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Resolution 2774-03 - \., .... 1 2 3 4 5 6 RESOLUTION NO. 2774-03 A RESOLUTION OF THE BOARD OF THE DIRECTORS OF THE SOUTH TAHOE PUBLIC UTILITY DISTRICT AMENDING DISTRICT DEFERRED COMPENSATION PLAN SUPERSEDING RESOLUTION NOS. 2581, 2582, 2663, 2731-01, 2751-03,2754-03 7 WHEREAS, the South Tahoe Public Utility District (District) has employees 8 rendering valuable services; and WHEREAS, the District has adopted the South Tahoe Public Utility District 10 Deferred Compensation Plan (Plan) for the benefit of eligible employees and their 11 beneficiaries; and 12 WHEREAS, it is deemed to be in the best interests of these employees to 13 amend the Plan to make changes to provide for continuing compliance with applicable 14 law. 15 16 9 NOW THEREFORE, the Board of Directors of the South Tahoe Public Utility District hereby resolve the Plan shall be amended and restated in the form attached hereto. 17 WE, THE UNDERSIGNED, do hereby certify that the above and foregoing 18 Resolution was duly and regularly adopted and passed by the Board of Directors of the 19 South Tahoe Public Utility District at a regular meeting duly held on the 21st day of 20 August, 2003, by the following vote: 21 22 23 24 25 26 27 AYES: NOES: ABSENT: Directors Wallace, Schafer, Comte, Mosbacher None Director Jones 28 ATTEST: '-' 29 30 SOUTH TAHOE PUBLIC UTILITY DISTRICT DEFERRED COMPENSATION PLAN As Amended Effective: August 21,2003 .... '-' \., ELIGIBLE DEFERRED COMPENSATION PLAN PREAMBLE As used herein "Plan" shall mean the South Tahoe Public utility District Deferred Compensation Plan and Trust. "Employer" shall mean the South Tahoe Public utility District. This amended and restated Plan has been adopted by the Employer pursuant to an appropriate resolution, a copy of which is attached hereto and made a part of the Plan, and is effective as of the date of passage of such resolution. This Plan amends and restates all previous plan documents since the Plan original adoption on September 1, 1977. The primary purpose of this Plan is to permit Employees of the Employer to enter into an agreement which will provide for deferral of payment of a portion of their current compensation until death, retirement, severance from employment, or other event, in accordance with the provisions of Section 457 of the Internal Revenue Code of 1986, with other applicable provisions of such Code, and in accordance with the General Statutes of the State. It is intended that the Plan be an Eligible Deferred Compensation Plan. \. The Employer does not and cannot represent or guarantee that any particular federal or state income, payroll or other tax consequence will occur by reason of participation in this Plan. A Participant should consult with his or her own attorney or other representative regarding all tax or other consequences of participation in this Plan. ARTICLE I DEFINITIONS 1.1 Plan Definitions For purposes of this Plan, the following words and phrases shall have the meaning set forth below, unless a different meaning is plainly required by the context: "Administrator" means the Employer or its duly authorized designee for that purpose who shall exercise the discretion or other functions given to the Employer under the terms of the Plan. "Beneficiary" means any person designated by the Participant to receive an annuity, death benefit, or other benefit under the provisions of this Plan, by reason of such Participant's death. \. "Code" means the Internal Revenue Code of 1986, as amended. - 2 - ~ "Compensation" means the total of all wages or salaries which are paid by the Employer to, or for the benefit of, an Employee for services rendered, calculated without deduction for any portion thereof deferred under the provisions of this Plan or for any amounts contributed to any program established pursuant to Code Sections 403(b), 401(k), 408(k) (6), or 501(c) (18). "Contract" means a contract described in Section 4 01 (f) of the Code. "Deferred Compensation" means that portion of an Employee's compensation which said Employee has elected to defer in accordance with the provisions of this Plan. "Eligible Deferred Compensation Plan" means a plan that satisfies the requirements of Code Section 457(b) and the regulations thereunder. "Eligible Governmental Employer" means subdivision of a State, and any agency or State or political subdivision of a State. a State, political instrumentali ty of a \., "Employee" means any full-time employee working 40 or more hours per week. Employees shall only be eligible to participate during an open enrollment period. No employee shall be eligible to participate until such employee ceases to be a probationary employee. "Employer" means the South Tahoe Public utility District, a Governmental Employer. "Includible Compensation" means Compensation from the Employer that is currently includible in gross income for federal income tax purposes. "Participant" means any Employee or former Employee of the Employer, who elects to participate in this Plan or who has unpaid benefi ts due under the Plan. Notwithstanding the foregoing, the Employer may designate any class of Employees as ineligible to elect participation in this Plan. Such designation shall be made in writing and attached hereto. "Participant Account" means the account established and maintained on behalf of a Participant or alternate payee to reflect the total value of his or her interest under the terms of this Plan. "Participation Agreement" means an agreement filed by an Employee to elect or modify participation in the Plan. \., - 3 - \.., "Plan" shall mean the South Tahoe Public utility District Deferred Compensation Plan. "Plan Year" means the calendar year. "state" means the state of California. ARTICLE II OPERATION OF PLAN 2.1 Participation Any Employee may elect to become a Participant in the Plan and to defer payment of part of his compensation not yet earned by executing a written Participation Agreement and filing it with the Employer. The Employer shall defer payment of Participant compensation in the amount specified in each Participation Agreement filed with the Employer. Notwithstanding any provision of this Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). 2.2 Participation Agreement \.., The Administrator shall establish a written Participation Agreement which shall contain, among other provisions, a provision whereby the Participant specifies: (a) that portion of his/her Compensation which is to be deferred. (b) his/her investment election. Such election shall specify into which investments, among those investments available to receive contributions under the Plan, his or her contributions shall be invested, such election to remain in force until modified as provided in Section 3.2. (c) a Beneficiary or Beneficiaries, including one or more contingent Beneficiaries, to receive any benefits which may be payable under this Plan on the death of the Participant. (d) that his salary, wage or other compensation is as set forth in any salary ordinance or otherwise without deductions for amounts deferred under the provisions of this plan. (e) that the Participant together with his heirs, successors, and assigns, holds harmless the Employer from any liability hereunder for all acts performed in good faith, including acts relating to the investment of deferred amounts and/or the Employee's investment preference hereunder. ~ - 4 - \. (f) a payment option and payment frequency if applicable. 2.3 Agreement Effective Date Participation Agreement received during open enrollment will take effect on the first payday of the quarter following open enrollment. Thereafter, during each employment year in which the Employee is a Participant in the Plan, that portion of his said Compensation which is specified by the Employee in the Participation Agreement shall be deferred and paid in accordance with the provisions of this Plan. 2.4 Amendment of Participation Agreement The Participant may revoke his election to participate at any time, or may change his investment preference, by signing and filing with the Employer a written revocation or amendment, on a form approved by the Administrator. Any such revocation or amendment shall be effective prospectively only, beginning with the first pay period of the subsequent month. The Participant may change the amount of Compensation to be deferred during open enrollment only. Changes in amounts will be effective on the first payday of the quarter following open enrollment. \., 2.5 Regular Contributions The regular contribution is the amount of compensation which may be deferred by a Participant subject to the following limitations: (a) Calendar Year Maximum - Except as provided in section 2.6, the maximum amount a Participant may defer during a calendar year to this and/or any other Eligible Deferred Compensation Plan shall not exceed the lesser of (i) the applicable dollar amount as set forth in Section 457 (e) (15) of the Code, or (ii) 100% of the Participant's Includible Compensation. (b) Pay Period Minimum - The Administrator may establish in a uniform and nondiscriminatory manner a per pay period minimum amount which a Participant may defer. 2.6 Pre-Retirement Catch-Up Contributions A Participant may defer an additional amount under this section for one or more of the last three calendar years ending before attaining the Participant's Normal or Deferred Retirement Date, hereinafter referred to as "pre-retirement catch-up." The use of pre-retirement catch-up is subject to the following restrictions: '-' -5- \., (a) The maximum amount a Participant may defer each calendar year to this or any other Eligible Deferred Compensation Plan shall not exceed the lesser of these two amounts: (1) twice the dollar limit in effect under section 2.5 (a) hereunder, or (2) any Employer provided compensation eligible for deferral that was not deferred for any prior taxable year which began after December 31, 1978. (b) To use pre-retirement catch-up, a Participant must declare a retirement age, which may be any age at or after which the Participant qualified for Normal Retirement eligibility, but no later than age 70-1/2. This declaration does not compel retirement. (c) The pre-retirement catch-up provision may not be used during the calendar year that the Participant ceases to be an Employee. (d) The pre-retirement catch-up provision may be used only once by any Participant, whether under this Plan or any other eligible Deferred Compensation Plan. \., (e) Participants may continue to make regular contributions after they are no longer eligible to use pre-retirement catch-up. For purposes of this section, Normal Retirement Date means the date a Participant retires pursuant to the Employer's Retirement Plan without reduced benefits. Deferred Retirement Date means the date beyond the Normal Retirement Date designated by the Participant. Such date shall not exceed the earlier of (i) the Employer's mandatory retirement age (if applicable), or (ii) the date on which the Participant incurs a severance from employment. 2.7 Age 50+ Catch-Up Contributions All Participants who have attained age 50 before the close of the plan year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Section 414(v) of the Code. Such contribution shall not, with respect to the year in which the contribution is made, be subject to any otherwise applicable limitation contained in Section 457 of the Code, or be taken into account in applying such limitations to other contributions or benefits under this Plan or any other plan. This provision shall not apply to a Participant in any year in which Section 457(b) of the Code applies to such Participant. \. - 6- \. 2.8 Rollover Contributions An Employee may contribute a rollover contribution to the Plan. A rollover contribution is a Participant contribution or a direct rollover of an Eligible Rollover Distribution as defined in Section 402(c) (4) of the Code. The Administrator may require the Employee to certify, either in writing or in any other form permitted under rules promulgated by the IRS, that the contribution qualifies as a rollover contribution under the applicable provisions of the Code. If it is later determined that all or part of a rollover contribution was ineligible to be contributed to the Plan, the Administrator shall direct that any ineligible amounts, plus earnings or losses attributable thereto (determined in a uniform and nondiscriminatory manner) be distributed from the Plan to the Employee as soon as administratively feasible. Separate accounting shall be maintained by the Administrator for any rollover contribution not attributable to an Eligible Deferred Compensation Plan. Rollover contributions will be nonforfeitable at all times. 2.9 Employer Contributions Nothing in this Plan prohibits the Employer from making deposits to a Participant Account as additional compensation for services rendered, subject to the Participant's regular contribution limits. \. ARTICLE III INVESTMENT RESPONSIBILITIES 3.1 Investment of the Deferred Amount Amounts deferred or contributed pursuant to Article II shall be held for the exclusi ve benefit of Participants and their Beneficiaries in trust or under one or more Contracts. All amounts so held will be allocated to the appropriate Participant Accounts. Each Participant shall direct the investment of amounts held in his or her Participant Account under the plan. The investment of amounts segregated on behalf of an alternate payee pursuant to a qualified domestic relations order may be directed by such al terna te payee to the extent provided in such order. In the absence of such direction, such amounts shall be invested in the same manner as they were immediately invested before such segregation was made on account of such order. Each Participant Account shall reflect any gains or losses of the investment option(s) in which such account is invested. 3.2 Amendment of Investment Election \. A Participant may amend his statement of investment election at such times and by such manner and form as prescribed by the - 7- \., ~ \., Administrator. Such amendment will, unless specifically stated otherwise, apply only to future amounts deferred under the Plan. 3.3 Investment Changes A Participant may elect to transfer amounts in his Participation Account among and between the investment available under Contract at such times and by such manner prescribed by the Administrator, subject further restrictions or limitations placed on any investment Administrator to be uniformly applied to all Participants. or her options and form to any by the 3.4 Investment Responsibility Where a Participant exercises control over the investment of amounts credited to his/her Participation Account, the Employer and any other fiduciary of the Plan shall not be liable for any loss which results from such Participant's exercise of control. 3.5 Statements The Employer will cause statements to include and/or losses as well Account. statements to be issued periodically, such any contributions, distributions, gains as the total value of each Participant ARTICLE IV DISTRIBUTIONS 4.1 Eligibility Distribution may be taken under any of the following circumstances, subject further to the provisions of this Article IV: (a) On account of an unforeseeable emergency; (b) Non-participation; (c) Attainment of age 70-1/2, whether or not still employed; (d) Severance from employment; or (e) Participant's death. 4.2 Unforeseeable Emergency Distribution A Participant may apply for a single sum distribution from the Participant's Account in the event of an unforeseeable emergency. For purposes of this Section, an unforeseeable emergency is defined as a severe financial hardship to a Participant resulting from a - 8 - \., \., ~ sudden and unexpected illness or accident of the Participant or of a Participant's dependent (as defined at Section 152 (a) of the Code) or spouse, the loss of the Participant's property due to casual ty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. An unforeseen emergency does not include college expenses or expenses associated with the purchase of a home. For purposes of this Section, a severe financial hardship exists where the financial need arising from the unforeseeable emergency cannot be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of a Participant's asset, to the extent such liquidation would not itself cause a severe financial hardship, or by the cessation of deferrals under the Plan. The Administrator will evaluate the Participant's unforeseeable emergency request for conformity with its interpretation of the applicable Treasury regulations. The decision of the Administrator concerning whether an unforeseen emergency exists shall be final. 4.3 Distribution for Certain Non-Participating Participants If the total amount of a Participant's Account under the Plan, excluding amounts attributable to rollover contributions, does not exceed the dollar limit under Code Section 411(a) (11) (A), the Participant may elect to receive (or the Employer may elect to pay to the Participant without the Participant' s consent) the total amount in a single sum payment wi thin 60 days of such election; provided, however, such amount may be distributed pursuant to this section 4.3 only if: (a) no amount has been deferred under the Plan with respect to such Participant during the two-year period ending on the date of the distribution, and (b) there has been no prior distribution under the Plan to such Participant to which this section 4.3 applied. 4.4 Distribution On or After Age 70-1/2 or Severance From Employment Upon becoming eligible in accordance with section 4.1 (c) or (d) hereof, a Participant may elect to commence distribution in accordance with the payment options set forth at section 4.6 hereof. 4.5 Distribution On Account of the Participant's Death In the event of the Participant's death, the full amount credited to the Participant's Account shall be distributed according to the following requirements: (a) If distribution has commenced prior to the death of the Participant, the balance of a Participant's Account shall be - 9 - \., paid to the Beneficiary in accordance with the payment option already selected by the Participant so that the remaining distribution will be effected at least as rapidly as under the payment option used before the Participant's death. (b) If the distribution has not commenced prior to the death of the Participant; (1) a non-spousal beneficiary must either; (A) elect a distribution payable over a period not extending beyond his or her own life expectancy, commencing no later than the end of the calendar year following the calendar year in which the Participant died; OR (B) elect a single-sum payment by the end of the calendar year which contains the fifth anniversary of the date of death of the employee, otherwise, such single-sum payment shall be made by the end of such calendar year. \., (2) a spousal beneficiary may elect either a single-sum payment or a distribution payable over a period not exceeding his/her own life expectancy. Distribution to the spousal beneficiary must commence no later than the year the deceased Participant would have reached age 70-1/2. 4.6 Forms of Payment Except in the event of the Participant's death, all or a portion of the amount credited to the Participant's Account shall be distributed, as instructed by the Participant, under one of the following payment options: (a) A single sum payment; (b) Payments for a specified period where amounts are paid in installments not in excess of the Participant's allowable life expectancy or joint life expectancy of the Participant and his/her Beneficiary; (c) Annuity for a period certain of five (5) to thirty (30) years, but not in excess of the Participant's allowable life expectancy; (d) A life annuity; (e) A life annuity with period certain guaranteed, with the guarantee that if at the annuitant's death payments have not been made for the guaranteed period as elected, payments will continue to the Beneficiary. The guaranteed period to be \., - 10- \., elected may be either ten (10), fifteen years but may not exceed the life Participant and his or her Beneficiary; or (15) or twenty expectancy of (20 ) the (f) A joint and survivor annuity payable during the lifetime of the Participant and his/her Beneficiary. 4.7 Minimum Distribution Requirements Notwithstanding anything in this plan to the contrary, distribution from the Plan shall commence and be made in accordance with Section 401(a) (9) of the Code and, until the last calendar year beginning before the effective date of the final regulations under section 401 (a) (9) or such other date as may be published by the Internal Revenue Service, the regulations under section 401 (a) (9) that were proposed on January 17, 2001. Participants must commence distribution no later than April 1st following the later of (i) the calendar year in which the Participant attains age 70-1/2 or (ii) the calendar year in which the Participant retires. ARTICLE V BENEFICIARY 5.1 Designation \., Each Participant has the right, by written notice filed with the Employer, to designate one or more beneficiaries to receive any benefits payable under this Plan in the event of the Participant's death prior to the complete distribution of benefits. The Participant accepts and acknowledges that he has the burden for executing and filing, with the Employer, a proper beneficiary designation form. The form for this purpose shall be provided by the Employer. It is not binding on the Employer until it is signed, filed with the Employer by the Participant, and accepted by the Employer. If no such designation is in effect upon the Participant's death, or if no designated beneficiary survives the Participant, the beneficiary shall be the Participant's estate. If no estate executor or administrator is appointed and qualified within one hundred twenty (120) days after the Participant's death, the payment may be made first, to a surviving spouse, second, to a survi ving child or children, and third, to a surviving parent or parents. \., - 11 - ARTICLE VI \.., NON-ASSIGNABILITY 6.1 Non-Assignability Neither the Participant nor the Participant's beneficiary, nor any other designee, shall have any right to commute, sell, assign, pledge, hypothecate, transfer, or otherwise convey the right to recei ve any payments hereunder, which payments and right thereto are expressly declared to be non-assignable and nontransferable. Except to the extent otherwise provided by law, no payments shall be subject to attachment, garnishment or execution, or be transferable in the event of bankruptcy or insolvency. 6.2 Qualified Domestic Relations Orders No benefit or interest available hereunder will be subject to assignment or alienation, either voluntarily or involuntarily pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order, as defined in Section 414(p) of the Code. 6.3 Participant Loans \., Notwi thstanding Section 6.1, a Participant may receive a loan from the Plan subj ect to the terms and conditions of the Plan's loan agreement and provisions of this Section. The loan must be secured by the Participant Account. For purposes of this Section, the value of a Participant Account shall include the outstanding balance of any loans made by the Plan to the Participant. No more than 50% of the value of the Participant's Account shall be used as security. The loans must bear a reasonable interest rate. The loan, when made, must satisfy Code Section 72(p) and 457 and the regulations promulgated thereunder. At the time of any distribution, the amount of a Participant Account payable to the Participant or Beneficiary shall be reduced by the Participant's outstanding loan balance plus any accrued interest. In the event of a default, foreclosure on the loan note and attachment of security will not occur until a distributable event occurs under the Plan. At such time, the Participant Account shall be reduced by the Participant's outstanding loan balance plus any accrued interest. The Plan Administrator shall establish such rules, procedures, forms and agreements it deems prudent and necessary to effect, approve and administer Participant loans under this Section. \." - 12- ARTICLE VII \" ROLLOVERS AND PLAN TRANSFERS 7.1 Direct RelIevers A distributee may elect to have all or any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the distributee. For purposes of this section an Eligible Rollover Distribution means any distribution of all or any portion of the balance to the credit of the distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a) (9) of the Code; or any amount that is distributed on account of hardship. '-' For purposes of this section an Eligible Retirement Plan means an Eligible Retirement Plan that is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an eligible deferred compensation plan described in Section 457(b) of the Code which is maintained by an eligible employer described in Section 457(e) (1) (A) of the Code, an annuity plan described in Section 403(a) of the Code, an annuity contract described in Section 403(b) of the Code, or a qualified trust described in Section 401 (a) of the Code, that accepts the distributee's Eligible Rollover Distribution. The definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Section 414(p) of the Code. For purposes of this section, a distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414 (p) of the Code, are distributees with regard to the interest of the spouse or former spouse. For purposes of this section, a direct rollover is a payment by the Plan to the Eligible Retirement Plan specified by the distributee. ~ - 13- '-' 7.2 Transfers Out Allor a portion of a Participant Account may be transferred to another Eligible Deferred Compensation Plan maintained by another employer, if: (a) the transferee plan provides that such transfer can be made; and (b) where the transfer is to a plan of another employer, the Employee has severed employment with the Employer. Upon the completion of such transfer, the Plan and Employer are discharged of any liability to the Participant to pay amounts so transferred. As it deems necessary, the Employer may require such documentation from the other plan to effect the transfer, to confirm that such plan is an Eligible Deferred Compensation Plan within the meaning of Code Section 457 (b) and to assure that transfers are provided for under such plan. Such transfers shall be made only under such circumstances as are permitted under Code Section 457 and the applicable regulations. -.. If a transfer is associated with a distributable event and the distribution is an Eligible Rollover Distribution as defined Section 402 (c) (4) of the Code, such transfer will be considered a direct rollover subject to the provisions of Section 7.1. 7.3 Trustee to Trustee Transfers to Purchase Permissive Service Credit A Participant may elect to have all or a portion of his/her Participant Account directly transferred to a defined benefit governmental plan (as defined in Section 414 (d) of the Code) if such transfer is: (a) for the purchase of permissive service credit (as defined in Section 415(n) (3) (A) of the Code) under such plan; or (b) a repayment to which Section 415 of the Code does not apply by reason of subsection (k) (3) thereof. ARTICLE VIII ADMINISTRATION AND ACCOUNTING 8.1 ~nistration by Employer \. This Plan shall be prescribe such forms, administered by the Employer, which shall and adopt such rules and regulations as are - 14- ~ necessary to carry out the purposes of the Plan. The Employer may employ investment counsel to provide advice concerning categories of investment, investment guidelines and investment policy, provided, however, that the advice or recommendations of any such investment counsel shall not be binding on the Employer, which shall make the final determination concerning investment categories, investment guidelines and policies. The Employer may contract with a financially responsible independent contractor to administer and coordinate the Plan under the direction of the Employer or to perform such services as may be mutually agreed to between the contractor and the Employer. 8.2 Paperless AdDdnistration To the extent permitted by law, regulation or other guidance from an appropriate regulatory agency, the Administrator, Trustee, Employer or any other party may provide any notice or disclosure, obtain any authorization or consent, or satisfy any other obligation under this Plan through the use of media other than paper. Such alternative media may include, but is not necessarily limited to, electronic or telephonic media. 8.3 AdDdnistrative Costs ~ The Employer shall determine, in a manner deemed fair and equitable, the administrative costs associated with the withholding of Deferred Compensation amounts pursuant to this plan or in making investments or otherwise administering or implementing the Plan. The Employer may withhold or collect, or have withheld or collected, such costs, in such manner as he deems equitable either (1) from the compensation deferred pursuant to the Plan, the income produced from the compensation deferred pursuant to the Plan, the income produced from any investment, whether or not augmented, or (2) from the organization receiving such investment where required by law to collect there from or, if not so required, where mutually satisfactory to such organization and the Administrator. The Administrator may remit or direct the remission of appropriate amounts so withheld or collected to the Employer. ARTICLE IX AMENDMENTS 9.1 Right to Amend, Modify and Te~inate The Employer may at any time modify or terminate the Plan by notifying Participants of such action. 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 modification or termination. \., - 15- ..., 9.2 Conformation The Employer shall amend and interpret the Plan to the extent necessary to conform to the requirements of Code Section 457 and any other applicable law, regulation or ruling, including amendments that are retroactive. In the event the Plan is deemed by the Internal Revenue Service to be administered in a manner inconsistent with Code Section 457, the Employer shall correct such inconsistency within the period provided in Code Section 457(b). 9.3 Plan Ter.mination In the event of the termination of the Plan, distribution of benefits shall be made to Participants and Beneficiaries pursuant to the distribution guidelines in Article IV or the rollover/transfer provisions of Article VII. ARTICLE X EXCLUSIVE BENEFIT 10.1 Exclusive Benefit ~ 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 be held in trust or under one or more insurance contracts described in Section 401(f) of the Code. Except as may otherwise be permitted or required by law, no assets or income of the Plan shall be used for, or diverted to, purposes other than for the exclusive purpose of providing benefits for Participants and their Beneficiaries or defraying reasonable expenses of administration of the Plan. ARTICLE XI MISCELLANEOUS 11.1 Retirement System Integration Benefits payable by, and deductions for Employee contributions to, any retirement system of the Employer shall be computed without reference to amounts deferred pursuant to this Plan. 11.2 Employment Neither the establishment of the Plan nor any modification thereof, nor the establishment of any 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 or employment of any Employee be modified or in any way affected hereby. \i. - 16- ~ 11.3 Successors and Assigns \. \., The Plan shall be binding upon and shall inure to the benefit of the Employer, its successors and assigns, all Participants and Beneficiaries and their heirs and legal representatives. 11.4 Written Notice Any notice or other communication required or permitted under the Plan shall be in writing, and if directed to the Employer shall be sent to the designated office of the Employer, and, if directed to a Participant or to a Beneficiary, shall be sent to such Participant or Beneficiary at his last known address as it appears on the Employer's record. 11.5 Total Agreement This Plan and the Participation Agreement, and any subsequently adopted amendment thereof, shall constitute the total agreement or contract between the Employer and the Participant regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant. 11.6 Gender As used herein the masculine shall include the neuter and the feminine where appropriate. 11.7 Controlling Law This Plan is created and shall be construed, administered and interpreted in accordance with Section 457 of the Code and the regulations thereunder and under the laws of the State of domicile of the Employer as the same shall be at the time any dispute or issue is raised. If any portion of this Plan is held illegal, invalid or unenforceable, the legality, validity and enforceability of the remainder shall be unaffected. - 17- \., '-' \. PASSED AND ADOPTED at a duly held Regular Meeting of the Board of Directors of the South Tahoe Public utility District on the day of ,2003 by the following vote: AYES: NOES: ABSENT: - 18-