Resolution 2663
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RESOLUTION NO. 2663
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE SOUTH TAHOE PUBLIC UTILITY DISTRICT
AMENDING THE DEFERRED COMPENSATION PLAN
WHEREAS, the South Tahoe Public Utility District ("District") has employees
6 rendering valuable services; and
WHEREAS, the District has established a Deferred Compensation Plan for such
employees that serves the interest of the District by enabling it to provide reasonable
retirement security for its employees, by providing increased flexibility in its personnel
management system, and by assisting in the attraction and retention of competent
personnel; and
WHEREAS, the District has determined that the continuance of the Deferred
Compensation Plan will serve these objectives; and
WHEREAS, amendments to the Internal Revenue Code have been enacted that
require changes to the structure of and allow enhancements of the benefits of the Deferred
16 Compensation Plan:
17 NOW, THEREFORE, BE IT RESOLVED, that on the 18th day of December 1997 the
18 District amends and restates the Deferred Compensation Plan (the "Plan") in the form of
19 the Plan and Trust provided by the District (copy attached hereto).
20 BE IT FURTHER RESOLVED that the assets of the Plan shall be held in trust, with
21 Robert G. Baer, General Manager; Rhonda McFarlane, Chief Financial Officer; and Nancy
22 Hussmann, Director of Human Resources; serving as trustees, for the exclusive benefit of
23 the Plan participants and their beneficiaries, and the assets shall not be diverted to any
24 other purpose. The Trustees' beneficial ownership of the Plan assets held in the District's
25 Plan and Trust shall be held for the further exclusive benefit of the Plan participants and
26 their beneficiaries.
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Resolution 2663
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PASSED AND ADOPTED by the Board of Directors of the South Tahoe Public
Utility District this 18th day of December 1997 by the following vote:
AYES: Directors Wallace, Strohm, Jones, Gochnauer, and
Mosbacher.
NOES: None
ABSENT: None
~1t: ~
Board President
South Tahoe Public Utility District
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ATTEST:
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SOUTH TAHOE PUBLIC UTILITY DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
EFFECTIVE: September 1. 1977
AMENDED: December 18. 1997
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SOUTH TAHOE PUBLIC UTILITY DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
TABLE OF CONTENTS
CHAPTER
PAGE
1 PLAN ESTABLISHED ................... 1
2 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
3 ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . 1
4 PARTICIPATION IN THE PLAN ............ 2
5 UNFORESEEABLE EMERGENCY . . . . . . . . . . . 8
6 PARTICIPANT LOANS. . . . . . . . . . . . . . . . . . . 8
7 LEA VE OF ABSENCE ................... 9
8 AMENDMENT OR TERMINATION OF PLAN. . . 9
9 RELATIONSHIP TO OTHER PLANS ......... 9
10 TRANSFER IN LIEU OF CASH ... . . . . . . . .. 10
11 NON-ASSIGNABILITY CLAUSE ..... . . . . ., 10
12 ASSETS............................ 10
13 PARTICIPATION BY COMMITTEE MEMBERS. 10
14 PLAN SPONSOR PARTICIPATION ......... 10
15 INVESTMENT RESPONSIBILITY .......... 10
16 COMMITTEE POWERS ................. 10
17 APPLICABLE LAW ... . . . . . . . . . . . . . . . ., 11
18 TRUST AGREEMENT .................. 11
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SOUTH TAHOE PUBLIC UTILITY DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Chapter 01
PLAN ESTABLISHED
01-01 Plan Established. In accordance with the
provisions of Sections 53212-53214 of California
government code, and as provided in Section 457 of the
Internal Revenue Code of 1986, the South Tahoe Public
Utility District ("District") establishes the South Tahoe
Public Utility District Deferred Compensation Plan
("Plan") for its employees. Nothing contained in this Plan
shall be deemed to constitute an employment agreement
between the Participant and employer and nothing
contained herein shall be deemed to give a Participant any
right to be retained in the employment of the District.
This Plan document amends, re-states and supersedes all
previous plan documents since the Plan's original adoption
on September 1, 1977.
Chapter 02
DEFINITIONS
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02-01 Employer and Plan Sponsor. "Employer" and
"Plan Sponsor" mean the South Tahoe Public Utility
District, a public entity within the State of California, as
described in Section 1.457-2(c)(2) of the fmaI regulations
promulgated under Section 457 of the Internal Revenue
Code of 1986.
02-02 Compensation. "Compensation" means all
payments made to a public employee by the employer as
remuneration for services rendered.
02-03 Deferred Compensation.. "Deferred
Compensation" means the amount of the Participant's
compensation which the Participant and the employer shall
mutually agree (prior to the date on which such
compensation is earned) will be deferred.
02-04 Accumulated Deferrals. "Accumulated
Deferrals" means compensation deferred under the Plan,
adjusted until date of payment by income received,
increases or decreases in investment value, fees and any
prior distributions made.
02-05 Participation Agreement. "Participation
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Agreement" means the agreement executed and filed by an
eligible employee with the employer pursuant to Chapter
04, in which the eligible employee elects to become a
Participant in the Plan.
02-06 Separation from Service. "Separation (or
separates) from Service" means "separation from service"
as that term is interpreted for the purposes of Section 402
(e)(4)(A)(iii) of the Internal Revenue Code and refers to
the severance of the Participant's employment with the
employer. A Participant will be deemed to have severed his
or her employment as of the date of his or her last payroll.
02-07 Participant. "Participant" means any eligible
employee of the employer who executes a participation
agreement with the Committee assenting to the provisions
of this plan, once the agreement has been approved by the
Committee or its designee.
02-08 Beneficiary. "Beneficiary" means a beneficiary of
a Participant, a Participant's estate, or any other person
whose interest in the plan is derived from the Participant.
02-09 Committee. "Committee" means the Committee for
deferred compensation appointed by the District Trustee(s).
02-10 Eligible Em ployee. "Eligible Employee" means any
person who is employed by and receives any type of
compensation from the employer for whom services are
rendered, and who is a full time or permanent part-time
regular employee working in a position authorized.
02-11 Trustees. "Trustees" means the person(s) so
appointed by the Employer's Board of Directors.
02-12 Plan Year. "Plan Year" shall be the calendar year
ending December 31.
Chapter 03
ADMINISTRATION
03-01 Administered by Committee. This plan shall be
administered by the Committee which shall represent the
employer in all matters concerning the administration of
this plan.
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03-02 Committee to adopt rules and regulations. The
Committee shall have full power and authority to adopt
rules and regulations for the administration of the Plan, and
to interpret, alter, amend, or revoke any rules and
regulations so adopted.
03-03 Committee action fair and reasonable. Every
action taken by the Committee shall be presumed to be a
fair and reasonable exercise of the authority vested in or
the duties imposed upon it. The Committee and its
individual members shall be deemed to have exercised
reasonable care, diligence and prudence and to have acted
impartially as to all persons interested, unless the contrary
may be proven by affirmative evidence.
03-04 Committee to maintain records of accounts. To
facilitate an orderly administration of the Plan, the
Committee shall maintain or cause to be maintained a
deferred compensation ledger account with respect to each
Participant.
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03-05 Deferred Compensation Fund. All deferred
compensation hereunder may be paid into a special fund
created in the treasury of the District called the "deferred
compensation fund". All costs of administration and
staffmg of the plan, expenses of the Committee, and such
other amounts determined by the Committee and permitted
by law, may be paid as necessary out of the deferred
compensation fund. Amounts in the deferred
compensation fund may be invested as directed by the
Committee. All accumulated deferrals payable to
Participants or their respective beneficiary or beneficiaries
shall be paid from the deferred compensation fund unless
otherwise paid.
Chapter 04
P ARTICIP A TION IN THE PLAN
04-01 Enrollment. Enrollment in the plan.
(1) An eligible employee may become a Participant by
executing a participation agreement. Compensation will be
deferred for any payroll period only if a participation
agreement providing for such deferral is executed by the
Participant and approved by the Committee or its designee
before the beginning of the month in which payroll period
ends.
(2) In signing the participation agreement, the
Participant elects to participate in this plan and consents to
the employer deferring the amount specified in the
participation agreement from the Participant's gross
compensation for each pay period. The amount specified
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must equal at least ten dollars per pay period and shall
continue until changed or revoked pursuant to paragraph
04-06 or 04-07 of this plan.
04-02 Plan to Plan Transfers.
(1) Transfers to the Plan: If a Participant was formerly
a Participant in an eligible state deferred compensation
plan (within the meaning of Section 457 of the Internal
Revenue Code and the regulations thereunder), and if such
plan permits the direct transfer of the Participant's interest
therein to the plan, then the plan shall accept assets
representing the value of such interest; provided, however,
the Committee may require in its sole discretion that some
or all of such interest be transferred in cash or its
equivalent. Such amount shall be held, accounted for,
administered and otherwise treated in the same manner as
compensation deferred by the Participant under the plan
except that:
(a) Only the amount, if any,
transferred to this plan which was deferred under the
transferor plan in the taxable year when transfer occurs
shall be treated as compensation deferred under the Plan in
such year.
(b) No amount may be
transferred to this plan as of the time when such amount is
paid or made available under the Section 457 Plan of the
Participant's prior employer.
(2) Transfers from the Plan: The amounts credited to
the account of a former Participant in the Plan may be
transferred to another eligible deferred compensation plan
(within the meaning of Section 457 of the Internal Revenue
Code and the regulations thereunder) and in which the
former Participant currently participates, and if such plan
provides for the acceptance of such amounts. The only
rollovers or transfers allowable under Section 457 of the
Internal Revenue Code are from one eligible Section 457
plan to another eligible Section 457 plan.
If a Participant, prior to making a
final election under Chap. 04-11(2) regarding the method
of payment, accepts employment with an employer who
offers an eligible Section 457 plan, and the Participant
becomes a Participant in that plan, then accumulated
deferrals may, at the election of the Participant and after
written notice to the Committee, be transferred to the other
plan, provided that plan provides for the acceptance of
such transfers.
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(3) Application for Transfer: If the conditions in
subsections (I) and (2) of this section are met and the
Participant wishes to transfer hislher account, he/she shall
complete any application form and/or other documents as
may be required by the Commitee.
(4) Administrative Rules: The Committee shall
prescribe such rules consistent with the provisions of
subsections (I) and (2) of this section concerning plan-to-
plan transfers as in its sole judgment it deems desirable for
the orderly administration of the Plan.
04-03 Deferral Limitation.
(1) Except as provided in Chapter 04-4, relating to
catch-up, the maximum that may be deferred under the
Plan for any taxable year of a Participant shall not exceed
the lesser of seven thousand five hundred dollars ($7,500),
as such amount is adjusted from time to time by the
Secretary of Treasury pursuant to Code Section 457
(e )(15), or thirty-three and one-third percent (33+ 1/3%) of
the Participant's includible compensation, each reduced
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(a) By any amount excludable from the Participant's
gross income for that taxable year under Section 403(b) of
the Internal Revenue Code; and
(b) By any amount:
(I) Excluded from gross income under Section
402(a)(8) or 402 (h)(I)(B) of the Internal Revenue code
(relating to a Participant's elective deferrals to simplified
employee pensions) for that taxable year;
(ii) For which a deduction is allowable for that taxable
year by reason of a contribution to an organization
described in Section 501 (c) (18) of the Internal Revenue
Code (relating to pension trusts created before June 25,
1959, forming part of a plan for payment of benefits under
a pension plan funded only by contributions of employees);
or
(iii) Which is deferred by a Participant under Section
401(k) of the Internal Revenue code (relating to qualified
cash or deferred arrangement) during that taxable year; and
(c) By any amount the Participant contributes to any
other Section 457 of the Internal Revenue Code (relating
to deferred compensation plan (s)) during the taxable year.
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(2) "Includible Compensation" for the
purposes of this sections means includable compensation
as defined in Section 457 (e)(5) of the Internal Revenue
Code and as further defined by Treasury Department
Regulation I.457-2(e)(2) interpreting that section, and is
determined without regard to community property laws.
Includible compensation for a ta'l.able year includes only
compensation from the employer that is attributable to
services performed for the employer and that is includible
in the Participant's gross income for the taxable year for
federal income tax purposes. Accordingly, a Participant's
includible compensation for a taxable year does not include
an amount payable by the employer that is excludable from
the employee's gross income under:
(a) Section 457 of the Internal Revenue
Code;
(b) Section 403(b) of the Internal Revenue
Code (relating to annuity contracts purchased by Section
501(c)(3) of the Internal Revenue Code, (relating to
organizations or public schools);
(c) Section 1 05( d) of the Internal Revenue
Code (relating to wage continuation plans);
(d) Section 911 of the Internal Revenue Code
(relating to citizens or residents of the United States living
abroad);
(e) Section 402(a)(8) or 402(h)(I)(B) of the
Internal Revenue Code (relating to simplified employee
pensions);
(f) Section 501(c)(l8) of the Internal
Revenue Code (relating to certain pension trusts);
(g) Section 40 I (k) of the Internal Revenue
Code (relating to qualified cash or deferred arrangements);
and
(h) Section 408(p) of the Code (relating to
SIMPLE Retirement Accounts).
(3) In computing includible compensation, total gross
compensation as shown on District earnings statements
must be reduced by:
(a) Section 414(h) of the Internal Revenue
Code, before tax contributions to retirement plans; and
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(b) Any Section 125 of the Internal Revenue code,
contributions to cafeteria plans (including those which
include such items as dependent care salary reduction
plans) before excluding the items listed in subsection (2)(a)
through (h) of this section.
04-04 Catch-up provIsIOn. For one or more of the
Participant's last three taxable years ending before attaining
nonnal retirement age under the plan, the maximum
deferral shall be lesser of:
(I) Fifteen thousand dollars for the taxable year, reduced
in the same manner as the dollars limitation, is reduced in
Chap. 04-03, or
(2) the sum of:
(a) The limitations established for purposes of Chap. 04-
03 of the Plan for the taxable year (detennined without
regard to this section), plus
(b) So much of the limitation established under Chap.
04-03 for taxable years before the taxable year as has not
theretofore been used under Chap. 04-03 or Chap. 04-04.
A prior taxable year shall be taken into account only if:
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(i) It begins after December 31, 1978;
(ii) The Participant was eligible to participate in the
Plan during all or any portion of the taxable year, and;
(iii) Compensation deferred (if any) under the Plan
during the taxable year was subject to a maximum
limitation (as established under Chap. 04-03).
A prior taxable year includes a taxable year in which the
Participant was eligible to participate in an eligible plan
sponsored by another entity. In no event can the
Participant elect to have the catch-up provision apply more
than once whether or not the full catch-up had been
utilized.
"Nonnal retirement age," as used herein, means the range
of ages:
Ending not later than age seventy and one-half.
Beginning not earlier than the earliest age at which the
Participant has the right to retire under a District authorized
pension for which the Participant is eligible without
consent of the District and under which the Participant will
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receive immediate retirement benefits without actuarial
adjustment due to retirement prior to some later specified
age in a District authorized pension plan.
This catch-up provision may not be used in the year in
which the Participant attains age 70 '12, and may not be
used in any year thereafter.
04-05 Committee may disallow deferral. The Participant
acknowledges the right of the Committee to disallow
deferral of compensation under the Plan in excess of the
limitations in Chap. 04-03 and 04-04. However, the
Committee shall have no duty to assure that amounts
deferred are in compliance with such limitations.
04-06 Modification of deferral or investment option(s).
A Participant may change his/her deferral amount during
an open enrollment period. Changes in the amount of the
deferral must equal at least ten dollars per pay period.
Investment changes may be made at any time subject to the
terms of the investment provider( s). Beneficiaries who are
entitled to receive accumulated deferrals may change
investment options not more than four times per year.
A change shall be effective for any calendar month only if
the Participant signs a new participation agreement which
is approved by the Committee or its designee before the
beginning of that calendar month. 'All participation
agreements indicating changes in investment option(s)
must be filed with the Committee no later than fifteen days
prior to the established pay date for which the change will
occur. The Committee reserves the right to defer the
effective date of any change.
During the payout process, the Committee may periodically
liquidate mutual fund shares in the amounts necessary to
meet distribution requirements for a six month period.
04-07 Suspension and Reinstatement of Deferral.
SUSPENSION. A Participant may at any time direct that
deferrals under the Participant's participation agreement
cease by completing the proper fonn and filing it with the
Committee no later than the last day of the payroll period
prior to the payroll period during which the deferrals are to
cease; however, accumulated deferrals shall only be paid
as provided in Chap. 04-09 through 04-14.
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REINST A TEMENT. A Participant who has directed the
cessation of deferrals may resume deferrals for any
calendar month commencing no sooner than the month
following the close of the next enrollment period by
executing a new participation agreement to defer
compensation. The waiting period shall not apply to
Participants who are on leave without pay as discussed in
Chap. 06.
04-08 Investment Options. Each Participant shall
designate on his/her participation agreement the investment
option(s) in which he/she wishes to have invested. The
investment option(s) shall be selected from those options
made available for this purpose from time to time by the
Committee, in its sole discretion.
The Committee may make available as options for
investment;
(l) A fixed rate investment or pool of investments.
(2) Specified mutual fund shares; or
(3) Fixed or variable life insurance, or other options
permitted by law and selected by the Committee.
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In the event that a selected investment option experiences
a loss, the Participant's accumulated deferrals payable
hereunder shall likewise reflect a loss, rather than income,
for the period.
04-09 Designation of beneficiaries. Each Participant
shall have the right to designate a beneficiary or
beneficiaries to receive accumulated deferrals in the event
of Participant's death. If no such designation is in effect on
a Participant's death, the beneficiary shall be the surviving
spouse, then the beneficiary shall be the Participant's
estate. A Participant may change his/her beneficiary
designation at any time by filing a change of beneficiary
form with the Committee. A Participant may also change
hislher beneficiary designation by completing the
beneficiary designation portion of a participation
agreement form.
The Participant may name as hislher beneficiary:
(1) A designated organization or person (including without
limitation hislher unborn or later adopted children). If
unborn or later adopted children are to be included, the
designation must so indicate. The date of birth must be
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furnished for any living person who is named and who is
under the age of eighteen.
(2) His or her estate;
(3) A trust which is in existence, or which is to be
established under the Participant's last will. For an existing
trust, the Participant must provide the name of the trust and
the date it was established.
The Participant may name contingent beneficiaries in
addition to primary beneficiaries. Any named beneficiary
must have a tax ID. number or a social security number.
04-10 Distribution to Participant after separation from
service. After separation from service, accumulated
deferrals shall be paid to the Participant in one or more
installments as elected by the Participant pursuant to Chap.
04-11.
04-11 Distribution in the event of death of Participant
or beneficiary.
(1) Should the Participant die at any time, accumulated
deferrals shall be paid to the beneficiary or beneficiaries
designated by the Participant pursuant to Chap. 04-09. The
accumulated deferrals shall be paid out as provided in
Chap. 04-09 through 04-14. Ifno beneficiary is designated
as provided in the participation agreement, or if the
designated beneficiary does not survive a period of thirty
days, then a lump sum or series of payments shall be paid,
in accordance with Chap. 04-09 through 04-13, to the
surviving spouse, or if none, a lump sum shall be paid to
the estate of the Participant.
(2) In the event a beneficiary survives the Participant by
thirty days and becomes entitled to receive the accumulated
deferrals, accumulated deferrals shall become payable to
the beneficiary's estate on the twenty-fifth day of the
second month following the beneficiary's death, unless
accumulated deferrals are being paid in the form of an
annuity, in which case the disposition of the remaining
amount shall be determined by the annuity contract Such
annuity contracts shall be issued pursuant to the rules set
forth in Chap. 04-14.
04-12 Elections Regarding Distribution. Each
Participant (or in the event of death, each beneficiary other
than an organization, estate, or trust) shall elect when
hislher payout will begin and the payout period.
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(1) Election regarding time of payment. The election
regarding the time when payment will begin shalI be made
when a Participant separates from service (or dies, having
separated from service and having previously elected when
payment will begin). Once made, the election regarding
when pay-out will begin is irrevocable as to the Participant
or Beneficiary making the election; provided, however, that
after payments under the Plan have been made available to
a Participant, but prior to any actual distribution to the
Participant, the Participant may make a one-time only
election to defer the commencement of payments.
The election regarding when payment will begin:
(a) By a Participant who separates from service other
than by reason of death, must be made not later than sixty
days after separation from service. Payment may begin on
the first day of the month folIowing two weeks after an
election is filed with the Committee on fonns provided for
that purpose and payment must begin within the time
prescribed by Chap. 04-14.
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(b) By a beneficiary, other than an organization, estate
or trust, where the Participant was not already receiving
payments, must be made not later than sixty days after the
Participant's death. Payment may begin on the first day of
the month folIowing two weeks after an election is filed
with the Committee on fonns provided for that purpose,
and payment must begin within the time prescribed by
Chap. 04-14.
(2) Election regarding method of payment. The
Participant (or beneficiary other than an organization,
estate or trust) who makes an election regarding the date
payment will begin, may also elect the period over which
payments will be made. The payout period election may be
made either at the time he/she elects a beginning date for
payout or at any time not later than sixty days prior to the
date payout is to begin. Once having made this election,
the Participant (or beneficiary, other than an organization,
estate, or trust) may change the payout period election not
later than sixty days prior to the date payout is to begin.
Such a beneficiary may also make this election where the
Participant was already receiving payments but, as
provided in Chap. 04-13 (3)(a), must receive distribution
at least as rapidly as it was being distributed to the
Participant. Such a beneficiary must make the payout
period election not later than sixty days after the death of
the Participant and payout will be suspended folIowing the
Participant's death until the beneficiary either makes a
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payout period election or begins receiving payment as
provided in subsection (4) of this section. Provided, if the
Participant was receiving payout in the fonn of an annuity
contract, then the successor's right shall be limited by the
tenns of that contract.
(3) How elections are made. A Participant or beneficiary
makes elections alIowed under this section by completing
and filing applicable payment request fonns with the
Committee.
(4) Consequences in absence of a timely election
regarding time of payment. In the absence of a timely
election regarding when payout is to begin, payout will
begin within thirty-one days folIowing the month in which
the election period ends, and wilI be made in a lump sum
if the accumulated deferrals as of the end of the election
period are less than twenty-five thousand dollars or, if the
accumulated deferrals are twenty-five thousand dolIars or
more, in the fonn of a lifetime annuity with a 15 year
certain period or:
(a) As may be necessary under the minimum
payout requirements of Section 457 (d)(2)(B)(I)(l) of the
Internal Revenue Code, requiring amounts to be paid not
later than as detennined under Section 401 (a)(9)(G) of the
Internal Revenue Code; or .
(b) As may be necessary under Section 457
(d)(2)(B)(I)(1l) of the Internal Revenue Code, requiring
amounts not distributed to the Participant during hislher
life to be distributed at least as rapidly as they were being
distributed as of the Participants death.
(5) Effects of certain employment changes. Transfers
from the Plan are allowed in the circumstances described
in Chap. 04-02 (2).
(6) Consequences in absence of a timely election
regarding method of payment. In the absence ofa timely
election regarding the period of time over which payment
will be made, payment will be made in the manner
described in subsection (4) of this section.
(7) Payment to an organization, estate, or trust. Any
amount payable to an organization, estate, or trust shall be
paid in a lump sum as prescribed in Chap. 04-14 (3).
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O~-13 Distribution of deferrals.
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(1) General Rule. Assuming a timely election is allowed
and has been made pursuant to Chap. 04-11, payment will
be made in at least annual, substantially non-increasing
amounts. Payments are also subject to limitations in
subsections (2) through (5) of this section.
(2) Distribution to Participant. A Participant must
either:
(a) Receive hislher entire interest prior to the latest of:
(I) The April 1st immediately following the close of
the plan year in which the Participant attains age seventy
and one-half; or
(ii) The April 1 st immediately following the close of
the plan year in which the Participant separates from
service with the Employer; or
(b) Begin receiving hislher interest not later than the
time specified in (a) of this subsection and receive it over
a period not longer than either:
(I) The life of the Participant;
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(ii) The life of the Participant and a beneficiary
designated by the Participant;
(iii) The life expectancy of the Participant; or
(iv) The life expectancy of the Participant and a
designated beneficiary.
Payment must be sufficiently rapid to satisfy the
requirements of Section 457 (d)(2)(B)(I)(l) and Section
401 (a)(9)(G) of the Internal Revenue Code. Provided that,
until tables are issued by the Secretary of the Treasury, if
provision is made for the payment of a portion of the
accumulated deferrals to a beneficiary, the amount payable
to the Participant must actuarially exceed two-thirds ofthe
maximum amount payable to the Participant had no
provision been made for payments to the beneficiary
(detennined as of the commencement of the distribution).
Once payments to a Participant begin, the Participant may
accelerate the payment schedule only in the event of an
unforeseeable emergency and subject to the provisions of
Chap. 05 regarding such emergencies.
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(3) Distribution to beneficiaries.
(a) When distribution begins prior to the
Participant's death, then payout must be made at least as
rapidly as it was being made to the Participant. When the
beneficiary is an organization, estate or trust, then payment
will be payable in a lump sum by the first day of the third
month following the Participant's death.
(b) When distribution does not begin prior
to the Participant's death, and is to be made:
(I) To an organization, estate or
trust, then payment will be payable in one lump sum by
the first day of the third month following the Participant's
death.
(ii) To a living beneficiary
designated by the Participant other than the
Participant's surviving spouse, and, by election, not to
begin within one year of the Participant's death, then the
payment must be made within five years ofthe Participant's
death;
(iii) To a living beneficiary
designated by the Participant other than the
Participant's surviving spouse, and, by election,
beginning within one year of the Participant's death, then
payment must be made within fifteen years of the
Participant's death;
(iv)To the Participant's surviving
spouse, whether as designated beneficiary, or by default,
then payment must begin prior to the April 1 st immediately
following the later of the close of the plan year in which
the Participant would have attained age seventy and one-
half or, if later, the year in which the Participant separated
from services, and payment may be made over the lifetime
of the surviving spouse or over a period not longer than the
life expectancy of the surviving spouse.
(4) For purposes of this section, life expectancies will be
computed by use of the expected return multiples in
Treasury Department Regulation 1.72-9 or, if distribution
is to be effected through a contract issued by an insurance
company, by use of the mortality tables of such company.
Where payment is being made over the joint lives of the
Participant and the Participant's surviving spouse, the life
expectancy of the Participant and the Participant's
surviving spouse may be recalculated annually.
7
\.,
(5) Notwithstanding anything in this Plan to the contrary,
distributions from the Plan will be made in compliance
with the minimum distribution rules of Section 457(d)(2)
of the Internal Revenue Code, and in compliance with
Treasury Department Regulations issued under Sections
40 1 (a)(9) and 457 (d)(2) of the Internal Revenue Code.
04-14 In-Service Distribution. Notwithstanding any
other provision in the Plan, if (a) the total amount payable
to a Participant under the Plan does not exceed $3,500, and
(b) such Participant has not made any deferrals under the
Plan during the preceding two-year period, such
Participant's Accumulated Deferrals may be distributed to
him, provided that no amounts have been previously
distributed to him under this Chapter 04-14.
Chapter 05
UNFORESEEABLE EMERGENCY
\.,
05-01 Unforeseeable Emergency. Notwithstanding any
other provisions in Plan Chap. 0 I through 15, in the event
of an unforeseeable emergency, a Participant or beneficiary
entitled to accumulated deferrals may request the
Committee to payout a portion of accumulated deferrals.
If the application for payment is approved by the
Committee, payment will be made within sixty days
following such an approval. The amount paid shall be
limited strictly to that amount reasonably necessary to
satisfy the emergency need.
For purposes of this Plan, an unforeseeable emergency
shall be severe fmancial hardship to the Participant
resulting from:
(1) A sudden and unexpected illness or accident of the
Participant or ofa dependent (as defmed in Section 152 (a)
of the Internal Revenue Code) of the Participant;
(2) Loss of the Participant's property due to casualty; or
(3) Other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the
control of the Participant.
The circumstances that will constitute an unforeseeable
emergency will depend upon the facts of each case, but in
any case, payment shall not be made to the extent that such
hardship is or may be relieved (a) through reimbursement
or compensation by insurance or otherwise; (b) by
liquidation of the Participant's assets, to the extent
liquidation of such assets would not itself cause severe
...
financial hardship, or (c) by cessation of deferrals under
the plan. Examples of what shall not be considered to be
unforeseeable emergencies include the need to send a
Participant's child to college or the desire to purchase a
home.
Chapter 06
PARTICIPANT LOANS
06-01 Authorization of Loans. To the extent allowed
by applicable law, the Plan Sponsor may authorize the
committee to make loans to Participants pursuant to the
terms of this Chapter. Such loans shall be made on the
written application of the Participant and on such terms
and conditions as are set forth in this Chapter or by the
Committee. In making such loans, the Committee shall
follow uniform policies and shall not discriminate in
favor of or against any Participant or group of
Participants.
06-02 Maximum Loan Amount. In no event shall any
loan made to a Participant pursuant to this Chapter be in
an amount which shall cause the outstanding aggregate
balance of all loans made to such Participant under this
Plan exceed the lesser of:
(1) $50,000 reduced by the excess (if any)
of: the highest outstanding balance of loans from the
Plan to the Participant during the one-year period ending
on the day before the date on which the loan is made;
over the current outstanding balance of loans from the
Plan to the Participant or the Beneficiary on the date on
which the loan is made; or
(2) One-half of the Participant's
Accumulated Deferrals.
06-03 Repayment of Loan. Each loan made under this
chapter shall mature and be payable, in full and with
interest, within five years from the date such loan is
made, unless the loan is used to acquire any dwelling
unit that within a reasonable time (determined at the time
the loan is made) will be used as the principal residence
of the Participant.
06-04 Loan Terms and Conditions. In addition to such
rules and regulations as the Committee may adopt, all
loans to Participants shall comply with the following
terms and conditions:
8
(I) Loans sha1l be available to a1l Participants on a
reasonably equivalent basis.
'-"
(2) Loans sha1l bear interest at a reasonable rate to be
fixed by the Committee based on interest rates currently
being charged by commercial lenders for similar loans.
The Committee sha1l not discriminate among Participants
in the matter of interest rates, but loans granted at
different times may bear different rates based on
prevailing rates at the time.
(3) Each loan shall be made against c01lateral,
including the assignment of no more than one-half of the
present value of the Participant's Accumulated Deferrals
as security for the aggregate amount of a1l loans made to
such Participant, supported by the Participant's collateral
promissory note for the amount of the loan, including
interest.
(4) Payments of principal and interest must be made at
least quarterly and such payments shall be sufficient to
amortize the principal and interest payable pursuant to
the loan on a substantially level basis. The Committee
will require that loan repayments be made by payroll
deduction.
\.,
(5) A loan to a Participant or Beneficiary shall be
considered an earmarked funding option for such
Participant's Accumulated Deferrals.
(6) No distribution shall be made to any Participant, or
to a Beneficiary of any such Participant, unless and until
all unpaid loans, including accrued interest thereon, have
been satisfied. If a Participant terminates employment
with the Plan Sponsor for any reason, the outstanding
balance of all loans made to him shall become fully
payable and, if not paid within thirty days, any unpaid
balance shall be deducted from any benefit payable to
the Participant or his Beneficiary. In the event of default
in repayment of a loan or the bankruptcy of a Participant
who has received a loan, the note will become
immediately due and payable, foreclosure on the note
and attachment of security will occur, the amount of the
outstanding balance of the loan will be treated as a
distribution to the Participant, and the defaulting
Participant's Accumulated Deferrals will be reduced by
the amount of the outstanding balance of the loan (or so
much thereof as may be treated as a distribution without
violating the requirements of the Code).
(7) The loan program under the Plan sha1l be
administered by the Committee in a uniform and
\.,
nondiscriminatory manner. The Committee sha1l
establish procedures for loans. including procedures for
applying for loans. guidelines governing the basis on
which loans sha1l be approved. procedures for
determining the appropriate interest rate, the types of
c01lateral which will be accepted as security, any
limitations on the types and amount of loans offered, and
the events which will constitute default and actions to be
taken to c01lect loans in default.
Chapter 07
LEAVE OF ABSENCE
07-01 Leave of Absence. If a Participant is on an
approved leave of absence from the employer, participation
in this plan shall continue.
Chapter 08
AMENDMENT OR TERMINATION OF THE
PLAN
08-01 Termination of Plan. The employer or the
Committee may at any time terminate this Plan. Upon such
termination, accumulated deferrals will be paid pursuant to
Chap. 04 of the Plan. The Participant's deferrals will
cease.
08-02 Amendment of Plan. The Employer or the
Committee may also amend the provisions of this Plan at
any time: Provided, however, that no amendment shall
affect the rights of the Participants or their beneficiaries
regarding accumulated deferrals at the time of the
amendment.
Chapter 09
RELATIONSHIP TO OTHER PLANS
09-01 Retirement and Social Security not Reduced. It
is intended that pursuant to Section 457 of the Internal
Revenue Code, the amount of deferred compensation will
not be considered as current compensation for purposes of
federal income taxation. Such amounts will, however, be
included as compensation in determining benefits or rights
under the employer's group insurance, other retirement
plans and FICA. Payments under this Plan will
supplement retirement and death benefits payable under the
employer's group insurance and other retirement plans.
9
Chapter 10
TRANSFER IN LIEU OF CASH
\.
10-01 Assets in Lieu of Cash. Upon the occurrence of
any event requiring the payment of accumulated deferrals
under this Plan, the Committee may, in its sole discretion,
elect to honor a request from the Participant to substitute
the transfer in kind and assignment of any asset which the
employer has acquired at fair market value.
Chapter 11
NON-ASSIGNABILITY CLAUSE
11-01 Accumulated Deferrals not Assignable. It is
agreed that neither the Participant, nor the Participant's
beneficiaries, nor any other designee, shall 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 nontransferable; and in the event of attempt
to assign or transfer, the employer shall have no further
liability hereunder, nor shall any unpaid accumulated
deferrals be subject to attachment, garnishment or
execution, or be transferable by operation of law in event
of bankruptcy, insolvency, except to the extent otherwise
required by law.
'"
Chapter 12
ASSETS
12-01 Plan Assets. All amounts of Compensation deferred
under the Plan, all property and rights to property
(including rights as a Beneficiary of a contract providing
life insurance protection) purchased with such amounts,
and all income attributed to such amounts, property or
rights to property, including the deferred compensation
revolving fund provided for in Chapter 03-05, shall be held
in one ore more trusts, and/or custodial accounts or
insurance contracts described in section 40 I (t) of the
Internal Revenue Code, for the exclusive benefit of
Participants and their Beneficiaries.
Chapter 13
PARTICIPATION BY COMMITTEE MEMBERS
13-01 Participation by Committee Members. Members
of the Committee, who are otherwise eligible, may
participate in the Plan under the same terms and conditions
as apply to other Participants, but an individual member
~
shall not participate in any committee action taken with
respect to that member's participation.
Chapter 14
EMPLOYER PARTICIPATION
14-01 Employer Contributions. The employer may,
pursuant to a changed or new participation agreement filed
by a Participant as specified in Chapters 04-06 or 04-07,
add additional deferred compensation for services to be
rendered by the employee to the employer during any
calendar month, provided:
(1) The employee has elected to have such additional
compensation deferred, invested, and distributed, pursuant
to this Plan, prior to the calendar month in which the
compensation is earned; and
(2) Such additional deferred compensation, when added to
all other deferred compensation under the Plan, does not
exceed the maximum deferral permitted by Chapter 04.
Chapter 15
INVESTMENT RESPONSIBILITY
15-01 Investment Responsibility. The employer may, but
is not required to, invest funds held pursuant to
participation agreements between Participants and the
employer in accordance with the requests made by each
Participant. The Committee shall retain the right to
approve or disapprove such investment requests. Any
action by the Committee 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 [mancial soundness or
the suitability of any investment for the purpose ofmeeting
future obligations.
Chapter 16
COMMITTEE POWERS
16-01 Plan Prevails. In the event any form or other
document used in administering this Plan, including but not
limited to enrollment forms and marketing materials,
conflict with the terms of the Plan, the terms of the Plan
shall prevail.
10
\....
16-02 Decision Binding. The Committee is authorized to
determine any matters concerning the rights of any
Participant under this Plan and such determination shall be
binding on the Participant and any beneficiary thereof.
16-03 Committee to Interpret. The Committee is
authorized to construe this Plan and resolve any ambiguity
in the Plan. The Plan and any fonn or other document used
in administering the Plan shall be interpreted, and this Plan
shall be administered, so as to comply with Sections 457 of
the Internal Revenue Code and the regulations of the
Treasury Department promulgated thereunder.
16-04 Tax Status not Guaranteed. The Committee does
not represent or guarantee that any particular federal or
state income, payroll, personal property or other tax
consequence will occur because of the Participant's
participation in this Plan. The Participant should consult
with the Participant's own representative regarding all
questions of federal or state income, payroll, personal
property, or other tax consequences arising from
participation in this Plan.
\r
16-05 Committee May Require Court Order. The
Committee or the employer, if in doubt concerning the
correctness of their action in making a payment of
accumulated deferrals, may suspend payment until satisfied
as to the correctness of the payment or the person to
receive the payment or to allow the filing in any state court
of competent jurisdiction of a civil action seeking a
detennination of the amounts to be paid and the persons to
receive them. The Committee and the employer shall
comply with the final orders of the court in any such suit
and the Participant, for the Participant and the Participant's
beneficiary or beneficiaries, consents to be bound thereby.
Whenever payment of accumulated deferrals is suspended
pursuant to this section, the time for a Participant or
beneficiary making any election under Chap. 04-11 shall
not begin until amount(s) and person(s) entitled are
determined either by written agreement of all parties
concerned or by a court judgment that has become final.
16-06 Delegation of Authority. The Committee may
delegate its functions to be perfonned under this Plan to
any designee with legal authority to perform such
functions.
Chapter 17
APPLICABLE LAW
17-01 Plan to conform to state law. This Plan shall be
construed under the laws of the State of California.
\.,.
17-02 Plan to conform to federal law. This Plan is
intended to be an eligible state deferred compensation plan
within the meaning of Section 457 ofthe Internal Revenue
Code. and Treasury Department Regulation 1.457-2(a), and
shall be interpreted accordingly.
Chapter 18
TRUST AGREEMENT
18-01 Acceptance. The "Trustee", or any successor or
successors which accept appointment under this Chapter
18, accepts the Trust hereby created under the Plan and
agrees to perform the obligations imposed. The
Trustee's duties and responsibilities stated hereunder
shall be perfonned in accordance with, and as necessary
limited to comply with, applicable law.
18-02 Receipt of Contributions. The Trustee shall be
accountable to the Plan Sponsor for the funds
contributed to it by the Plan Sponsor, but shall have no
duty to see that the contributions received comply with
the provisions of the Plan. The Trustee shall be neither
obliged to collect any contributions from the Plan
Sponsor, nor to see that funds deposited with it are
deposited according to the provisions of the Plan.
18-03 Full Investment Powers. The Trustee shall have
full discretion and authority with regard to the
investment of any portion of the Trust fund that is not
subject to direction of investment by the Plan Sponsor,
Committee or a Participant. The Trustee is authorized
and empowered, but not by way of limitation, with the
following powers, rights, and duties:
(1) To invest any part or aU of the Trust
fund in any common or preferred stocks, open-end or
closed-end mutual funds, shares of an investment
company, variable annuities, put and caU options traded
on a national exchange, United States retirement bonds,
corporate bonds, debentures, convertible debentures,
commercial paper, U.S. Treasury bills, U.S. Treasury
notes and other direct or indirect obligations of the
United States Government or its agencies, improved or
unimproved real estate situated in the United States,
limited partnerships, insurance contracts, mortgages,
notes or other property of any kind, real or personal, and
to buy or sell options on common stock on a nationally
recognized options exchange with or without holding the
underlying common stock, as a prudent man would do
under like circumstances with due regard for the
purposes of this Plan.
11
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(2) To retain in cash so much of the Trust fund as it
may deem advisable to satisfy liquidity needs of the Plan
and to deposit any cash held in the Trust Fund in a bank
account at reasonable interest;
(3) To credit and distribute the Trust as directed by the
Committee. The Trustee shall not be obliged to inquire
as to whether any payee or distributee is entitled to any
payment or whether the distribution is proper or within
the tenns of the Plan, or as to the manner of making any
payment or distribution. The Trustee shall be
accountable only to the Committee for any payment or
distribution. The Trustee shall be accountable only to the
Committee for any payment or distribution made by it in
good faith on the order or direction of the Committee;
(4) To invest in loans to a Participant in accordance
with the loan policy established by the Committee (if
such loans are to be permitted), provided any loan is
adequately secured, bears a reasonable rate of interest,
and provides for repayment within a specified time;
(6) To compromise, contest, arbitrate or abandon
claims and demands, in its discretion;
\.,
(7) To have with respect to the Trust all the rights of
an individual owner, including the power to give proxies,
to participate in any voting Trusts, mergers,
consolidations or liquidations, and to exercise or sell
stock subscriptions or conversion rights;
(8) To hold any securities or other property in the
name of Trustee or nominee, or in another form as it may
deem best, with or without disclosing the Trust
relationship;
(9) To perform any and all other acts in its judgment
necessary or appropriate for the property advantageous
management, investment and distribution of the Trust;
(10) To retain any funds or property subject to any
dispute without liability of the payment of interest, and
to decline, when reasonable to do so, to make payment or
delivery of the funds or property until final adjudication
is made by a court of competent jurisdiction;
(11) To furnish any tax returns or portions thereof
required of the Trustee;
(12) To furnish to the Plan Sponsor and the
Committee statements of account at least annually
\w
showing the condition of the Trust fund and all
investments, receipts, disbursements and other
transactions effected by the Trustee during the plan Year
covered by the statement and also stating the assets of
the Trust held a the end of the Plan Year. The committee
may approve an account by written notice of approval
delivered to the Trustee in writing within ninety (90)
days from the date upon which the account statement
was mailed or otherwise delivered to the Committee.
The Committee agrees to use its best efforts to review
account statements provided by the Trustee within ninety
(90) days from the date the account statement was mailed
or delivered to the Committee. Any matters objected to
by the Committee shall be communicated to the Trustee
in a writing signed by a member of the Committee, and
the Trustee shall be given a reasonable opportunity to
explain or adjust such matters. In no event shall the
Trustee be liable for losses to the extent that the same
could have been prevented by a prompt review (within
90 days) of the Trustee's written account by the
Committee; and
(13) To begin, maintain, or defend any
litigation necessary in connection with the administration
of the Plan, except that the Trustee shall not be obliged
or required to do so unless indemnified to its
satisfaction.
18-04 Records and Statements. The records of the
Trustee pertaining to the Plan shall be open to the
inspection of the Plan Sponsor and the Committee at all
reasonable times and may be audited from time to time
by any person or persons as the Plan Sponsor or
Committee may specify in writing. The Trustee shall
furnish the Committee or the Plan Sponsor with
whatever information relating to the Trust fund the
Committee of Plan Sponsor considers necessary.
18-05 Fees and Expenses from Fund. The Trustee
shall receive reasonable annual compensation as may be
agreed upon from time to time between the Plan Sponsor
and the Trustee. The Trustee shall pay all expenses
reasonably incurred by it or by the Plan Sponsor, the
Committee, or other professional advisers or
administrators in the administration of the Plan from the
Trust fund unless the Plan Sponsor pays the expenses.
The Committee shall not treat any fee or expense paid,
directly or indirectly, by the Plan Sponsor as a Plan
Sponsor contribution.
18-06 Distribution of Cash or Property. The Trustee
may make distribution under the Plan in cash or
12
\.,.
property, or partly in each, at its fair market value as
detennined by the Trustee.
18-07 Resignation. The Trusteee may resign at any time
as Trustee of the Plan by giving thirty (30) days' written
notice in advance to the Plan Sponsor and to the
Committee.
18-08 Removal. The Plan Sponsor, by giving thirty (30)
days' written notice in advance to the Trustee, may
remove any Trustee.
18-09 Interim Duties and Successor Trustee. In the
event of the resignation or removal ofa Trustee, the Plan
Sponsor shall appoint a successor Trustee if it intends to
continue the Plan. During any period of the selection of
a Trustee is pending, or during any period a Trustee is
unable to serve for any reason, the remaining Trustee or
Trustee(s), if any, shall act as the sole Trustee or as the
only Trustee) of the Trust created under this Agreement.
If no Trusteee remains during any period the selection of
a Trustee is pending, the Plan Sponsor shall act as
Trustee until a successor Trustee is selected.
\.
Each successor Trustee shall succeed to the title to the
Trust vested in his predecessor by accepting in writing
his appointment as successor Trustee and filing the
acceptance with the fonner Trustee and the Committee
without the signing or filing of any further statement.
The resigning or removed Trustee, upon receipt of
acceptance in writing of the Trust by the successor
Trustee, shall execute all documents and do all acts
necessary to vest the title of record in any successor
Trustee. Each successor Trustee shall have and enjoy all
of the powers, both discretionary and ministerial,
conferred under this Agreement upon his predecessor.
No successor Trustee shall be personally liable for any
act or failure to act of any predecessor Trustee. With the
approval of the Plan Sponsor and the Committee, a
successor Trustee, with respect to the Plan, may accept
the account rendered and the property delivered to it by a
predecessor Trustee without incurring any liability or
responsibility for do doing.
18-10 Valuation of Trust. The Trustee shall value the
Trust fund as of the last day of each calendar year and at
such other times as the Committee may direct to
detennine the fair market value of each Participant's
Accumulated Deferrals, and the Trustee shall value the
Trust fund on such other date(s) as directed by the
Committee.
~
18-11 Exclusive Benefit. The Trust fund will be held
for the exclusive benefit of Participants and their
Beneficiaries. Except as otherwise provided in the Plan,
it shall be impossible under any circumstances at any
time for any part of the corpus or income of the Trust
fund to be used for, or diverted to, purposes other than
for the exclusive benefit of Participants and their
Beneficiaries.
*******************
13
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PASSED AND ADOPTED at a duly held Regular Meeting of the Board of Directors of the South Tahoe Public Utility
District on the 18 day of December, 1997 by the following vote:
NOES: None
AYES: Directors Wallace, Strohm, Jones, Gochnauer, and Mosbacher.
ABSENT: None
14