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FEDRAC PKT 01-22-2002
City Hall AGENDA 1. CALL TO ORDER 2. PUBLIC COMMENT 3. COMMITTEE BUSINESS A. Approval of November 28, 2001 Minutes Action B. Parks Maintenance Bobcat Skid Steer Loader Trade-out Program (Reuter) Action C. Legislative and Regional Affairs Update - Verbal (Matheson) Information D. Changes to 401(A) Plan (McDougal) Action E. Changes to 457 Deferred Compensation Plan - (McDougal) Action F. Public Works Purchase of 5 Cubic-Yard dump Truck (Salloum) Action G. Vouchers - (Wang) Action H. Monthly Financial Report - (Wang) Action 4. FUTURE AGENDA ITEMS 2001/2002 LTAC Workplan Update (February) Insurance Renewal (February) Olympic Pipeline (TBD) Adoption of Final King Cotmty Comprehensive Solid Waste Management Plan (VanOrsow) 5. NEXT'MEETING: Tuesday, February 26th, 2002 at 5:30 P.M. Committee Members: City Staff Michael Hellickxon, Chair lwen Wang, Management Services Director Mary Gates Sheila Murray, Administrative Assistant Eric Faison (253) 661-4061 MINUTES Committee Members in Attendance: Chair Mary Gates, Members Jeanne Burbidge and Eric Faison. City Council Member in Attendance: Deputy Mayor Linda Kochmar Staff Members in Attendance: Iwen Wang, Management Services Director; Bob Sterbank, City Attorney; Anne KJrkpatrick, Public Safety Director; Rob VanOrsow, Public Works Recycling Coordinator; Derek Matheson, Assistant City Manager; Mary McDougal, Human Resource Manager; David Mos¢lcy, City Manager. Others in Attendance: Joanne Piquette, Arts Commission Chair. 1. CALL TO ORDER Chair Mary Gates called the meeting to order at 9:00AM. 2. PUBLIC COMMENT Joanne Piquette commented that the Coalition of Performing Arts is working with SeaTac Mall Management for potential use of the vacant movie theater. 3. COMMITTEE BUSINESS a) Approval of November 28, 2001 meeting minutes MOTION TO APPROVE BY JEANNE BURBIDGE, SECONDED BY ERIC FAISON. MOTION CARRIED. b) Motion to Add the following: 1) ACC Interlocal Agreement, Presented by, Bob Sterbank, City Attorney 2) Military Shared Leave Pay, Presented by, Iwen Wang MOTION TO ADD BY ERIC FAISON, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. A-1 c) 2002 ACC Interlocal Agreement Presented by Bob C. Sterbank, City Attorney The City of Federal Way participates in the Airport Communities Coalition pursuant to an Interlocal Agreement among the participating cities (Des Moines, Tukwila, Normandy Park, Bm'ien and Federal Way) and the Highline School District. Each year, the ACC members approve an amended lnterlocal Agreement setting forth each member's intended financial contribution for the upcoming year. The proposed 2002 Federal Way financial contribution is $30,000.00, which is the same that was approved by the council in 2001. The only changes are the effective date and the monetary contributions made by the other participating cities, Federal Ways contribution is unchanged. City of Burien $475,000 per year for 2002 City of Federal Way $ 30,000 per year for 2002 City of Des Moines $ 25,000 per year for 2002 Staff request that the Committee forward the 2002 ACC Interlocal Agreement to the December 18, 2001 City Council meeting, and recommend that the Council authorize the City Manager to execute the lnterlocal Agreement. <Note: The Council has subsequently reduced this amount to $15,000 during the mid- biannual budget adjustment.> MOTION TO APPROVE TO FORWARD THE INTERLOCAL AGREEMENT TO THE CITY COUNCIL MEETING FOR APPROVAL ON DECEMBER 18, 2001 BY ERIC FAISON, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. d) Shared Vacation Leave for Military Leave/Addition to Employee Guidelines Presented by Iwen Wang The proposed Shared Leave Program will allow the employees to donate their vacation leave to those who are on extended Military leave. The donated amount is limited to the pay difference between what they are receiving from military pay, and what they would have received from city pay. The real impact for the city is the continuation of benefits for the three-month period. The cost is approximately $600.00 a month per family, for a total cost of $1800.00 per family. Staff recommends that the Council set the effective date of the program to December 1, 2001. A-2 MOTION TO APPROVE TO FORWARD THE SHARED VACATION LEAVE FOR MILITARY TO THE CITY COUNCIL MEETING FOR APPROVAL ON DECEMBER 18, 2001 BY ERIC FAISON, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. e) Legislative and Regional Affairs Update - Verbal Presented by Derek Matheson Legislative: Lobbyist: Doug Levy is back on board for the legislative session in January. On our behalf, Doug Levy attended a meeting a week ago o£City lobbyists to talk about major issues o£this next session, the primary being the State Budget. The newest estimate from the State Forecast Council is that the State is facing a $800 - $900 million deficit out oga $20 billion budget, much o£ which is non discretionary. Backfill: Donna Hanson attended an AWC meeting where local government revenue options were discussed. Federal Way's principles are: a. That AWC should not loose £ocus on backfill. Larger tax-base cities are not going to hurt, but the smaller and midsize cities will. b. Reducing mandates reduces expenditures and make dollars go further. c. Focus on the economic development. Transit Study: There is a study underway about costs, £unding options and institutional relationships of local transit shu~le service. Federal Way is a key player in this study along with Kent, SeaTac, and Tukwila. The interim report is due in January. The final report is due next December. Staff will be very involved in this issue. A-3 Meeting with 13th District Legislators: On December 10th, 2001, the City Council will be meeting with three 30th District Legislators to talk about our legislative agenda and to get their perspective on what is happening in Olympia. Derek and the City Manager, David Moseley will hold a pre-meeting next week with Doug Levy to go over the issues. Lakehaven: The Lakehaven Board of Commissioners would like to meet with this Committee to discuss Lakehaven's legislative agenda. We have received a copy of their legislative agenda and we are still in the process of analyzing it. State and County Redistricting Policy Presented by Derek Matheson Derek presented a policy option that calls on all redistricting commissions to keep the city and its PAA together in a single district. The wording of the initial recommendation was changed to the following: "The City of Federal Way calls upon the State Redistricting Commission and King County Redistricting Commission to place the entire city and its unincorporated Potential Annexation Area in a single district so as to maintain the city's cohesiveness." As Council requested, we communicate this to the County and the State. The County has adopted a new map of the thirteen council districts. The plan keeps the city and its PAA together in a single district. Regional There will be a meeting of the Suburban Cities to discuss the King County budget, its $45 million cut, and the impact on the cities about their seeking a Countywide Utility Tax authority, which raises some flags within City boundaries where the cities are already collecting a utility tax, so this is being discussed regionally, and it will be an issue that comes up in the meeting this afternoon. David Moseley, City Manager will be attending this meeting. At the December membership meeting of the Suburban Cities Association, the group will be discussing the SCA restructuring, including issues such as geographical caucuses, the number of general membership meetings, the system for adopting policy resolutions, and working committees. Our assessment under this structure would continue to be 32-1/2 cents per person next year. A-4 MOTION TO INCORPORATE THE INFORMATIONAL REPORTS OF SECTION "E" INTO OFFICIAL MINUTES BY JEANNE BURBIDGE, SECONDED BY ERIC FAISON. MOTION CARRIED. f) Extension of City Solid Waste Utility in Annexed Areas Presented By: Rob VanOrsow This topic looks at the extension o£ Solid Waste Utility authority to annexation areas. The benefits of this extension are the following: a. Consistent rates to all customers throughout the City. b. Consistent application of the Utility Tax. c. City would be able to regulate the services via a franchise throughout the City. d. If this process is not started, the required notice period never begins and, UTC regulated haulers would be entitled to provide service forever. In order to extend the City authority to annexed areas we have to do two things: 1. Issue a franchise to the incumbent solid waste haulers. 2. Provide specific notice of City intent to begin regulating these 31'eas. The Ordinance changes will in fact accomplish this. We have two haulers with partially overlapping service areas in the City's planned annexation areas: 1. Waste Management, Inc. 2. Rabanco Half of this issue has been dealt with because, by Waste Management, Inc. signing the franchise agreement, they have complied with the RCW's related to annexation in terms that are favorable for the City. The revised RCW's have set a seven-year period for the haulers to continue operation in the annexed areas. The intent of the City's granted franchise is the WUTC to continue to set service standards, and rates during the seven year period. The other issue created by the revised RCW's is that haulers may now claim measurable damages at the end o£ the seven-year notice period. For example, if they lost substantial revenue due to the City's action. In claiming damages the burden of proof is on the A-5 hauler, they will have to document the damages, and they will have to pursue this legally. There are very few accounts in the annexed areas and this would reduce the likelihood of a claim happening. If there are claims, the City could settle simply by extending the notice period to provide compensation that covers the claim. Staff will start a negotiation process with Rebanco following granting this franchise. The goal is to minimize the potential of any claims of damages in the future, and to set up a reasonably process for additional annexations in the future. MOTION TO APPROVE BY MARY GATES, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. g) CiW. Code Revisions For Solid Waste Recycling, Presented By: Rob VanOrsow These City Code changes are intended to go into effect in conjunction with the start of the new franchise agreement on January 1, 2002. A strike- out/underline version o£ the proposed changes to the City Code is attached (Attachment 1). ~n addition to revising definitions from Section 12-1 to reflect the new franchise agreement, highlights of the revised Code include: Adding additional flexibility for the City to designate disposal location(s), allowing for potential lower-cost disposal options (Section 12-2). Repealing a conflicting statement regarding exclusion of County powers (Section 12-3). These powers are already excluded as delineated by the existing Solid Waste Interlocal Agreement with King County. The reference to RCW 70.95.160 could imply that the City desires to forgo Health Department support in solid waste enforcement, which has not been the case in practice. Updating regulations concerning scavenging and ownership of wastes, and clarifying that commercial recyclables may be collected by parties other than the contracted Service Provider (Section 12-4). Eliminating provisions for the City to participate in regional Commercial recycling programs, as this service is not regulated through our franchise agreement (Section 12-5). Commercial recycling has been substantially "deregulated" since this code was first adopted, and these services are now available on a "free market" basis. A-6 Adding authority for the City to prepare franchises or agreements in extending City authority to annexed areas (Section 12-6). Clarifying provisions concerning both illegal dumping (Section 12-22), and requirements for sufficient container capacity for garbage (Section 12- 30). Setting requirements for proper home composting (Section 12-23). Revising weight limits and usage parameters for various container types and sizes to reflect the new franchise agreement (Sections 12-24, 12-31, 12-34, 12-35). Adding provisions regarding "Public Nuisance" resulting from improper waste handling (Section 12-36), provisions for handling hazardous waste (Section 12-38), and provisions for suspending service to problem customers per the franchise agreement (Section 12-39). Adding provisions regarding disabled service to reflect the new franchise agreement (Section 12-37). Defining service providers in terms of City authority (Sections 12-52, 12- 56). Eliminating some "Duties Required" that are instead specified in the new franchise agreement (Section 12-55). Streamlining the format of the Code, so that the City's role is clearly stated within sections, rather than being repeated (hence the repeal of Section 12- 57). For example, elements of the City's role are described in Sections (12- 21, 12-24, 12-31, 12-33, and 12-52). Repealing requirements for billing frequency that are more appropriately specified in the franchise agreement (Section 12-73). Billing frequency is generally a cash-flow versus billing-cost decision made by a hauler, and may also vary by customer account type. In addition, State law would generally apply regarding debt collection (hence the repeal of Section 12- 77). These highlighted changes are reflected in the attached proposed revision to the Chapter 12 of the City Code. (Attachment II) MOTION TO APPROVE BY MARY GATES, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. A-7 h) Vouchers Presented by Iwen Wang Clarification were made on few voucher items. Check #63224, KDD & Associates. This payment is for path- through expedited review, paid by applicants. Check #63092, bottled water service. The primary reason we are buying bottle water is due to the condition of the pipes in the building, and refrigerated fountains will not solve the problem. MOTION TO APPROVE BY MARY GATES, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. i) Monthly Financial Report Presented by Iwen Wang All the revenue and expenditure per£ormance is consistent with prior months. Thc Sales Tax is still holding positive at 5% above our budget projection and 2% above last year's activities. Hotel and Motel tax has declined due to the 911 impact on the industry. State shared revenue which has the largest surplus of $706,000 primarily because of thc I695 backfill that we received for next year for $467,000. Question was raised about the higer revenue for Police Services. The detail is on page Fl0 which shows the higher traffic school revenue is partially offset by the lower traffic ticket revenue in court. MOTION TO MOVE TO THE DECEMBER AGENDA BY MARY GATES, SECONDED BY JEANNE BURBIDGE. MOTION CARRIED. 4. Future Agenda Items a. Olympic Pipeline b. LTAC c. Vouchers d. Monthly Financial Report 5. NEXT SCHEDULED MEETING December's meetings cancelled. Meeting notice will be sent out for January 2002. ADJOURN Chair Mary Gates adjourned the meeting at 10:30 AM Recorded by Sheila Murray A-8 CITY OF FEDERAL WAY PARKS, RECREATION & CULTURAL SERVICES DEPARTMENT Date: January 22, 2002 To: Finance, Economic Development and Regional Affairs Council Committee Via:Fr°m: ~icda~~~Kurt Reuter, Parks aintenance Superintendent - ~/~N~- ~gram Subject: ual Trade Out Pro Background: It has come to our attention through the local Bobcat equipmeut dealer that an annual trade out program is available to us. Due to a strong market for used skid steer type equipment, the Bobcat company is offering to trade out our machine for a new one every year. As with any offer such as this, there are some conditions that need to be met. First and foremost, the initial trade out cost would be $4,158.40. This cost would be a one-time fee for the first trade out. Each annual trade out from this point forward would not require the city to pay a replacement fee. We propose to pay for the first new trade out machine from the replacement reserves that have been accumulated on PK 413, 1999 Bobcat Skid Steer Loader. As of January 31, 2001, the replacement reserve account for PK 413 is $4,966.00. This initial cost is incurred due to the fact that our machine bas accumulated nearly four hundred hours of use in its 26 months of service. Had we been aware of this program and began the trade out during the first year of use on this machine, no fee woold have been charged. The offer for the annual trade out program is good as long as we make the exchange prior to our machine reaching 400 hours of service. Currently, it has been operated approximately 380 hours. The $4, 158.40 figure also includes upgrading to a turbocharged machine that provides twenty percent more horsepower. The annual trade out program supplies the city with an identical new turbocharged machine. The clear advantage of this program, aside from getting a new machine each year relates to warranty and repair. Obtaining a new machine annually means it will always be under warranty. This would eliminate any repair costs other than regular servicing such as fluid changes and replacing items like belts, hoses, and tires. The annual budget for maintenance and repairs on this machine comes out of the 504 fleet account. A new machine each year means less will be spent l¥om this account to maintain this piece of equipment. I have reviewed this proposal with fleet coordinator, Chris Pyle, and he concurs that it would benefit the city to take advantage of this program. Once a new machine has been put in to service, we will continue to collect replacement reserves at the current rate of $2,483.00 a year based on a ten-year life cycle. Even if the Bobcat Company were to cancel this program two or three years from now, we would still benefit by having the latest model year machine and accumulated reserves to purchase a ne~v machine when the end of its life cycle has been reached. Committee Recommendation: Move to full Council, the approval to participate in the annual Bobcat Skid Steer Loader trade out program and to authorize the use of replacement reserve fnnds in the amount of $4,158.00. APPROVAL OF COMMITTEE REPORT: Committee Chair Committee Member Committee Member (B) City of Federal Way MEMORANDUM Date: January 15, 2002 To: Finance, Economic Development and Regional Affairs Committee Via: David Mo~anager From: Mary McDougal, Human Resources Manager .~~'- Subject: 401 Governmental Money Purchase Plan Changes Background: A number of changes to the laws goveming Section 401 governmental money purchase plans were recently passed as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). These changes are related to contribution provisions, portability provisions, and distribution provisions. Just a couple of examples of key changes include allowing portability of retirement assets between retirement plans including governmental deferred compensation plans and traditional IRAs, and increased plan contribution and compensation limits An overview of the changes and the revised plan and trust document are attached for your review. In most cases, these provisions become effective on January 1, 2002. The City has reviewed the new ICMA Retirement Corporation 401 governmental money purchase plan document, which includes language implementing the changes in the law. The City Attorney's Office has reviewed the changes to determine whether any state or local laws or regulations must be amended before the changes to the 401 plan become effective, and have concluded that none are necessary. Therefore, the City Council may take action to implement 401 law changes. Attached is a draft resolution for your consideration. Committee Action Recommended The Finance, Economic Development and Regional Affairs Council Committee moves to full Council to adopt the attached resolution which implements changes in the laws for 401 governmental money purchase plans effective January 1, 2002, and replaces Resolution 99-307 establishing a governmental money purchase plan for the City. Committee Member RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, AMENDING THE CITY'S 401 (A) MONEY PURCHASE PLAN (AMENDS N0.99- 307). NAME OF EMPLOYER: CITY OF FEDERAL WAY, WASHINGTON EMPLOYER PLAN NUMBER: 107222 WHEREAS, the City of Federal Way ("City") has employee.~ rendering valuable services; and WHEREAS, pursuant to Resolution No. 99-307 the City Council established a qualified retirement plan for such employees that serves the interest of the City 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 City has determined that the continuance of the qualified retirement 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 qualified retirement plan; Res. # Page 1 NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY HEREBY RESOLVES AS FOLLOWS: Section 1. Plan Form. The City hereby amends and restates the qualified retirement plan (the ~'Plan") in the form of the ICMA Retirement Corporation Governmental Money Purchase Plan and Trust, a copy of which is attached hereto and incorporated herein by this reference. Section 2. Plan Assets. The assets of the Plan shall be held in trust, with the City serving as trustee, for the e¥clusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The Trustee's beneficial ownership of Plan assets held in Vantage Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. Section 3. Plan Loans. The Plan will not permit loans. Section 4. Plan Trustee. The City hereby agrees to serve as Trustee under the Plan. Section 5. Severability. If any section, sentence, clause or phrase of this resolution should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or Res. #__ Page 2 constitutionality of any other section, sentence, clause or phrase of this resolution. Section 6. Ratification. Any act consistent with the authority and prior to the effective date of the resolution is hereby ratified and affirmed. Section 7. Effective Date. This resolution shall be effective immediately upon passage by the Federal Way City Council. RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, this day of 2002. CITY OF FEDERAL WAY JEANNE A. BURBIDGE, MAYOR ATTEST: CITY CLERK, N. CHRISTINE GREEN, CMC APPROVED AS TO FORM: CITY ATTORNEY, BOB C. STERBANK FILED WITH THE CITY CLERK: Res. #__, Page 3 PASSED BY THE CITY COUNCIL: RESOLUTION NO. K: \Resolution\40 laplan2002 Res. #__, Page 4 Qualified Retirement Plan Retirement Reform Implementation Package ICMA RETIREMENT CORPORATION The Public Sector Expert ATTACHMENT B: OVERVIEW OF 401 LAW CHANGES - GUST As your 401 qualified retirement plan provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Contribution Provisions Combined For testing years before 2000, The combined test was repealed for MPP: Old Article 5.03, old May allow participants to make additional Combined limit test is no Contribution when a participant was testing years beginning after 5.04(c), (d), and (e); Adoption contributions to a defined contribution plan, or to longer required to be Limit Test for covered under both a defined December 31, 1999. Agreement old Article VllI.2. receive additional benefits from a defined benefit performed. Participant in benefit pension plan and a pension plan than would have been permitted Both a Defined defined contribution plan of PSP: Old Article 5.05, old under the combined test. Benefit and an employer, the 5.06(c), (d), and (e); Adoption Defined participant's annual Agreement old Article IX.2. Simplifies administration of 401 qualified Contribution contributions and benefits retirement plans for employers sponsoring both a Plan (Section 415 were restricted by a special I The ICMA-RC model documents defined benefit pension and a defined contribution Limit) combined limit imposed by allow contributions to the fullest plan. Internal Revenue Code i extent under the law. Section 415. Definition of Compensation included for For years meter December 31, 1997, MPP: A~ide 503(b)(3) The treatment of employee elective contributions Adjust payroll systems to Compensation purposes of annual limit compensation includes elective as compensation for purposes of the limits on collect the correct testing (section 415 test) did deferrals to a section 401 (k), 403(b) PSP: Article 5.05(b)(3) contributions under 401 qualified plans allows compensation not include certain deferrals or 457 plan, a 125 cafeteria plan, or employees, particularly employees who are not information for purposes and negatively impacted the a qualihed transportation fringe The ICMA-RC model documents highly compensated, to save more for retirement by of contribution limit ability of certain participants benefit under section 132(0. include these deferrals as increasing the amount they can contribute to the testing. to make contributions to compensation for purposes of limit plan. their Section 401 plans, testing. Uniformed No provision. As of October 13, 1996, renrement MPP: Article 4.07 Provides rights to employees that serve in qualified Provide information to Service plans must provide that "qualified uniformed service, ensuring that their service is not employees regarding their Contributions military service" by a participant is PSP: Article 4.08 a detriment to their retirement security, rights under USERRA. (USERRA) not treated as a "break in service" and that participants are eligible to The ICMA-RC documents meet Collect "make up" "make up" contributions missed the requirements of USERRA. contributions and remit while serving in uniformed service, to ICMA-RC. * MPP = Money Purchase Plan PSP = Profit Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES ~ GUST As your 401 qualified retirement plan provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Contribution Provisions (cont.) Indexing of Contribution and compensation limits are Effective for years after December Not Applicable (No plan To encourage increased ICMA-RC pub]ici?~:s thc fimits Limits indexed to inflation. The timing of the 31, 1994, the indexing amounts amendment is required.) contributions to qualified each year in an Employer Bullctin. indexing calculation was such that information were changed for contribution and retirement plans and to simplify the on the new limits was not available until after compensation limits (see also administration of plans by making Make participants aware of limits the beginning of the year to which they EGTRRA changes below for new limit amounts available on a prior to the beginning of each year. applied, subsequent changes). In addition, more timely basis. ICMA-RC will help in this regard the timing of cost-of-living by publishing the limits in the adjustments was revised so that the quarterly Vantagepoint Newsletter adjusted dollar limits would be and other communications. available before the beginning of the calendar year to which they · ..~ apply. .~ Distribution Provisions De Minimis 401 plans could automatically cash out The de minimis amount was MPP: Article 9.02 Simplifies administration of 401 None anticipated. Account terminated participants with account balances increased from $3,500 to $5,000, qualified retirement plans. Distributions of $3,500 or less, The account could not be effective for plan years beginning PSP: Article 9.02 cashed out unless it has never exceeded the de after August 5, 1997. The fact that minimis amount, the account may, at one time, have The ICMA-RC model exceeded the de minimis amount is documents require mandatory irrelevant. (EGTRRA made cash out of accounts of $5,000 additional changes to the de or less. minimis rules.) Joint and Certain 40 l qualified retirement plan Effective for plan years beginmng MPP: Article 12.04 Allows the participant to receive None anticipated. ICMA-RC Survivor participants are required to take their i after December 31, 1996, the benefits faster. Simplifies provides the Q.ISA notice as part Annuity payments in the form of a qualified joint and participant may elect to waive PSP: n/a administration of 401 qualified of our standard 401 money Waiver of survivor annuity (QJSA). The participant is (with spousal consent) the 30 day retirement plans, purchase plan withdrawal Explanatian permitted to elect (with spousal consent) to explanation period, if the 1CMA-RC's model money materials. Period waive the QJSA. A plan is required to distribution begins no earlier than purchase plan document provide a written explanation oftbe QJSA 7 days after the explanation is allows the participant (with provisions. The participant was given a 30 day provided, spousal consent) to waive the period after the notice was provided to 30-day explanation period. consider the waiver of the O. JSA benefit. * MPP = Money Purchase Plan PSP = Profit Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES - GUST AS your 40I qualified retirement plan provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Portability Provisions (cont.) Receipt of Rollovers A 401 qualified plan that accepts rollovers Effective for years beginning Not Applicable (No plan Encourages plan sponsors to accept rollovers None anticipated. from Qualified401 from other plans will not be disqualified after August 5, 1997, the law amendment is required.) from other qualified plans by simplifying Plans just because the plan making the was revised to clarify that it is administration of the rollover. distribution was not qualified at the time not necessary for a distributing of the distribution, if, before accepting the plan to have a determination distribution, the receiving plan "reasonably letter on the distributing plan's concluded" that the distributing plan was status as a qualified plan for the qualified under section 401. The administrator of the receiving "reasonably concluded" rule was met if, plan to reasonably conclude that before accepting the rollover, the the contribution is a valid distributing plan provided a statement that rollover contribution. it had received a favorable determination letter from IRS. Treatment of 4Ol(k) Distributions that qualify as "eligible For distributions made after MPP: n/a Eliminating the requirement that hardships None anticipated. Hardship rul[over distributions" (ERDs) may be December 31, 1998, hardship be considered ERDS (and thus not Distributions for rolled directly to another plan or distributions are no longer PSP: Article 9.03(c)(1) requiring the withholding of 20% from Purposes of Rollaver Traditional IRA. ERDs that are not rolled considered ERDs and cannot be these distributions) removes the imposition Rules over are subject to 20% tax withholding, rolled over to another plan. In 401 (k) plan hardship of an additional hardship on the participant. Hardship distributions are treated as addition, 20% withholding no distributions are not considered Prior to this change, it was often necessary [401(k) Plans Only] ERDs. longer applies. ERDs under the ICMA-RC for additional funds to be withdrawn from model profit-sharing document, the retirement account to pay for the withholding and still leave enough to cover the original hardship expenses. Other Provision Nondiscrimination Nondiscrimination rules apply to private Effective for years beginning M PP and PSP: Various Congress determined the nondiscrimination None anticipated. Moratorium sector plans to ensure that these plans do after August 5, 1997, the nondiscrimination provisions rules should not apply to state and local not discriminate in favor of ~highly nondiscrimination rules were were stripped from the model government plans. An application of the compensated employees". These made permanently inapplicable documents, rules to the public sector was deemed to be nondiscrimination rules were scheduled to to governmental qualified plans, unnecessary given the public oversight on apply to governmental qualified retirement In late 1999, ICMA-RC these plans as well as other factors. plans beginning in 1999, after many years distributed revised plan ora temporary moratorium against the documents, which eliminated application of the rules, the nondiscrimination requirements. ' MPI' = Money Purdlasc I'lan I'SP = Prollt Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES - EGTRRA Note: All provisions are effective January 1, 2002, unless otherwise noted. As your 401 qualified retirement plan provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1 ~800-326-7272 to answer your questions. Contribution Provisions Plan Contribution Contributions under a 401 Effectlve Januasy 1, 2002, the 401 defined contribution plan MPP: EGTRRA Amendment Allows participants to save Payroll systems may have to be Limiu(Section defined contribution plan are contribution limit willbe ralsed. The newlimit wig be thele~ser Section I additional funds for re0rement, modified to: 415 Limit) [imlted to the lesser of (1) 25 of(l) 100 percent of gross compensation after reduction for Revision of the percentage limit percent of gross compensation picked-up contributions to a 401 plan or (2) $40.000. PSP: EGTRRA Amendment helps lower-compensated Revise the dollar limit after reduction for picked-up Section I employees save more for on a more frequent contributions to a 401 plan or The dollar limit will be indexed to inflation in $1,000 retirement, basis for purposes of (2) $35,000 (indexed). increments. The 1CMA-RC plan documents allow tracking when contributions to the fullest extent Indexing the dollar limit in participants have allowed under the new law. $1,000 increments may result in contributed the more frequent increases to the maximum in their dollar limit. 401 defined contribution plans, Increase the percentage limit to 100 percent of gross compensation (after reduction for picked- up contributions to a 401 plan) in testing parameters. Limitation on Employee elective deferral The elective deferral limit is raised incrementally over a %year MPP: n/a Allows participants to save Payroll systems may have to be ElectiveDefitral contributions to a 40 l (k) cash period ax follows: additional ~mds for retirement, modified to adjust the dollar Contributiom to a nr deferred account are limited PSP: EGTRRA Amendment Section 5 amount of tbe limit each year for 401(k) Plan to $10,500 (indexed). Contribution Indexing the limit in $500 purposes of tracking when (Section 402(g) Year Limit The ICMA-RC profit-thating plan increments may result in an employees have contributed the Limit) document allows contributions to the increa.~ heady every year. maximum amount of elective 2002 $11,000 fullest extent allowed under the new deferrals into the 401 (k) plan. [401(k) Plans 2003 $12,000 law. Only] 2004 $13,000 2005 $14,000 2006 $15,000 The limit will be indexed to inflation in $500 limits. * MPP = Money Purchase Plan PSP = Profit Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES - E(;TRRA Note: All provisions are effective January 1. 2002, unless otherwise noted. As your 401 qualified retirement plan provider, ICMA-RC wild take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Contribution Provisions (cont.) * MPP = Money Purchase Plan PSP = Protqt Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES ~ EGTRRA Note: All provisions are effective January 1, 2002, unless otherwise noted. A~ your 401 qualified retirement plan provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Contribution Provisions (cont.) Tax Credit for Low- No provision. A tax credit ofa~ much as $1.000 will be Not Applicable. (No plan Provision provides an No plan amendment is required. and Middle4ncorae provided to qualifying low- and middle- amendment is required.) incentive for qualifying Provide information to Savers income savers who make salary low- to medium income employees regarding the reduction contributions to retirement individuals to contribute to availability of the credit. Note: Note: The tax credit plans such as 401 money purchase and retirement plans such as the IRS has released a sample is available from 2002 profit sharing plans. 401 plans, document that may be used for - 2006. this purpose. Voluntary Participant Voluntary after-tax employee The 10% limit is increased to 25%. MPP: EGTRRA Amendment Allows participants to save Payroll sy, stems may have to be Contributions contributions were limited to 10% of Section 5 additional funds for modified to a participant's compensation, retirement, increase the percentage limit to PSP: EGTRRA Amendment 25 percent of compensation for Section 9 voluntary after-tax contributions. ICMA-RC's model plan documents allow after-tax contributions to the fullest extent under the new law. Suspension Period 401 (k) plan regulations provided that The 12-month suspension period is MPP: n/a Shortening the suspension Resume payroll deduction of Following Hara~hlp participants are prohibited from reduced to 6 months, period allows participants employee elective deferral Distribution making elective deferral PSP: EGTRRA Amendment to resume saving for contributions 6 months at'er a contributions for at least 12 months Section 7 retirement more quickly hardship distribution. [401(k) Plans Only] after a hardship distribution, after a hardship. ICMA-RC's model profit sharing plma provides for a 6-month suspension period. MPP ~ Money Purchase Plan PSP ~ Profit Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES - EGTRRA Note: All provisions are effective January I, 2002, unless otherwise noted. As your 401 qualified retirement plan provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Portability Provisions Roi!overs Into 401 Amounts paid from a 457 or Allows portability of retirement assets between (to and ' MPP: EGTRaRA Provision provides employers an Approve rollover requests. Plans From 403(b) plan may not be rolled from) retirement plans (401,403(b), governmental 457 Amendment Section 4 attractive plan feature that allows Various Types of into a 401 qualified retirement plans) and Traditional IRAs. retirement asset consolidation and Provide educational materials to Plans plan. PSP: EGTRRA Amendment could enhance the employer's ability to participants and new hires Amounts may not be rolled Section 4 recruit and retain qualified personnel, regarding the benefits of rolling assets intoa401 plan. ICMA-RC over from a Traditional IRA The ICMA-RC model Also, allowing rollovers into a plan will assist you in this regard. (other than a "conduit" IRA) documents allow rollovers could help of~iet rollovers out thus to any type of employer plan. into the 401 plan from all benefiting the plan from an economic ICMA-RC will handle the plan types and Traditional perspective, majoritT of the administration IRAs. associated with rollovers into your I 401 plan. Rollovers Out of Amounts paid from a 401 plan Allows portability of retirement assets between (to and MPP: EGTRRA Expanding the rollover options for Approve rollover requests. 401 Plans Into may be rolled into a from) retirement plans (401,403(b), governmental 457 Amendment Section 3 individuals in employer-sponsored Va~ous Types of Traditional IRA or another plans) and Traditional IRAs. retirement plans and IRA owners Plans 401 qualified retirement plan. PSP: EGTRRA Amendment provides them ( 1 ) the opportunity to They may not be transferred to Participants may roll 401 assets to another plan or Section 3 consolidate retirement savings and (2) a 457 or 403(b) plan. Traditional IRA when they are eligible to take a further incentives to accumulate funds distribution from the 401 plan (generally upon The ICMA-RC model on a tax-deferred basis for retirement. separation from service), and only if the distribution is documents allow unrestricted an "eligible rollover d's ribu ion' (ERD). rollovers out of the 401 plan Into another retirement plan The law is also revised to clarify that hardship or Traditional IRA. distributions from a 401(k) plan are not ERDs. Rollovers of Afier- Distributions of after-tax Allows direct rollovers of after-tax contributions MPP: EGTRRA Provision provides employers an Approve rollover requests. T~r contdbntfuns may not be between 401 defined contribt~tion plans and from 401 Ameodment Sections 3.C. attractive plan feature that allows Contributions rolled over to an IRA or other plans to Traditional IRAs. After-tax contributions can and 4 retirement asset consolidation and Provide educational materials to retirement plan. agJ; be rolled from an IRA back to a retirement plan could enhance the employer's ability to participants and new hires PSP: EGTRRA Amendment recruit and retain qualified peesonneh reg~ding the benefits of rolling Sections 3.D. and 4 assets between plans. ICMA-RC will assist you in this regard. The ICMA-RC model documents allow after-tax assets to be rolled into and out of the 401 plan. * MPP = Money Purchase Plan PSP = Profit Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES - EGTRRA Note: All provisions are effective January 1, 2002, unless otherwise noted. As your 401 qualified retirement plan provider. ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Portabili{y Provisions (cont.) Expansion of Spousal Surviving spouses of participants Allows surviving spouses to roll over MPP: EGTRRA Amendment Expanded rollover options places Approve initial distribution Rollovers generally may roll over distributions distributions from a plan in which Sections 3.B. and 4 the surviving spouse on par with requests. In order to ensure from a 401 plan to an IRA. the deceased spouse participated to a the participant, that distributions are made 401,403(b) or 457 plan in which the PSP: EGTRRA Amendment only to surviving spouses surviving spouse participates. Sections 3.B. and 4 who are eligible for Distributions may also be rolled into disbursement, ICMA-RC a Traditional IRA. The iCMA-RC model will continue to request that documents allow surviving employers approve initial spouses the same flexibility as distribution requests from participants with respect to the surviving spouse. rollovers. ~ However, to minimize employer administration, ~-~ ICMA~RC will not request ~ I that employers approve subsequent distribution requests from surviving * MPP = Money Purchase Plan PSP = Profit Sharing Plan ATTACHMENT B (com.): OVERVIEW OF 401 LAW CIIANGF~. EGTRRA Note:. All provisions arc effective Januan.. 1, 2002. unless otherwise noted. As your 401 qualified retirement plan provider. ICMA-RC will take care of mos add onal administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Diseribut~on Provisions Automatic Ro/lover of 401 plans may automatically cash out Plans providing for mandatory Not Applicable. (No plan Requiring mandatory cashouts of small None anticipated. Minimis Distribuffom balances of $5,000 or less. transfer such distributions to an required.) economics. IRA or other retirement vehicle, Note: Effective upon The plan is not required to roll over such ualess the participant The ICMA-RC model regulations, which are vehicle. Applies only to distributions mandatory cash outs of required to be issued between $1,000 and $5,000. accounts of $5,000 or less. No no later than June 7, automatic rollover to ma IRA ,..-% I Written notice must be provided will be required until .~. Note: It still must be requirement, as well as RC will reconsider our de whether this may be transferred without cost implementation of the Rollovers Disregarded 401 plans may automatically cash out ' Rollovers may be disregarded in MPP: Article 9.02 None anticipated. for Purposes of De terminated participants with account determining whether the $5,000 Minimis Accounts balances of $5,000 or less. All amounts, limit is exceeded. PSP: Artide 9.02 determining the $5,000 limit. ICMA-RC will not disregard balance will be taken into consideration in determining minimis. * MPP = Money Purchase Plan PSP = Profit Sharing Plan ATTACHMENT B (cont.): OVERVIEW OF 401 LAW CHANGES - EGTRRA Note: All provisions are effective January 1, 2002, unless otherwise noted. As your 40I qualified retirement phtn provider, ICMA-RC will take care of most additional administrative tasks associated with the law changes. Our Employer Services Unit is available at 1-800-326-7272 to answer your questions. Distribution Provisions (cont.) Revision of Minimura 401 plan participants must begin receiving The U.S. Department of Not Applicable. (No plan The distributions a participant is required None anticipated. Distribution Rules benefits no later than April I of the calendar Treasury is directed to revise the amendment is currently to take afxer reaching age 70 1/2 will be year following the year in which the life expectancy tables used to required.) reduced in most cases, more accurately participant retires or reaches age 70 1/2. determine minimum required ICMA-RC will use the new reflecting increased life expectancies. distributions to reflect current life expectancy table for life expectancies. Minimum Distributions made after Treasury releases the tables. ICMA-RC has not yet revised irs beneficiary payment rules in accordance with proposed Minimum Required Distribution regulations currently pending. The plan document wild be amended when the regulations are finalized. Relaxation of "Same An employee who transfers employment to The "same desk rule~ is MPP: n/a Participants that cease working for the None anticipated. Desk Rule" another employer but continues to work at eliminated for 401 (k) plans, employer that maintains the 401 (k) plan, the same job (e.g., an independent The requirement for distribution PSP: EGTRRA Amendment even if they begin working for a separate, [401(k) Plans Only] governmental agency is absorbed by a becomes "severance from Section 8 although perhaps related employer may t~ke County) is not considered to have ~separated employment' rather than a distribution from their 401 account as r scr~cc and therefore, is not eligihlc for " ' ' a distribution of elective deferrals from a 401(k) plan. The ICMA-RC model profit successor 401(k) plan. sharing document allows distributions to be made upon employment." * MPP = Money Purchase Plan PSP = Profit Sharing Plan Governmental Money Purchase PLAN & TRUST DOCUMENT ICMA RETIREMENT CORPORATION The Public Sector Exper~ (~ ICMA RETIREMENT CORPORATION GOVERNMENTAL MONEY PURCHASE PLAN & TRUST EGTRRA AMENDMENT PREAMBLE A. Adoption and effective date of amendment. This Amendment of the ICMA Retirement Corporation Governmental Money Purchase Plan & Trust (the "Plan") and its Adoption Agreement is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This Amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this Amendment shall be effective as of the first day of the first Plan Year beginning after December 31, 2001 and shall end December 31, 2010, unless otherwise extended by law or other- wise. B. Supersession of inconsistent provisions. This Amendment shall supersede the provisions of the Plan and Adoption Agreement to the extent those provisions are inconsistent with the provisions of this Amend- ment. Section 1. Limitations on Contributions A. Effective date. This Section shall be effective for Limitation Years beginning after December 31, 2001. B. Maximum annual addition. The maximum Annual Addition that may be contributed or allocated to a Participant's Account under the Plan for any Limitation Year shall not exceed the lesser of: (i) $40,000, as adjusted for increases in the cost-of-living under section 4I 5(d) of the Code, or (ii) One hundred percent (100%) of the Participant's Compensation for the Limitation Year. The compensation limit referred to in (ii) shall not apply to any contribution for medical benefits after separation from service (within the meaning of section 401 (h) or section 419A(f) (2) of the Code) which is otherwise treated as an Annual Addition. Section 2. Increase in Earnings Limit A. In general. For Plan Years beginning on or after January 1, 2002, the annual Earnings of each Participant taken into account in determining all benefits provided under the Plan for any Plan Year shall not exceed $200,000, as adjusted for increases in_the cost-of-living in accordance with section 401 (a)(17)(B) of the Code. Annual Earnings means Earnings during the Plan Year or such other consecutive 12-month period over which Earnings is otherwise determined under the Plan (the determination period). The cost-of- living adjustment in effect for a calendar year applies to annual Earnings for the determination period that begins with or within such calendar year. B. Prior years. If Earnings for any prior determination period are taken into account in determining a Participant's allocations or benefits for the current Plan Year, the Earnings for such prior year are subjec~ to the applicable annual Earnings limit in effect for that prior year. MPP 10/25/00 Section 3. Direct Rollovers of Plan Distributions A. Effective date. This Section shall apply to distributions made after December 31, 2001. B. Modification of definition of eligible retire/nent plan. For purposes of the direct rollover provisions in Section 9.03 of the Plan, an eligible retirement plan shall also mean an annuity contract described in section 403(b) of the Code and an eligible plan under section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. 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. C. Modification of definition of eligible rollover distribution to indude after-tax employee contributions. For purposes of the direct rollover provisions in Section 9.03 of the Plan, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in section 401 (a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is indudible in gross income and the portion of such distribution which is not so includible. Section 4. Rollovers From Other Plans Effective January 1, 2002, unless otherwise elected by the Employer in the Adoption Agreement, the Plan will accept Participant rollover contributions and/or direct rollovers of distributions (including after-tax contributions) made after December 31,2001 that are eligible for rollover in accordance with Section 402(c), 403 (a)(4), 403 (b)(8), 408(d)(3)(A)(ii), or 457(e)(16) of the Code, from all of the following types of plans: (1) a qualified plan described in Section 401(a) or 403(a) of the Code; (2) an annuity contract described in Section 403(b) of the Code; (3) an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; and (4) an individual retirement account or annuity described in Section 408(a) or 408(b) of the Code (including SEPs, and SIMPLE IRAs after 2 years of participating in the SIMPLE IRA). The amount distributed from such plan must be rolled over to this Plan no later than the sixtieth (60th) day after distribution was made from the plan, unless otherwise waived by the IRS pursuant to Section 402(c)(3) of the Code. Section 5. Voluntary Participant Contributions The ten percent (10%) limit on Voluntary Participant Contributions under Section 4.05 of the Plan shall be increased to twenty-five percent (25%). MPP 10/25/00 . BASIC DOCUMENT MPP 10'25'00 ICMA RETIREMENT CORPORATION GOVERNMENTAL MONEY PURCHASE PLAN & TRUST I. PURPOSE The Employer hereby adopts this Plan and Trust to provide funds for its Employees' retirement, and to provide funds for their Beneficiaries in the event of death. The benefits provided in this Plan shall be paid from the Trust. The Plan and the Trust forming a part hereof are adopted and shall be maintained for the exclusive benefit of eligible Employees and their Beneficiaries. Except as provided in Sections 4.10 and 14.03, no part of the corpus or income of the Trust shall revert to the Employer or be used for or diverted to purposes other than the exclusive benefit of Participants and their Beneficiaries. II. DEFINITIONS 2.0! Account. A separate record which shall be established and maintained under the Trust for each Participant, and which shall include all Participant subaccounts created pursuant to Article IV, plus any Participant Loan Account created pursuant to Section 13.03. Each subaccount created pursuant to Artide IV shall include any earnings of the Trust and adjustments for withdrawals, and realized and unrealized gains and losses allocable thereto. The term "Account" may also refer to any of such separate subaccounts. 2.02 Accounting Date. Each day that the New York Stock Exchange is open for trading, and such other dates as may be determined by the Plan Administrator, as provided in Section 6.06 for valuing the Trust's assets. 2.03 Adoption Agreement. The separate agreement executed by the Employer through which the Employer adopts the Plan and elects among the various alternatives provided thereunder, and which upon execution, becomes an integral part of the Plan. 2.04 Benetlciary. The person or persons designated by the Participant who, subject to the requirements of Article XII, shall receive any benefits payable hereunder in the event of the Participant's death. The designation of such Beneficiary shall be in writing to the Plan Administrator. A Participant may designate primary and contingent Benefi- ciaries. Where no designated Beneficiary survives the Participant, the Participant's Beneficiary shall be his/her surviv- ing spouse or, if none, his/her estate. 2.05 Break in Service. A Period of Severance of at least twelve (12) consecutive months. In the case of an individual who is absent from work for maternity or paternity reasons, the twelve (12) consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a Break in Serv- ice. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. 2.06 Code. The Internal Revenue Code of 1986, as amended from time to time. 2.07 Covered Employment Classification. The group or groups of Employees eligible to make and/or have contri- butions to this Plan made on their behalf, as specified by the Employer in the Adoption Agreement. 2.08 Disability. A physical or mental impairment which is of such permanence and degree that, as determined by the Employer, a Participant is unable because of such impairment to perform any substantial gainful activity for which he/she is suited by virtue of his/her experience, training, or education and that has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months, or can be expected to result in death. The permanence MPP 10/25/00 and degree of such impairment shall be supported by medical evidence. If the Employer maintains a long-term disability plan, the definition of Disability shall be the same as the definition of disability in the long term disability plan. 2.09 Earnings. (a) General Rule. Earnings, which form the basis for computing Employer Contributions, are all of each Participant's W-2 earnings which are actually paid to the Participant during the Plan Year, plus any contributions made pursuant to a salary reduction agreement which are not includible in the gross income of the Employee under section 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b), 414(h)(2), or 457(b) of the Code. Unless the Employer elects otherwise in the Adoption Agreement, Earnings shall exclude overtime compensation and bonuses. (b) Limitation on Earnings. Notwithstanding the foregoing, effective as of the first Plan Year beginning on or after January 1, 1989, and before January 1, 1994, the annual Earnings of each Participant taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed $200,000. This limitation shall be adjusted by the Secretary of the Treasury at the same time and in the same man- ner as under section 415(d) of the Code, except that the dollar increase in effect on January 1 of any calendar year is effective for years beginning in such calendar year and the first adjustment to the $200,000 limitation is effective on January 1, 1990. For Plan Years beginning on or after January 1, 1994, the annual Earnings of each Participant taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed $150,000, as adjusted for increases in the cost-of-living in accordance with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year. Ifa determination period consists of fewer than twelve (12) months, the annual Earnings limit is an amount equal to the otherwise applicable annual Earnings limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is twelve (12). If Earnings for any prior determination period are taken into account in determini~.g a Participant's allocations for the current Plan Year, the Earnings for such prior determination period are subject to the applicable annual Earnings limit in effect for that prior year. For this purpose, for years beginning on or after January 1, 1989, the applicable annual Earnings limit is $200,000. In addition, in determining allocations in Plan Years beginning on or after January 1, 1994, the annual Earnings limit in effect for determination periods beginning before that date is $150,000. (c) Limitations for Governmental Plans. In the case Bran eligible participant in a governmental plan (within the meaning of section 414(d) of the Code), the dollar limitation shall not apply to the extent the Earn- ings which are allowed to be taken into account under the Plan would be reduced below the amount ~ which was allowed to be taken into account under the Plan as in effect on July 1, 1993. For purposes of this Section, an eligible participant is an individual who first became a Participant in the Plan during a Plan Year beginning before the first Plan Year beginning after December 31, 1993. 2.10 Effective Date. The first day of the Plan Year during which the Employer adopts the Plan, unless the Employer elects in the Adoption Agreement an alternate date as the Effective Date of the Plan. 2.11 Employee. Any individual who has applied for and been hired in an employment position and who is em- ployed by the Employer as a common law employee; provided, however, that Employee shall not include vidual who is not so recorded on the payroll records of the Employer, including any such person who is subse, MPP 10/25/00 (2,) reclassified by a court of law or regulatory body as a common law employee of the Employer. For purposes of clarifica- tion only and not to imply that the preceding sentence would otherwise cover such person, the term Employee does not include any individual who performs services for the Employer as an independent contractor, or under any other nonemployee classification. 2.12 Employer. The unit of state or local government or an agency or instrumentality of one (1) or more states or local governments that executes the Adoption Agreement. 2.13 Hour of Service. Each hour for which an Employee is paid or entitled to payment for the performance of duties for the Employer. 2.14 Nonforfeitable Interest. The interest of the Participant or his/her Beneficiary (whichever is applicable) in that percentage of his/her Employer Contribution Account balance which has vested pursuant to Article VII. A Participant shall, at all times, have a one hundred percent (100%) Nonforfeitable Interest in his/her Participant Contribution, Portable Benefits, and Voluntary Contribution Accounts. 2.15 Normal Retirement Age. The age which the Employer specifies in the Adoption Agreement. If the Employer enforces a mandatory retirement age, the Normal Retirement Age is the lesser of that mandatory age or the age speci- fied in the Adoption Agreement. 2.16 Partidpant. An Employee or former Employee for whom contributions have been made under the Plan and who has not yet received all of the payments of benefits to which he/she is entitled under the Plan. A Participant is treated as benefiting under the Plan for any Play Year during which the Participant received or is deemed to receive an allocation in accordance with Treas. Reg. section 1.410(b)-(3) (a). 2.17 Period of Service. For purposes of determining an Employee's initial or continued eligibility to participate in the Plan or the Nonforfeitable Interest in the Participant's Account balance derived from Employer Contributions, an Employee will receive credit for the aggregate of all time period(s) commencing with the Employee's first day of employment or reemployment and ending on the date a Break in Service begins. The first day of employment or reemployment is the first day the Employee performs an Hour of Service. An Employee will also receive credit for any Period of Severance of less than twelve (12) consecutive months. Fractional periods ora year will be expressed in terms of days. Notwithstanding anything to the contrary herein, if the Plan is an amendment and restatement of a plan that previ- ously calculated service under the hours of service method, service shall be credited in a manner that is at least as generous as that provided under Treas. Regs. section 1.410(a)-7(g). 2.18 Period of Severance. A continuous period of time during which the Employee is not employed by the Em- ployer. Such period begins on the date the Employee retires, quits or is discharged, or if earlier, the twelve (12) month anniversary of the date on which the Employee was otherwise first absent from service. 2.19 Plan. This Plan, as established by the Employer, including any elected provisions pursuant to the Adoption Agreement. 2.20 Plan Administrator. The ICMA Retirement Corporation or any successor Plan Administrator. 2.21 Plan Year. The twelve (12) consecutive month period designated by the Employer in the Adoption Agreement. 2.22 Trust. The Trust created under Article VI of the Plan which shall consist of all of the assets of the Plan derived from Employer and Participant contributions under the Plan, plus any income and gains thereon, less any losses, expenses and distributions to Participants and Beneficiaries. MPP 10/25/00 IlL ELIGIBILITY 3.01 Service. Except as provided in Sections 3.02 and 3.03 of the Plan, an Employee within the Covered Employ- ment Classification who has completed a twelve (12) month Period of Service shall be eligible to participate in the Plan at the beginning of the payroll period next commencing-thereafter. The Employer may elect in the Adoption Agreement to waive or reduce the twelve (12) month Period of Service. If the Employer maintains the plan of a predecessor employer, service with such employer shall be treated a Service for the Employer. 3.02 Age. The Employer may designate a minimum age requirement, not to exceed age twenty-one (21), for partici- pation. Such age, if any, shall be declared in the Adoption Agreement. 3.03 Return to Covered Employment Classification. In the event a Participant is no longer a member o£Covered Employment Classification and becomes ineligible to make contributions and/or have contributions made on his/her behalf, such Employee will become eligible for contributions immediately upon returning to a Covered Employment Classification. If such Participant incurs a Break in Service, eligibility will be determined under the Break in Service rules of the Plan. In the event an Employee who is not a member ora Covered Employment Classification becomes a member, such Employee will be eligible to participate immediately if such Employee has satisfied the minimum age and service requirements and would have otherwise previously become a Participant. 3.04 Service Before a Break in Service. All Periods of Service with the Employer are counted toward eligibility, including Periods of Service before a Break in Service. I~. CONTRIBUTIONS 4.01 Employer Contributions. For each Plan Year, the Employer will contribute to the Trust an amount as s in the Adoption Agreement. The Employer's full contribution for any Plan Year shall be due and paid not later than thirty (30) working days after the close of the Plan Year. Each Participant will share in Employer Contributions for the period beginning on the date the Participant commences participation under the Plan and ending on the date on which such Employee severs employment with the Employer or is no longer a member of a Covered Employment Classification, and such contributions shall be accounted for separately in his/her Em Notwithstanding anything to the contrary herein, if so elected by the Employer in the Adoption Agreement, an Employee shall be required to make contributions as provided pursuant to Section 4.03 or 4.04 in order to be for Employer Contributions to be made on his/her behalf to the Plan. - 4.02 Forfeitm'es. All amounts forfeited by terminated Participants, pursuant to Section 7.06, shall be allocated m a suspense account and used to reduce dollar for dollar Employer Contributions otherwise required under the Plan for the current Plan Year and succeeding Plan Years, if necessary. Forfeitures may first be used to pay the reasonable administrative expenses of the Plan, with any remainder being applied to reduce Employer Contributions. 4.03 Mandatory Participant Contributions. If the Employer so elects in the Ado: Employee shall make contributions at a prescribed rate as a requirement for his/her participation in the Plan. Once such an eligible Employee becomes a Participant hereunder, he/she shall not thereafter have the right to d vary the rate of such Mandatory Participant Contributions. Such contributions shall be accounted for separately in the Participant Contribution Account. Such Account shall be at all times nonforfeitable by the Participant. If the Employer so elects in the Adoption Agreement, the Mandatory Participant Contributions shall be' by the Employer in accoMance with Code section 414(h)(2). Any contribution picked-up under this Section MPP 10/25/00 treated as an employer contribution in determining the tax treatment under the Code, and shall not be included as gross income of the Participant until it is distributed. 4.04 Matched Participant Contributions. If the Employer so elects in the Adoption Agreement, Employer Contri- butions shall be made on behalf of an eligible Empl~)yee for a Plan Year only if the Employee agrees to make Matched Participant Contributions for that Plan Year. The rate of Employer Contributions shall, to the extent specified in the Adoption Agreement, be based upon the rate at which Matched Participant Contributions are made for that Plan Year. Matched Participant Contributions shall be accounted for separately in the Participant Contribution Account. Such Account shall be at all times nonforfeitable by the Participant. 4.05 Voluntary Participant Contributions. If the Employer so elects in the Adoption Agreement, an eligible Employee may make voluntary (unmatched) contributions under the Plan for any Plan Year in any amount up to ten percent (10%) of his/her Earnings for such Plan Year. Such contributions shall be accounted for separately in the Participant's Voluntary Contribution Account. Such Account shall be ar all times nonforfeitable by the Participant. 4.06 Deductible Employee Contributions. The Plan will not accept deductible employee contributions which are made for a taxable year beginning after December 31, 1986. Contributions made prior to that date will be main- tained in a Deductible Employee Contribution Account. The Account will share in the gains and losses under the Plan in the same manner as described in Section 6.06 of the Plan. Such Account shall be at all times nonforfeitable by the Participant. 4.07 Military Service Contributions. Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Code. If the Employer has elected in the Adoption Agreement to make loans available to Participants, loan repayments will be suspended under the Plan as permitted under section 414(u)(4) of the Code. 4.08 Changes in Participant Election. A Participant may elect to change his/her rate of Matched Participant Contributions or Voluntary Participant Contributions at anytime or during an election period as designated by the Employer. A Participant may discontinue such contributions at any time or during an election period as designated by the Employer. 4.09 Portability of Benefits. (a) An Employee within the Covered Employment Classification, whether or not he/she has satisfied the minimum age and service requirements of Article III, may transfer or roll over his/her interest in a plan qualified under section 401 (a) or 403(a) of the Code to this Plan, provided: (1) The distribution is on account o~ termination or discontinuance of the plan or the distribution becomes payable on account of the Employee's separation from service, death, disability or after the Employee attains age fifty-nine and one-half (59-1/2); and the form and nature of the distri- bution from the other plan satisfies the applicable requirements under the Code to make the transfer or rollover a nontaxable transaction to the Employee; (2) The amount distributed from the plan is transferred to this Plan no later than the sixtieth (60th) day after distribution was made from the plan; and (3) In the case ofa rollover, the amount transferred to this Plan does not exceed the amount of the distribution reduced by the Employee contributions (if any) to the plan (other than accumulated deductible voluntary contributions). MPP 10/25/00 Such transfer or rollover may also be through an Individual Retirement Plan qualified under section 408 of the Code where the Individual Retirement Plan was used as a conduit from the prior plan and the transfer is made in accordance with the rules provided at (1) through (3) of this paragraph and the transfer does not include any personal contribu- tions or earnings thereon the Participant may have made to the Individual Retirement Plan. The amount transferred shall be deposited in the Trust and shall be credited to a Portable Benefits Account. Such Account shall be one hundred percent (100%) vested in the Employee. The Plan will accept accumulated Deductible Employee Contributions as defined in section 72(0)(5) of the Code that were distributed from a qualified retirement plan and transferred (rolled over) pursuant to section 402(a)(5), 402(a)(7), 403(a)(4), or 408(d)(3) of the Code. Notwithstanding the above, this transferred (rolled over) amount shall be deposited to the Trust and shall be credited to a Deductible Employee Contribution Account. Such Account shall be one hundred percent (I00%) (~ested in the Employee. (b) An Employee within the Covered Employment Classification, whether or not he/she has satisfied the minimum age and service requirement of Article III, may, upon approval by the Employer and the Plan Administrator, transfer his/her interest in another plan maintained by the Employer that is qualified under section 401 (a) of the Code to this Plan, provided the transfer is effected through a one-time irrevocable written election made by the Participant. The amount transferred shall be deposited in the Trust and shall be credited to sources that maintain the same attributes as the plan from which they are transferred. Such transfer shall not reduce the accrued years or service credited to the Participant for purposes of vesting or eligibility for any Plan benefits or features. 4.10 Return of Employer Contributions. Any contribution made by the Employer because of a mistake of fact must be returned to the Employer within one year of the date of contribution. V. LIMITATION ON AL~ OCATIONS 5.01 Participants Only in This Plan. (a) If the Participant does not participate in, and has never participated in another qualified plan or a welfare benefit fund, as defined in section 419(e) of the Code, maintained by the Employer, or an individual medical account, as defined by section 415(1) (2) of the Code, maintained by the Employer, which pro- .~' vides an Annual Addition, the amount of Annual Additions which may be credited to the Participant's Account for any Limitation Year will not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. If the Employer Contribution that would otherwise be contrib- uted or allocated to the Participant's Account would cause the Annual Additions for the Limitation Year m exceed the Maximum Permissible Amount, the amount contributed or allocated will be the Annual Additions for the Limitation-Year will equal the Maximum Permissible Amount. (b) Prior to determining the Participant's actual Compensation for the Limitation Year, the Em determine the Maximum Permissible Amount for a Participant on the basis of a reasonable the Participant's Compensation for the Limitation Year, uniformly determined for all Paxticipants simi- larly situated. (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual for the Limitation Year. (d) If, pursuant to Subsection (c) or as a result of the allocation of forfeitures, there is an E~xcess Amount, I excess will be disposed of as follows: MPP 10/25/00 (i) Any Voluntary Participant Contributions, to the extent they would reduce thc Excess Amount; will be returned to the Participant; (2) If after the application of paragraph (1) an Excess Amount still exists, and the Participant is covered by the Plan at the enc] of the Limitation Year, the Excess Amount in the Participant's Account will be used to reduce Employer Contributions (including any allocation of forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary; (3) If after the application of paragraph (I) an Excess Amount still exists, and the Participant is not covered by the Plan at the end of the Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer Contri- butions (including allocation of any forfeitures) for ali remaining Participants in the next Limita- tion Year, and each succeeding Limitation Year if necessary; (4) Ifa suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' accounts before any Employer or any Employee contributions may be made to the Plan for that Limitation Year. Excess Amounts in a suspense account may not be distributed to Participants or former Partici- pants. 5.02 Participants in Another Defined Contribution Plan. (a) Unless the Employer provides other limitations in the Adoption Agreement, this Section applies if, in addition to this Plan, the Participant is covered under another qualified defined contribution plan main- tained by the Employer, or a welfare benefit fund, as defined in section 419(e) of the Code, maintained by the Employer, or an individual medical account, as defined by section 415(1) (2) of the Code, maintained by the Employer, which provides an Annual Addition, during any Limitation Year. The Annual Additions which may be credited to a Participant's Account under this Plan for any such Limita- tion Year will not exceed the Maximum Permissible Amount reduced by the Annual Additions credited to a Participant's Account under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by the Employer are less than the Maximum Permissible Amount and the Employer contribution that would otherwise be contributed or allocated to the Participant's Account under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated will be reduced so that the Annual Additions under all such plans and funds for the Limitation Year will equal the Maximum Permissible Amount. If the Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Permissible Amount, no amount will be contrib- uted or allocated to the Participant's Account under this Plan for the Limitation Year. (b) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant in the manner described in Section 5.01(b). (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. (d) If, pursuant to Subsection (c) or as a result of the allocation of forfeitures, a Participant's Annual Addi- tions under this Plan and such other plans would result in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a welfare benefit fund or individual medical account will be deemed to have MPP 10/25/00 been allocated first regardless of the actual allocation date. (e)If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of, (1) The total Excess Amount allocated as of such date, multiplied by (2) The ratio of(i) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (ii) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified defined contribution plans. (f) Any Excess Amount attributed to this Plan will be disposed in the manner described in Section 5.01(d). 5.03 Definitions. For the purposes of this Article, the following definitions shall apply: (a)AnnualAdditions: The sum of the following amounts credited to a Participant's account for the Limita- tion Year: (1) Employer Contributions; (3) Employee contributions; and (4) Allocations under a simplified employee pension. Amounts allocated, afl:er March 31, 1984, to an individual medical account, as defined in section 415(1)(2) of the Code, which is part ora pension or annuity plan maintained by the Employer, are treated as Annual Additions to a defined contribution plan. For this purpose, any Excess Amount applied under Sections 5.01 (d) or 5.02(~ in the Limitation Year to reduce Employer Conrributions will be considered Annual Additions for such Limitation Year. (b) Compensation: A Participant's wages, salaries, and fees for professional services and other amounts re- ceived (without regard to whether an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer maintaining the Plan to the extent that the amounts are includible in gross income (including, but not limited to, bonuses, fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan (as described in Treas. Reg. section 1.62-2(c))), exduding the following: (1) Employer Contributions to a plan of deferred compensation which are not includible in the Employee's gross income for the taxable year in which contributed, or Employer Contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensation; and (2) Other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in section 403(b) of the Code (whether or not the amounts are actually excludable from the gross income of the Employee). (3) Notwithstanding the above, for Limitation Years beginning after December 31, 1997, Compen- sation shall include: MPP ~0/25/00 (a) any elective deferrals (as defined in section 402(g)(3) of thc Code), and (b) any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of sections 125 or 457 of the Code. (4) Notwithstanding the above, for Limitation Years beginning on and after January 1, 2001, for purposes of applying the limitations described in this Article V of the Plan, Compensation paid or made available during such Limitation Years shall include elective amounts that are not includible in the gross income of the Employee by reason of section 132(f)(4) of the Code. For purposes of applying the limitations of this Article, Compensation for a Limitation Year is the Compensa- tion actually paid or made available during such year. (c) Defined Contribution Dollar Limitation: $30,000. (d) Employe~. The Employer that adopts this Plan. (e) ExcessAmounr. The excess of the Participant's Annual Additions for the Limitation Year over the Maxi- mum Permissible Amount. An Excess Amount shall include allocable income. The income allocable to an Excess Amount is equal to the sum of the allocable gain or loss for the Plan Year and the allocable gain or loss for the period between the end of the Plan Year and the date of distributions (the gap period). The Plan may use any reasonable method for computing the income allocable to an Excess Amount, provided that the method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participants' Accounts. (f) Highest Average Compensation: The average Compensation for the three (3) consecutive years of service with the Employer that produce the highest average. A year of service with the Employer is the twelve (I 2) consecutive month period defined as the Limitation Year in the Adoption Agreement. (g) Limitation Year. A calendar year, or the twelve (12) consecutive month period elected by the Employer in the Adoption Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different twelve (12) consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (h) Maximum PermissibleAmounr. The maximum Annual Addition that may be contributed or allocated to a Participant's Account under the Plan for any Limitation Year shall not exceed the lesser of: (1) The Defined Contribution Dollar Limitation, or (2) Twenty-five percent (25%) of the Participant's Compensation for the Limitation Year. Ifa short Limitation Year is created because of an amendment changing the Limitation Year to a different twelve (12) consecutive month period, the Maximum Permissible Amount will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction: Number of months in the short Limitation Year 12 (i) Projected Annual Benefit: The annual retirement benefit (adjusted to an actuarially equivalent straight MPP 10/25/00 k.'~ ~}) life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which the Participant would be entitled under the terms of the plan assuming: (1) The Participant will continue emplo_yment until Normal Retirement Age under the plan (or current age, if later), and (2) The Participant's Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the plan will remain constant for all future Limitation Years. VI. TRUST AND INVESTMENT OF ACCOUNTS 6.01 Trust. A Trust is hereby created to hold all of the assets of the Plan for the exclusive benefit of Participants and Beneficiaries, except that expenses and taxes may be paid from the Trust as provided in Section 6.03. The trustee shall be the Employer or such other person which agrees to act in that capacity hereunder. 6.02 Investment Powers. The trustee or the Plan Administrator, acting as agent for the trustee, shall have the powers listed in this Section with respect to investment of Trust assets, except to the extent that the investment of Trust assets is controlled by Participants, pursuant to Section 13.03. (a) To invest and reinvest the Trust without distinction between principal and income in common or preferred stocks, shares of regulated investment companies and other mutual funds, bonds, loans, notes, debentures, certificates of deposit, contracts with insurance companies including but not limited to insurance, individual or group annuity, deposit administration, guaranteed interest contracts, and deposits at reasonable rates of interest at banking institutions including bur not limited to savings ac- counts and certificates of deposit. Assets of the Trust may be invested in securities that involve a higher degree of risk than investments that have demonstrated their investment performance over an extended period of time. (b) To invest and reinvest all or any part of the assets of the Trust in any common, collective or commingled trust fund that is maintained by a bank or other institution and that is available to Employee plans qualified under section 401 of the Code, or any successor provisions thereto, and during the period of time that an investment through any such medium shall exist, to the extent of participation of the Plan, the declaration of trust of such common, collective, or commingled trust fund shall constitute a part of this Plan. (c) To invest and reinvest all or any part of the assets of the Trust in any group annuity, deposit administra- tion or guaranteed interest contract issued by an insurance company or other financial institution on a commingled or collective basis with the assets of any other plan or trust qualified under section 401 (a) of the Code or any other plan described in s~ction 401 (a)(24) of the Code, and such contract may be held or issued in the name of the Plan Administrator, or such custodian as the Plan Administrator may appoint, as agent and nominee for the Employer. During the period that an investment through any such contract shall exist, to the extent of participation of the Plan, the terms and conditions of such contract shall constitute a part of the Plan. (d) To hold cash awaiting investment and to keep such portion of the Trust in cash or cash balances, without liability for interest, in such amounts as may from time to time be deemed to be reasonable and necessary to meet obligations under the Plan or otherwise to be in the best interests of the Plan. (e) To hold, to authorize the holding of, and to register any investment to the Trust in the name of the Plan, the Employer, or any nominee or agent of any of the foregoing, including the Plan Administrator, or in bearer form, to deposit or arrange for the deposit of securities in a qualified central depository even MPP 10/25/00 C,~) though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, and to organize corpora- tions or trusts under the laws of any jurisdiction for the purpose of acquiring or holding title to any property for the Trust, all with or without the addition of words or other action to indicate that property is held in a fiduciary or representative capacity but the books and records of the Plan shall at all times show that all such investments are part oft-he Trust. (f) Upon such terms as may be deemed advisable by the Employer or the Plan Administrator, as the case may be, for the protection of the interests of the Plan or for the preservation of the value of an investment, to exercise and enforce by suit for legal or equitable remedies or by other action, or to waive any right or claim on behalf of the Plan or any default in any obligation owing to the Plan, to renew, extend the time for payment of, agree to a reduction in the rate of interest on, or agree to any other modification or change in the terms of any obligation owing to the Plan, to settle, compromise, adjust, or submit to arbitration any claim or right in favor of or against the Plan, to exercise and enforce any and all rights of foreclosure, bid for property in foreclosure, and take a deed in lieu of foredosure with or without paying consideration therefor, to commence or defend suits or other legal proceedings whenever any interest of the Plan requires it, and to represent the Plan in all suits or legal proceedings in any court of law or equity or before any body or tribunal. (g) To employ suitable consultants, depositories, agents, and legal counsel on behalf of the Plan. (h) To open and maintain any bank account or accounts in the name of the Plan, the Employer, or any nominee or agent of the foregoing, including the Plan Administrator, in any bank or banks. (i) To do any and all other acts that may be deemed necessary to carry out any of the powers set forth herein. 6.03 Taxes and Expenses. All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon, or in respect to the Trust, or the income thereof, and all commissions or acquisitions or dispositions of securities and similar expenses of investment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable compensation of the Plan Administrator, as may be agreed upon from time to time by the Employer and the Plan Administrator, and reimbursement for reasonable expenses incurred by the Plan Administrator in perform- ance of its duties hereunder (including but not limited to fees for legal, accounting, investment and custodial services) shall also be paid from the Trust. However, no person who is a fiduciary within the meaning of section 3(21) (A) of ERISA and regulations promulgated thereunder, and who receives full-time pay from the Employer may receive compensation from the Trust, except for expenses properly and actually incurred. 6.04 Payment of Benefits. The payment of benefits from the Trust in accordance with the terms of the Plan may be made by the Plan Administrator, or by any custodian or other person so authorized by the Employer to make such disbursement. Benefits under this Plan shall be paid only if the Plan Administrator, custodian or other person decides in his/her discretion that the applicant is entitled to them. The Plan Administrator, custodian or other person shall not be liable with respect to any distribution of Trust assets made at the direction of the Employer. 6.05 Investment Funds. In accordance with uniform and nondiscriminatory rules established by the Employer and the Plan Administrator, the Participant may direct his/her Accounts to be invested in one (1) or more investment funds available under the Plan; provided, however, that the Participant's investment directions shall not violate any investment restrictions established by rhe Employer and shall not include any investment in collectibles, as defined in section 408 (m) of the Code. 6.06 Valuation of Accounts. As of each Accounting Date, the Plan assets held in each investment fund offered shall be valued at fair market value and the investment income and gains or losses for each fund shall be determined. Such investment income and gains or losses shall be allocated proportionately among all Account balances on a fund- by-fund basis. The allocation shall be in the proportion that each such Account balance as of the immediately preced- ing Accounting Date bears to the total of all such Account balances as of that Accounting Date. For purposes of this MPP 10/25/00 - k ta.J Article, all Account balances include the Account balances of all Participants and Beneficiaries. 6.07 Participant Loan Accounts. Participant Loan Accounts shall be invested in accordance with Section 13.03 of thc Plan. Such Accounts shall not share in any investment income and gains or losses of the investment funds described in Section 6.05. VII. VESTING 7.01 Vesting Schedule. The portion of a Participant's Account attributable to Mandatory Participant Contribu- tions, Matched Participant Contributions, or Voluntary Participant Contributions, and the earnings thereon, shall be at ail times nonforfeitablc by the Participant. A Participant shall have a Nonforfeitable Interest in the percentage of his/her Employer Contribution Account established under Section 4.01 determined pursuant to the schedule elected by the Employer in the Adoption Agreement. 7.02 Crediting Periods of Service. Except as provided in Section 7.03, all of an Employee's Periods of Service with the Employer are counted to determine the nonforfeitable percentage in the Employee's Account balance derived from Employer Contributions. If the Employer maintains the plan ora predecessor employer, service with such employer will be treated as service for the Employer. For purposes of determining years of service and Breaks in Service for purposes of computing a Participant's nonforfeitable right to the Account balance derived from Employer Contributions, the twelve (12) consecutive month period will commence on the date the Employee first performs an hour of service and each subsequent twelve (I 2) consecutive month period will commence on the anniversary of such date. 7.03 Service After Break in Service. In the case of a Participant who has a Break in Service of at least five (5) years, all Periods of Service after such Breaks in Service will be disregarded for the purpose of determining the nonforfeitable percentage of the Employer-tierived Account balance that accrued before such Break, but both pre-Break and post- Break service will count for the purposes of vesting the Employer-derived Account balance that accrues after such Break. Both Accounts will share in the earnings and losses of the fund. In the case of a Participant who does not have a Break in Service of at least five (5) years, both the pre-Break and post- Break service will count in vesting both the pre-Break and post-Break Employer-derived Account balance. In the case of a Participant who does not have any nonforfeitable right to the Account balance derived from Employer Contributions, years of service before a period of consecutive one (1) year Breaks in Service will not be taken into account in computing eligibility service if the number of consecutive one (1) year Breaks in Service in such period equals or exceeds the greater of five (5) or the aggregate number of years of service. Such aggregate number of years of service will not include any years of service disregarded under the preceding sentence by reason of prior Breaks in Service. - Ifa Participant's years of service are disregarded pursuant to the preceding paragraph, such Participant will be treated as a new Employee for eligibility purposes. Ifa Participant's years of service may not be disregarded pursuant to the preceding paragraph, such Participant shall continue to participate in the Plan, or, if terminated, shall participate immediately upon reemployment. 7.04 Vesting Upon Normal Retirement Age. Notwithstanding Section 7.01 of the Plan, a Participant shall have a Nonforfeitable Interest in his/her entire Employer Contribution Account, to the extent that the balance of such Account has not previously been forfeited pursuant to Section 7.06 of the Plan, if he/she is employed on or after his/ her Normal Retirement Age. MPP 10/25/00 7.05 Vesting Upon Death or Disability. Notwithstanding Section 7.01 of the Plan, in the event of Disability or death, a Participant or his/her Beneficiary shall have a Nonforfeitable Interest in his/her entire Employer Contribution Account, to the extent that the balance of such Account has not previously been forfeited pursuant to Section 7.06 of the Plan. 7.06 Forfeitures. Except as provided in Sections 7.04 and 7.05 of the Plan or as otherwise provided in this Section 7.06, a Participant who separates from service prior to obtaining full vesting shall forfeit that percentage of his/her Employer Contribution Account balance which has not vested as of the date such Participant incurs a Break in Service of five (5) consecutive years or, if earlier, the date such Participant receives, or is deemed under thc provisions of Section 9.04 to have received, distribution of the entire Nonforfeitable Interest in his/her Employer Contribution Account. Ifa Participam receives a voluntary distribution of less than the entire vested portion of his/her Employer Contribution Account, the part of the nonvested portion that will be treated as a forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to Employer Contributions and the denominator of which is the total value of the vested Employer Contribution Account. No forfeiture will occur solely as a result of a Participant's withdrawal of Employee Contributions. Forfeitures shall be allocated in the manner described in Section 4.02. 7.07 Reinstatement of Forfeitures. If the Participant returns to the employment of the Employer before incurring a Break in Service of five (5) consecutive years, any amounts forfeited pursuant to Section 7.06 shall be reinstated to the Participant's Employer Contribution Account on the date of repayment by the Participant of the amount distributed to such Participant from his/her Employer Contribution Account; provided, however, that if such Participant forfeited his/her Account balance by reason of a deemed distribution, pursuant to Section 9.04, such amounts shall be auto- matically restored upon the reemployment of such Participant. Such repayment must be made before the eadier of five (5) years after the first date on which the Participant is subsequently reemploycd by the Employer, or the date the Participant incurs a Break in Service of five (5) consecutive years. VIII. BENEFITS CLAIM 8.01 Claim of Beneflts. A Participant, Employee or Beneficiary shall notify the Plan Administrator in writing ora daim of benefits under the Plan. The Plan Administrator shall take such steps as may be necessary to facilitate the payment of such benefits to the Participant, Employee or Beneficiary. 8.02 Appeal Procedure. If any claim for benefits is denied by the Plan Administrator, the Plan Administrator shall notify the daimant in writing of such denial, setting forth the specific reasons and citing reference to specific provi- sions of the Plan upon which the denial is based. An appeal period of sixty (60) days after receipt of the notification of denial shall be granted, and said notification shall advise the claimant of the appeal procedure. The claimant shall file the appeal with the Plan Administrator, whose decisiorrshall be final, to the extent provided by Section 15.07. IX. COMMENCEMENT OF BENEFITS 9.01 Normal and Elective Commencement of Beneilts. A Participant who retires, becomes Disabled or separates from 'service for any other reason may elect by written notice to the Plan Administrator to have the distribution of benefits commence on any date, provided that such distribution complies with Sections 9.02 and 9.07. Such election must be made in writing during the ninety (90) day period ending on the date as of which benefit payments are to commence. A Participant's election shall be revocable and may be amended by the Participant. MPP 10/25/00 The failure of a Participant and the Participant's Spouse to consent to a distribution while a benefit is immediately distributable, within the meaning of section 9.02 of the Plan, shall be deemed to be an election to defer commence- ment of payment of any benefit. 9.02 Restrictions on Immediate Distributions. Notwithstanding anything to the contrary in Section 9.01 of the Plan, if the value of a Paruc~pant s vested Account balance exceeds the dollar hm~t under secuo 411 (a)(11 )(A) of the Code, and the Account balance is immediately distributable, the Participant and the Participant's Spouse (or where either has died, the survivor) must consent to any distribution of such Account balance. The consent of the Partici- pant and the Participant's Spouse shall be obtained in writing during the ninety (90) day period ending on the date as of which benefit payments are to commence. The Plan Administrator shall notify the Participant and the Participant's Spouse of the right to defer any distribution until the Participant's Account balance is no longer immediately distributable. Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy section 417(a)(3) of the Code, and shall be provided no less than thirty (30) and no more than ninety (90) days before the date as of which benefit payments are to commence. However, distribution may commence less than thirty (30) days after the notice described in the preceding sentence is given, provided (i) the distribution is one to which sections 401 (a)( 11 ) and 417 of the Code do not apply or, if sec- tions 401 (a)(11 ) and 417 of the Code do apply, the waiver requirements of Section 12.04(a) are met; (ii) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least thirty (30) days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particu- lar distribution option); and (iii) the Participant, after receiving the notice, affirmatively elects a distribution. Notwithstanding the foregoing, only the Participant need consent to the commencement of a distribution in the form of the Qualified Joint and Survivor Annuity while the Account balance is immediately distributable. (Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to section 12.02 of the Plan, only the Participant need consent to the distribution of an Account balance that is immediately distributable.) Neither the consent of the Participant nor the Participant's Spouse shall be required for any form of distribution to the extent that a distribution is required to satisfy section 401(a)(9) or 415 of the Code. In addition, upon termination of this Plan if the Plan does not offer an annuity option (purchased from a commercial provider) and if the Employer does not maintain another defined contribution plan, the Participant's Account balance will, without the Participant's consent, be distributed to the Participant. An Account balance is immediately distributable if any part of the Account balance could be distributed to the Partici- pant (or Surviving Spouse) before the Participant attains or would have attained (if not deceased) the later of Normal Retirement Age or age sixty-two (62). For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first plan year beginning after December 31, 1988, the Participant's vested Account balance shall not include amounts attributable to accumulated deductible employee contributions within the meaning of section 72(0) (5)(B) of the Code. 9.03 Transfer to Another Plan. (a) Ifa Participant becomes eligible to participate in another plan maintained by the Employer that is quali- fied under section 401 (a) of the Code, the Plan Administrator shall, at the written election of such Participant, transfer all or part of such Participant's Account to such plan, provided the plan administra- tor for such plan certifies to the Plan Administrator that its plan provides for the acceptance of such a transfer. For purposes of this Plan, any such transfer shall not be considered a distribution to the Partici- pant subject to spousal consent as described in Section 9.02 and Article XlI. MPP 10/25/00 (b) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. For purposes of this Plan, any such Eligible Rollover Distribution shall be considered a distribution to the Participant subject to spousal consent as described in Section 9.02 and Article XII. (c) Definitions. For the purposes of Subsection (b), the following definitions shall apply: (1) Eligible Rollover Distribution. 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; the portion of any distribution that is not includible in gross income; and any other distribution(s) that is reasonably expected to total less than $200 during a year. (2) Eligible Retirement Plan. An individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408 (b) of the Code (collectively, an "IRA"), an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401 (a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. How- ever, in the case of an Eligible Rollover Distribution to the Surviving Spouse, an Eligible Retire- ment Plan is an IRA. (3) Distributee. Participant; in addition, the Participant's surviving spome and the Participant's 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. (4) DirectRollover. A payment by the Plan to the Eligible Retirement Plan specified by the Distributee. 9.04 De Minimis Accounts. Notwithstanding the foregoing provisions of this Article, ifa Participant terminates service, and the value of his/her Nonforfeitable Interest in his/her Account is not greater than the dollar limit under section 41 l(a)(11)(A) of the Code, the Participant's benefit shall be paid (to the extent it constitutes an Eligible Rollover Distribution) in the form of a direct rollover to the Plan Administrator's designated IRA, unless he/she affirmatively elects to receive a cash payment or a Direct Rollover in accordance with procedures established by the Plan Administrator. For purposes of this Section, ifa Participant's Nonforfeitable Interest in his/her Account is zero, the Participant shall be deemed to have received a distribution of such Nonforfeitable Interest in his/her Account. A Participant's Nonforfeitable Interest in his/her Account shall not include accumulated Deductible Employee Contri- butions within the meaning of Section 72(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989. 9.05 Withdrawal of Voluntary Contributions. A Participant may make a written election, or if married, a Quali- fied Election, to withdraw a part of or the tull amount of his/her Voluntary Contribution Account. Such withdrawals may be made at any time, provided that no more than two (2) such withdrawals ma7 be made during any calendar year. No forfeiture will occur solely as the result of any such withdrawal. 9.06 Withdrawal of Deductible Employee Contributions. A Participant may make a written election, or if married, a Qualified Election, to withdraw a part of or the full amount of his/her Deductible Employee Contribution Account. Such withdrawals may be made at any time, provided that no more than two (2) such withdrawals may be made during any calendar year. No forfeiture will occur solely as the result of any such withdrawal. MPP 10125/00 ,!l~ C~) 9.07 Latest Commencement of Benetlts. Notwithstanding anything to the contrary in this Article, benefits shall begin no later than the Participant's Required Beginning Date, as defined under Section 10.06, or as otherwise pro- vided in Section 10.05. X. DISTRIBUTION REQUIREMENTS 10.01 General Rules. (a) Subject to the provisions of Article XII, the requirements of this Article shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of this Plan. (b) All distributions required under this Article shall be determined and made in accordance with the pro- posed regulations under section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of section 1.401 (a) (9)-2 of the proposed regulations. 10.02 Required Beginning Date. The entire Nonforfeitable Interest of a Participant must be distributed or begin to be distributed no later than the Participant's Required Beginning Date. 10.03 Limits on Distribution Periods. As of the first Distribution Calendar Year, distributions, if not made in a single-sum, may only be made over one of the following periods (or a combination thereof): (a) The life of the Participant, (b) The life of the Participant and a Designated Beneficiary, (c) A period certain not extending beyond the Life Expectancy of the Participant, or (d) A period certain not extending beyond the Joint and Last Survivor Expectancy of the Participant and a Designated Beneficiary. 10.04 Determination of Amount to Be Distributed Each Year. If the Participant's Nonforfeitable Interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the Required Beginning Date: (a) Individual Account. (1) Ifa Participant's Benefit is to be distributed over (i) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and the Participant's DesignatetI Beneficiary, or (ii) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calen- dar year, beginning with distributions for the first Distribution Calendar Year, must at least equal the quotient obtained by dividing the Participant's Benefit by the Applicable Life Expectancy. (2) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Desig- nated Beneficiary, the method of distribution selected must assure that at least fifty percent (50%) of the present value of the amount available for distribution is paid within the Life Ex- pectancy of the Participant. (3) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first Distribution Calendar Year shall not be less than the quotient obtained by dividing the Participant's Benefit by the lesser of (i) the Applicable Life MPP 10/25/00 ~i~ Expectancy, or (ii) if the Participant's spouse is not the Designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of the proposed regulations. Distributions after the death of the Participant shall be distributed using the Appli- cable Life Expectancy in Subsection (1) as the relevant divisor without regard to Proposed Regu- lations section 1.401(a)(9)-2.- (4) The minimum distribution required for the Participant's first Distribution Calendar Year must be made on or before the Participant's Required Beginning Date. The minimum distribution for other calendar years, including the minimum distribution for the Distribution Calendar Year in which the Employee's required beginning date occurs, must be made on or before December 31 of that Distribution Calendar Year. (b) Other forms. If the Participant's Benefit is distributed in the form of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of section 401 (a)(9) of the Code and the proposed regulations thereunder. 10.05 Death Distribution Provisions. Upon the death of the Participant, the following distribution provisions shall take effect: (a) If the Participant dies after distribution of his/her interest has commenced, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death. (b) If the Participant dies before distribution of his/her interest commences, the Participant's entire interest will be distributed no later than December 31 of the calendar year containing the fifth (5th) anniversary of the Participant's death except to the extent that an election is made to receive distributions in accord- ance with (1) or (2) below: (1) If any portion of the Participant's interest is payable to a Designated Beneficiary, distributions may be made over the life or over a period certain not greater than the Life Expectancy of the Designated Beneficiary commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; (2) If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with Subsection (1) shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Partici- pant died, and (ii) December 31 of the calendar year in which the Participant would have at- tained age seventy and one-half (70-1/2). If the Participant has not made an election pursuant to this Subsection by the time of his/her death, the Participant's Designated Beneficiary must elect the method of distribution no later than the earlier of (i) December 31 of the calendar year in which distributions would be required to begin under this Section, or (ii) December 31 of the calendar year which contains the fifth (5th) anniversary of the date of death of the Participant. If the Participant has no Designated Beneficiary, or if the Designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth (5th) anniversary of the Participant's death. (c) For purposes of Subsection (b), if the surviving spouse dies after the Participant, but before payments to such spouse begin, the provisions of Subsection (b), with the exception of paragraph (2) therein, shall be applied as if the surviving spouse were the Participant. MPP 10/25/00 .~ {.,~) (d) For purposes of this Section, any amount paid to a child of the Participant will be treated as if it bad been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. (e) For the purposes of this Section, d~stnbutio~ of a Participant's interest's cons'dered to begin on the Participant's Required Beginning Date (or, if Subsection (c) is applicable, the date distribution is required to begin to the surviving spouse pursuant to Subsection (b)). If distribution in the form of an annuity ir- revocably commences to the participant before the Required Beginning Date, the date distribution is considered to begin is the date distribution actually commences. 10.06 Definitions. For the purposes of this Section, the following definitions shall apply: (a) Applicable Life Expectancy. The Life Expectancy (or Joint and Last Survivor Expectancy) calculated using the attained age of the Participant (or Designated Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in the applicable calendar year reduced by one (1) for each calendar year which has elapsed since the date Life Expectancy was first calculated. If Life Expectancy is being recalculated, the Applicable Life Expectancy shall be the Life Expectancy as so recalculated. The applicable calendar year shall be the first Distribution Calendar Year, and if Life Expectancy is being recalculated such succeeding calendar year. (b) Designated Beneficiary. The individual who is designated as the Beneficiary under the Plan in accordance with section 401 (a)(9) of the Code and the proposed regulations thereunder. (c) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distribu- tions beginning before the Participant's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant's Required Beginning Date. For distributions beginning after the Participant's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to Section 10.05 above. (d) Life Expectancy. The Life Expectancy and joint and last survivor expectancy, respectively, as computed by use of the expected return multiples in Tables V and VI of section 1.72-9 of the income tax regulations. Unless otherwise elected by the Participant (or spouse, in the case of distributions described in Section 10.05 (b)(2) above) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy ofa nonspouse Beneficiary may not be recalculated. (e) Participant's Benefit. (I) The Account balance as of the last Accounting Date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contri- butions or forfeitures allocated to the Account balance as of dates in the valuation calendar year after such Accounting Date and decreased by distributions made in the valuation calendar year after such Accounting Date. (2) For purposes of paragraph (1) above, if any portion of the minimum distribution for the first Distribution Calendar Year is made in the second Distribution Calendar Year on or before the Required Beginning Date, the amount of the minimum distribution made in the second Distri- bution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year. MPP 10/25/00 (f) Required Beginning Date. The Required Beginning Date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age seventy and one-half (70-1/ 2), or such later date as permitted under this Section or section 401 (a)(9) of the Code. XI. MODES OF DISTRIBUTION OF BENEFITS II.01 Normal Mode of Distribution. Unless an elective mode of distribution is elected in accordance with Article XII, benefits shall be paid to the Participant in the form provided for in Article XIL 11.02 Elective Mode of Distribution. Subject to the requirements ofArticles X and )(II, a Participant may revocably elect to have his/her Account distributed in any one (1) of the following modes in lieu of the mode described in Section 11.01: (a) Equal Payments. Equal monthly, quarterly, semi-annual, or annual payments in an amount chosen by the Participant continuing until the Account is exhausted. (b Lump Sum. Alump sum payment. (c) Period Certain. Approximately equal monthly, quarterly, semi-annual, or annual payments, calculated to continue for a period certain chosen by the Participant. (d) Other. Any other sequence of payments requested by the Participant. 11.03 Election of Mode. Except as otherwise provided in Section 12.04(a), a Participant's election ora payment option must be made in writing between thirty (30) and ninety (90) days before the payment of benefits is to com- mence. 11.04 Death Benefits. Subject to Articles X and XII, (a) In the case ora Participant who dies before he/she has begun receiving benefit payments, the Participant's entire Nonforfeitable Interest shall then be payable to his/her Beneficiary within ninety (90) days of the aruc~pant s death. A Beneficiary who is entitled to receive benefits under this Section may elect to have benefits commence at a later date, subject to the provisions of Section 10.05. The Beneficiary may elect to receive the death benefit in any of the forms available to the Participant under Section 11.02. If the Beneficiary is t e Parnc~pant s Surviving Spouse, and such Surv~vtng Spouse dies before payment com- mences, then this Section shall apply to the beneficiary of the Surviving Spouse as though such Surviving Spouse were the Participant. (b) Should the Participant die after he/she has begun receiving benefit payments, the Beneficiary shall receive the remaining benefits, if any, that are payable, under the payment schedule elected by the Participant. Notwithstanding the foregoing, the Beneficiary may elect to accelerate payments of the remaining bal- ances, including but not limited to, a lump sum distribution. XII. SPOUSAL BENEFIT REQUIREMENTS 12.01 Application. The provisions of this Article shall take precedence over any conflicting provision in this Plan. The provisions of this Article shall apply to any Participant who is credited with any Period of Service with the Em- ployer on or after August 23, 1984, and such other Participants as provided in Section 12.05. ,<5/00, 12.02 Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a Qualified Election within the ninety (90) day period ending on the Annuity Starting Date, a married Participant's Vested Account Balance will be paid in the form of a Qualified Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance will be paid in the form of a Straight Life Annuity. The Participant may elect to have such annuity distributed upon thc attainment of the Earliest Retirement Age under thc Plan. 12.03 Qualified Preretirement Survivor Annuity. Ifa Participant dies before the Annuity Starting Date, then fifty percent (50%) of the Participant's Vested Account Balance shall be applied toward the purchase of an annuity for the life of the Surviving Spouse; the remaining portion shall be paid to such Beneficiaries (which may include such Spouse) designated by the Participant. Notwithstanding the foregoing, the Participant may waive the spousal annuity by designating a different Beneficiary within the Election Period pursuant to a Qualified Election. To the extent that less than one hundred percent (100%) of the vested Account balance is paid to the Surviving Spouse, the amount of the Participands Account derived from Employee contributions will be allocated to the Surviving Spouse in the same proportion as the amount of the Participant's Account derived from Employee contributions is to the Participant's total Vested Account Balance. The Surviving Spouse may elect to have such annuity distributed within a reasonable period after the Participant's death. Further, such Spouse may elect to receive any death benefit payable to him/her hereunder in any of the forms available to the Participant under Section 11.02. 12.04 Notice Requirements. (a) In the case ora Qualified Joint and Survivor Annuity as described in Section 12.02, the Plan Admin- istrator shall, no less than thirty (30) days and no more than ninety (90) days prior ro the Annuity Starting Date, provide each Participant a written explanation of: (i) the terms and conditions o£a Qualified Joint and Survivor Annuity; (ii) thc Participant's right ?o make and the effect of an election to waive the Qualified Joint and Survivor Annuity form of benefit; (iii) the rights of a Participant's Spouse; and (iv) the right to make, and the effect of, a revocation o£a previous election to waive the Qualified Joint and Survivor Annuity. However, if the Participant, after having received thc wrltren explanation, affirmatively elects a form of distribution and the Spouse consents to that form of distribution (if neces- sary), benefit payments may commence less than 30 days after the written explanation w~s provided to the Participant, provided chat thc following requirements are met: (1) The Plan Administrator provides information to the Participant clearly indicating that the Participant has a right to at least 30 days to consider whether to waive the Qualified Joint and Survivor Annuity and consent to a form of distribution other than a Qualified Joint and Survivor Annuity; (2) The Participant is permitted to revoke an affirmarive distribution election at least until the Annuity Starring Date, or if later, at any time prior ro the expiration of thc 7-day period that begins the day after thc explanation of the Qualified Joint and Survivor Annuity is provided ro the Participant; (3) The Annuity Starting Date is after the date that the explanation of the Qualified Joint and Survivor Annuity is provided to the Participant; and (4) Distribution in accordance with the affirmative election does not commence before the expira- tion of the 7-day period that begins after the day after the explanation of the Qualified Joint and Survivor Annuity is provided to the Participant. (b) In the case of a qualified preretirement survivor annuity as described in Section 12.03, the Plan Adminis- trator shall provide each Participant within the applicable period for such Participant a written explana- tion of the qualified pre-retirement survivor annuity in such terms and in such manner as would be MPP 10/25/00 C~) comparable to the explanation provided for meeting the requirements of Subsection (a) applicable to a Qualified Joint and Survivor Annuity. The applicable period for a Participant is whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age thirty-two (32) and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age thirty- five (35); (ii) a reasonable period ending after the individual becomes a Participant; (iii) a reasonable period ending after Subsection (c) ceases to apply to the Participant; (iv) a reasonable period ending after this Article first applies to the Participant. Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation from service in the case of a Participant who separates from service before attaining age thirty-five (35). For purposes ofapplying the preceding paragraph, a reasonable period ending after the enumerated events described in (ii), (iii) and (iv) is the end of the two (2) year period beginning one (1) year prior to the date the applicable event occurs, and ending one (1) year after that date. In the case of a Participant who separates from service before the Plan Year in which age thirty-five (35) is attained, notice shall be provided within the two (2) year period beginning one (1) year prior to separation and ending one (1) year after separation. If such a Participant thereafter returns to employment with the Employer, the ap- plicable period for such Participant shall be redetermined. (c) Notwithstanding the other requirements of this Section, the respective notices prescribed by this Section need not be given to a Participant if (1) the Plan "fully subsidizes" the costs of a Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity, and (2) the Plan does not allow the Partici- pant to waive the Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity and does not allow a married Participant to designate a non-Spouse Beneficiary. For purposes of this Subsec- tion (c), a plan fully subsidizes the costs of a benefit if no increase in cost or decrease in benefits to the Participant may result from the Participant's failure to elect another benefit. 12.05 Definitions. For the purposes of this Section, the following definitions shall apply: (a) Annuity Starting Date. The first day of the first period for which an amount is paid as an annuity or any other form. (b) Election Period: The period which begins on the first day of the Plan Year in which the Participant attains age thirty-five (35) and ends on the date of the Participant's death. Ifa Participant separates from service prior to the first day of the Plan Year in which age thirty-five (35) is attained, with respect to the Account balance as of the date of separation, the Election Period shall begin on the date of separation. Pre-age thir~y-five (35) waiver. A Participant who will not yet attain age thirty-five (35) as of the end of any current Plan Year may make a special-Qualified Election to waive the qualified preretirement survivor annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age thirty-five (35). Such election shall not be valid unless the Partici- pant receives a written explanation of the qualified preretirement survivor annuity in such terms as are comparable to the explanation required under Section 13.04(a). Qualified preretirement survivor an- nuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age thirty-five (35). Any new waiver on or after such date shall be subject to the full requirements of this Article. (c) Earliest Retirement Age: The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits. MPP 10/25/00 (d) Qualified Election: A waiver of a Qualified Joint and Survivor Annuity or a qualified preretirement survivor annuity. Any waiver of a Qualified Joint and Survivor Annuity or a qualified preretirement survivor annuity shall not be effective unless: (a) the Participant's Spouse consents in writing to the election; (b) the election designates a specific Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent); (c) the Spouse's consent acknowledges the effect of the election; and (d) the Spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further Spousal consent). ][fit is established to the satisfaction of a Plan representative that there is no Spouse or that the Spouse cannot be located, a waiver will be deemed a Qualified Election. Any consent by a Spouse obtained under this provision (or establishment that the consent of a Spouse may not be obtained) shall be effective only with respect to such Spouse. A consent that permits designa- tions by the Participant without any requirement of further consent by such Spouse must acknowledge that the Spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the Spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Spouse ar any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Sec- tion 12.04. (e) QualifiedJointandSurvivorAnnuit~ An immediate annuity for the life of the Participant with a survivor annuity for the life of the Spouse which is not less than fifty percent (50%) and not more than one hundred percent (100%) of the amount of the annuity which is payable during the joint lives of the Participant and the Spouse and which is the amount of benefit which can be purchased with the Partici- pant's Vested Account Balance. The percentage of the survivor annuity shall be fifty percent (50%). (f) Spouse (Surviving Spouse): The Spouse or Surviving Spouse of the Participant, provided that a former Spouse will be treated as the Spouse or Surviving Spouse and a current Spouse will not be treated as the Spouse or Surviving Spouse to the extent provided under a qualified domestic relations order as described in section 414(p) of the Code. (g) Straight Life Annuity: An annuity payable in equal installments for the life of the Participant that termi- nates upon the Participant's death. (h) Vested Account Balance. The aggregate value of the Participant's vested Account balances derived from Employer and Employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant's life. The provisions of this Article shall apply to a Participant who is vested in amounts attributable to Employer Contributions, Employee contributions (or both) at the time of death or distribution. 12.06 Annuity Contracts. Where benefits are to be paid in the form of a life annuity pursuant to the terms of this Article, a nontransferable annuity contract shall be purchased from a life insurance company and distributed to the Participant or Surviving Spouse, as applicable. The terms of any annuity contract purchased and distributed by the Plan shall comply with the requirements of this Plan and section 417 of the Code. XIII. LOANS TO PARTICIPANTS 13.01 Availability of Loans to Participants. MPP 10/25/00 (a) If the Employer has elected in the Adoption Agreement to make loans available to Participants, a Partici- pant may apply for a loan from the Plan subject to the limitations and other provisions of this Article. (b) The Employer shall establish written guidelines governing the granting of loans, provided that such guidelines arc approved by the Plan Administrator and are not inconsistent with the provisions of this Article, and that loans are made available to all Participants on a reasonably equivalent basis. 13.02 Terms and Conditions of Loans to Participants. Any loan by the Plan to a Participant under Section 13.01 of the Plan shall satisfy the following requirements: (a) Availability. Loans shall be made available to all Participants on a reasonably equivalent basis. (b) Nondiscrimination. Loans shall not be made to highly compensated Employees in an amount greater than the amount made available to other Employees. (c) Interest Rate. Loans must be adequately secured and bear a reasonable interest rate. (d) Loan Limit. No Participant loan shall exceed the present value of the Participant's Nonforfeitable Interest in his/her Account. (e) Spousal Consent. A Participant must obtain the consent of his/her Spouse, as defined under Section 12.05 if any, within the ninety (90) day period before the time the Account balance is used as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the ninety (90) day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a Plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Account balance is used for renegotiation, extension, renewal, or other revision of the loan. (f) Foreclosure. In the event ofdefanlt, foreclosure on the note and attachment of security will not occur until a distributable event occurs in the Plan. (g) Reduction of Account. Ifa valid spousal consent has been obtained in accordance with Subsection (e), then, notwithstanding any other provision of this Plan, the portion of the Participant's vested Account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the Account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than one hundred percent (100%) of the Participant's nonforfeitable Account balance (determined without regard to the preceding sentence) is payable to the surviving spouse, then the Account balance shall be adjusted by first reducing the nonforfeitable Account balance by the amount of the security used as repayment of the loan, and then determining' the benefit payable to the surviving spouse. (h) Amount of Loan. At the time the loan is made, the principal amount of the loan plus the outstanding balance (principal plus accrued interest) due on any other outstanding loans to the Participant or Benefi- ciary from the Plan and from all other plans of the Employer that are qualified employer plans under section 72(p)(4) of the Code shall not exceed the least of.' (1) $50,000, reduced by the excess (if any) of (a) The highest outstanding balance of loans from the Plan during the one (1) year period ending on the day before the date on which the loan is made, over MPP I0/25/00 (b) The outstanding balance of loans from the Plan on the date on which such loan is made; OF (2) The greater of (a) $10,000, or (b) One-half (1/2) of the value of the Participant's Nonforfeitable Interest in all of his/her Accounts under this Plan. For the purpose of the above limitation, all loans from all qualified employer plans under section 72(p)(4) of the Code are aggregated. (i) Application for Loan. The Participant must give the Employer adequate written notice, as determined by the Employer, of the amount and desired time for receiving a loan. No more than one (1) loan may be made by the Plan to a Participant in any calendar year. No loan shall be approved if an existing loan from the Plan to the Participant is in default to any extent. (j) Length of Loan. The terms of any loan issued or renegotiated after December 31,199.3, shall require the Participant to repay the loan in substantially equal installments of principal and interest, at least monthly, over a period that does not exceed five (5) years from the date of the loan; provided, however, that if the proceeds of the loan are applied by the Participant to acquire any dwelling unit that is to be used within a reasonable time (determined at the time the loan is made) after the loan is made as the principal residence of the Participant, the five (5) year limit shall not apply. In this event, the period of repaymem shall not exceed a reasonable period determined by the Employer. Principal installments and interest payments otherwise due may be suspended during an authorized leave of absence, if the promissory note so provides, but not beyond the original term permitted under this Subsection (j), with a revised payment schedule (within such term) instituted at the end of such period of suspension. (k) Prepayment. The Participant shall be permitted to repay the loan in whole or in part at any time prior to maturity, without penalty. (1) Note. The loan shall be evidenced by a promissory note executed by the Participant and delivered to the Employer, and shall bear interest at a reasonable rate determined by the Employer. (m) Security. The loan shall be secured by an assignment of that portion the Participant's right, title and interest in and to his/her Employer Contribution Account (to the extent vested), Participant Contribu- tion Account, and Portable Benefits Account that is equal to fifty percent (50%) of the Participant's Account (to the extent vested). (n) Assignment or Pledge. For the purposes of paragraphs (h) and (i), assignment or pledge of any portion of the Participant's interest in the Plan and a loan, pledge, or assignment with respect to any insurance contract purchased under the Plan, will be treated as a loan. (o) Other Terms and Conditions. The Employer shall fix such other terms and conditions of the loan as it deems necessary to comply with legal requirements, to maintain the qualification of the Plan and Trust under section 401 (a) of the Code, or to prevent the treatment of the loan for tax purposes as a distri- bution to the Participant. The Employer, in its discretion for any reason, may fix other terms and condi- tions of the loan, not inconsistent with the provisions of this Article. MPP 10/25/00 CO(~9 13.03 Parfidpant Loan Accounts. (a) Upon approval of a loan to a Participant by the Employer, an amount not in excess of the loan shall be transferred from the Participant's other investment fund(s), described in Section 6.05 of the Plan, to the Participant's Loan Account as of the A&ounting Date immediately preceding the agreed upon date on which the loan is to be made. (b) The assets of a Participant's Loan Account may be invested and reinvested only in promissory notes received by the Plan from the Participant as consideration for a loan permitted by Section 13.01 of the Plan or in cash. Uninvested cash balances in a Participant's Loan Account shall not bear interest. No person who is otherwise a fiduciary of the Plan shall be liable for any loss, or by reason of any breach, that results from the Participant's exercise of such control. (c) Repayment of principal and payment of interest shall be made by payroll deduction or, where repayment cannot be made by payroll deduction, by check, and shall be invested in one (1) or more other invest- ment funds, in accordance with Section 6.05 of the Plan, as of the next Accounting Date after payment thereof to the Trust. The amount so invested shall be deducted from the Participant's Loan Account. (d) The Employer shall have the authority to establish other reasonable rules, not inconsistent with the provisions of the Plan, governing the establishment and maintenance of Participant Loan Accounts. ~ PLAN AMENDMENT, TERMINATION AND OPTIONAL PROVISIONS 14.01 Amendment by Employer. The Employer reserves the right, subject to Section 14.02 of the Plan, to amend the Plan from time to time by either: (a) Filing an amended Adoption Agreement to change, delete, or add any optional provision, or (b) Continuing the Plan in the form of an amended and restated Plan and Trust. No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's ac- crued benefit. Notwithstanding the preceding sentence, a Participant's Account balance may be reduced to the extent permitted under section 412(c)(8) of the Code. For purposes of this paragraph, a Plan amendment which has the effect of decreasing a Participant's Account balance or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee's right to his/her Employer-derived accrued benefit will not be less than his perc~-ntage computed under the plan without regard to such amend- ment. The Employer may (i) change the choice of options in the Adoption Agreement, (2) add overriding language in the Adoption Agreement when such language is necessary to satisfy sections 415 or 416 of the Code because of the required aggregation of multiple plans, and (3) add certain model amendments published by the Internal Revenue Service. 14.02 Amendment of Vesting Schedule. If the Plan's vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of the Participant's nonforfeitable percentage, each Participant may elect, within a reasonable period after the adoption of the amendment or change, to have the nonforfeitable percentage computed under the Plan without regard to such amendment or change. MPP 10/25/00 ~(~t4.) The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of: (a) Sixty (60) days after the amendment is _adopted; (b) Sixty (60) days after the amendment becomes effective; or (c) Sixty (60) days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator. 14.03 Termination by Employer. The Employer reserves the right to terminate this Plan. However, in the event of such termination no part of the Trust shall be used or diverted to any purpose other than for the exclusive benefit of the Participants or their Beneficiaries, except as provided in this Section. Upon Plan termination or partial termination, all Account balances shall be valued at their fair market value and the Participant's right to his/her Employer Contribution Account shall be one hundred percent (100%) vested and nonforfeitable. Such amount and any other amounts held in the Participant's other Accounts shall be maintained for the Participant until paid pursuant to the terms of the Plan. Any amounts held in a suspense account, after all liabilities of the Plan to Participants and Beneficiaries have been satisfied or provided for, shall be paid to the Employer in accordance with the Code and regulations thereunder. In the event that the Commissioner of Internal Revenue determines that the Plan is not initially qualified under the Internal Revenue Code, any contribution made by the Employer incident to that initial qualification must be returned to the Employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the Employer's return for the year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. 14.04 Discontinuance of Contributions. A permanent discontinuance of contributions to the Plan by the Em- ployer, unless an amended and restated Plan is established, shall constitute a Plan termination. 14.05 Amendment by Plan Administrator. The Plan Administrator may amend this Plan upon thirty (30) days writ-ten notification to the Employer; provided, however, that any such amendment must be for the express purpose of maintaining compliance with applicable federal laws and regulations of the Internal Revenue Service. Such amend- ment shall become effective unless, within such 30-day period, the Employer notifies the Administrator, in writing, that it disapproves such amendment, in which case such amendment shall not become effective. In the event of such disapproval, the Administrator shall be under no obligation to continue acting as Administrator hereunder. 14.06 Optional Provisions. Any provision which is_optional under this Plan shall become effective if and 9nly if elected by the Employer and agreed to by the Plan Administrator. X~. ADMINISTRATION 15:01 Powers of the Employer. The Employer shall have the following powers and duties: (a) To appoint and remove, with or without cause, the Plan Administrator; (b) To amend or terminate the Plan pursuant to the provisions of Article XIV; (c) To appoint a committee to £acilitate administration of the Plan and communications to Participants;~ MPP 10/25/00 ~7/~ ) (d) To decide all questions of eligibility (1) for Plan participation, and (2) upon appeal by any Participant, Employee or Beneficiary, for the payment of benefits; (e) To engage an independent qualified public accountant, when required to do so by law, to prepare an- nually the audited financial statements ~f the Plan's operation; (f) To take all actions and to communicate to the Plan Administrator in writing all necessary information to carry out the terms of the Plan and Trust; and (g) To notify the Plan Administrator in writing of the termination of the Plan. 15.02 Dudes of the Plan Administrator. The Plan Administrator shall have the following powers and duties: (a) To construe and interpret the provisions of the Plan; (b) To maintain and provide such returns, reports, schedules, descriptions, and individual Account state- ments, as are required by law within the times prescribed by law; and to furnish to the Employer, upon request, copies of any or all such materials, and further, to make copies of such instruments, reports, descriptions, and statements as are required by law available for examination by Participants and such of their Beneficiaries who are or may be entitled to benefits under the Plan in such places and in such manner as required by law; (c) TO obtain from the Employer such information as shall be necessary for the proper administration of the Plan; (d) To determine the amount, manner, and time ofpayn;ent of benefits hereunder; (e) To appoint and retain such agents, counsel, and accountants for the purpose of properly administering the Plan; (f) To distribute assets of the Trust to each Participant and Beneficiary in accordance with Article X of the Plan; (g) To pay expenses from theTrust pursuant to Section 6.03 of the Plan; and (h) To do such other acts reasonably required to administer the Plan in accordance with its provisions or as may be provided for or required by law. 15.03 Protection of the Employer. The Employer shall nor be liable for the acts or omissions of the Plan Adminis- trator, but only to the extent that such acts or omissions do not result from the Employer's failure to provide accurate or timely information as required or necessary for proper administration of the Plan. 15.04 Protection of the Plan Administrator. The Plan Administrator may rely upon any certificate, notice or direction purporting to have been signed on behalf of the Employer which the Plan Administrator believes to have been signed by a duly designated official of the Employer. 15.05 Resignation or Removal of Plan Administrator. The Plan Administrator may resign at any time effective upon sixty (60) days prior written notice to the Employer. The Plan Administrator may be removed by the Employer at any time upon sixty (60) days prior written notice to the Plan Administrator. Upon the resignation or removal of the Plan Administrator, the Employer may appoint a successor Plan Administrator; failing such appointment, the F-mployer shall assume the powers and duties of Plan Administrator. Upon the resignation or removal of the Plan MI'p 10/25/00 Ct4 {0 ) Administrator, any Trust assets invested by or held in the name of the Plan Administrator shall be transferred to the trustee in cash or property, at fair market value, except that the return of Trust assets invested in a contract issued by an insurance company shall be governed by the terms of that contract. 15.06 No Termination Penalty. The Plan Administrator shall have no authority or discretion to impose any termina- tion penalty upon its removal. 15.07 Decisions oft. he Plan Administrator. All constructions, determinations, and interpretations made by the Plan Administrator pursuant to Section 15.02(a) or (d) shall be final and binding on all persons participating in the Plan, given deference in all courts of law to the greatest extent allowed by applicable law, and shall not be overturned or set aside by any court of law unless found to be arbitrary or capricious, or made in bad faith. XVL MISCELLANEOUS 16.01 Nonguarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employ- ment between the Employer and any Employee, or as a right of an Employee to be continued in the employment of the Employer, as a limitation of the right of the Employer to discharge any of its Employees, with or without cause. 16.02 Rights to mrtmt fl.~$ets. No Employee or Beneficiary shall have any right to, or interest in, any assets of the Trust upon termination of his/her employment or otherwise, except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Employee or Beneficiary out of the assets of the Trust. All payments of benefits as provided for in this Plan shall be made solely out of the assets of the Trust and none of the fiduciaries shall be liable therefor in any manner. 16.03 Nonalienation of Benefits. Except as provided in Section 16.04 of the Plan, benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The Trust shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. 16.04 Qualified Domestic Relations Order. Notwithstanding Section 16.03 of the Plan, amounts may be paid with respect to a Participant pursuant to a domestic relations order, but if and only if the order is determined to be a qualified domestic relations order within the meaning of section 414(p) of the Code or any domestic relations order entered before January 1, 1985. "' 16.05 Nonforfeitability of Benefits. Subject onlyxo the specific provisions of this Plan, nothing shall be deemed to '~' deprive a Participant of his/her right to the Nonforfeitable Interest to which he/she becomes entitled in accordance with the provisions of the Plan. 16.06 Incompetency of Payee. In the event any benefit is payable to a minor or incompetent, to a person otherwise under legal disability, or to a person who, in the sole judgment of the Employer, is by reason of advanced age, illness, or other physical or mental incapacity incapable of handling the disposition of his/her property, the Employer may apply the whole or any part of such benefit directly to the care, comfort, maintenance, support, educa-tion, or use of such person or pay or distribute the whole or any part of such benefit to: (a) The parent of such person; (b) The guardian, committee, or other legal representative, wherever appointed, of such person; MPP 10/25/00 (c) The person with whom such person resides; (d) Any person having the care and control of such person; or (e) Such person personally. The receipt of the person to whom any such payment or distribution is so made shall be full and complete discharge therefor. 16.07 Inability to Locate Payee. Anything to the contrary herein notwithstanding, if the Employer is unable, after reasonable effort, to locate any Participant or Beneficiary to whom an amount is payable hereunder, such amount shall be forfeited and held in the Trust for application against the next succeeding Employer Contribution or contributions required to be made hereunder. Notwithstanding the foregoing, however, such amount shall be reinstated, by means of an additional Employer contribution, if and when a claim for the forfeited amount is subsequently made by the Participant or Beneficiary or if the Employer receives proof of death of such person, satisfactory to the Employer. To the extent not inconsistent with applicable law, any benefits lost by reason of escheat under applicable state law shall be considered forfeited and shall not be reinstated. 16.08 Mergers, Consolidations, and Transfer of Assets. The Plan shall not be merged into or consolidated with any other plan, nor shall any of its assets or liabilities be transferred into any such other plan, unless each Participant in the Plan would (if the Plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer that is equal to or greater than the benefit he/she would have been entided to receive immediately before the merger, consolidation, or transfer (if the Plan had then terminated). 16.09 Employer Records. Records of the Employer as to an Employee's or Participant's Period of Service, termina- tion of service and the reason therefor, leaves of absence, reemployment, Earnings, and Compensation will be condu- sive on all persons, unless determined to be incorrect. 16.10 Gender and Number. The masculine pronoun, whenever used herein, shall indude the feminine pronoun, and the singular shall indude the plural, except where the context requires otherwise. 16.11 Applicable Law. The Plan shall be construed under the laws of the State where the Employer is located, except to the ~tent superseded by federal law. The Plan is established with the intent that it meets the requirements under the Code. The provisions of this Plan shall be interpreted in conformity with these requirements. In the event of any conflict between the Plan and a policy or contract issued hereunder, the Plan provisions shall control; provided, however, no Plan amendment shall supersede an existing policy or contract unless such amendment is required to maintain qualification under section 401 (a) and 414(d) of the Code. MPP 10/25/00 ~/4~) DECLARATION OF TRUST DECLARATION OF TRUST This Declaration of Trust (the "Group Trust Agreement") is made as of the 19th day of May, 2001, by VantageTrust Company, which declares itself to be the sole Trustee of the trust hereby created. WHEREAS, the ICMA Retirement Trust was created as a vehicle for the commingling of the assets of governmental plans and governmental units described in Section 818(a)(6) of the Internal Revenue Code of 1986, as amended, pursuant to a Declaration of Trust dated October 4, 1982, as subsequently amended, a copy of which is attached hereto and incorporated by reference as set out below (the "ICMA Declaration"); and WHEREAS, the trust created hereunder (the "Group Trust") is intended to meet the requirements of Revenue Ruling 81-i00, 1981-1 C.B. 326, and is established as a common trust fund within the meaning of Section 391:1 of Title 35 of the New Hampshire Revised Statutes Annotated, to accept and hold for investment purposes the assets of the Deferred Compensation and Qualified Plans held by and through the ICMA Retirement Trust. NOW, THEREFORE, the Group Trust is created by the execution of this Declaration of Trust by the Trustee and is established with respect to each Deferred Compensation and Qualified Plan by the transfer to the Trustee of such Plan's assets in the ICMA Retirement Trust, by the Trustees thereof, in accord with the following provisions: 1. Incorporation oflCMA Declaration by Reference; ICMA By-Laws. Except as otherwise provided in this Group Trust Agreement, and to the extent not inconsistent herewith, all provisions of the ICMA Dedaration are incorporated herein by reference and made a part hereof, to be read by substituting the Group Trust for the Retirement Trust and the Trustee for the Board of Trustees referenced therein. In this respect, unless the context clearly indicates otherwise, all capitalized terms used herein and defined in the ICMA Declaration have the meanings assigned to them in the tCMA Declaration. In addition, the By- Laws of the ICMA Retirement Trust, as the same may be amended from time-to-time, are adopted as the By-Laws of the Group Trust to the extent not inconsistent with the terms of this Group Trust Agreement. Notwithstanding the foregoing, the terms of the ICMA Declaration and By-Laws are further modified with respect to the Group Trust created hereunder, as follows: (a) any reporting, distribution, or other obligation of the Group Trust vis-h-vis any Deferred Compensation Plan, Qualified Plan, Public Employer, Public Employer Trustee, or Employer Trust shall be deemed satisfied to the extent that such obligation is undertaken by the ICMA Retirement Trust (in which case the obligation of the Group Trust shall run to the ICMA Retirement Trust); and (b) all provisions dealing with the number, qualification, election, term and nomination of Trustees shall not apply, ar~ all other provisions relating to trustees (including, but not limited to, resignation and removal) shall be interpreted in a manner consistent with the appointment of a single corporate trustee. 2. Compliance with Revenue Procedure 81-100. The requirements of Revenue Procedure 81-100 are applicable to the Group Trust as follows: (a) Pursuant to the terms of this Group Trust Agreement and Article X of the By-Laws, invest- ment in the Group Trust is limited to assets of Deferred Compensation and Qualified Plans, investing through the ICMA Retirement Trust. (b) Pursuant to the By-Laws, the Groop Trust is adopted as a part of each Qualified Plan that invests herein through the ICMA P, etircment Trust. (c) In accord with thc By-Layvs, that part of the Group Trust's corpus or income which equitably belongs m any Deferred Compensation and Qualified Plan may not be used for or diverted to any purposes other than for thc exclusive benefit of the Plan's employees or their benefici- aries who arc entitled to benefits under such Plan. (d) In accord with the By-Laws, no Deferred Compensation Plan or Qualified Plan may assign any or part of its equity or interest in the Group Trust, and any purported assignment of such equi ,fy or interest shall be void. 3. Governing Law. Except as otherwise required by federal, state or local law, this Declaration of Trust (including the ICMA Declaration to the extent incorporated herein) and the Group Trust created hereun- der shall be construed and determined in accordance with applicable laws of the State of New Hampshire. 4. Judicial Proceedings. The Trustee may at any time initiate an action or proceeding in the appropriate state or federal courts within or outside the state of New Hampshire for the setdcment of its accounts or for the determination of any question of construction which may arise or for instructions. IN VfflTNESS WHEREOF, the Trustee has executed this Declaration of Trust as of the day and year first above written. VANTAGETRUST COMPANY Name: Paul E Gallagher Title: Assistant Secretary City of Federal Way MEMORANDUM Date: January 15, 2002 To: Finance, Economic Development and Regional Affairs Committee Via: David Mose~Manager From: Mary McDougal, Human Resources Manager I¥-~5' Subject: 457 Deferred Compensation Plan Changes Background: A number of changes to the laws governing Section 457 deferred compensation plan changes were recently passed as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). These changes are related to contribution provisions, portability provisions, and distribution provisions. Examples of key changes include an increase in the contribution limit to $11,000 in 2002, the "catch up" limit is raised to twice the limit in effect for normal contributions, a new age 50 catch up provision is added, portability of retirment assets between retirement plans and govern_mental 457 plans and traditional IRAs is allowed, and there is more flexibility in taking distributions from the plan An overview of the changes and the revised plan and trust document are attached for your review. In most cases, these provisions become effective on January 1, 2002. The City has reviewed the new ICMA Retirement Corporation 457 deferred compensation plan document, which includes language implementing the changes in the law. The City Attorney's Office has reviewed the changes to determine whether any state or local laws or regulations must be amended before the changes to the 457 plan become effective, and have concluded that none are necessary. Therefore, the City Council may take action to implement 457 law changes. Attached is a draft resolution for your consideration. Committee Action Recommended The Finance, Economic Development and Regional Affairs Council Committee moves to full Council to adopt the attached resolution which implements changes in the laws for 457 deferred compensation plans effective January 1, 2002, and replaces Resolution 90- 28 establishing a deferred compensation plan for the City and Resolution 97-241 amending the City's deferred compensation plan. RESOLUTION NO. A RESOLUTION OF THE CITY cOLrNCIL OF THE CITY OF FEDEP~AL WAY, WASHINGTON, AMENDING THE CITY'S DEFERRED COMPENSATION PLAN (AMENDS NO.90-28 and 97-241). NAME OF EMPLOYER: CITY OF FEDERAL WAY, WASHINGTON EMPLOYER PLAN NUMBER: 3350 WHEREAS, the City of Federal Way ("City") has employees rendering valuable services; and WHEREAS, pursuant to Resolution No. 90-28 amended by Resolution No. 97-241 the City Council established a deferred compensation plan for such employees that serves the interest of the City 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 City 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 compensation plan; Res. #__, Page 1 NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDER3ZL WAY HEREBY RESOLVES AS FOLLOWS: Section 1. Plan Form. The City hereby amends and restates the deferred compensation plan (the "Plan") in the form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust, a copy of which is attached hereto and incorporated herein by this reference. Section 2. Plan Assets. The assets of the Plan shall be held in trust, with the City serving as trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The Trustee's beneficial ownership of Plan assets held in the ICMA Retirement Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. Section 3. Plan Loans. The Plan will not permit loans. Section 4. Plan Trustee. The City hereby agrees to serve as Trustee under the Plan. Section 5. Severability. If any section, sentence, clause or phrase of this resolution should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or Res. #__, Page 2 constitutionality of any other section, sentence, clause or phrase of this resolution. Section 6. Ratification. Any act consistent with the authority and prior to the effective date of the resolution is hereby ratified and affirmed. Section 7. Effective Date. This resolution shall be effective immediately upon passage by the Federal Way City Council. RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDEP~AL WAY, WASHINGTON, this day of , 2002. CITY OF FEDERAL WAY JEANNE A. BURBIDGE, MAYOR ATTEST: CITY CLERK, N. CHRISTINE GREEN, CMC APPROVED AS TO FORM: CITY ATTORNEY, BOB C. STERBANK FILED WITH THE CITY CLERK: Res. #__, Page 3 PASSED BY THE CITY COUNCIL: RESOLUTION NO. K: \Resolut ion\De f erredCMP2002 \2002 005 Res. #__, Page 4 C~) (~ ( C~.) Deferred Compensation Plan PLAN & TRU S T DOCUMENT ICMA RETIREMENT CORPORATION The public service Vantagepoint® since 1972 DEFERRED COMPENSATION PLAN & TRUST As Amended and Restated Effective January 1, 2001 ~trticle I. Purpose The Employer hereby establishes the Employer's Deferred Compensation Plan and Trust, hereafter referred to as the "Plan." The Plan consists of the provisions set forth in this document. The primary purpose of this Plan is to provide retirement income and other deferred benefits to the Employ- ees of the Employer and the Employees' Beneficiaries in accordance with the provisions of Section 457 of the Internal Revenue Code of 1986, as amended (the "Code"). This Plan shall be an agreement solely between the Employer and participating Employees. The Plan and Trust forming a part hereof are established and shall be maintained for the exclusive benefit of Participants and their Beneficiaries. No part of the corpus or income of the Trust shall revert to the Employer or be used for or diverted to purposes other than the exclusive benefit of Participants and their Beneficiaries. Article II. Definitions 2.01 Account: The bookkeeping account maintained for each Participant reflecting the cumulative amount of the Participant's Deferred Compensation, including any income, gains, losses, or increases or decreases in market value attributable to the Employer's i .... nvestment of the Parucxpant s Deferred Compensauon, and further reflecting any distributions to the Participant or the Participant's Beneficiary and any fees or expenses charged against such Participant's Deferred Compensation. 2.02 Accounting Date: Each business day that the New York Stock Exchange is open for trading, as pro- vided in Section 6.06 for valuing the Trust's assets. 2.03 Administrator= The person or persons named to carry out certain nondiscretionary administrative functions under the Plan, as hereinafter described. The Employer may remove any person as Administrator upon 60 days' advance notice in writing to such person, in which case the Employer shall name another person or persons to act as Administrator. The Administrator may resign upon 60 days' advance notice in writing to the Employer, in which case the Employer shall name another person or persons to act as Admin- istrator. 2.04 Automatic Distribution Date: Prior to January 1, 2002, ' ....... Automauc D~stnbuuon Date means the 60th day of the calendar year after the Plan YeaF of the Participant's Retirement or any other date permitted under the regulations promulgated under Code section 457. On and after January 1, 2002, "Automatic Distribution Date" means April 1 of the calendar year after the Plan Year the Participant attains age 70-1/2 or, if later, has a Severance Event. 2.05 Beneficiary: The person or persons designated by the Participant in his or her Joinder Agreement who shall receive any benefits payable hereunder in the event of the Participant's death. In the event that the Participant names two or more Beneficiaries, each Beneficiary shall be entitled to equal shares of the benefits payable at the Participant's death, unless otherwise provided in the art~opant s Jo~nder Agreement. If no beneficiary is designated in the Joinder Agreements if the Designated Beneficiary predeceases the Participant, or if the designated Beneficiary does not survive the Participant for a period of fifteen (15) days, then the estate of the Participant shall be the Beneficiary. If a married Participant resides in a community or marital property state, the Participant shall be responsible for obtaining appropriate consent of his or her spouse in the event the Participant designates someone other than his or her spouse as Beneficiary. 2.06 Deferred Compensation: The amount of~ormal Compensation otherwise payable to the Participant which the Participant and the Employer mutually agree to defer hereunder, any amount credited to a Partici- pant's Account by reason of a transfer under Section 6.09, a rollover under Section 6.10, or any other amount which the Employer agrees to credit to a Participant's Account. 2.07 Dollar Limitation: The applicable dollar amount within the meaning of Section 457(b)(2)(A) of the Code, as adjusted for the cost-of-living in accoMance with Section 457(e)(15) of the Code. 2.08 Employee: Any individual who provides services for the Employer, whether as an employee of the Employer or as an independent contractor, and who has been designated by the Employer as eligible to participate in the Plan. 2.09 Employer: , which is a political subdivision, agency or instrumentality of the [State/Commonwealth] of , within the meaning of Section 414(d) of the Code and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 2.10 457 Catch-Up Dollar Limitation.' Prior to January 1, 2002, "457 Catch-Up Dollar Limitation" means $15,000. On and after January 1, 2002, "457 Catch-Up Dollar Limitation" means twice the Dollar Limitation. 2.11 Indudlble Compensation: The amount of an Employee's compensation from the Employer for a taxable year that is attributable to services performed for the Employer and that is includible in the Employ- ee's gross income for the taxable year for federal income tax purposes as defined in Section 457(e)(5) of the Code; such term does not include any amount excludable from gross income under this Plan or any other plan described in Section 457(b) of the Code or any other amount excludable from gross income for federal income tax purposes. Includible Compensation shall be determined without regard to any community property laws. 2.12 Joinder Agreement: An agreement entered into between an Employee and the Employer, including any amendments or modifications thereof. Such agreement shall fix the amount of Deferred Compensation, specify a preference among the investment alternatives designated by the Employer, designate the Employee's Beneficiary or Beneficiaries, and incorporate the te[ms, conditions, and provisions of the Plan by reference. 2.13 Normal Compensation: The amount of Compensation which would be payable to a Participant by the Employer for a taxable year if no Joinder Agreement were in effect to defer compensation under this Plan. 2.14 Normal Limitation: The maximum amount of Deferred Compensation for any Participant for any taxable year (other than amounts referred to in Sections 6.09 and 6.10). 2.15 Normal Retirement Age: Age 70-1/2, unless the Participant has elected an alternate Normal Retire- ment Age by written instrument delivered to the Administrator prior to a Severance Event. A Participant's ( Normal Retirement Age determines the period during which a Participant may utilize the 457 Catch-Up Dollar Limitation of Section 5.02(b) hereunder. Once a Participant has to any extent utilized the catch-up limitation of Section 5.02(b), his Normal Retirement Age may nor be changed. Participant s alternate Normal Retirement Age may not be earlier than the earliest date that the Participant will become eligible to retire and receive unreduced retirement benefits under the Employer's basic retire- ment plan covering the Participant and may not be later than the date the Participant will attain age 70-1/2. If a Participant continues employment after attaining age 70-1/2, not having previously elected alternate Normal Retirement Age, the Participant's alternate Normal Retirement Age shall not be later than the mandatory retirement age, if any, established by the Employer, or the age at which the Participant actually has a Severance Event if the Employer has no mandatory retirement age. If the Participant will not become eligible to receive benefits under a basic retirement plan maintained by the Employer, the Participant's alternate Normal Retirement Age may not be earlier than age 55 and may not be later than age 70-1/2. 2.16 Partidpant.. Any Employee who has joined the Plan pursuant to the requirements of Article IV. 2.17 Percentage Limitation: Prior to January 1, 2002, the Percentage Limitation means 33 1/3 percent of the participant's Includible Compensation for the taxable year, which will ordinarily be equivalent to the lesser of the Dollar Limitation in effect for the taxable year or 25 percent of the Participant's Normal Com- pensation. After December 31, 2001, the Percentage Limitation means 100 percent of the participant's Includible Compensation for the taxable year, which will ordinarily be equivalent to the lesser of the Dollar Limitation in effect for the taxable year or 50 percent of the Participant's Normal Compensation. 2.18 Plan Year: The calendar year. 2.19 Retirement: The first date upon which both of the following shall have occurred with respect to a participant: Severance Event and attainment of age 65. 2.20 Severance Event: Prior to January 1, 2002, severance of the Participant's employment with the Em- p oyer that constitutes a separation from service" within the meaning of Section 402(e)(4)(D)(iii) of the Code. After December 31, 2001, a Severance Event means a severance of the Participant's employment with the Employer within the meaning of Section 457(d) (1) (A) (ii) of the Code. In general, a Participant shall be deemed to have experienced a Severance Event for purposes of this Plan when, in accordance with the established practices of the Employer, the employment relationship is consid- ered to have actually terminated. In the case ora Participant who is an independent contractor of the Em- ployer, a Severance Event shall be deemed to haxTe occurred when the Participant's contract under which services are performed has completely expired and terminated, there is no foreseeable possibility that the Employer will renew the contract or enter into a new contract for the Participant's services, and it is not anticipated that the Participant will become an Employee of the Employer, or such other events as may be permitted under the Code. 2.21 Trust: The Trust created under Article VI of the Plan which shall consist of all compensation deferred under the Plan, plus any income and gains thereon, less any losses, expenses and distributions to Participants and Beneficiaries. Article IlL Administration 3.01 Duties of the Employer: The Employer shall have the authority to make all discretionary decisions affecting the rights or benefits of Participants which may be required in the administration of this Plan. The Employer's decisions shall be afforded the maximum deference permitted by applicable law. 3.02 Duties of Administrator: The Administrator, as agent for the Employer, shall perform nondiscretionary administrative functions in connection with the Plan, including the maintenance of Par- ticipants' Accounts, the provision of periodic reports of the status of each Account, and the disbursement of benefits on behalf of the Employer in accordance with the provisions of this Plan. Article I~. Participation in the Plan 4.01 Initial Participation: An Employee may become a Participant by entering into a Joinder Agreement prior to the beginning of the calendar month in which the Joinder Agreement is to become effective to defer compensation not yet earned, or such other date as may be permitted under the Code. 4.02 Amendment of Joinder Agreement: A Participant may amend an executed Joinder Agreement to change the amount of Normal Compensation not yet earned which is to be deferred (including the reduc- tion of such future deferrals to zero). Such amendment shall become effective as of the beginning of the calendar month commencing after the date the amendment is executed, or such other date as may be per- mitted under the Code. A Participant may at any time amend his or her Joinder Agreement to change the designated Beneficiary, and such amendment shall become effective immediately. Article V. Limitations on Deferrals 5.01 Normal Limitation.. Except as provided in Section 5.02, the maximum amount of Deferred Com- pensation for any Participant for any taxable year, shall not exceed the lesser of the Dollar Limitation or the Percentage Limitation. 5.02 Catch-Up Limitations: (a) Catch-up Contributions for Participants Age 50 and Over: A Participant who has attained the age of 50 before the close of the Plan Year, and with respect to whom no other elective deferrals may be made to the Plan for the Plan Year by reason of the Normal Limitation of Section 5.01, may enter into a Joinder Agreement to make elective deferrals in addition to those permitted by the Normal Limitation in an amount not to exceed the lesser of (1) the applicable dollar amount as defined in Section 414(v) (2)(B) of th~ Code, as adjusted for the cost-of-living in accordance with Section 414(v) (2)(C) of the Code, or (2) the excess (if any) of (i) the Participant's compen- sation (as defined in Section 415(c)(3) of the Code) for the year, over (ii) any other elective deferrals of the Participant for such year which are made without regard to this Section 5.02(a). An additional contribution made pursuant to this Section 5.02(a) shall not, with respect to the year in which the contribution is made, be subject to any otherwise applicable limitation con- tained in Section 5.01 above, or be taken into account in applying such limitation to other contributions or benefits under the Plan or any other plan. This Section 5.02(a) shall not apply in any year to which Section 5.02(b) applies. The provisions of this Section 5.02(a) of the Plan shall only apply on and after January 1, 2002. (b) Last Three Years Catch-up Contribution: For each of the last three (3) taxable years for a Partici- pant ending before his or her attainment of Normal Retirement Age, the maximum amount of Deferred Compensation shall be the lesser of.' (1) the 457 Catch-Up Dollar Limitation, or (2) the sum of (i) the Normal Limitation for the taxable year, and (ii) the Normal Limitation for each prior taxable year of the Participant commencing after 1978 less the amount of the Partici- pant's Deferred Compensation for such prior taxable years. A p[ior taxable year shall be taken into account under the preceding sentence only if (x) the Participant was eligible to participate in the Plan for such year (or in any other eligible deferred compensation plan established under Section 457(b) of the Code which is properly taken into account pursuant to regulations under Section 457), and (y) compensation (if any) deferred under the Plan (or such other plan) was subject to the Normal Limitation. 5.03 Other Plans: Notwithstanding any provision of thc Plan to the contrary, the amount excludible from a Participant's gross income under this Plan or any other eligible deferred compensation plan under Section 457(b) of the Code shall not exceed the limits set forth in Sections 457(b) and 414(v) of the Code. Prior to January 1, 2002, the limits under Section 457(b) of the Code described in the first sentence of this Section 5.03 shall be further reduced by any amount excluded from gross income under Sections 401 (k), 402(e)(3), 402(h)(1)(B), and 403(b) of the Code, or any amount with respect to which a deduction is allowable by reason of a contribution to an organization described in Section 501 (c)(18) of the Code. ArticleVI. Trust and Investment of Accounts 6.01 Investment of Deferred Compensadom A Trust is hereby created to hold all the assets of the Plan for the exclusive benefit of Participants and Beneficiaries, except that expenses and taxes may be paid from the Trust as provided in Section 6.03. The trustee shall be the Employer or such other person that agrees to act in that capacity hereunder. 6.02 Investment Powers: The trustee or the Administrator, acting as agent for the trustee, shall have the powers listed in this Section with respect to investment of Trust assets, except to the extent that the invest- ment of Trust assets is directed by Participants, pursuant to Section 6.05. (a) To invest and reinvest the Trust without distinction between principal and income in common or preferred stocks, shares of regulated investment companies and other mutual funds, bonds, loans, notes, debentures, certificates of deposit, contracts with insurance companies including but not limited to insurance, individual or group annuity, deposit administration, guaranteed interest contracts, and deposits at reasonable.rates of interest at banking institutions including but not limited to savings accounts and certificates of deposit. Assets of the Trust may be invested in securities that involve a higher degree of risk than investments that have demonstrated their investment performance over an extended period of time. (b) To invest and reinvest all or any part of the assets of the Trust in any common, collective or commingled trust fund that is maintained by a bank or other institution and that is available to Employee plans described under Sections 457 or 401 of the Code, or any successor provisions thereto, and during the period of time that an investment through any such medium shall exist, to the extent of participation of the Plans the declaration of trust of such commonly collective, or commingled trust fund shall constitute a part of this Plan. (c) To invest and reinvest all or any part of the assets of the Trust in any group annuity, deposit administration or guaranteed interest contract issued by an insurance company or other financial institution on a commingled or collective basis with the assets of any other 457 plan or trust qualified under Section 401 (a) of the Code. or any other plan described in Section 401 (a)(24) of the Code, and such contract may be held or issued in the name of the Administrator, or such custodian as the Administrator may appoint, as agent and nominee for the Employer. During the period that an investment through any such contract shall exist, to the extent of participation of the Plan, the terms and conditions of such contract shall constitute a part of the Plan. (d) To hold cash awaiting investment and to keep such portion of the Trust in cash or cash balances, without liability for interest, in such amounts as may from time to time be deemed to be reason- able and necessary to meet obligations under the Plan or otherwise to be in the best interests of the Plan. (e) To hold, to authorize the holding of, and to register any investment to the Trust in the name of the Plan, the Employer, or any nominee or agent of any of the foregoing, including the Adminis- trator, or in bearer form, to deposit or arrange for the deposit of securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, and to organize corporations or trusts under the laws of any jurisdiction for the purpose of acquiring or holding tide to any property for the Trust, all with or without the addition of words or other action to indicate that property is held in a fiduciary or representative capacity but the books and records of the Plan shall at all times show that all such investments are part of the Trust. (f) Upon such terms as may be deemed advisable by the Employer or the Administrator, as the case may be, for the protection of the interests of the Plan or for the preservation of the value of an investment, to exercise and enforce by suit for legal or equitable remedies or by other action, or to waive any right or claim on behalf of the Plan or any default in any obligation owing to the Plan, to renew, extend the time for payment of, agree to a reduction in the rate of interest on, or agree to any other modification or change in the terms of any obligation owing to the Plan, to settle, compromise, adjust, or submit to arbitration any claim or right in favor of or against the Plans to exercise and enforce any and all rights of foreclosure, bid for property in foreclosure, and take a deed in lieu of foreclosure with or without paying consideration therefor, to commence or defend suits or other legal proceedings whenever any interest of the Plan requires it, and to represent the Plan in all suits or legal proceedings in any court of law or equity or before any body or tribunal. (g) To employ suitable consultants, depositories, agents, and legal counsel on behalf of the Plan. (h) To open and maintain any bank account or accounts in the name of the Plan, the Employer, or any nominee or agent of the foregoing, including the Administrator, in any bank or banks. (i) To do any and all other acts that may be deemed necessary to carry out any of the powers set forth herein. 6.03 Taxes and Expenses: All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon the Plan, or in respect to the Trust, or the income thereof, and all commissions or acquisitions or dispositions of securities and similar expenses of investment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable compensation of the Administrator, as may be agreed upon from time to time by the Employer and the Administrator, and reimbursement for reasonable expenses incurred by the Administrator in performance of irs duties hereunder (including but not limited to fees for legal, accounting, investment and custodial services) shall also be paid from the Trust. 6.04 Payment of Beneflts: The payment of benefits from the Trust in accordance with the terms of the Plan may be made by the Administrator, or by any custodian or other person so authorized by the Employer to make such disbursement. The Administrator, custodian or other person shall not be liable with respect to any distribution of Trust assets made at the direction of the Employer. 6.05 Investment Funds: In accordance with uniform and nondiscriminatory rules established by the Employer and the Administrator, the Participant may direct his or her Accounts to be invested in one (1) or more investment funds available under the Plan; provided, however, that the Participant's investment direc- tions shall not violate any investment restrictions established by the Employer. Neither the Employer, the Administrator, nor any other person shall be liable for any losses incurred by virtue of following such direc- tions or with any reasonable administrative delay in implementing such directions. 6.06 Valuation of Accounts: As of each Accounting Date, the Plan assets held in each investment fund offered shall be valued at fair market value and the investment income and gains or losses for each fund shall be determined. Such investment income and gains or losses shall be allocated proportionately among all Account balances on a fund-by-fund basis. The allocation shall be in the proportion that each such Account balance as of the immediately preceding Accounting Date bears to the total of all such Account balances as of that Accounting Date. For purposes of this Article, all Account balances include the Account balances of all Participants and Beneficiaries. 6.07 Partidpant Loan Accounts: Participant Loan Accounts shall be invested in accordance with Section 8.03 of the Plan. Such Accounts shall not share in any investment income and gains or losses of the invest- ment funds described in Sections 6.05 and 6.06. 6.08 Crediting of Accounts: The Participant's Account shall reflect the amount and value of the invest- ments or other property obtained by the Employer through the investment of the Participant's Deferred Compensation pursuant to Sections 6.05 and 6.06. It is anticipated that the Employer's investments with respect to a Participant will conform to the investment preference specified in the Participant's Joinder Agreement, but nothing herein shall be construe~l to require the Employer to make any particular invest- ment of a Participant's Deferred Compensation. Each Participant shall receive periodic reports, not less frequently than annually, showing the then current value of his or her Account. 6.09 Transfers: (a) IncomingTransfers: A transfer may be accepted from an eligible deferred compensation plan maintained by another employer and credited to a Participant's Account under the Plan if (i) the Participant has had a Severance Event with that employer and become an Employee of the Employer, and (ii) the other employer's plan provides that such transfer will be made. The Employer may require such documentation from the predecessor plan as it deems necessary to effectuate the transfer in accordance with Section 457(e)(10) of the Code, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457(b) of the Code, and to assure that transfers are provided for under such plan. The Employer may refuse to accept a transfer in the form of assets other than cash, unless the Employer and the Administra- tor agree to hold such other assets under the Plan. Any such transferred amount shall riot be treated as a deferral subject to the limitations of Article V, except that, for purposes of applying the limitations of Sections 5.01 and 5.02, an amount deferred during any taxable year under the plan from which the transfer is accepted shall be treated as if it has been deferred under this Plan during such taxable year and compensation paid by the transferor employer shall be treated as if it had been paid by the Employer. (b) Outgoing Transfers: An amount may be transferred to an eligible deferred compensation plan maintained by another employer, and charged to a Participant's Account under this Plan, if (i) the Participant has a Severance Event with the Employer and becomes an employee of the other employer, (ii) the other employer's plan provides that such transfer will be accepted, and (iii) the Participant and the employers have signed such agreements as are necessary to assure that the Employer's liability to pay benefits to the Participant has been discharged and assumed by the other employer. The Employer may require such documentation from the other plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457(b) of the Code, and to assure that transfers are provided for under such plan. Such transfers shall be made only under such circumstances as are permit- ted under Section 457 of the Code and the regulations thereunder. 6.10 Eligible Rollover Distributions: (a) Effective Date: This Section 6.10 is effective January 1, 2002. (b) Incoming Rollovers: An eligible rollover distribution may be accepted from an eligible retire- ment plan maintained by another employer and credited to a Participant's Account under the Plan. The Employer may require such documentation from the distributing plan as it deems necessary to effectuate the rollover in accordance with Section 402 of the Code and to confirm that such plan is an eligible retirement plan within the meaning of Section 402(c)(8)(B) of the Code. The Plan shall separately account for eligible rollover distributions from any eligible retirement plan that is not an eligible deferred compensation plan described in Section 457(b) of the Code maintained by an eligible governmental employer described in Section 457(e)(1)(A) of Code. (c) Outgoing Rollovers: Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an eligible rollover distri- bution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (d) Definitions: (1) Eligible Rollover Distribution: An eligible rollover distribution is 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 ora series of sub- stantially 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 Sec- tions 401(a)(9) and 457(d)(2) of the Code; and any distribution made as a result of an unforeseeable emergency_of the employee. For purposes of distributions from other eligible retirement plans rolled over into this Plan, the term eligible rollover distribu- tion shall not include the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (2) Eligible Retirement Plan: An eligible retirement plan 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 annuity plan described in Sections 403(a) or 403(b) of the Code, a qualified trust described in Section 401 (a) of the Code, or an eligible deferred compensation plan described in Section 457(b) of the Code which is maintained by an eligible governmental employer described in Section 457(e)(1)(A) of the Code, that accepts the distributee's eligible rollover distribution. (3) Distributee: 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 em- ployee'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 distriburees with regard to the interest of the spouse or former spouse. (4) Direct Rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. 6.11 Trustee-to-Trustee Transfers to Purchase Permissive Service Credit: All or a portion of a Partici- pant's Account may be transferred directly to the trustee ora 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, within the meaning of Section 457(e) (17) of the Code. 6.12 Treatment of Distributions of Amounts Previously Rolled Over From 401(a) and 403(b) Plans and IR/la. For purposes of Section 72(t) of the Code, a distribution from this Plan shall be treated as a distribution from a qualified retirement plan described in Section 4974(c)(1) of the Code to the extent that such distribution is attributable to an amount transferred to an eligible deferred compensation plan from a qualified retirement plan (as defined in Section 4974(c) of the Code). 6.13 Deemed IRAs: Effective for Plan Years beginning after December 31, 2002, the Employer may elect to allow Employees to make voluntary employee contributions to a separate account or annuity established under the Plan that complies with the requirements of Code section 408 (q) and any regulations promul- gated thereunder. Such accounts or annuities shall meet the applicable requirements of Code sections 408 or 408A and shall be treated as an individual retirement plan that is not part of the Plan. 6.14 Employer Liability: In no event shall the Employer's liability to pay benefits to a Participant under this Plan exceed the value of the amounts credited to the Participant's Account; neither the Employer nor the Administrator shall be liable for losses arising from depreciation or shrinkage in the value of any invest- ments acquired under this Plan. Artlde VII. Benefits 7.01 Retirement Benefits and Election on Severance Event: (a) General Rule: Except as otherwise provided in this Article VII, the distribution of a Participant's Account shall commence as of a Participant's Automatic Distribution Date, and the distribution of such benefits shall be made in accordance with one of the payment options described in Section 7.02. Notwithstanding the foregoing, but subject to the following paragraphs of this Section 7.01, the Participant may elect following a Severance Event to have the distribution of benefits commence on a fixed determinable date other than that described in the preceding sentence, but not later than April I of the year following the year of the Participant's Retirement or attainment of age 70-1/2, whichever is later. Prior to January 1, 2002, an election made pursuant to the preceding sentence shall not be valid unless such election is made not less than 30 days prior to the date that the distribution of a Participant's Account would otherwise com- mence. (b) Additional Delay in Distribution: Prior to January 1, 2002, the Participant may elect to defer the commencement of distribution of benefits to a £uced determinable date later than the date provided in Section 7.01(a), but not later than April 1 of the year following the year of the Participant's retirement or attainment of age 70 1/2, whichever is later, provided, however, that (a) such election is made after the 61st day following the Participant's Severance Event and before commencement of distributions, (b) the Participant may make only one (1) such election, and (c) such election is made not less than 30 days prior to the date the distribution ora Participant's Account would otherwise commence. On or after January 1, 2002, the Participant's right to change his or her election with respect to commencement of the distribution of benefits shall not be restrained by this Section 7.01. Notwithstanding the foregoing, the Administrator, in order to ensure the orderly administration of this provision, may establish a deadline after which such election to defer the commencement of distribution of benefits shall not be allowed. (c) Loans: Notwithstanding the foregoing provisions of this Section 7.01, no election to defer the commencement of benefits after a Severance Event shall operate to defer the distribution of any amount in the Participant's Loan Account in the event of a default of the Participant's loan. 7.02 Payment Options: As provided in Sections 7.01, 7.04 and 7.05, a Participant may elect to have value of the Participant's Account distributed in accordance with one of the following payment options, provided that such option is consistent with the limitations set forth in Section 7.03. (a) Equal monthly, quarterly, semi-annual or annual payments in an amount chosen by the Partici- pant, continuing until his or her Account is exhausted; (b) One lump-sum payment; (c) Approximately equal monthly, quarterly, semi-annual or annual payments, calculated to con- tinue for a period certain chosen by the Participant. (d) Annual Payments equal to the minimum distributions required under Section 401 (a)(9) of the Code, including the incidental death benefit requirements of Section 401 (a)(9)(G), over the life expectancy of the Participant or over the life expectancies of the Participant and his or her Beneficiary. (e) Payments equal to payments made by the issuer of a retirement annuity policy acquired by the Employer. (f) A split distribution under which, payments under options (a), (b), (c) or (e) commence or are made at the same time, as elected by the Participant under Section 7.01, provided that all payments commence (or are made) by the latest benefit commencement date under Section 7.01. (g) Any other payment option elected by the Participant and agreed to by the Employer and Ad- ministrator. A Participant's selection of a payment option made after December 31, 1995, under Subsections (a), (c), or (g) above may include the selection of an automatic annual cost-of-living increase. Such increase will be based on the rise in the Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of the last year in which a cost-of-living increase was provided to the third quarter of the current year. Any increase will be made in periodic payment checks beginning the following January. If, prior to January 1, 2002, a Participant made a timely election of a payment date but failed to specify a payment option or failed to make a timely election of both payment date and option, and as a result, was defaulted to benefit commencement at age 65, or such other date as the Participant may have specified, benefits shall be paid annually in the amount of $100 per year commencing at age 65 or the date specified by the Participant until the Participant reaches age 70-1/2. When the Participant reaches age 70-1/2, payments shall be made in accordance with Code section 401 (a)(9) and the regulations thereunder. 7.03 Limitation on Options: No payment option may be selected by a Participant under subsections 7.02(a) or (c) unless the amount of any installment is not less than $100. No payment option may be selected by a Participant under Sections 7.02, 7.04, or 7.05 unless it satisfies the requirements of Sections 401 (a)(9) and 457(d)(2) of the Code, including that payments commencing before the death of the Partici- pant shall satisfy the incidental death benefit requirements under Section 401 (a)(9)(G). 7.04 Post-Retirement Death Benefits: (a) Should the Participant die after he/she has begun to receive benefits under a payment option, the remaining payments, if any, under the payment option shall continue until the Administrator receives notice of the Participant's death. Upon notification of the Participant's death, benefits shall be payable to the Participant's_Beneficiary commencing not later than December 31 of the year following the year of the Participant's death, provided that the Beneficiary may elect to begin benefits earlier than that date. (b) If the Beneficiary has not attained age 80 at the time payments commence, he or she may elect to receive payments in a single lump-sum payment or in equal or approximately equal monthly, quarterly, semi-annual or annual payments continuing over a period not to exceed ten years from the first payment. The Beneficiary also may elect to receive a partial lump-sum payment fol- lowed by monthly, quarterly, semi-annual or annual installments, provided that all payments are made within a period often years from the initial payment. In the event that the Beneficiary is age 80 or over, the remaining balance in the Participant's account will be paid to the Beneficiary in a single lump sum. (c) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the Participant's Account shall be paid to the estate of the Beneficiary in a lump sum. In the event that the Participant's estate is the Beneficiary, payment shall be made to the estate in a lump sum. 7.05 Pre-Retirement Death Benefits: (a) Should the Participant die before he or she has begun to receive the benefits provided by Section 7.01, the value of the Participant's Account shall be payable to the Beneficiary commencing not later than December 31 of the year following the year of the Participant's death, provided that the Beneficiary may elect to begin benefits earlier than that date. (b) If the Beneficiary has not attained age 80 at the time payments commence, he or she may elect to receive payments in a single lump-sum payment or in equal or approximately equal monthly, quarterly, semi-annual or annual payments continuing over a period not to exceed ten years from the first payment. The Beneficiary also may elect to receive a partial lump-sum payment followed by monthly, quarterly, semi-annual or annual installments, provided that all payments are made within a period often years from the initial payment. In the event that the Beneficiary is age 80 or over, the remaining balance in the Participant's account will be paid to the Beneficiary in a single lump sum. (c) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the Participant's Account shall be paid to the estate of the Beneficiary in a lump sum. In the event that the Participant's estate is the Beneficiary, payment shall be made to the estate in a lump sum. 7.06 Unforeseeable Emergencies: (a) In the event an unforeseeable emergency occurs, a Participant may apply to the Employer to receive that part of the value of his or her Account that is reasonably needed to satisfy the emer- gency need. If such an application is approved by the Employer, the Participant shall be paid only such amount as the Employer deems necessary to meet the emergency need, but payment shall not be made to the extent that the financial hardship may be relieved through cessation of deferral under the Plan, insurance or other reimbursement, or liquidation of other assets to the extent such liquidation would not itself cause severe financial hardship. (b) An unforeseeable emergency shall be deemed to involve only circumstances of severe financial hardship to the Participant resulting from a sudden unexpected illness, accident, or disability of the Participant or of a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar and extraoMinary unforeseeable circumstances arising as a result of events beyond the control of the Participant. The need to send a Participant's child to college or to purchase a new home shall not be considered unforesee- able emergencies. The determination as to whether such an unforeseeable emergency exists shall be based on the merits of each individual case. 7.07 De Minimis Accounts: Notwithstanding the foregoing provisions of this Article, prior to January 1, 2002, if the value of a Participant's Account does not exceed the dollar limit under Section 41 l(a)(11)(A) of the Code as described in Section 457(e)(9)(A) of the Code and (a) no amount has been deferred under the Plan with respect to the Participant during the 2-year period ending on the date of the distribution and (b) there has been no prior distribution under the Plan to the Participant pursuant to this Section 7.07, the Participant may elect to receive or the Employer may involuntarily distribute the Participant's entire Account without the consent of the Participant. Such distribution shall be made in a lump sum. On or after January 1, 2002, if the value of a Participant's Account is less than $1,000, the Participant's Account shall be paid to the Participant in a single lump sum distribution, provided that (a) no amount has been deferred under the Plan with respect to the Participant during the 2-year period ending on the date of the distribution and (b) there has been no prior distribution under the Plan to the Participant pursuant to this Section 7.07. If the value of the Participant's Account is at least $I,000 bur not more than the dollar limit under Code Section 411 (a)(l 1)(A) and (a) no amount has been deferred under the Plan with respect to the Participant during the 2-year period ending on the date of the distribution and (b) there has been no prior distribution under the Plan to the Participant pursuant to this Section 7.07, the Participant may elect to receive his or her entire Account. Such distribution shall be made in a lump sum. Arfide VIII. Loans to Participants 8.01 Availability of Loans to Participants: (a) The Employer may elect to make loans available to Participants in this Plan. If the Employer has elected to make loans available to Participants, a Participant may apply for a loan from the Plan subject to the limitations and other provisions of this Article. (b) The Employer shall establish written guidelines governing the granting of loans, provided that such guidelines are approved by the Administrator and are not inconsistent with the provisions of this Article, and that loans are made available to all Participants on a reasonably equivalent basis. 8.02 Terms and Conditions of Loans to Partidpants: Any loan by the Plan to a Participant under Section 8.01 of the Plan shall satis~ the following requirements: (a) Availability. Loans shall be made available to all Participants on a reasonably equivalent basis. (b) Interest Rate. Loans must be adequately secured and bear a reasonable interest rate. (c) Loan Limit. No Participant loan shall exceed the present value of the Participant's Account. (d) Foreclosure. In the event of default on any installment payment, the outstanding balance of the loan shall be a deemed distribution. In such event, an actual distribution of a plan loan offset amount will not occur until a distributable event occurs in the Plan. (e) Reduction of Account. Notwithstanding any other provision of this Plan, the portion of the Participant's Account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the Account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. (f) Amount of Loan. At the time the loan is made, the principal amount of the loan plus the out- standing balance (principal plus accrued interest) due on any other outstanding loans to the Participant from the Plan and from all other plans of the Employer that are qualified employer plans under Section 72(p)(4) of the Code shall not exceed the lesser of: (1) $50,000, reduced by the excess (if any) of (a) The highest outstanding balance of loans from the Plan during the one (1) year period ending on the day before the date on which the loan is made, over (b) The outstanding balance of loans from the Plan on the date on which such loan is made; or (2) One-half of the value of the Participant's interest in all of his or her Accounts under this Plan. (g) Application for Loan. The Participant must give the Employer adequate written notice, as determined by the Employer, of the amount and desired time for receiving a loan. No more than one (1) loan may be made by the Plan to a Participant's in any calendar year. No loan shall be approved if an existing loan from the Plan to the Participant is in default to any extent. (h) Length of Loan. Any loan issued shall require the Participant to repay the loan in substantially equal installments of principal and interest, at least monthly, over a period that does not exceed five (5) years from the date of the loan; provided, however, that if the proceeds of the loan are applied by the Participant to acquire any dwelling unit that is to be used within a reasonable time (determined at the time of the loan is made) after the loan is made as the principal residence of the Participant, the five (5) year limit shall not apply. In this event, the period of repayment shall not exceed a reasonable period determined by the Employer. Principal installments and interest payments otherwise due may be suspended for up to one (1) year during an authorized leave of absence, if the promissory note so provides, but nor beyond the original term permitted under this subsection (h), with a revised payment schedule (within such term) instituted at the end of such period of suspension. (i) Prepayment. The Participant shall be permitted to repay the loan in whole or in part at any time prior to maturity, without penalty. (j) Promissory Note. The loan shall be evidenced by a promissory note executed by the Participant and delivered to the Employer, and shall bear interest at a reasonable rate determined by the Employer. (k) Security. The loan shall be secured by an assignment of the participant's right, title and interest in and to his or her Account. (1) Assignment or Pledge. For the purposes of paragraphs (f) and (g), assignment or pledge of any portion of the Participant's interest in the Plan and a loan, pledge, or assignment with respect to any insurance contract purchased under the Plan, will be treated as a loan. (m) Other Terms and Conditions. The Employer shall fix such other terms and conditions of the loan as it deems necessary to comply with legal requirements, to maintain the qualification of the Plan and Trust under Section 457 of the Code, or to prevent the treatment of the loan for tax purposes as a distribution to the Participant. The Employer, in its discretion for any reason, may also fix other terms and conditions of the loan, includ- ing, but not limited to, the provision of grace periods following an event of default, not inconsistent with the provisions of this Article and Section 72(p) of the Code, and any applicable regulations thereunder. 8.03 Participant Loan Accounts: (a) Upon approval ora loan to a Participant by the Employer, an amount not in excess of the loan shall be transferred from the Participant's other investment fund(s), described in Section 6.05 of the Plan, to the Participant's Loan Account as of the Accounting Dare immediately preceding the agreed upon date on which the loan is to be made. (b) The assets ora Participant's Loan Account may be invested and reinvested only in promissory notes received by the Plan from the Participant as consideration for a loan permitted by Section 8.01 of the Plan or in cash. Uninvested cash balances in a Participant's Loan Account shall not bear interest. Neither the Employer, the Administrator, nor any other person shall be liable for any loss, or by reason of any breach, that results from the Participant's exercise of such control. (c) Repayment of principal and payment of interest shall be made by payroll deduction or, where repayment cannot be made by payroll deduction, by check, and shall be invested in one (1) or more other investment funds, in accordance with Section 6.05 of the Plan, as of the next Ac- counting Date after payment thereof to the Trust. The amount so invested shall be deducted from the Participant's Loan Account. (d) The Employer shall have the authority to establish other reasonable rules, not inconsistent with the provisions of the Plan, governing the establishment and maintenance of Participant Loan Accounts. Article DC Non-Assignability 9.01 In General: Except as provided in Article VIII and Section 9.02, no Participant or Beneficiary shall have any right to commute, sell, assign, pledge, transfer or otherwise convey or encumber the right to receive any payments hereunder, which payments and rights are expressly declared to be non-assignable and non- transferable. 9.02 Domestic Relations Orders: (a) Allowance of Transfers: To the extent required under a final judgment, decree, or order (includ- ing approval ora property settlement agreement) that (i) relates to the provision of child support, alimony payments, or marital property rights and (ii) is made pursuant to a state domestic relations law, any portion ora Participant's Account may be paid or set aside for payment to a spouse, former spouse, child, or other dependent of the Participant. Where necessary to carry out the terms of such an order, a separate Account shall be established with respect to the spouse, former spouse, or child who shall be entitled to make investment selections with respect thereto in the same manner as the Participant; any amount so set aside for a spouse, former spouse, or child shall be paid out in a lump sum at the earliest date that benefits may be paid to the Partici- pant, unless the order directs a different time or form of payment. Nothing in this Section shall be construed to authorize any amount'to be distributed under the Plan at a time or in a form that is not permitted under Section 457(b) of the Code. Any payment made to a person pursu- ant to this Section shall be reduced by any required income tax withholding. (b) Release from Liability to Participant: The Employer's liability to pay benefits to a Participant shall be reduced to the extent that amounts have been paid or set aside for payment to a spouse, former spouse, or child pursuant to paragraph (a) of the Section. No such transfer shall be effectuated unless the Employer or Administrator has been provided with satisfactory evidence that the Employer and the Administrator are released from any further claim by the Participant with respect to such amounts. The Participant shall be deemed to have released the Employer and the Administrator from any claim with respect to such amounts, in any case in which (i) the Employer or Administrator has been served with legal process or otherwise joined in a proceed- ing relating to such transfer, (ii) the Participant has been notified of the pendency of such pro- ceeding in the manner prescribed by the law of the jurisdiction in. which the proceeding is pend- ing for service of process in such action or by mail from the Employer or Administrator to the Participant's last known mailing address, and (iii) the Participant fails to obtain an order of the court in the proceeding relieving the Employer or Administrator from the obligation to comply with the judgment, decree, or order. (c) Participation in Legal Proceedings: The Employer and Administrator shall not be obligated to defend against or set aside any judgement, decree, or order described in paragraph (a) or any legal order relating to the garnishment of a Participant's benefits, unless the full expense of such legal action is borne by the Participant. In the event that the Participant's action (or inaction) nonetheless causes the Employer or Administrator to incur such expense, the amount of the expense may be charged against the Participant's Account and thereby reduce the Employer's obligation to pay benefits to the Participant. In the course of any proceeding relating to divorce, separation, or child support, the Employer and Administrator shall be authorized to disclose information relating to the Participant's Account to the Participant's spouse, former spouse, dependent, or child (including the legal representatives of the spouse, former spouse, or child), or to a court. Article X. Relationship to other Plans and Employment Agreements This Plan serves in addition to any other retirement, pension, or benefit plan or system presently in existence or hereinafter established for the benefit of the Employer's employees, and participation hereunder shall not affect benefits receivable under any such plan or system. Nothing contained in this Plan shall be deemed to constitute an employment contract or agreement between any Participant and the Employer or to give any Participant the right to be retained in the employ of the Employer. Nor shall anything herein be construed to modify the terms of any employment contract or agreement between a Participant and the Employer. Article XI. Amendment or Termination of Plan The Employer may at any time amend this Plan provided that it transmits such amendment in writing to the Administrator at least 30 days prior to the effective date of the amendment. The consent of the Admin- istrator shall not be required in order for such amendment to become effective, but the Administrator shall be under no obligation to continue acting as Administrator hereunder if it disapproves of such amendment. The Employer may at any time terminate this Plan. The Administrator may at any time propose an amendment to the Plan by an instrument in writing trans- mitted to the Employer at least 30 days before the effective date of the amendment. Such amendment shall become effective unless, within such 30-day period, the Employer notifies the Administrator in writing that it disapproves such amendment, in which case such amendment shall not become effective. In the event of such disapproval, the Administrator shall be under no obligation to continue acting as Administrator here- under. Except as may be required to maintain the status of the Plan as an eligible deferred compensation plan under Section 457(b) of the Code or to comply with other applicable laws, no amendment or termination of the Plan shall divest any Participant of any rights with respect to compensation deferred before the date of the amendment or termination. Article XII. Applicable Law This Plan and Trust shall be construed under the laws of the state where the Employer is located and is established with the intent that it meet the requirements of an "eligible deferred compensation plan" under Section 457(b) of the Code, as amended. The provisions of this Plan and Trust shall be interpreted wherever possible in conformity with the requirements of that Section of the Code. In addition, notwithstanding any provision of the Plan to the contrary, the Plan shall be administered in compliance with the requirements of Code Section 414(u). Article XIII. Gender and Number The masculine pronoun, whenever used herein, shall include the feminine pronoun, and the singular shall include the plural, except where the context requires otherwise. ICMA RETIREMENT CORPORATION DECLARATION OF TRUST ICMA RETIREMENT CORPORATION The public service Vantagepoint® since 1972 DECLARATION OF TRUST This Declaration of Trust (the "Group Trust Agreement") is made as of the 19th day of May, 2001, by VantageTrust Company, which declares itself to be ihe sole Trustee of the trust hereby created. WHEREAS, the ICMA Retirement Trust was created as a vehicle for the commingling of the assets of governmental plans and governmental units described in Section 818(a)(6) of the Internal Revenue Code of 1986, as amended, pursuant to a Declaration of Trust dated October 4, 1982, as subsequently amended, a copy of which is attached hereto and incorporated by reference as set out below (the "ICMA Declaration"); and WHEREAS, the trust created hereunder (the "Group Trust") is intended to meet the requirements of Rev- enue Ruling 81-100, 1981-1 C.B. 326, and is established as a common trust fund within the meaning of Section 391:1 of Title 35 of the New Hampshire Revised Statutes Annotated, to accept and hold for invest- ment purposes the assets of the Deferred Compensation and Qualified Plans held by and through the ICMA Retirement Trust. NOW, THEREFORE, the Group Trust is created by the execution of this Declaration of Trust by the Trustee and is established with respect to each Deferred Compensation and Qualified Plan by the transfer to the Trustee of such Plan's assets in the ICMA Retirement Trust, by the Trustees thereof, in accord with the following provisions: I. Incorporation oflCMA Dedaration by Reference; ICMA By-Laws. Except as otherwise provided in this Group Trust Agreement, and to the extent not inconsistent herewith, all provi- sions of the ICMA Declaration are incorporated herein by reference and made a part hereof, to be read by substituting the Group Trust for the Retirement Trust and the Trustee for the Board of Trustees referenced therein. In this respect, unless the context clearly indicates otherwise, all capitalized terms used herein and defined in the ICMA Declaration have the meanings assigned to them in the ICMA Declaration. In addition, the By-Laws of the ICMA Retirement Trust, as the same may be amended from time-to-time, are adopted as the By-Laws of the Group Trust to the extent not inconsistent with the terms of this Group Trust Agreement. Notwithstanding the foregoing, the terms of the ICMA Declaration and By-Laws are further modified with respect to the Group Trust created hereunder, as follows: (a) any reporting, distribution, or other obligation of the Group Trust vis-it-vis any Deferred Compensation Plan, Qualified Plan, Public Employer, Public Employer Trustee, or Employer Trust shall be deemed satisfied to the extent that such obligation is undertaken by the ICMA Retirement Trust (in which case the obligation of the Group Trust shall run to the ICMA Retirement Trust); and (b) all provisions dealing with the number, qualification, election, term and nomination of Trustees shall not apply, and all other provisions relating to trustees (including, but not limited to, resignation and removal) shall be interpreted in a manner consistent with the appointment ora single corporate trustee. 2. Compliance with Revenue Procedure 81-100. Thc requirements of Revenue Procedure 8 I- l00 are applicable to the Group Trust as follows: (a) Pursuant to the terms of this Group Trust Agreement and Article X of the By-Laws, investment in the Group Trust is limited to assets of Deferred Compensation and Qualified Plans, investing through the ICMA Retirement Trust. (b) Pursuant to the By-Laws, the Group Trust is adopted as a part of each Qualified Plan that invests herein through the ICMA Retirement Trust. (c) In accord with the By-Laws, that part of the Group Trust's corpus or income which equitably belongs to any Deferred Compensation and Qualified Plan may not be used for or diverted to any purposes other than for the exclusive benefit of the Plan's employees or their beneficiaries who are entitled to benefits under such Plan. (d) In accord with the By-Laws, no Deferred Compensation Plan or Qualified Plan may assign any or part of its equity or interest in the Group Trust, and any purported assignment of such equity or interest shall be void. 3. Governing Law. Except as otherwise required by federal, state or local law, this Declaration of Trust (induding the ICMA Declaration to the extent incorporated herein) and the Group Trust created hereunder shall be construed and determined in accordance with applicable laws of the State of New Hampshire. 4~ Judicial Proceedings. The Trustee may at any time initiate an action or proceeding in the appro- priate state or federal courts within or outside the state of New Hampshire for the settlement of its accounts or for the determination of any question of construction which may arise or for instructions. IN 10~ITNE.$S WHEREOF, the Trustee has executed this Declaration of Trust as of the day and year first above written. VANTAGETRUST COMPANY Name: Paul E Gallagher Title: Assistant Secretary (3,4) CITY OF ~EHHHHHHHHHHHHHHH~ DATE: January 22, 2002 TO: Finance, Economic Development and Reg~fairs~ FROM: Marwan Salloum, Street Systems Manag~55 ¥1A: David H. M~ger ~ SUBJECT: Purchase of 5-Cubic Yard Dump Truck BACKGROUND The City has collected approximately $66,233 in replacement reserves for the replacement of the existing 1985 International 5-Cubic Yard Dump Truck. Public Works is requesting authorization to expend these funds £or the purchase ora new 5-Cubic Yard Dump Truck. The new track will be equipped to operate a snowplow and sander, and will serve as replacement snow removal capacity that was lost when the lnterlocal Agreement with Lakehaven Utility District was terminated. In addition, it will also significantly reduce the need to activate the snow and ice removal services contract with Lloyd Enterprises. In April of 2001, Lakehaven Utility District received bids for the purchase of two 5-cubic yard dump trucks and Seattle Sterling Mack was the low bidder. The bid for each dump truck was $62,982 including Washington State Sales Tax. Seattle Streling Mack has agreed to extend the price to the City of Federal Way. Lakehaven Utilily District has authorized the City, as a political subdivision within the State of Washington, to use their bidding process. New Truck Cost 5- CY Dump Truck $57,888.00 Hydraulics Package for Plow and Sander $ 3,850.00 Sales Tax ~ 8.8% $ 5,433.00 TOTAL PURCHASE COST $67:171.00 Available Budget Replacement Reserve collected $66,233.00 Sale of the existing 5-CY Dump Truck (Est.) $ 7,000.00 TOTAL AVALIBLE BUDGET $72.233.00 RECOMMENDATION Staffrecommends placing the following item on the February 5, 2001 Council Consent Agenda for approval: Approve awarding the purchase of the 5-CY Dump truck and the addition of a hydraulics package to accommodate the plow and sander attachments to Seattle Sterling Mack in the amount of $67,171.00 including Washington State sales tax. MS:dl k:\fedc~2002L5 -ydDumpTruck.doc ! (F) CiTY OF MEMORANDUM Date: January 22, 2002 To: Finance, Economic Development & Regional Affairs Committee From: Tho Kraus, Financial Management Supervisor Subject: Vouchers Action Requested: Accept the vouchers and forward to the Next Council meeting for approval. APPROVAL OF COMMITTEE REPORT Committee Chair: Mary Gates Committee Member: Jeanne Burbidge Committee Member: Eric Faison k:fin~acctspay~'n frcvr,wpd MEETING DATE: January 22 2002 ITEM# CITY OF FEDERAL WAY City Council AGENDA BILL SUBJECT: VOUCHERS CATEGORY: BUDGET IMPACT: [] CONSENT [] ORDINANCE Amount Budgeted: $1,276,600.21 [] RESOLUTION [] PUBLIC HEARING Expenditure Amt.: $1,276,600.21 [] CITY COUNCIL BUSINESS [] OTHER Contingency Req'd: $ ATTACHMENTS: VOUCHER LIST SUMMARY/BACKGROUND: I, the undersigned, do hereby certify under penalty of perjury that the materials have been furnished, the services rendered, or the labor performed as described herein and that the claims are just and due obligations against the City of Federal Wa Wash' gton, and ar I am authorized to authenticate and certify said claims. CITY COUNCIL COMMITTEE RECOMMENDATION: Approve attached vouchers pursuant to RCW 42.24 PROPOSED MOTION: I move approval of Vouchers. 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Please Forward to the February 5th Council Meeting. APPROVAL OF COMMITTEE REPORT Committee Chair: Mary Gates Committee Member: Jeanne Burbidge Committee Member: Eric Faison K:\FIN\M FR\OI mt¥\MFRI:EDRACCVRDOC J-I lbo Kmus 661-4t70 ~enueS &; Expenditures ~oo ~.oo ; Si~ficant Events 1 General Gove~ent Revenues 2 - 13 L. Expendi~es 14-18 ~ ARac~ent A 19 Preliminary December 2001 Monthly Financial Report This is a preliminary December 2001 report and is subject to change. The final year-end 2001 report will be forwarded to the February FEDRAC. This preliminary report focuses mainly on achvity incurred in the following operating funds: General, Street, Arterial Street, Utility Tax Projects, Solid Waste & Recycling, Hotel/Motel Lodging Tax, Paths & Trails, Surface Water Management, Strategic Reserve, A/rport Strategic Reserve, Debt Service, and Dumas Bay Centre. The S~ of Sources and Uses (Attachment A) captures financial activity through October for the years 1996 through 2001. ItI~ILIGHTS ,~,. ~;~ ;~: City of Federal Way Offers New Online Business License Renewal Process: In conjunction with MRSC (Municipal Resouxce & Service Center) and the state of Washington, the City of Federal now offers business establishments the ability to renew their business licenses, update pertinent information and also pay for services on-line. This is expected improve and create more efficiency in the business license renewal processes. Cit~ of Federal ~Va¥ December 2001 Monthlv Financial Report GOVERN~ENTAL General governmental operating revenue collections through December total $43,220,452, which is $1,912,502 or 4.6% above the year-to-date budget of $41,307,951. Of this amount, $305,068 is related to Utility taxes and PEET that are reserved for the payment of debt services. Attachment A provides a comparison of year-to-date revenues by major sources for 2001 with comparative figures for the past 5 years. REVENUE SUMMARY BY MAJOR REVENUE SOURCES Period Ending December 31,2001 :: :i:i: :i:i:i: :! ::: ::: ::::: ::::::::::: :::::: :!:!: :i:200'q:Rey ~ Budget::::: :::::~uals:: ::.: :::::::::::::::::::::ir.e::::::::::: PropertyTaxes $ 6,g76,g72 $ 7,200,394 $ 7,200,394 $ 7,235,242 $ 34,848 0.5% SalesTax $ 10,159,770 $ 9,905,347 $ 9,905,347 $ 10,302,061 396,714 4.0% Hotel/Motel Lodging Tax $ 126,767 $ 121,500 $ 121,500 $ 138,817 17,316 14.3% Criminal Justice Sales Tax $ 1,632.969 $ 1,589,767 $ 1,589,767 $ 1,657,647 67,880 4.3°/ Intergovernmental $ 3,317,666 $ 3,168,255 $ 3,168,255 $ 3,795,504 627,249 19.8% Real Estate Excise Tax $ 2,149,691 $ 1,750,000 $ 1,750,000 $ 1,997,537 247,537 14.1~ Gambling Taxes $ 1,601,699 $ 2,000,000 $ 2,000,000 $ 2,188,285 188,285 9.4~, Utility Taxes $ 5,524,329 $ 6,016,400 $ 6,016,400 $ 6,073,931 57,531 1.0o/ Court Revenue $ 942,806 $ 1,022,784 $ 1,022,784 $ 998,827 (23,957~ -2.3~, BuildingPermits/Fees-CD $ 1,076,978 $ 1,194,583 $ 1,194,583 $ 1,051,463 (143,12£ -12.0o/, Expedited Review Fees-CD $ 92,732 $ $ - $ 118,343 118,343 n/~ ROW Permits/Fees-PW $ 260,398 $ 259,583 $ 259.583 $ 362,774 103,191 39.8°/, Expedited Review Fees-PW $ 51,501 $ - $ - $ 22,068 22,068 n/~ Licenses $ 137,180 $ 174,809 $ 174,809 $ 96,737 (78,072) -44.7°/, Franchise Fees $ 496,418 $ 561,294 $ 561,294 $ 591,965 30,671 5.5°/, Recreation Fees $ 538,930 $ 625,540 $ 625,540 $ 578,208 (47,332 -7.6°/, Dumas Bay Centre $ 484,865 $ 534,312 $ 534,312 $ 590,230 55,918 10.5°/{ KnutzenFamilyTheatre $ 81,144 $ 65,475 $ 65,475 $ 86,771 21,296 32.5°/{ Interest Earnings $ 1,315,590 $ 841,319 $ 841,319 $ 898,136 56,817 6.8°/{ ~:tmin / Cash Management Fees $ 170,588 $ 476,306 $ 476,30~ $ 476,302 (4) 0.0°/{ SWMFees ~$ 3,074,347 $ 3,165,155 $ 3,165,155 $ 2,951,828 (213,327 -6.7°/{ Refuse CollectionFees $ 154,365 $ 153,013 $ 153,013 $ 149,514 (3,499 -2.3~ Police Services $ 967,328 $ 423,516 $ 423,516 $ 780,474 356,958 84.3o/~ Dther $ 54,951 $ 58,599 $ 58,599 $ 78,633 20,034 su~otal:~ti~giRevenues:::::::.:.: .:.:::::4t:;38!9,994 ::::::::::::::::::1:::::::::::::::::::::::i:i:ii:i:43r22t:,296 :::::::::::::::::34:::::::::::::::::::::::::: Interfund Transfers - In - - / - 0.0% Dther Financin~ Sources 7,230,373 6,563,405/ 6,563,405 5,438,493 (1,124,912 0.0% rotat:R:evenues&otfaer:SoUrCes::::$::::::48,620;357 ::$:::::47/,871~3561::$::::::4T,87~;356: !$ :!:i:48,65~;78~ : $:i:::: :i7:88i~33!:' ':':':::: :':::t;r6% COMPARISON OF 2001 OPERATING REVENUES - BUDGET TO ACTUAL Total 2001 Budgeted Revenues $41,307,951 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec City of Federal gFaV December 2001 Monthlv Financial Report Property tax Property tax revenue collected through December total $7,235,242, which includes second half property taxes. Actual taxes received in December total $39,975, which is $2,025,939 or 98% lower than November's receipt. The large decrease is due to the receipt of most of second half property tax payments in November. The first half payment was received in April/May. Real Estate Excise Tax Year-to-date Real Estate Excise tax revenue total $1,997,537, which is $247,537 or 14.1% above budget amount of $1,7500,000. The current months' receipt of $168,156 is also above the monthly estimate of $144,839 by $23,317 or 16.1%. There were a total of 230 real estate transactions of which 106 were tax exempt and 4 were mobile home sales. The largest transactions in December consist of the sale of Ocean Ridge aparmaents phase 1 for $9.2 million; a parcel in the East Corporate park for $2.2miilion; and the sale of hits 8, 9, and 10 in West Campus Office Park for a total of $1.3 million. ~ $ 96,366 $ 146,326 $ 163,211 289,269 1013,300 134,120 $ 82,006 Feb'uay 70,177 94,719 119,717 6~,939 103,388 79,5~ 80,019 457 0.~ Ivta~h 84,d~6 101,508 82,116 80,862 166,189 90,612 174,165 83,553 82.~ /~pril 105,133 132,678 166~82 203,522 166,725 132,370 124,749 (7620 -5.~ May 15~107 186,187 189,860 169,610 183,110 15~801 139,G14 (16,767 -10.8~ /~gust 130,765 231,911 324,962 194,853 20G,678 186,790 168,149 (18,6411 -10.0~ September 123,913 181,490 137,949 326,168 163,636 158,672 361,664 20~9~ 127.9~ Nc~mber 1~780 216,381 143,877 209,0~6 101,804 134277 155,743 21,465 16.0~ Decerrber 160,199 18&829 13Z448 177,881 153~124 144,839 16&156 2~317 16.15 REAL ESTATE EXCISE TAX ACTIVITY Through December 2001 $1,000,000 City of Federal ~YaF December 2001 Monthly Financial Report Sales Tax Sales tax received through December of $10,302,061 is $396,714 or 4.0% above the annual budget of $9,905,347. Year-to-date December 2001 Sales tax revenue is $142,291 or 1.4% higher than December 2000 revenue of $10,159,770. Sales tax received in the month of December total $835,083, which is $24,912 or 2.9% below the adopted budget estimate of $859,995. Retail sales continue to remain the largest source of sales tax revenue, accounting for 63.4% of all sales tax collections. However, year-to-date December 2001 retail sales tax collections are $60,856 or .01% lower than December 2000. The decline would have been steeper if not for the monthly internal audit which resulted in recovery of over $76,000 on a year-to-date basis. Construction and contracting activity, which accounts for 10.9% of sales tax collections is $42,224 or 3.7% above year 2000 activity. This continues to be a relatively high percentage of tax collection when compared to historical trend. We anticipate tax from construction to slow substantially in the first quarter of 2002, as indicated by the number of building permit applications received for new construction. 5,210,138 5,372,492 6,205,106 $ 6,595,604 $ 6,534,748 733,658 808,219 917,612 970,113 1,130,669 160,556 503,797 645,397 601,147 984,931 1,104,115 1,146,339 42,224 82,187 75,342 ~2,587 Service industries accounts for 10.9% of the total sales tax collections in the month of December. Service sales tax is up from the prior month by $77,385 or 7.3%. On a year-to-date basis, service sales tax is up $160,556 or 14.2% from the year 2000. Hotels/motels, personal services and amusement/recreation accounts for most of the increase. CitF of Federal Way December 2001 Monthlv Financial Repo~ Government activity through December total $147,531, which is a $5,757 or 6.4% increase from the same period last year. SALES TAX ACTIVITY BY SIC CODE ~FI'D Through December 2001 Government Fin/Ins/Real Manufacturing 1.4% Estate Services Retail Trade 11.0% 63.4% Sales Tax Activity by Area The City's largest retail center, South 348th, which generates over 13.8% of the City's sales tax experienced a decline of $213,991 or 13.1% when compared to the year 2000. The decline is due in part to decreased construction activity, and the other is a result of continuous competition from Wal-Mart, which began its operation in March of 2000. Sales tax has decreased slightly from the prior month by $4,047 or 3.6%, with decreases in such areas as the retail building materials, retail eating and drinking, and wholesale durable goods. Ho~vever, there was as increases in retail general merchandise from the prior month. SeaTac Mall is showing a decrease of $42,811 or 4.2% when compared to the year 2000 activity. Sales tax also decreased from the prior month by $13,410 or 17.3%, with most significant decreases in such areas as retail apparel accessories and retail general merchandise. Major Auto Sales have through December collected $446,905, which is $18,043 or 3.3% below the same period in 2000. This is due to higher car sales generated in 2000 as a result of the passing of Initiative 695. However, sales tax has increased from the CitF of Federal Wag December 2001 Monthlv Financial Report prior month by $28,679 or 78.1%, indicating an increase in auto sales. South 312t~ to South 316t~ Block sales tax activity is $32,514 or 6.8% above the same period in 2000. However, December sales tax collection is below November's collections by $1,631 or 4%. Slight decreases could be seen in such areas as retail/general merchandise, retail eating and drinking, and wholesale durable goods. Hotels & Motels sales tax collected through December total $130,643, which is a $27,856 or 27.1% increase over the same period in 2000. Revenue has gradually increased, with the largest increase still being between the years 1999 and 2000. The increase was a result of new hotel additions in Federal Way in the year 2000. We have however started to see some improvement in Hotel/Motel Lodging Tax activities, since the September 11th incident. SALES TAX BY AREA YTD through December, 2001 SeeTac Mall Other 96% 654%~ S 348th Pavilion Center 20% Major Autos 4.3% $ 312th to S 316th Gambling Tax Gambling tax collection is $187,442 or 9.4% above the year-to-date budget of $2,000,000. Year-to-date December 2001 tax collection is also above the same period in 2000 by $585,744 or 36.6%. December's collection is also $2,304 or 1.3% above the monthly budget estimate of $182,203. The year-to-date increase is due in part to the collection of $64,663 in delinquent taxes from one establishment. In addition, another establishment reopened its card room activity, which it had ceased operating between the periods of July 1999 and May 2000. Two establishments were delinquent in filing their November 2001 returns, however, we expect to receive these payments in January of 2002. January $24,558 $31,616 $28,182 $90,611 $127,344 $157,600 $193,344 $35,744 22.7% February 24,558 34,403 21,305 98,117 116,227 153,526 178,617 25,091 16.3~ March 24,558 30,346 23,182 104,183 106,912 149,686 183,941 34,254 22.9% April 29,665 36,041 29,498 130,536 142,792 186,261 238,928 52,667 28.3% May 29,665 31,106 19,025 150,818 133,715 172,973 168,101 (4,872) -2.8% June 29,665 29,421 20,121 145,174 134,100 170,475 185,526 15,051 8.8°/, Jury 17,721 26,096 34,691 137,222 141,075 164,608 188,828 24,220 14.7% August 17,721 17,016 36,336 110,081 103,991 138,011 150,734 12,723 9.2% September 17,721 18,454 36,915 111,146 143,483 150,557 168,991 18,434 12.2% October 28,715 23,907 50,005 115,324 156,436 189,489 158,363 (31,127) -16.4% November 28,715 20,591 51,544 118,762 143,530 184,610 187,562 2,952 1.6% December 28,715 19,766 48,147 152,094 182,203 184,508 2,304 1.3% CiO, of Federal Wav December 2001 Monthly Financial Repo,t 77'1°/~ 49.1 Table reflects gambling activity through October on a cash basis. Hotel/Motel Lodging Tax Hotel/motel lodging tax collected through December total $138,817, which is $17,316 or 14.3% above the budget total of $121,500. The mount collected represents activity from November 2000 to October 2001. The month-to-month budget is somewhat unreliable as only a year of history is available. ~ ~ Ac~ua/ B~* Act~/ $~ $ Valance January $ - $ 7,169 $ 7,169 $ 10,145 $ 2,976 41.59 Febma~ 6.255 6,25~ 10.977 4,722 75,5°/ ~ 6,204 6,204 11,239 5,035 81.2'/ MI 7,553 7,553 11,226 3,673 48.6°/ ~a? 10,383 10.383 13,693 3,311 31.9~/ JL~e 4,541 7.351 7,351 10,978 3,627 49.3*/ July 5,401 8,584 8,584 10,663 2,079 24.2*/ N~gUSt 5,689 11,606 11.606 9,933 (1,673 -14.4~ ~xamber 8,538 15,569 15.5~9 16,071 502 3.2~/' 3ctobe¢ 7,613 15,460 15,4~0 12,644 (2,816) -18.2'/, ~ 8,971 13,463 13,463 9,607 (3.856) ~ecernber 6,428 11,904 11,904 11.641 (262) rTD Oct Total 47,181 121,5(D 121.500 138,817 17.316 14.3~A Tolal $ 4;,t81 $ IZI,~O0 $ 121,5110 $ 130,817 $ 17,316 '14.3~1 Utility Tax Utility tax received through December total $6,073,931 which is $57,531 or 1.0% above the budget total of $6,016,400. Year-to- date December 2001 utility tax receipt is also above the same period in 2000 by $549,602 or 9.9%. Gas taxes exceed the total budget of $745,244 by $229,749 or 30.8% due mainly to two large rate increases implemented in the past 18 months. Cellular taxes also exceed the budget total of $786,080 by $212,739 or 27.1%, a growth trend consistent with prior years. Contrary to expectations, the eleca-ical utility tax is $72,598 or 3.6% below the 2000 collections. This was primarily due to conservation efforts initiated during the energy crisis in earlier part of the year. City of Federal Wav December 2001 Monthly Financial Repot t January 431,08( 454,774 494.362 551,273 551,273 $ February 460.440 439,880 512,067 573.843 573,843 March 429,076 429,405 496,215 551,951 551,951 595.183 Apdl 415,919 583,327 559,860 582,963 582,963 617,404 5.90/ May 431,710 401,428 449,858 466,035 532,404 532,404 544,080 11.676 2.2°/ June 320,663 373.909 415,001 409,595 453.758 453.758 466,013 12,255 2.7o/ July 294,086 348,201 389.429 419,539 459.784 459,784 435.775 (24,010] -5 2o/ August 314,176 318,935 370,720 383,806 424,759 424,759 416,374 (8,3851 -2.0°/ September 310,675 322,551 392,963 428,707 451,363 451,363 428,486 (22,877j -5.1 October 326.801 348,206 435,016 462,901 504,637 504,637 468,293 (36,344 November 365,280 349.857 428.070 446,614 463.413 463,413 466,773 3.360 December 401,119 328,501 412,635 444,629 466,252 466,252 495,606 29.354 Cellular 5.9% 16.4% Gas .~ \x_ Pagers 1 6.0% E~ectric ~/ 0.2% Cit~ of Federal Way December 2001 Monthly Financial Report State Shared Revenue State shared revenue collected through December total $5,453,151 and exceeds the budget total of $4,675,594 by $777,557 or 16.6%. The majority of the variance was due in part to a receipt of $470,179 in July of 2001 for local government financial assistance. In addition, there were sigmficant increases in liquor profit tax, local criminal justice sales tax, and fuel tax from the prior month. 487,167 $ $ 22,046 520,434 176,821 95,609 153,219 193,372 1,262,828 1,129,927 1,657,647 67,880 4.3% 1,718,083 1,725,264 1,793,897 1,735,658 1,721,708 1,776,636 54,928 3.2% 644,532 533,509 687,022 733,086 680,038 741,226 61,188 9.0% 16,506 10,936 5,548 12,804 7,256 Asst. 470,179 470,179 na · Represents monthly historiCal patterns (1990 - 2000) for the 2001 Adopted Budget. STATE-SHARED REVENUES mVeh Lic Fees 1996-2001 $8,000,000 $6,000,000 $2,000,000 mLi(~uor City of Federal Way December 2001 MonthlF Financial Report Court Revenue Court revenue is $66,581 or 7.5% below year-to-date budget total of $893,478 from fines and forfeitures. Total court revenue collected through December amounts to $998,827, which is $23,956 or 2.3% below the total year budget of $1,022,784, but is however above last year's collections of $942,806 by $56,021 or 5.9%. This is primarily due to the inclusion of adult probation services (BI, Inc.), and Traffic School Admm Fees. The base line court revenue is $62,936 or 7.1% below 2000 collections, primarily due to the reduction in traffic and non-parking citations, and criminal costs. DUI and other misdemeanors collected through December total $153,019, which is $42,702 or 38.7% above year-to-date budget of $110,317. Criminal costs collected for the year total $75,597, which is $19,722 or 35.3% above the annual budget of $55,875. Parking infractions actual of $57,551 is above the total year budget of $31,041 by $26,510 or $85.4%. Traffic and Non-Parking are below total year budget of $595,898 by $116,480 or 19.5%, but are offset by Traffic School revenue total of $97,606. JanuaP/ $50,286 $56,405 $60,696 $52,565 $61,809 $54,621 $78,577 $13,75~ February 56,197 37,783 66,750 6~,562 83,491 71,430 70,573 (857 -1 2% Mar¢~l 47,205 46,373 84,382 84,643 83,707 76,600 74,074 {2,5261 -3 3% .~rll 49,168 49,917 57,631 82,673 74,273 78,836 77,631 (1,2~351 -1 5% May 51,288 52,203 73,420 61,106 75,541 78,408 82,189 5,761 7 5% June 42,515 50,138 64,2~O 72,121 73,046 77,663 73,812 (3,851 July 46,166 52,491 80,666 61,536 71,957 76,848 59,668 (17,176', -224% ~ugust 58,695 65,123 61,751 71+255 97,179 88,821 71,793 (17,028', -19 2% Septemba- 36,993 56,626 72,313 62,059 71,311 73,514 67,015 (6,499', -88% COURT REVENUE YTD Through December ~Traffic School Adm Fee I ,000,000 ~ IProbation 800,000~ Services 600,000 400,000 200,000 ICourt 0 City of Federal Way December 2001 MonthlV Financial Report Building Permits and Plan Check Fees Building permit revenues collected through December total $1,051,463, which is below the budget total by $143,119 or 12%. This does not include a year-to-date pass through revenue of $118,343 for expedited and environmental review. Revenue collected for expedited review is not budgeted nor are the offsetting expenses. Building perm/ts, which include mechanical, plumbing and clear/grade permits total $489,595 through the end of December, which is below the adopted budget of $660,855 by $171,260 or 20.2%. Electrical perm/ts total $93,976, which is below the adopted budget by $41,522 or 24.9%. Plan check fees collected through November total $356,630, which is $50,355 or 34.4% above the adopted budget of $290,710. Significant building permits during the month of December include 29 commercial alterations with a total valuation of $4,772,697; and 3 new commercial constructions with a $1,313,162 combined valuation. CitT of Federal FYal2 December 2001 Monthlv Financial Report The table below presents a synopsis of building permit activity as of December 31, 2001 for new construction between 1999 and 2001: Building Division - Permit Activity YTD Through December, 2001 1999 2000 2001 New Residential (Platted) 102 $ 5,343,350 56 $ 9,031,565 28 $ 4,190,824 New Commercial 16 25,216,319 20 25,807,541 23 35,480,320 New Multi-Family Units 6 2,628,427 12 3,819,904 6 1,789,927 New Public 0 0 0 0 0 :i:!:!S~i~ot~i:i:Ni~v~:~6ns[ru:cfi~r~ :::::::::: :12~::: ~: ::::: 33[~8~095.:.::::::::8~:::::: $:::: 38 659;0~g::: 57 ::::s :: 4~6~:;07~ Manu~ctumd Homes 0 0 0 Residential Alterations 95 1,038,109 129 2,509,711 138 3,723,038 Commercial Alterations 201 13,036,799 230 12,815,413 267 23,596,715 Plumbing Only 27 0 68 0 Mechanical Only 431 4,883,4~ 366 1,527,024 357 1,756 Misc. Building Permits 0 0 0 0 ::::::s~bto~al: ;:::::::::::::::::::::::::::::::::::::::::~::::::$:::::::: Electri~l Permits 1461 0 1113 0 980 Non-Building Permit: Sign Permits 304 71,203 357 1,059,815 271 523,846 ROtF Permits and Fees Overall Public Works permits and fees collected through December total $362,774, which is $103,191 or 39.8% above the annual budget of $259,583. A year-to-date pass-through revenue of $22,068 for expedited review is not included in the permits and fees. Plan review fees collected total $80,530, which is $39,796 or 31.8% below the budget total of $158,347 for the year. January $ 12,719 7,041 $ 16,188 $ 19,293 $ 23,522 $ 18,728 $ 44,253 $ 25,525 136.3% February 23,627 8,583 8,437 16,802 17,836 $ 16,517 $ 29,361 $ 12.843 77.8% March 10,708 26,504 12.347 38,782 22,290 $ 28,250 $ 12,940 $ (15,310) -54.2% April 14,751 9,079 19,977 16,286 22,313 $ 19,038 $ 23.964 4,926 25.9% May 21,158 9,551 26,621 12,147 45,771 $ 27,839 $ 32,040 4.201 15.1% June 8,283 9,977 26,339 17,944 24.811 $ 21,414 $ 37,544 16,131 75.3% Jury 29,676 12,353 21,002 10,644 13,887 $ 21,000 $ 29,732 8,732 41.6% August 18,645 27.438 26,631 23,777 21,405 $ 27,888 $ 49.974 22,086 79.2% September 15,252 26,180 25,233 10,346 22,846 $ 23.214 22,312 (9021 -3.9% October 14.041 15,049 21,878 14,652 19,103 $ 17,415 17,687 272 November 13,524 18,019 28,332 18,508 17,101 $ 21,759 25,232 December 14,832 19,049 19,968 38,690 9,513 $ 37,737 CitF of Federal Way December 2001 MonthlF Financial Report R e vle~',~ p e ction F e e s Tl~l~o~l~h Dec~m ~er 2oo~: Police Services Revenue Police Services Revenue collected through December total $780,471. This amount includes Traffic School revenue of $97,606 and interest earnings of $21,055. Police Security services of $426,187 include payments from the Federal Way School Dish-ict for semi-annual billing for school resources officer at Decatur, Federal Way and Truman High Schools. Also included is $92,411 of state seizure revenue, which is designated for that specific program. The remaining $143,312 balance is made up of rrdscellaneous revenue such as, weapon permits, police report copies, photographs, fingerprinting, and false alarms. $298,946 has been received in grant revenues this year, but is included in other financing sources. Traffic School and the Explorer program are currently not budgeted revenues, however these adjustments will be made during the carry forward budget adjustment. Pt~lice&ProtectlveLJ, oms~ :$ -:$ -:$ -:$ 5,133 $ 6,0~22 $ 3,564 Concealed Pistd License 13,435 1 10,90~ i 6,542 :: 4,804 7,943 9,823 .~ien Fiream hcense 75 i 106 1 120 i - 53 60 mice ~ Copies 9,ceo i ~0,3341 ~t~471 ~0,336 ~,3~8 ~Z~75 Rngeqmnts 3.456 1 3,527 i 3,286 1 3,281 3,425 3,827 State Seiz~es 149,6671 223,245 i ¢~,543 1 124,4~ 51,011 92,411 Federal Se/alles -: -', -: 85,396 Tra~c Scho:l & Traffic Safety Gray 3, 725,: 24,114 ,, 59, 3~ ." 80,975 97,606 ~nterest ~nirrjs S,S~0 1 a7,74S i 22,2S41 20,m0 2~,0rS F-"~.~/~lams - ', -: -: 13,945 8,30 441614 Opera~ng Transfer In-Grants _ CitF of Federal ~Yay December 2001 Monthly Financial Report General governmental expenditures through December total $36,728,068, which is below the annual operating budget of $40,646,180 by $3,918,112 or 9.6%. When compared to the year 2000, operating expenditures are up $580,006 or 1.6%. EXPENDITURE SUMIVlARY BY DEP,N~'rMENT Period Ending December 31, 2001 i iii i :::i:i::2000i:i! i ~!~ ii ii i~i'~,Ugtt::: ::i:F~i(iJ~ ==================================================== :::::::::::::::::::::::::::::: · .... . ., . . · .():: 3ityCoundl $ 195,431 $ 224,893 $ 224,893 $ 206,955 $ 17,938 8.05 .3ityManager $ 405,195 $ 709,908 $ 709,908 $ 660,907 49,001 6.9~ ;Munidpalgourt-Operations $ 793,644 $ 1,056,440 $ 1,056,440 $ 1,057,414 (9731 -0.1% Management Services $ 1,613,592 $ 1,756,088 $ 1,756,088 $ 1,648,248 107,840 6.1% Civil/Criminat Legal Services $ 1,225,375 $ 1,273,928 $ 1,273,928 $ 1,149,559 124,369 9.8% Comm. Deveropment Services $ 2,969,746 $ 3,710,221 $ 3,710,221 $ 2,947,860 762,360 20.5% Po~iceServices $ 12,899,772 $ 13,628,144 $ 13,626,144 $ 13,033,783 594,361 4.4% Jail Services $ 1,486,6595 1,388,938 $ 1,388,938 $ 1,218,234 170,704 12.3% Parks and RecreaUon $ 3,007,220 $ 3,247,600 $ 3,247,600 $ 3,056,650 190,950 5.9% Public Works $ 3,150,634 $ 3,676,246 $ 3,676,246 $ 3,109,906: 566,340 15.4% City Overlay Program $ 1,458,054 $ 2,005,169 $ 2,005,169 $ 1,358,785 646,384 32.2°/ Snow & Ice Removal $ - $ $ $ nh SolidWaste $ 294,540 $ 407,034 $ 407,034 $ 350,748 56,286 13.8o/ Ho~el/Motel Lodging Tax $ 72,298 $ 139,202 $ 139,202 $ 46,835 92,367 n/~ Surface Water Management $ 1,533,594 $ 2,208,181 $ 2,208,181 $ 1,657,912 550,269 24.9°/ Debt Service $ 4,328,241 $ 4,528,541 $ 4,528,541 $ 4,512,519 16,022 Dumas BayCentre $ 475,759 $ 520,599 $ 520,599 $ 550,338 (29,739) -5.7~, Knutzen Family Theatre $ 183,280 $ 165,048 $ 165,048 $ 161,416 3,632 2.2°/ ~otal~i~i~ditums:::: :::::36,093;034: :::::: :,]~;~180::::::::40,648;!:80::: ::::36i728;,068: !:!:!:i: :~,;9]];~1:~12: :::::::::::::::::::::::: Other Finandr~ Uses* 11,425,326 11,075,159 11,075,159 9,439,603 1,635,556 n/~ "Other Financing Use~ are tho~e acu'viaes co~sidered o~e time in nature, COMPARISON OF 2001 OPERATING EXPENDITURES - BUDGET TO ACTUAL $40,600,000 Total 2001 Budgeted Expenditures $40,646,180 $35,600,000 $30,600,000 $25.600,000 $20,600,000 $15,600,000 $10,600,000 $5.600,000 $600,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec City of Federal I~aF December 2001 Monthly Financial Report City Council City Council expenditures total $206,955, which is above the budget total of $224,893 by $17,938 or 8.0%. The savings is due to Puget Sound Regional Council dues not yet spent. Municipal Court Municipal Court Operations expenditures total $1,057,414, which is above the total budget of $1,056,440 by $973 or 0.1%. City Manager: Activity through December total $660,907 and is below total budget of $709,908 by $49,001 or 6.9%. The variance is primarily due to salary savings in earlier part of the year, and the Management Intern position that was £mally filled in September. Civil/Criminal Legal Activity through December total $1,149,559 and is below the budget total of $1,273,928 by $124,369 or 9.8%. Savings can be found in Civil Legal Services salary and benefits, outside legal counseI/litigatinn specialist cost (have expended $42.5K or 48.4% of $88K annual budget), and public defense attorney services (have expended $209K or 89.6% of its $233K annual budget). Management Services Activity through December total $1,648,248, which is $107,840 or 6.1% below the year-to-date budget total of $1,756,088. Although Human Resources division has expended its budget for job announcements, savings can be found primarily in one-time fund internal service charges for the Krnnos Timekeeping System, Documant Imaging System, and the Eden Financial System upgrade. Community Development Community Development is below their total year budget of $3,710,221 by $762,360 or 20.5%. The savings are prunarily due to unfilled positions in Human Services during the earlier part of the year. In addition, one-time funded programs such as the planned action SEPA contracted services, PAA planning, compensation plans update, and code amendments were not fully expended as at year-end. Parks and Recreation Parks Operations expenditures through December total $3,056,650, which is $190,950 or 5.9% below total year budget of $3,247,600. Savings can be found in some one-time programs such as e-commerce class registration and other internal service charges that have not yet been allocated but will be for year-end close. Also, there are some outstanding bills that will be paid. Dumas Bay Centre: Oparatmg expenditures for the year total $550,338, which exceeds the total budget of $520,296 by $29,739 or 5.7%. This is primarily due to an increase in professional services, specifically catering and custodial and cleaning charges. The increase in expenditures is offset by a $55,918 or 10.5% favorable revenue variance. Knutzen Family Theatre: Operating expenditures through December total $161,416, which is $3,632 or 2.2% below total year budget amount of $165,048. Year-to-date revenue of $86,771 exceeds the budget total of $65,475 by $21,296 or 32.5%. The expected increase in expenditures in later part of the year did not occur. City of Federal Way December 2001 Monthly Financial Report The table below summarizes recreation and cultural services and Dttmas Bay Centre activity, and their related recovery rates: RECREATION & CULTURAL SERVICE PROGRAMS Community Center 23,500 14,406 61.3% 60,440 58,355 96.6% 38.9% 24.7oA Senior Services 7,200 7,498 104.1% 52,066 54,520 104.7% 13.8% 13.8~ Special Populations 16,850 21,605 128.2% 55,627 58,270 104.8% 30.3% 37.1% Youth Commission 500 0.0% 1,800 1,578 87.7% 27.8% n/~ I Adult Athletics 174,500 178,966 102.6% 109,112 142,983 131.0% 159.9% 125.2% Youth Athletics 60,500 80,091 132.4% 84,429 84,179 99.7% 71.7% 95.1% Aquatics 15,644 162 1.0% 20,360 29,179 143.3% 76.8% 0.6% Celebration Park 57,000 7,159 12.6% 264,206 279,229 105.7% 21.6% 2.6 o/~ Arts & Special Events 39,100 27,937 71.4% 74,322 109,405 147.2% 62.6% 25.5% I Community Recreation 205,046 197,561 96.3% 196,606 156,604 79.7% 104.3% 126.2% ! Red, White & Blue 25,700 16,082 62.6% 41 ,SOO 48,914 118.7% 62.4% 32.9% ~:~'~!~ Subtotal ~$,540 $ 960~G8 ~ ~1~3;217 106~ 53.9% IAdministration 0.0% 334,617 301,086 90.0~ n/a i~R~"~ I $ 625, ~l,468 I 88;~ ~:~294,785 I$ 1~24,303~[ ~:i02~3% 48.3%I DUMAS BAY CENTRE Dumas Bay Centre 534,312 I 590,230 110.5°/o 520,296 I 550,338 105.8% 102.7% 107.20/. Knutzen Family Theatre 65,475I 86,771 132.5% 165,048I 161,416 97.8% 39.7% Arts 185 70,200 47,444 Revenues do not include grants or operating rranslers Expenditures do not include residual equity [ransfers or Other inleffund con[nbutions Recreation and Cultural Services: Total revenue of $625,540 is $74,072 or 11.8% below the annual budget of $625,540. Direct program expenditure total of $1,023,217 exceeds the annual budget of $960,168 by $63,099 or 6.6%. Recreation services have recovered 53.9% of direct program costs as of year-end. When total administrative expenditure of $301,086 is included, the total recovery ratio is 48.3%. Dumas Bay Centre: Operating revenue total $590,230, which is $55,918 or 10.5% above the annual budget of $534,312. Operating expenditures of $550,338 also exceeds the annual budget of $520,296 by 5.8%. The Dumas Bay Centre has recovered 107.2% of its' total operating costs. Knutzen Family Theatre: Operating revenue total $86,771, which is $21,296 or 32.5% above the annual budget of $65,475. Total operating expenditure of $161,416 is $3,632 or 2.2% below the annual estimate of $165,048. The Knulzen Family Theatre has also recovered 53.8% of its' total operating costs. Cit~ of Federal WaV December 2001 MonthlF Financial Report Public Works Emergency Management 7,000 19,250 275.0% Expedited Plan Review (1) $ 5,000 1008.4% Neighborhood Traffic Safety-Private Contract 19,868 0.0% Pavement Marking Maintenance-Private Contract 25,000 0.0% Traffic Maintenance (NTS, School Safety)-King Co 406,500 334,563 82.3% WSDOT Study 50,000 0.0% Expedited Plan Review 3,900 n/a Consultant-Traffic Impact Fees 50,000 5,091 10.2% Consultant-Transportation Modeling 15,198 11,815 77.7% Water Utility Billing - KC Watershed Interlocal Agreement State Highway Maintenance - WSDOT Water Analysis 3,877 31.3% Str. Sweeping, Catch Basin, Manhole & Pipes 238,605 113,287 47.5% ESA/NPDES Gap Analysis 115,000 43,361 37.7% (1) Expedited plan review service expenditures have matching revenues. (2) Private Contracts for streets maintenance/traffic control($16,687),ROW vegetation, mowing and tree maintenance ($145,000), stump grinding, irrigation services, dangerous tree removal ($10,000), tree replacement ($20,000), small works projects ($14,000), Right-of-way contracted inspection ($21,000), and Pavement Management System ($5,000). (3) Private Contractors for sidewalk, ramps, curb and gutter maintenance ($112,696) and fences, guardrails, barriers and retaining wall maintenance ($6,671). Public Works Operations: Expenditures are below the total budget of $3,676,246 by $566,340 or 15.4%. Savings can be found in one-time funded programs such as transportation model update and WSDOT study. In addition, some contract payments are not reflected on this preliminary report. Solid Waste and Recycling Operations: Expenditures are below the total budget of $407,034 by $56,286 or 13.8%. Savings are due to grant programs that have not been expended and may be carried forward into 2002. Surface Water Management Operations: Expenditures are below the total budget of $2,208,181 by $550,269 or 24.9%. Savings are due primarily to unfilled budgeted positions within the division, and the NPDES/ESA one-time funded program. City of Federal Way December 2001 MonthlF Financial Report Public Safety & Jail Services Police Services have expended $13,033,783 through December, which is below the adjusted budget of $13,628,144 by $594,361 or 4.4%. The savings are from grants and restricted seizure funds that have not yet been spent. The table below represents police operating revenue collected through December 2001. =olice & R-otective Licenses i $ - ! $ $ - [ $ 5,13 6,022 $ 3,564 13,435 i0,909 4 804 7.943 9,823 5, lien Firearm License ~ ~ ~ ~'~ 120 ~ 53 60 519 404 3,425 3,827 , 43,492 92,164 172,921 267,048 426,187 31 & Traff~ Safety Grant 3,725 24,114 ~ 59,358 80,975 nterest ~rnings 5,510 17,745 21,055 False Alar~ 13,945 8,306 44,614 403 [ 70 36,727 12,171 10,~ 53 23,043 Jail Services: Jail services are below the adjusted budget of $1,388,938 by $170,704 or 12.3%. This is due outstanding invoices for November & December. Jail Costs vs Maintenance Days Through December 2001 $1,600,000 lS,4SS 20,000 $1,400,000 '-~ 7'~ ..... 18,000 16,000 $1,200,000 $600,000 8,000 $400,000 6,000 4,000 $200;000 2,000 19~6 1997 1998 1999 20~b 2001 · Cases CitF of Federal Way December 2001 MonthlF Financial Report ~ND ACTI Y VIT a~g,5'ueeti~i::i:i::!: i::i:i::i:i:: $iiii:i:i:i::i6i720i~:/i:$::::~iS3;3844: $i::i~i:28~34~ $i:::i:: 599r1-~ :::$::::::ii:;,i3~1~06~ ~is~'~r~ce ~nq,:i:(~: :.:.:: :::~:;:;:;:::::..: :.:;:;: :;::~ ZB~;~: :::::::::::::::::::::: :$:::::::::::~;7~ ::::::::::::::::::::::: :::~::::::::::6 ~3,:~ S~ial ~edal Street 487,4~ 1,R1,672 1,~.7~ 1~,~ 670,~ ~ili~ T~ (1) 4,~7,~ 5,521,513 4,452,~ 1,~,~ 5,475,~3 ~lid Waste & Re.cling 275,4~ 167,073 3~,7~ (1~,675 91,7~ S~al ~y (~v. ~) 111,~ 24.6~ 11,~6 12,7~ 123,~ ~te~tel L~gi~ T~ ~,4~ 132,~ 46,~5 ~,813 1 ~,~7 2% f~ the ~s 19,274 5,~ 5,~ 24,274 ~B~ 6,~9 111.712 ~ 132,~9 (20,~7) (14,418) ~ & Trails 32,414 9,~ 9,4~ 41,~8 Stmt~i~ R~e~e 2,~8,~ 32,424 2,~,718 (2,~8,~ ~a~l~~::~:~::~: ~:~::~:~:~:~::~:~;~ :~ ::~::::7;~;~2 $ ::~:~::~8;4~4;4~0:: :: :::.:::::(~) ::::::::::::::::::::: ~pi~l ~'~: ~bHc ~fe~ Facili~ 6,~,528 297.397 297,397 6,~2,~5 ~t~ R~tali~tion 1,~9,~0 59,2~ ~,~8 (18,181) 1,~1,249 Unall~t~ 1~7 Bo~ Pr~s 19,~9 870 870 20,829 ~le~ti~ ~ 1~.797 5,769 11,079 (5,311) 1~,487 ~ Imp~ve~nts ~.5~ 5~,3~ ~,~ (~9,~) 4~,~ Suffe~ Water ~nag~ 5,378,~7 2,1 ~,~ ~2,6~ 1,7~,873 7,1 ~,~ T~ation 9,~,~8 5,~,~7 6,472,~ (~,293 9,251,615 ================================== ::::::::::::~4: ::::::~.~;~ 7.~7,~ ::::::::::~:?;~5::::::::::~2~$~; En~se ~s: Su~a~ Water ~nag~nt 751,3~ 3,~7,1 ~ 3,391,105 ( 1 ~,~1 ) ~7,~ ~ ~y ~ntre O~tions ~,497 ~1,2~ 28,293 28,293 ~ ~y ~ntre ~pi~l 3~,~2 ~,0~ ~,0~ ~en Family T~tre ~pital 31,~ 1.435 1,~ 32,979 Knu~en Family ~tre O~tions 1~,516 161,416 28.1~ 28.1~ ::::::::::::::::::::::: ::::::::::::::::::::::: ::::::::::: ~ ~,~ 4,~73,72s ::::::::::::::::::::::::: ::,:~: :::~ ~ gn~al~s: (2) ~sk ~ge~nt 1,~4.~3 2,~,180 497,172 2,~1,~ 3,~5,911 I~o~tion S~te~ 1,~,129 1.~7,~ 1,237,798 ~9,~ 1,749,711 ~il & ~p[i~tion 1~,571 191,673 1~,701 ~,972 Fleet & Equip~ 1,824,~7 1,~9,~ 1,015,~ 23,921 1,~8,~ Buildings & Fumishin~ ~,7~ 737,732 5~,~ 1~,1~ 1,103,970 ; S~/~I~[~::::::::::: :: ::: :::::::::~:: ::: ::: ::e,~ ~1: ~:: :~:: :~: 3;~7;~1;0 ::::::::::: :~;~ ~:~:~: :~:: :~e~6,:7~ :::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::: : ::: :::6~2~73: :: :::::::::~5~ ::::::::::~: '4~5~2,~57 :::::::::::5~:~,0~ :1) ~ili~ Tax and ~bt ~ fund ~lan~ is r~e~ for the ~y~nt ~ debt se~. :2) IntemaJ Se~ fu~ ~lan~ is ~ds~ of a~muJat~ relaxant r~ f~ the pu~e of fix~ ~t ~pla~t. ATTACHMENT A CITY OF FEDERAL WAY SUMMARY OF SOURCES AND USES OPERATING FUNDS Through December 200.1 1996-2001 ============================= :::::;:)~gg'::::: :.::~997::: :;:: ::'~::::: ::::i~i,~::::: ::: ::20et(:::::: :::::Ad,Bi Beginning Fund Balance I $10,33'1,541 $10,396,188 ! $15,128,342 $17,578,962 $t5,694,065 $20,831,348 $20,831,348 $20,831,348 $ 0.0°4 ~ilit~ Taxes 3,552,885: 4,528,073 ' (23,957) Building Permits/Fees-CD 585,397. 188+823 260,398 ~ I <nutzen Family mheab'e - ' : 16,483 48,883 81,144 65,475 65,475 86,771 21,296)(4 32.5% Total Oparatin~ Expenditures I 28,90'1,033 29,193,622 30,660,580 36,289,'107 36,093,0~4 I 40,646,'160 36,728,068 I Operating Revenues overl(under) Other Financing Sources 3,524,944 2,822,839 5,381,058 7,230,373 i 6,563,405 I 6,563,405 , 5438493 1,124,912 ~ 171% Ending Fund Balance I I ! Intedund Loans - .... $ 7,818,980151gr970r007 $17,235r237 $18r'136r869 $21622220~:$'I65940:03::.$:.:::::.:::~:::':$23323,A'66::$5~2O~8tBt'::: : 01/22/20023:15 PM PUBLIC WORKS DEPARTMENT SWM DIVISION 1/16/02 PROJECT STATUS REPORT Paul Bucich, Surface Water Division Manager Staff is reevaluating the scope of this project to ensure that it complies with new ESA W. Hylebos Channel 6/99 To Be Determined 6/99 TBD TBD TBD TDB TBD requirements while also 747,868 0 Stabilization Design (TBD) maximizing benefits to the City. A new schedule and cost will be developed upon identifying the best course of action for the City. This project is funded for design, right of way acquisition, and construction. Preliminary design was completed in march 1999. SW 356th Street Drainage 1/99 9/01 1/99 N/A 8/O1 6/01 TBD N/A Property acquisition is under way 623,535 261,206 Study/SW356th St Closed Land Acquisition with a revised completion date of Depression Acquisition 6/02. Property acquisition issues continue to delay the project. Condemnation proceeding will be initiated on 4 properties. City Council awarded the project on 7/5/00 to Katspan, Inc for the amount of (~2,469,053. The project is complete. The City is working on the final pay estimate to the Contractor. Since the SeaTac Mall Basin Drainage 10/96 6/01 actual expenditure of the project is Improvements Phase II Design Construction Phase N/A 9/97 4/00 4/00 6/00 N/A significantly less than what was 3,071,630 3,067,665 expected during the time of loan (Design/ROW/Construction) II application, preliminary analysis shows that the City may have to return a portion of Public Works Trust Fund loan money back to the State in order to meet 30% of local contribution requirement for 1% loan rate. The last part of the project - So. 336th/KittsCorner 1/94 12/96 wetland mitigation vegetation Regional Storage Facility N/A N/A N/A N/A N/A 1/97 30,189 (Monitoring) Prelim. Design Construction monitoring has been completed in late 2001. PUBLIC WORKS DEPARTMENT SWM DIVISION 1/16/02 PROJECT STATUS REPORT Paul Bucich, Surface Water Division Manager Staff is reevaluating the scope of this project to ensure that it complies with new ESA W. Hylebos Channel 6/99 To Be Determined 6/99 TBD TBD TBD TDB TBD requirements while also 747,868 0 Stabilization Design {TBD) maximizing benefits to the City, A new schedule and cost will be developed upon identifying the best course of action for the City. ' This project is funded for design, right of way acquisition, and construction. Preliminary design was completed in march 1999. SW 356th Street Drainage ' 1/99 9/01 1/99 N/A 8/O1 6/O1 TBD N/A Property acquisition is under way Study/SW356th St Closed Land Acquisition with a revised completion date of 623,535 261,206 Depression Acquisition 6/02. Property acquisition issues continue to delay the project. Condemnation proceeding will be initiated on 4 properties. City Council awarded the project on 7/5/00 to Katspan, Inc for the amount of $2,469,053. The project is complete. The City is working on the final pay estimate to the Contractor. Since the actual expenditure of the project is SeaTac Mall Basin Drainage 10/96 6/01 Improvements Phase II Design Construction Phase N/A 9/97 4/00 4/00 6/00 N/A significantly less than what was 3,O71,630; 3,067,665 expected during the time of loan (Design/ROW/Construction) II application, preliminary analysis shows that the City may have to return a portion of Public Works Trust Fund loan money back to the State in order to meet 30% of local contribution requirement for 1% loan rate. The last part of the project - So. 336th/KittsCorner 1/94 12/96 wetland mitigation vegetation Regional Storage Facility N/A N/A N/A N/A N/A 1/97 30,189 (Monitoring) Prelim. Design Construction monitoring has been completed in [ate 2001. PUBLIC WORKS DEPARTMENT STREETS DIVISION 1/14/2002 PROJECT STATUS REPORT Marwan Salloum, P.E. Street Systems Manager PROJECTED START ADOPTED BUDGET PROJE~ TITLE START COMPLETION pRoJ E~ STATUS PROJECT AMOUNT DATE DATE PREIJM~ ENVIRO F~NAL ~ CONST. BUDGET ENCUMB~ 23rd Avenue So Road 8/93 12/02 N/A 1/00 7/96 12/98 6/01 This project is under construction. The contractor DPK, 8,470,042 8,470,042 Improvements, So 317th St to Inc. Estimated project completion is July 2002. So 324th, and So 320th Street double left turn lanes Design, ROW, and Construction (Design/ROW/ (TEA 21, AlP) Construction) South 320th Street - 11th 1/98 12/02 1/98 N/A N/A N/A N/A Project is being worked on in conjunction with the 1,923,930 1,923,930 Place South to I-5, Utility following projects: Underground and Streetscape - So 320th & SR 99 Intersection Improvements, will (Design/ include the portion from11th PI So to 20th Ave So, and Construction) Design, Construction - 23® Ave So Road Improvements will include the portion from 20th Ave So to I-5 ramps. SR99Phasel-So. 312th 5/98 12/02 8/98 7/99 9/98 3/00 3/02 This project is funded for Design, ROW and 11,208,332 3,431,617 Street to So. 324th Street Construction. Consultant is CH2M Hill, Inc., currently HOV Lanes working on project design. ROW acquisitions are in Design, ROW, Construction progress. Condemnation Ordinance was approved (Design/ROW) (TEA 21, TPP) effective 3/15/01 on 19 parcels. Construction Ad date is estimated to be Mach 2002. SR 99 Phase II - So. 324th Street toSo. 340tbStreet 6/00 12/03 N/A 9/00 6/00 11/00 3/03 This project is funded for Design, ROW and 13,670,720 1,027,720 HOV Lanes Construction with an estimated $2 million shortfall at Design, ROW, Construction this time. The City have submitted an application for (TEA21, TPP, AlP) additional grant funding for the improvements of (Design) S324th Street at Pacific Highway project which was incorporated and made part of the Pacific Highway Phase II project. The Consultant is CH2M Hill, Inc., currently working on project design. Project construction Ad date is estimated to be March 2003 ST E IMATED PROJECT PHASE PROJECTED START ADOPTED BurET PROJECT TITLE START COMPLETION PROJECT STATUS PROJECT AMOUNT DATE DATE ,~UM. £NVIRO FINAL ~ co,sr. BUDGET ENCUMB. l~^¥enueS°uthSh°ulder 11/01 12/02 11/01 N/^ 2/02 2/02 5/02 This project is funded for Design, ROW and 150,000 Improvements (S356th Street Construction. Design for this project will be done in to S361th street) house, lhis project is scheduled for construction as part Design, Construction of the 2002 ^sphalt Overlay proiect 2002 ^sphalt Overlays 9/01 12/02 9/01 N/^ 1/02 H/^ 5/02 lhe City Council approved the list of streets for the 2,245,113 2002 ^sphalt overlay. Staff currently working on project Design, Construction design. S288th Street SR99 to Military Road South 10/01 12/03 10/01 1/02 4/02 1/02 1/03 This pr9ject is funded for Design, ROW and 2,068,955 136,000 Construction. Consultant is CH2M Hill, Inc., currently working on project design Design, ROW, Construction (Design) (TIA, HES) K:\CIP\STRO 102.doc 01/14/2002 The annual programs are used Annual Programs to correct deficiencies posing Minor CIP/Maior hazards in major conveyance Maintenance 1/01 12/01 N/A N/A N/A N/A N/A systems, solve minor Localized 2006 South 308th project flooding problems improving Storm pipe installation at water quality and habitat, 19th Avenue South north of reduce the Liability aspects of South 296t~ Street publicly owned R/D facilities, Manhole replacement near and restore Lost functions and the intersection of 26th values of City's many streams Ave. SW and SW 323rd St and Lakes. R/D Retrofit Each year a Est of projects is Remove sediment from developed for each of the ponds following programs: Minor CIP/Major Lake and Stream Maintenance Lake Killarney - R/D Retrofit Water Quality - Lake E Steam 364TMStreet Culvert WQ Improvement replacement Projects 296,963 74,443 Storm Drainase Hot Tape Total Stencil Joe's Creek Restoration 364th Street Culvert Monitoring Replacement project is Stations/Equipment postponed to 2002. Lakota Adopt a Creek K:\CIP\swrn011602.do¢