINA THAT:
SECTION 1. The City of West Covina Deferred Compen-
sation Plan, a copy of which is attached as Exhibit A, is
hereby adopted and approved.
SECTION 2. It is the intention of this Council that
amounts deferred by participating City employees not be
considered as income paid to the participants concerned, thus
the City will own and have all rights to said amounts,
including all property and rights purchased with such amounts
and all income attributable to such amounts, and said deferred
• amounts will not be held in any as security for the fulfilling
of the obligations of the City but shall be held as general,
• unpledged and unrestricted asset.
SECTION_ 3. Any and all plans for deferral of
• compensation approved, adopted or entered into by the City
prior to the adoption of this Resolution are hereby revoked.
• All amounts deferred and obligations incurred by the City
under such plans shall be administered or maintained, -as -the
case may be, pursuant to the terms of the Plan adopted by
this Resolution.
SECTION 4. The agreements entered into by the
City pursuant to Resolution Number.4692 and -Minute Action
of March 12, 1979, and any such agreement with Financial
Kinetics Corporation concerning the investment of deferred
amounts, shall remain in effect and shall be governed by
the terms of the Plan.
SECTION 5. The City Manager of the City of West
Covina is authorized to act on its behalf in respect to the
Plan, to formulate rules and -procedures for the implementa-
tion of same, and to execute documents as necessary for such
implementation.
SECTION 6. The City Manager of the City of West
Covina is hereby directed to set about securing in due course,
a private letter ruling from the Internal Revenue Service
holding that the terms of the Plan meet the pertinent
requirements set forth in the Internal Revenue Code and in
such regulations as may be prescribed by the Secretary of the
Treasury.
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SECTION 7. The City Clerk shall certify to the
. adoption of this Resolution and thenceforth and thereafter
the same shall be in full force and effect.
• APPROVED AND ADOPTED this 7th day of
January , 1979.
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ATTEST:
CITY CLERK
I HEREBY CERTIFY that the foregoing Resolution
• No. 6037 was adopted at a regular meeting of the City
Council of the City of West Covina held on the 7th day
• of January , 1979, by the affirmative vote of at
least r Councilmen, to wit:
AYES: Councilmen Miller., Tice, Shearer, Browne, Chappell
NOES: Councilmen None
ABSENT: Councilmen None
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CITY CLERK
CITY'OF WEST COVINA
DEFERRED COMPENSATION PLAN
SE, CTTON 1. NAME:
'Phe name of this Plan is the City of West
Covina Deferred Compensation Plan (hereinafter
•
referred to as the.."Plan").
SECTION 2. PURPOSEc
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The primary purpose of the Plan is to attract
and hold personnel by permitting them to enter
into agreements with the City of West Covina
which will provide for deferral of payment of
a portion of their current Compensation until
death, disability, retirement, termination or
employment, or other event as provided herein,
in accordance with the provisions of Section
53212-53214 of the Government Code of the
State of California, and the applicable
provisions of the Internal Revenue Code..
SECTION 3. DEFINITIONS:
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For the purposes of this Plan, certain words
or phrases used herein will have the following
meanings.
3.1 "Employer" shall mean the City of West
Covina.
3.2 "Employee" shall mean all officers, any
full or part time employees, and contrac-
ted personnel of the City of West Covina.
3.3 "Participant" shall mean an employee who
has elected to participate in the Plan.
"Participant" excludes any person who
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does not perform services for the City of
West Covina.
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3.4
"Participation Agreement" shall mean the
agreement executed and filed by an
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Employee with the Employer pursuant to
Section 4, in which.the.Employee elects
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to become a Participant i.n 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 Year" 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 employ-
ment and ending on December 31.
3.7
"Deferred Compensation" shall mean the
amount of compensation not yet earned,
which the Participant and the Employer
mutually agree shall be deferred in
accordance with the provisions of this
Plan.
3.8
"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
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basis of advice from a physician or
physicians.
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SECTION 4.
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3.9 "Normal Retirement" shall mean a retire-
ment from service with the Employer which
becomes effective on the first day of the
calendar month after the Participant
meets the age and service requirements
for normal retirement specified in the
Public Employees Retirement System.
3.10 "Early Retirement" shall mean a retirement
from service with the Employer which
becomes effective on the first day of the
calendar month after the Participant
meets the age requirements for Early
Retirement specified in the Public
Employees Retirement System.
3.11 "Late Retirement" shall mean a retirement
from service with the Employer which
becomes effective after the Participant
has exceeded the normal retirement age as
specified in the Public Employees Retire-
ment System.
3.12 "Termination of Employment" shall mean
the severance of the Participant's
employment with the Employer for reasons
other than those specified in Sections
3.8 through 3.11 above.
PARTICIPATION
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.
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A Participation Agreement must ho
executed and tiled no later than thirty
(30) days prior to the first day of the
calendar month of the first deferral, in
which case it shall be effective for.that
part of the Employment Year following its
execution and filing.
The Participation Agreement shall
continue from year to year and remain in
full force and effect unless terminated
as provided in Section 4.3 below.
4.2 At the time of any agreement hereunder, a
Participant must agree to defer a minimum
.amount of $ _ per pay period.
4.3 Additional agreements with respect to Com-
pensation not yet earned may be executed
no more than thirty (30) days prior to
the first day of any succeeding calendar
month, to become effective during such
subsequent month.
4.4 A Participant may terminate his participa-
tion 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 calendar month .in which termination
occurred; however, he may elect to become
a Participant in subsequent calendar
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months. No amounts shall be .payable to
an Employee upon terminating his partici-
pation in the Plan unless otherwise due
pursuant to Section 10.
SECTION.5. DEFERRAL OF COMPENSATION:.
5.1 During each Employment Year in which the
Employee is a Participant in the Plan,
the Employer shall not pay the Employee
his full Compe,nsation,,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 Employer.
5.2 The maximum Compensation that may be
deferred (except as provided in Section
5.3) for any taxable year shall be the.
lesser of:
(A) $7,500.00, or
(B) 33-1/3 per cent M of the Partici-
pant's Compensation which is cur-
rently includible in Participant's
gross income for federal income tax
purposes,..
5.3 Notwithstanding, the provisions of Section
5.2, for one (1) or more of a Partici-
pant's last three (3) consecutive years
ending before the Participant attains
Normal Retirement Age, the maximum.Com-
pensation that may be deferred for each
such year shall be the lesser or:
(A) .:$15,000.00, or
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(B) the sum of
(i) the Plan limitation
established 'for purposes of
Section 5.2 for the taxable year
(determined without regard to
this section,) PLUS
(ii) so much of the Plan limitation
established for purposes of
Section 5.2 for taxable years
before the current taxable year
as has not previously been used
under Section 5.2.
5.4 (A) The maximum amount of Compensation
of any Participant which may -be
deferred under Section 5.2 during
any taxable year shall not exceed
$7,500 (as modified by any adjustment
provided under Section 5.3).
(B) In applying Subsection 5.4(A) and'
Sections 5.2 and 5.3, an amount
excluded during a taxable year under
Internal Revenue Code Section 403(b)
shall be treated as an amount
deferred under the Plan.
SECTION 6. ADMINISTRATION OF THE PLAN:
6.1 The Employer shall have full authority
and power to adopt the rules and regula-
tions for the administration of the Plan,
and to interpret, amend, alter and revoke
any rules and regulations so adopted.
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6.2 The Employer may establish a Deferred
Compensation fund to which all Deferred
Compensation shall be credited at such
•
times as the Compensation would have been
payable to individual Employees if not a
•
Participant of the Plan.. In any event,
separate book accounts will be estab-
lished for each Participant, showing all
amounts of Deferred Compensation, invest-
ments 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,
the Employee shall designate his invest-
..ment objective. The Employer is not
required to invest any amount it may
receive, but may invest amounts of Defer-
red Compensation'in mutual fund shares,
or interest deposits with a savings and
loan company or banking institution or
credit union, or investments with a stock-
broker, or life insurance and/or fixed/vari-
able annuity contract with an insurance
company, or mortgages, deeds of trust, or
other security interests in real property,
whichever in the Employer's sole judgment
will best achieve the Employee's designa-
tions. The Employer is the sole owner and
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beneficiary of all funds; investments, or
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other assets under this plan.
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6.3(a) If a mutual fund is selected as the
investment vehicle, all dividends and
capital gains distributions may be rein-
vested in shares of said mutual fund.
The total of full or fractional mutual
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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
if purchased 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 or
if credit union accounts are selected as
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the investment vehicle, interest earnings,
or dividends as the case may be,. will be
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declared by the institution. Annual"
valuation may include all interest or
dividends earned, whether paid or accrued.
6.3(c) If investments are selected, dividend
and interest earnings may be credited to
the City of West Covina Deferred Compensa-
tion Plan Investment Account with the
stockbroker.
The market value of any investments and
cash in the account shall be determined
on December 31st of each year and each
Participant's share of the account shall
be valued by any cash income, plus or
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minus any market action. New Participants
may join the account after existing
Participants' values are.determined.
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6.3(d) If a variable annuity contract is
selected as the investment vehicle, the
value of Participant's individual account
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during the employment period may be
• determined by the insurance company.'s
accumulation unit, which is a statistical
index of the net investment 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 pro-
vided for in this Plan. All amounts of
Compensation deferred under the Plan, all
property and rights purchased with such
amounts, and all income attributable to
such amounts, property, or rights, shall
remain (until made available to the Par-
ticipant or other beneficiary) solely the
property and rights'of the Employer (with-
out being restricted to the provision of
benefits under the Plan) subject only to
the claims of the Employer's general
creditors. The Employer shall have the.
sole right to vote any shares of stock
which it may acquire by investment..
6.5 Neither this Plan nor any Participation
Agreement nor any book 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
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Plan or his beneficiaries shall have., by
reason of the Plan, Participation Agree-
ment or book account, any secured or
preferred interest in or to any -assets
• of the Employer..
The Employer shall have only a con-
tractual obligation to pay the benefits
due the Participant under the Plan.
SECTION 7. DISTRIBUTION OF BENEFITS
7.1 Election - Each participating Employee
must elect, prior to the earliest dis-
tribution date provided under this sec-
tion, 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. Subject to the provision of
• the preceding sentence, each participat-
ing Employee may alter his election by
executing an additional Participation
Agreement. Said altered election shall
apply to all benefits currently and
subsequently credited to Participants'
book account, unless subsequent altering
elections are made by the Participant.
7.2 Retirement - In event of retirement, the
full benefits. credited to Participant's
book 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:
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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 distri-
bution 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 substan-
tially 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
• 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 Termina-
tion of Employment by reason other than
• those specified in Sections 7.2 and 7.,3,
then the full benefits credited to Par-
ticipant's book account plus or minus any
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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 distri-
bution 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 50th,
55th, 60th or 65th birthday.
• The Employee shall elect the method
of distribution at the time of signing
each Participation Agreement. Partici-
pant's book 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 Partici-
• pant's birthday.
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7.5 Death - In the event of the death of any
Participant, either before or after
• Termination of Employment, then the ful.1
benefits credited to his book account,
• less any Federal or State Withholding
Taxes required by law,' shall be distri-
buted to his beneficiaries in the manner
designated in the Participant's Participa-
tion Agreement. The Employer shall in
the case of lump sum payment make payment
ninety (90) days after notification of
death of the Participant, in compliance
with any State laws governing the payments
of death benefits.
7.6 Unforeseeable Emergency - In the event of
. an unforeseeable emergency affecting a
Participant where the withdrawal of funds
• would be necessary to prevent extreme
hardship to the Participant and the amount
of withdrawal requested by the Participant
is only the amount necessary to meet that
unforeseeable emergency, and is not reim-
bursed by insurance, a Participant may
apply to the Employer for withdrawal of
such amount from the Plan prior to.retire-
ment or to termination of Participant's
employment with the City.
Examples of such need under the fore-
going criteria may be catastrophic ill-
ness, flood, fire, earthquake, death in
• the Participant's family
, y, or disabling
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injrtr.y, and c-xaIII ples, (-)F :iIII i Iar. i►npo1.1..
wit hdrawa I :s I or expond i I tit t-; norm,► I I y
• 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 speci-
fied in the Participant's application or
the date approved by the Employer.
Determination of unforeseeable emer-
gency shall be governed by such regula-
tions as are prescribed from time to time
by the Secretary of the Treasury.
• SECTION 8. EMPLOYER PARTICIPATION
within the limitations of Sections 5.2 and
• 5.3,-the Employer may make additional deposits
in, the Deferred Compensation Fund as additional
Compensation 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 Compensa-
tion will be earned. In no event shall the
limitations set forth in Sections 5.2 and 5.3
be exceeded. `
SECTION 9. NON_ASSIGNABILITY CLAUSE
It is agreed that neither the Participant nor
• his beneficiary, nor any other designee, shall
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have any right to commute, sell, assign,
transfer, or otherwise convey the right to
. receive any payments hereunder, which payments
and right thereto are expressly declared to be
non -assignable and non -transferable and in the
event of any attempted assignment or transfer,
the Employer shall have no further liability
hereunder, nor shall any payments be subject
to attachment, garnishment or execution, or be
transferable by operation of law in event of
bankruptcy, insolvency, except to the extent
otherwise provided by law, notwithstanding the
above clause.
SECTION 10. MISCELLANEOUS
10.1 Status of Participants - Neither the
. establishment of the Plan nor any modifi-
cation 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 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 partici-
pating 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.
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10.3 Governing Law - This Plan shall be
construed, administered and enforced
• according to the laws of the State of
California, and by.the provisions of the
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• Internal Revenue Code. This Plan shall
be construed so as to conform to the
requirements of Internal Revenue Code
Section 457.
10.4 Designation of Beneficiaries - Each Par-
ticipant 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.
SECTION 11. AMENDMENT AND TERMINATION
11.1 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
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delivering to each Participant 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 book account or any
rights accrued under the Plan prior to
such modification, amendment, termination
or cessation.
In particular, the Employer shall
amend the Plan to the extent necessary to
conform the Plan to the requirements of
Section 457 of the Code and'any other
applicable law, regulation or ruling,
including amendments that are retroactive
to the effective date of the Plan. In
the event that the Plan is deemed by the
Internal Revenue Service to be adminis-
tered in a manner inconsistent with Sec-
tion 457 of the Code, the Employer shall
correct such administration within the
period provided in Section 457(b) of the
Code.
11.2 In the event of the termination of the
Plan by the Employer under Section 11.1,
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.
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11.3 No
amendment shall affect the rights of
the
Participants or their beneficiaries
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to
the receipt of payment of benefits, to
the
extent of any Compensation deferred
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at
the time of the amendment as adjusted
for
investment experience hereunder prior
to and subsequent to the amendment.
SECTION 12. EMPLOYER NOT RESPONSIBLE
12.1 The Employer may, but is not required to,
invest funds held pursuant to agreements
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 disapprove such investment
requests. Any action by the Employer in
• investing 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
investment for the purpose of meeting
future obligations as provided in Section
7 of this Plan.
The Employer hereby establishes this Deferred Com-
pensation Plan on the terms and conditions set fort,h herein.
• ATTEST: CITY OF WEST COVINA/y
• 13Y : {zl_': � ., r.� (. _ � ..: __ ._.._,_ DATE: Januar l 0. 1980 --
, City Manager.
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