City of Biddeford s2

CITY OF BIDDEFORD

DEFERRED COMPENSATION PLAN

(as amended and restated effective January 1, 2005)

Sponsored by:

City of Biddeford 205 Main Street Biddeford, Maine 04005 207-284-9333 Table of Contents Page

ARTICLE I Definitions...... 1

ARTICLE II Deferral of Compensation...... 3 2.01 Deferral Election...... 3 2.02 Modification of Deferral Election...... 3 2.03 Termination of Deferral Election...... 3 2.04 Matching Deferral...... 3 2.05 Investment of Deferrals...... 4 2.06 Accounts...... 4 2.07 Plan to Plan Transfers...... 4 2.08 Rollover Contributions...... 5

ARTICLE III Deferral Limitations...... 5 3.01 Maximum Deferrals...... 5 3.02 Age 50 Catch-Up...... 5 3.03 Limited Catch-Up...... 6 3.04 Coordination of Catch-Up Limits...... 6 3.05 Distribution of Excess Deferrals...... 6

ARTICLE IV Distribution of Deferred Compensation...... 7 4.01 Distributions to Participants...... 7 4.02 Methods of Making Distributions to Participants...... 7 4.03 Distributions to Beneficiaries...... 7 4.04 Methods of Making Distributions to Beneficiaries...... 8 4.05 Emergency Distributions...... 8 4.06 In-Service Distributions...... 8 4.07 Direct Rollovers...... 9 4.08 Installment Distributions - Adjustment for Investment Experience...... 9 4.09 Minimum Amounts to be Distributed...... 9

ARTICLE V Administrator...... 10 5.01 Appointment of Administrator...... 10 5.02 Resignation and Removal...... 10 5.03 Duties...... 11 5.04 Action by Administrator...... 11 5.05 Delegation of Ministerial Duties...... 11

ARTICLE VI Nonalienability of Benefits; Qualified Domestic Relations Order...... 11 6.01 Definitions...... 11 6.02 Nonalienability of Benefits...... 12 6.03 Qualified Domestic Relations Orders...... 12 6.04 Notice...... 12 6.05 Representative...... 12 6.06 Determination by Plan Administrator...... 12

ARTICLE VII Miscellaneous...... 13 7.01 Exclusive Benefit...... 13 7.02 Designation of Beneficiary...... 13 7.03 Employment...... 13 7.04 Amendment and Termination...... 13 7.05 Governing Law...... 13

ARTICLE VIII Trust...... 13 8.01 Duties...... 13 8.02 Investment of Contributions...... 13 8.03 Custodian...... 14 8.04 Trustee Powers...... 14 8.05 Distributions and Transfers...... 15 8.06 Accounts...... 15 8.07 Compensation and Expenses of Trustee...... 15 8.08 Reliance by Trustee...... 15 8.09 Reliance by Others...... 16 8.10 Merger or Consolidation of Trustee...... 16 8.11 Resignation or Removal of Trustee...... 16 8.12 Fiscal Year of Trust...... 17 CITY OF BIDDEFORD

Deferred Compensation Plan

The purpose of this Plan is to permit employees of the City of Biddeford to supplement their retirement benefits through deferral of a portion of their compensation. This Plan is intended to meet the requirements of Section 457 of the Internal Revenue Code of 1986, as amended, and the Plan shall be interpreted and administered to comply with the requirements of Section 457 as well as the regulations issued thereunder. In addition, the Plan shall be interpreted and administered in accordance with Chapter 67 of Title 5 of the Maine Revised Statutes and any other applicable state law, as the same may from time to time be amended.

ARTICLE I Definitions

The following terms, when used herein, shall have the meanings as hereinafter set forth, unless the context indicates otherwise:

1.01 “Account” shall mean the account established and maintained by the Ad- ministrator for each Participant in accordance with Section 2.06.

1.02 “Administrator” shall mean the person or persons designated by the Employer in accordance with Section 5.01. If more than one person shall be designated the committee thus formed shall be known as the “Administrative Committee” and all references in the Plan to the Administrator shall be deemed to apply to the Administrative Committee.

1.03 “Beneficiary” shall mean the person or persons or other entity designated by a Participant in accordance with Section 7.02 to receive any benefits payable under the Plan following the death of the Participant, or an alternate payee under a qualified domestic relations order as defined in Code Section 414(p).

1.04 “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.05 “Compensation” shall mean the compensation received by an Employee from the Employer that is attributable to services performed for the Employer, including, but not limited to, wages or salary, overtime pay and bonuses, and excluding severance pay and compensation received in lieu of or in exchange for benefits.

1.06 “Effective Date” shall mean, with respect to this amendment and restatement, January 1, 2005. 1.07 “Eligible Plan” shall mean an eligible governmental compensation plan as defined by Section 457(b) of the Code and Section 1.457-2(f) of the Department of Treasury Regulations.

1.08 “Eligible Rollover Distribution” shall mean a distribution from the Plan or any other 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; a tax-qualified plan described in Section 401(a) or 403(a) of the Code; an annuity contract described in Section 403(b) of the Code; and an individual retirement account or annuity described in Section 408(a) or 408(b) of the Code, excluding after-tax employee contributions and further excluding: (a) a distribution that is one of a series of periodic payments (not less frequently than annually) made for a specified period of ten (10) years or longer; (b) a required distribution pursuant to Section 401(a)(9) of the Code; (c) a hardship distribution pursuant to Section 4.05 of the Plan.

1.09 “Employee” shall mean any individual employed by the Employer as a regular employee.

1.10 “Employer” shall mean the City of Biddeford.

1.11 “Hardship” shall mean a severe financial hardship of a Participant or Beneficiary resulting from: an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in section 152(a)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner’s insurance, e.g., as a result of a natural disaster); the need to pay for the funeral expenses of the Participant’s spouse or dependent (as defined in section 152(a) of the Code); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute a Hardship. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute a Hardship. Except as otherwise specifically provided in this Section 1.11, neither the purchase of a home nor the payment of college tuition is a Hardship.

1.12 “Includible Compensation” shall, for any taxable year, mean a Participant’s actual wages in box 1 of Form W-2 for a year for services to the Employer, but subject to a maximum of $200,000 (or such higher maximum as may apply under section 401(a)(17) of the Code) and increased (up to the dollar maximum) by any compensation reduction election under section 125, 132(f), 401(k), 403(b), or 457(b) of the Code (including an election to defer Compensation under Article II).

1.13 “Normal Retirement Age” shall mean age 65.

1.14 “Participant” shall mean an individual who is currently deferring Compensation under the Plan, or who has previously deferred Compensation under the Plan and has not received distribution of his or her entire Account.

2 1.15 “Plan” shall mean the City of Biddeford Deferred Compensation Plan, as from time to time amended.

1.16 “Plan Year” shall mean the twelve-consecutive month period ending December 31.

1.17 “Trust” shall mean the trust created by the Employer in accordance with the provisions of the Plan and Section 457(g) of the Code.

1.18 “Trustee” shall mean the person or persons appointed by the Employer to serve as trustee of the Trust.

1.19 “Trust Fund” shall mean the property held in Trust for the benefit of the Participants and their Beneficiaries.

ARTICLE II Deferral of Compensation

2.01 Deferral Election. Subject to the limitations set forth in Article III, an Employee may elect to defer payment of a specified portion of the Compensation payable to him or her during the calendar month following the month in which the election is made and during succeeding months. In addition, a specific portion of the Compensation payable for the calendar month in which an individual first becomes an Employee may be deferred if an election providing for such deferral is made on or before the first day on which such Employee performs services for the Employer. An election shall be made by such written, telephonic or electronic means as the Administrator may accept. A deferral election shall be effective on the later of (i) the date specified in the deferral election form or (ii) as soon as practicable following receipt of the deferral election form by the Administrator. Only an individual who performs services for the Employer as an Employee may defer Compensation under the Plan.

Contributions pursuant to this Section 2.01 shall be made to the Participant=s Account within a period that is not longer than is reasonable for the proper administration of the Plan. For this purpose, deferrals shall be treated as contributed within a period that is not longer than is reasonable for the proper administration of the Plan if the contribution is made to the Trust within fifteen (15) business days following the end of the month in which the amount would otherwise have been paid to the Participant.

2.02 Modification of Deferral Election. Twice each Plan Year a Participant may modify a previous election to increase, subject to the limitations set forth in Article III, or decrease the portion of his or her Compensation to be deferred during the following calendar month and during succeeding calendar months. An election may be modified by such written, telephonic or electronic means as the Administrator may accept. A modification of a previous deferral election shall be effective on the later of (i) the date specified on the modification form or (ii) as soon as practicable following receipt of the modification by the Administrator.

3 2.03 Termination of Deferral Election. A Participant may terminate an election to defer Compensation by such written, telephonic or electronic means as the Administrator may accept. Termination of an election shall be effective on the later of (i) the date specified on the termination notice or (ii) as soon as practicable following receipt of the notice by the Administrator.

2.04 Matching Deferral. Subject to the limitations set forth in Article III and except as hereinafter provided in this Section 2.04, each Plan Year the Employer shall contribute on behalf of a Participant, excluding a Participant employed on a part-time basis, an amount equal to one dollar ($1.00) for each one dollar ($1.00) of Compensation he or she has elected to defer up to five percent (5%) of his or her Compensation for such year. Contributions pursuant to this Section 2.04 shall be made to the Participant=s Account no later than the last day of the Plan Year.

Notwithstanding the foregoing, a Participant who receives a distribution pursuant to Section 4.05 or Section 4.06 shall not be eligible for a contribution under this Section 2.04 for a period of one year ending on the anniversary of the date he or she received such distribution. In addition, no contribution under this Section 2.04 shall be made on behalf of a Participant who participates in the Maine State Retirement System.

2.05 Investment of Deferrals. At the time an initial deferral election is made to defer Compensation under this Plan, the Participant shall designate by such written, telephonic or electronic means as the Administrator may accept that his or her deferred Compensation shall be invested in one or more of the following investments:

(1) fixed or variable life insurance contracts issued by an insurance company qualified to do business in the State of Maine;

(2) fixed or variable annuity contracts issued by an insurance company qualified to do business in the State of Maine;

(3) shares in an investment company registered under the Investment Company Act of 1940.

The Trustee shall invest amounts deferred by a Participant in accordance with his or her investment designation, and such designation shall determine the amount payable to the Participant or, in the event of the Participant's death, the amount payable to his or her Beneficiary, in accordance with Article IV.

A Participant may, at any time, modify a previous investment election by delivering a revised investment designation to the Administrator. A modification of a previous designation shall take effect on the later of (a) the date specified in the revised investment designation, or (b) as soon as practicable following receipt of the revised investment designation by the Administrator. An investment designation may be made by such written, telephonic or electronic means as the Administrator may accept.

4 2.06 Accounts. The Administrator shall establish and maintain an Account for each Participant and shall adjust such Account to reflect the amount of Compensation deferred with respect to the Participant and, in accordance with the Participant’s investment designation, the income, expenses, gains and losses attributable thereto.

2.07 Plan to Plan Transfers. The Administrator may permit a Participant to transfer to the Plan, amounts deferred under another plan that qualifies as an Eligible Plan. Such a transfer is permitted only if the other plan provides for the direct transfer of such Participant’s interest therein to the Plan. The Administrator may require in its sole discretion that the transfer be in cash or other property acceptable to the Administrator. The Administrator may require such documentation from the other plan as it deems necessary to effectuate the transfer in accordance with Section 457(e)(10) of the Code and Section 1.457-10(b) of the Department of Treasury Regulations and to confirm that the other plan is an eligible governmental plan as defined in Section 1.457-2(f) of the Treasury Regulations. The amount so transferred shall be credited, accounted for, administered and otherwise treated in the same manner as an annual deferral by the Participant under the Plan, except that the transferred amount shall not be considered a deferral under the Plan in determining the maximum deferral under Article III.

2.08 Plan-to-Plan Transfers from the Plan.

(a) The Administrator may permit a Participant or Beneficiary to elect to have all or any portion of their account balance transferred to another Eligible Plan. A transfer is permitted under this Section 2.07(a) for a Participant only if the Participant has had a severance from employment with the Employer and is an employee of the entity that maintains the other Eligible Plan. Further, a transfer is permitted under this Section 2.08(a) only if the other Eligible Plan provides for the acceptance of plan-to-plan transfers with respect to the Participant or Beneficiary and for each Participant and Beneficiary to have an amount deferred under the other plan immediately after the transfer at least equal to the amount transferred.

(b) Notwithstanding the preceding paragraph to the contrary, no severance from employment shall be required for a transfer to another Eligible Plan of the Employer.

(c) At the direction of the Employer, the Administrator may direct that all Plan assets be transferred to another Eligible Plan within the State of Maine provided the other Eligible Plan provides for the acceptance of plan-to-plan transfers with respect to Participants and Beneficiaries and for each Participant and Beneficiary to have an amount deferred under the other plan immediately after the transfer at least equal to the amount transferred. Further, a transfer is permitted under this Section 2.08(c) only if the Participants and Beneficiaries whose deferred amounts are being transferred are not eligible for additional annual deferrals in the other plan unless they are performing services for the entity maintaining the other plan.

(d) Upon the transfer of assets under this Section 2.08, the Plan’s liability to pay benefits to the Participant or Beneficiary under this Plan shall be discharged to the extent of the amount so transferred for the Participant or Beneficiary. The Administrator

5 may require such documentation from the receiving plan as it deems appropriate or necessary to comply with this Section 2.08 (for example, to confirm that the receiving plan is an Eligible Plan under paragraph (a), (b) or (c) of this Section 2.08, and to assure that the transfer is permitted under the receiving plan) or to effectuate the transfer pursuant to Section 1.457-10(b) of the Department of Treasury Regulations.

2.09 Permissive Service Credit Transfers.

(a) If a Participant is also a participant in a tax-qualified defined benefit governmental plan (as defined in section 414(d) of the Code) that provides for the acceptance of plan-to-plan transfers with respect to the Participant, then the Participant may elect to have any portion of the Participant’s Account balance transferred to the defined benefit governmental plan. A transfer under this Section 2.09(a) may be made before the Participant has had a severance from employment.

(b) A transfer may be made under Section 2.09(a) only if the transfer is either for the purchase of permissive service credit (as defined in Section 415(n)(3)(A) of the Code) under the receiving defined benefit governmental plan or a repayment to which Section 415 of the Code does not apply by reason of Section 415(k)(3) of the Code.

2.10 Rollover Contributions. A Participant who receives an Eligible Rollover Distribution from an Eligible Plan may transfer all or any portion of such distribution to the Plan, provided the transfer is made not later than the 60th day following the day on which the Participant receives such distribution. The Administrator 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. Such contribution shall be separately accounted for under the Plan.

ARTICLE III Deferral Limitations

3.01 Maximum Deferrals. The amount of Compensation that may be deferred under the Plan for any taxable year of a Participant shall not exceed the lesser of:

(a) 50% of the Participant’s Includible Compensation for the taxable year, or

(b) the following dollar amount for such year:

Year Amount

2002 $11,000 2003 $12,000 2004 $13,000 2005 $14,000 2006 and thereafter $15,000

6 For purposes of this Section 3.01, Compensation deferred under the Plan shall exclude rollover contributions and shall include both elective deferrals pursuant to Section 2.01 and matching deferrals pursuant to Section 2.04 and shall be taken into account at its value at the end of the Plan Year in which deferred. Effective January 1, 2007, the dollar amount in subsection (b) shall be adjusted to reflect cost-of-living increases made by the Secretary of Treasury pursuant to Section 457(e)(15)(B) of the Code.

3.02 Age 50 Catch-Up. Notwithstanding Section 3.01 to the contrary, a Participant who is age 50 or older by the end of the taxable year and who defers the maximum amount under that Section may defer the following additional amount:

Year Amount

2002 $1,000 2003 $2,000 2004 $3,000 2005 $4,000 2006 and thereafter $5,000

Deferrals under this Section 3.02 shall be made in accordance with the applicable requirements of Code Section 414(v). Effective January 1, 2007, the dollar amount described in this Section shall be adjusted to reflect cost-of-living increases as provided under Code Section 414(v).

3.03 Limited Catch-Up. Notwithstanding Section 3.01 to the contrary, the amount of Compensation that may be deferred in any one or more of the last three taxable years ending before a Participant attains Normal Retirement Age shall not exceed the lesser of:

(a) twice the dollar amount under Section 3.01(b); or

(b) the sum of (i) the dollar amount under Section 3.01(b) for the taxable year, plus (ii) the sum of such amounts determined under Section 3.01 for prior taxable years less the amounts deferred under the Plan for such prior taxable years (disregarding any deferrals under Section 3.02). A prior taxable year shall be taken into account under this subsection (b) only if (i) it begins after December 31, 1978, (ii) the Participant was eligible to participate in the Plan during all or any portion of the taxable year, and (iii) Compensation deferred under the Plan during the taxable year was subject to the limitation established under Section 3.01.

For taxable years prior to 2002, the limit under this subsection (b) shall be determined in accordance with the applicable Treasury Regulations addressing the coordination limitation then in effect under Code Section 457(c)(2).

A Participant may not elect to have this limited catch-up apply more than once, whether or not the limited catch-up is utilized in less than all three taxable years ending before the Participant attains Normal Retirement Age, and whether or not the Participant or former Participant rejoins the Plan or participates in another Eligible Plan after retirement.

7 3.04 Coordination of Catch-Up Limits. The amount of Compensation that may be deferred by a Participant who is eligible under Section 3.02 during one of the years described in Section 3.03 shall not exceed the greater of:

(a) the sum of the amounts described in Sections 3.01 and 3.02; or

(b) the amount described in Section 3.03.

3.05 Distribution of Excess Deferrals. To the extent the amount of Compensation deferred with respect to any Participant exceeds the limit under Section 3.01, 3.02 or 3.03, the Administrator shall determine the portion of the excess attributable to Compensation deferred under Section 2.01, and such portion shall be distributed to the Participant, with allocable net income, as soon as administratively practicable.

3.06 Protection of Persons Who Serve in a Uniformed Service. An Employee whose employment is interrupted by qualified military service under Code Section 414(u) or who is on a leave of absence for qualified military service under Code Section 414(u) may elect to make additional annual deferrals upon resumption of employment with the Employer equal to the maximum annual deferrals that the Employee could have elected during that period if the Employee’s employment with the Employer had continued (at the same level of Compensation) without the interruption or leave, reduced by the annual deferrals, if any, actually made for the Employee during the period of the interruption or leave. This right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave).

ARTICLE IV Distribution of Deferred Compensation

4.01 Distributions to Participants. Except as otherwise provided in Section 4.05, 4.06 or 4.07, a Participant=s deferred Compensation (adjusted in accordance with Section 2.06) shall be distributed to him or her in accordance with Section 4.02 as soon as practicable following his or her severance from employment with the Employer; provided, however, that the Participant may, by an irrevocable written election filed with the Administrator prior to separating from service, specify a later commencement date which shall be the first day of any month beginning on or before April 1 of the calendar year following the calendar year in which he or she attains age 70 2. Notwithstanding the preceding provisions to the contrary, a Participant who has elected a commencement date earlier than April 1 of the calendar year following the calendar year in which he or she attains age 70 2 may, after separating from service and before distribution of his or her deferred Compensation commences, make a one-time written election to further defer the commencement date to the first day of any later month but not beyond such April 1.

4.02 Methods of Making Distributions to Participants. Distributions to a Participant shall be made in one or more of the following ways:

8 (a) in a single payment; or

(b) in annual installment payments through the year of the Participant’s death, the amount payable each year equal to a fraction of the account balance equal to one divided by the distribution period set forth in the Uniform Lifetime Table at section 1.401(a)(9)-9, A-2, of the Income Tax Regulations for the Participant’s age on the Participant’s birthday for that year. If the Participant’s age is less than age 70, the distribution period is 27.4 plus the number of years that the Participant’s age is less than age 70. At the Participant’s election, this annual payment can be made in monthly or quarterly installments. The account balance for this calculation (other than the final installment payment) is the account balance as of the end of the year prior to the year for which the distribution is being calculated. Payments shall commence as described in Section 4.01. For any year, the Participant can elect distribution of a greater amount (not to exceed the amount of the remaining account balance) in lieu of the amount calculated using this formula.

Notwithstanding any other provision of the Plan to the contrary, no distribution shall cause benefits payable with respect to a Participant in the event of his death to be more than incidental (within the meaning of paragraph (b)(1) of Section 1.401-1 of the Department of Treasury Regulations) to the primary purpose of providing retirement benefits; furthermore, all distributions will be made in a form under which the amounts payable with respect to the Participant will be paid at such times as meet the requirements of Section 401(a)(9)(G), relating to incidental death benefits.

A Participant may, by an irrevocable written election filed with the Administrator at least forty-five (45) days prior to the commencement of distribution of his or her deferred Compensation, specify the manner in which distribution shall be made in accordance with this Section. In the absence of such written election, distribution shall be made in a single payment.

4.03 Distributions to Beneficiaries. If a Participant dies before distribution of his or her deferred Compensation has been made or commenced or before such distribution has been completed in accordance with the method elected in accordance with Section 4.02, the amount or remaining amount thereof (adjusted in accordance with Section 2.06) shall be distributed to the Beneficiary or Beneficiaries designated by him or her, or if no Beneficiary has been properly designated or no designated Beneficiary survives the Participant, then to the Participant’s estate. Such distribution shall be made or commence within one year of the Participant’s death in one of the methods prescribed in Section 4.04 as elected by the Participant, or if no election has been made, then in a single payment.

4.04 Methods of Making Distributions to Beneficiaries.

(a) If distribution has not commenced to a Participant before his or her death, the amount of the Participant’s deferred Compensation (as adjusted in accordance with Section 2.06) shall be distributed within five (5) years after the death of the Participant; provided, however, that such amount may be paid in installments to a natural person within a distribution period determined under this Section 4.04(a):

9 (i) If the Beneficiary is the Participant’s surviving spouse, the distribution period is equal to the Beneficiary’s life expectancy using the single life table in Section 1.401(a)(9)-9, A-1, of the Department of Treasury Regulations for the spouse’s age on the spouse’s birthday for that year.

(ii) If the Beneficiary is not the Participant’s surviving spouse, the distribution period is the Beneficiary’s life expectancy determined in the year following the year of the Participant’s death using the single life table in Section 1.401(a)(9)-9, A-1, of the Department of Treasury Regulations for the Beneficiary’s age on the Beneficiary’s birthday for that year, reduced by one for each year that has elapsed after that year.

For any year, a Beneficiary can elect distribution of a greater amount (not to exceed the amount of the remaining account balance) in lieu of the amount calculated using the formula above.

(b) If distribution has commenced to a Participant before his or her death, any remaining amount of deferred Compensation (as adjusted in accordance with Section 2.06) shall be distributed after the death of the Participant at least as rapidly as the method of distribution in effect at the time of his or her death.

4.05 Emergency Distributions. Except as hereinafter provided in this Section 4.05 and Sections 4.06 and 4.07, Compensation deferred under the Plan shall not be paid to a Participant or Beneficiary before the Participant separates from service with the Employer. The Administrator may, in its sole discretion, upon the written request of a Participant who has incurred a Hardship, direct the Employer to make a lump sum distribution to the Participant of all or such lesser portion of the Participant’s deferred Compensation (adjusted in accordance with Section 2.06) as may be required to relieve such Hardship (which may include amounts needed for related income taxes or penalties reasonably anticipated to result from the distribution); provided, however, payment may not be made to the extent that such Hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause a hardship, or (iii) by cessation of deferrals under the Plan.

4.06 In-Service Distributions. Notwithstanding any of the provisions of the Plan to the contrary, if a Participant=s deferred Compensation (adjusted in accordance with Section 2.06) does not exceed $5,000 (excluding rollover contributions), and the Participant has deferred no amounts under the Plan during the preceding two-year period, such Participant may elect in writing to receive an in-service distribution of such amount, provided that the Participant has received no prior distribution pursuant to this Section. Distribution shall be made in the form of a lump sum as soon a practicable following receipt by the Administrator of the Participant=s election.

10 4.07 Direct Rollovers.

(a) A Participant who is entitled to receive an Eligible Rollover Distribution may elect to have such distribution (or a portion thereof not less than five hundred dollars ($500)) made directly to an Eligible Retirement Plan (“direct rollover election”).

(b) No earlier than ninety (90) days and no later than thirty (30) days before an Eligible Rollover Distribution is to be made, the Committee shall provide the Participant, alternate payee, or surviving spouse, as the case may be, with a written explanation of

(i) the rules under which he or she may make a direct rollover election;

(ii) the legal requirement that federal income tax be withheld from the distribution if he or she does not elect a direct rollover;

(iii) the rules under which the amount that he or she actually receives will not be subject to federal income tax if such amount is transferred (“rolled over”) within sixty (60) days after being received pursuant to Sections 402(c)(8) (B) and 457(e)(16)(A) of the Code;

(iv) the rules, if applicable, for receiving special income tax averaging, or capital gain treatment, under Section 402(d) of the Code; and

(v) the Plan provisions under which a direct rollover election with respect to one payment in a series of periodic payments will apply to all subsequent payments until such election is changed.

Notwithstanding the foregoing to the contrary, if an Eligible Rollover Distribution is one of a series of periodic payments, the explanation required by this subsection shall be provided annually as long as such payments continue.

(c) A direct rollover election shall be made in such manner and at such time as the Plan Administrator shall prescribe, and shall include:

(i) the name of the Eligible Retirement Plan;

(ii) a statement that such plan is an Eligible Retirement Plan; and

(iii) any other information necessary to permit a direct rollover by the means selected by the Plan Administrator.

An election to make a direct rollover with respect to one payment in a series of periodic payments shall apply to all subsequent payments in the series until such election is changed; such change with respect to subsequent payments may be made at any time.

11 (d) As used in this Section, “Eligible Retirement Plan” means 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; a tax- qualified plan under Section 401(a) or 403(a) of the Code, an annuity contract described in Section 403(b) of the Code; and an individual retirement account or annuity described in Section 408(a) or 408(b) of the Code. The definition of Eligible Retirement Plan also shall 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.

4.08 Installment Distributions - Adjustment for Investment Experience. If distribution is to be made to a Participant, a Participant’s spouse or other Beneficiary pursuant to this Article, the amount of the installments shall be adjusted in accordance with Section 2.06 to reflect the Participant’s investment designation. Distributions payable over more than one year shall be made in substantially non-increasing amounts not less frequently than annually.

4.09 Minimum Amounts to be Distributed. Distribution shall be made in accordance with the regulations under Section 401(a)(9) of the Code, including Regulation 1.401(a)(9)-2, which shall override any distribution options in the Plan inconsistent therewith.

ARTICLE V Administrator

5.01 Appointment of Administrator. The Employer may appoint a person or persons to administer the Plan. If an Administrator is not appointed, the Employer shall be the Administrator. If more than one (1) person is appointed, they shall be known as the Administrative Committee. Any Administrative Committee shall act by a majority of its members either by a meeting or in a writing without a meeting. If an Administrative Committee is appointed, all references in the Plan to the Administrator shall be deemed to refer to the Administrative Committee.

5.02 Resignation and Removal. The Administrator, or any member of the Administrative Committee, may resign at any time by delivering to the Employer a written notice of resignation, to take effect at a date specified therein, which shall not be less than thirty (30) days after the delivery thereof, unless such notice shall, in writing, be waived by the Employer.

The Administrator or any member of the Administrative Committee shall serve at the pleasure of the Employer and may be removed by delivery of written notice of removal, to take effect at a date specified therein.

The Employer, upon receipt of a written notice of resignation or delivery of a written notice of removal of the Administrator or any member of the Administrative Committee, shall appoint a successor. In the event the Employer fails to appoint a successor Administrator, the Employer shall serve as the Administrator until a successor has been appointed. In the event the Employer fails to appoint a successor to serve as a member of the Administrative Committee, the remaining members of the Administrative Committee shall constitute the Administrative

12 Committee, provided if there is only one remaining member such individual shall serve as the Administrator.

5.03 Duties. The Administrator shall have the following power and authority to control and manage the operation and administration of the Plan:

(a) to determine questions regarding the eligibility of an individual to participate in the Plan;

(b) to determine the amounts which Participants may elect to defer under the Plan;

(c) to determine the amounts payable to any Participant or any Beneficiary;

(d) to interpret the provisions of the Plan and to make rules and regulations for the administration of the Plan;

(e) to maintain records for the administration of the Plan;

(f) to employ or retain counsel, accountants, actuaries or such other consultants as may be required to administer the Plan.

5.04 Action by Administrator. The Administrator shall act by a majority of its members and such action shall be taken by a vote at a meeting or in a writing without a meeting.

5.05 Delegation of Ministerial Duties. The Administrator may delegate to any member or to any Employee, severally or jointly, the authority to perform any ministerial act in connection with the administration of the Plan.

ARTICLE VI Nonalienability of Benefits; Qualified Domestic Relations Order

6.01 Definitions. As used in this Article, the following terms shall have the meaning indicated.

(a) “Alternate Payee” means any spouse, former spouse, child or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to the Participant.

(b) “Domestic relations order” means any judgment, decree or order (including approval of a property settlement agreement) that relates to the provision of child support, alimony payments or marital property rights to a spouse, former spouse, child or other dependent of a Participant, and is made pursuant to a State domestic relations law (including a community property law).

13 (c) “Qualified domestic relations order” means a domestic relations order that creates or recognizes the existence of an alternate payee’s right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a Participant under the Plan.

6.02 Nonalienability of Benefits. Except as expressly provided below, benefits provided under the Plan shall not be subject to alienation, assignment, garnishment, attachment, execution (other than the collection by the United States on a judgment resulting from an unpaid tax assessment) or levy of any kind (other than a federal tax levy made pursuant to Section 6331 of the Code), and any attempt to cause such benefits or Account to be so subjected shall not be recognized.

6.03 Qualified Domestic Relations Orders. The provisions of the immediately preceding Section shall apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless the order is determined to be a Qualified Domestic Relations Order.

6.04 Notice. Upon the receipt of any domestic relations order by the Plan, the Plan Administrator shall promptly notify, in writing, the Participant and any alternate payee named in the domestic relations order (at the address included in the domestic relations order) of the receipt of such order and the Plan’s procedures for determining the qualified status of such domestic relations order.

6.05 Representative. Any alternate payee named in a domestic relations order received by the Plan shall have the right to designate, by notice in writing to the Plan Administrator, a representative for the receipt of copies of notices that are sent to the alternate payee with respect to such domestic relations order.

6.06 Determination by Plan Administrator.

(a) Within ninety (90) days after receipt of a domestic relations order, the Plan Administrator will determine whether such order is a qualified domestic relations order and will notify, in writing, the Participant and each alternate payee named in such order of such determination.

(b) If the Plan Administrator determines that the domestic relations order is a qualified domestic relations order, the Plan Administrator shall direct the Trustee to pay to each alternate payee named in such order, the benefits required to be paid under such order.

(c) If the Plan Administrator determines that the domestic relations order is not a qualified domestic relations order, the notice required by subsection (a) above shall include a statement of the specific reason or reasons for the Plan Administrator’s determination. The Participant and the alternate payee will have sixty (60) days from the date of the notification that the notice was not qualified, to submit a revised domestic relations order.

ARTICLE VII

14 Miscellaneous

7.01 Exclusive Benefit. All assets and income of the Plan, including all amounts of Compensation deferred pursuant to the Plan, all property and rights purchased with such amounts, and all income attributable to such amounts, shall be held in trust for the exclusive benefit of Participants and their Beneficiaries.

7.02 Designation of Beneficiary. Each Participant may, from time to time, by completing and signing a form approved by the Administrator designate any person or persons (who may be designated concurrently or contingently), his or her estate or any trust or trusts created by him or her to receive amounts which are payable under this Plan to his or her Beneficiary or Beneficiaries. Each beneficiary designation shall revoke all prior designations and shall be effective upon receipt by the Administrator.

7.03 Employment. This Plan shall not be construed to grant any Employee the right to be retained in the employ of the Employer or any other rights or interest, other than those specifically set forth.

7.04 Amendment and Termination. The Employer reserves the right to amend or terminate this Plan, provided that amendment or termination shall not affect the rights of Participants and Beneficiaries with regard to amounts deferred prior to the adoption thereof except as may be required to satisfy the requirements of Section 457 of the Code and the regulations promulgated and the rulings issued thereunder. If the Plan is terminated, the Administrator shall direct the Trustee to distribute amounts deferred under the Plan to Participants and Beneficiaries as soon as administratively practicable.

7.05 Mistaken Contributions. If any contribution (or any portion of a contribution) is made to the Plan by a good faith mistake of fact, then within one year after the payment of the contribution, and upon receipt in good order of a proper request approved by the Administrator, the amount of the mistaken contribution (adjusted for any income or loss in value, if any, allocable thereto) shall be returned directly to the Participant or, to the extent required or permitted by the Administrator, to the Employer.

7.06 Payments to Minors and Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan.

7.07 Procedure When Distributee Cannot Be Located. The Administrator shall make all reasonable attempts to determine the identity and address of a Participant or a Participant’s Beneficiary entitled to benefits under the Plan. For this purpose, a reasonable attempt means (a) the mailing by certified mail of a notice to the last known address shown on the Employer’s or the Administrator’s records, (b) notification sent to the Social Security Administration or the Pension Benefit Guaranty Corporation (under their program to identify payees under retirement

15 plans), and (c) the payee has not responded within 6 months. If the Administrator is unable to locate such a person entitled to benefits hereunder, or if there has been no claim made for such benefits, the Trust shall continue to hold the benefits due such person.

7.08 Governing Law. This Plan shall be governed and construed by the laws of the State of Maine.

ARTICLE VIII Trust

8.01 Duties. The Trustee accepts the Trust created under this Plan and agrees to perform the duties set forth in this Article. The Trustee shall receive and hold all Compensation deferred under the Plan together with such other assets as may be transferred to it in accordance with the provisions of the Plan. In addition, the Trustee shall make distributions and transfers as directed by the Administrator in accordance with the provisions of Article IV and Section 2.07 and 2.08. No part of the assets or income of the Trust may be used for or diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries, prior to the satisfaction of all liabilities with respect to such persons.@

8.02 Investment of Contributions. Each Participant shall direct that his or her deferred Compensation shall be invested in one of more of the investments described in Section 2.05.

8.03 Custodian. The Employer may from time to time appoint one or more banks, insurance companies, third party plan administrators or brokers to serve as custodian of all or any portion of the Trust Fund.

8.04 Trustee Powers. In addition to and not in limitation of such powers as the Trustee has by law or under any other provisions of the Plan, the Trustee shall have the following powers:

(a) to establish and maintain a separate investment account for each Participant in accordance with Section 2.05;

(b) to allocate and credit deferred Compensation to the accounts of Participants;

(c) to invest and reinvest the Trust Fund, without distinction between principal and income, in any investment described in Section 2.05;

(d) to allocate and credit assets transferred in accordance with Section 2.07;

(e) to maintain one or more checking accounts in the name of the Trust and to make deposits thereto and draw checks thereon to make distributions or transfers directed by the Administrator;

16 (f) to sell, exchange, mortgage, lease and to make contracts concerning real and personal property for such considerations and upon such terms and conditions as the Trustee may determine, which leases and contracts may extend beyond the terms of the Trust and to execute deeds, transfers, mortgages, releases, assignments, and discharges of mortgages, leases and other instruments of any kind;

(g) to vote, in person or by proxy, any corporate stock or other assets having voting rights; to exercise any conversion privilege, subscription right or any other right or option given to the Trustee as the owner of any asset of the Trust Fund;

(h) to consent to, take any action in connection with, and receive and retain any securities resulting from any reorganization, consolidation, or merger affecting any assets of the Trust Fund;

(i) to cause title to the assets of the Trust Fund to be registered in the name of the Trustee, or the name of any nominee or to retain such assets unregistered or in form permitting transferability by delivery, provided the records of the Trustee shall at all times indicate that all such assets are part of the Trust Fund;

(j) to employ such agents and counsel as may be reasonably necessary in collecting, managing, administering, investing, and distributing the assets of the Trust Fund;

(k) to compromise, adjust and settle any and all claims against or in favor of the Trustees or the Trust;

(l) to make, execute, acknowledge and deliver any and all documents that may be necessary or appropriate to carry out the powers herein granted;

(m) to exercise any of the powers and rights of an individual owner with respect to any assets of the Trust Fund; and

(n) to perform any and all other acts which are necessary for the proper administration and investment of the Trust Fund.

8.05 Distributions and Transfers. The Trustee shall, from time to time, make, or cause to be made, distributions or transfers of assets from the Trust Fund to such persons, in such manner and in such amount or amounts as the Administrator may from time to time direct. Distributions shall be made in cash. The Trustee shall be entitled to rely upon the written directions of the Administrator and shall not be under any liability for any distribution or transfer made in accordance therewith.

17 8.06 Accounts. The Trustee shall upon request from the Employer, furnish the Employer with statements of account which shall, with respect to the Trust Fund, show all receipts, disbursements and other transactions since the last accounting and (if requested) the investments, at cost and current fair market value, at the end of the period for which such account is rendered. To the extent permitted by law, the written approval of any account by the Employer shall be final and binding, as to all matters stated therein, upon the Employer and all persons who then are or thereafter become interested in the Trust.

8.07 Compensation and Expenses of Trustee. The Trustee shall be entitled to such reasonable compensation as may from time to time be agreed upon, in writing, by the Employer and shall be entitled to reimbursement for its reasonable expenses incurred in connection with the administration of the Trust Fund. Notwithstanding the foregoing provisions of this Section to the contrary, no person serving as Trustee who receives compensation from the Employer for services rendered as an Employee shall receive compensation from the Plan, except reimbursement of expenses properly and actually incurred and not otherwise reimbursed.

8.08 Reliance by Trustee. To the extent permitted by law, the Trustee may rely and act upon the written directions of the Employer, the Administrator, or other person authorized in writing by the Employer or the Administrator and may rely upon and be protected in acting upon such directions reasonably believed by it to have been executed by a duly authorized person, so long as the Trustee acts in good faith and in accordance with the provisions of this Article.

8.09 Reliance by Others. No person dealing with the Trustee shall be bound to see to the application of any money or property paid or delivered to the Trustee or to inquire into the validity or propriety of any transactions, except as otherwise required by law.

8.10 Merger or Consolidation of Trustee. If the Trustee is a financial institution, then any corporation into which the Trustee may merge or with which it may be consolidated shall become the Trustee hereunder without the execution or filing of any additional instrument or the performance of any further act.

8.11 Resignation or Removal of Trustee.

(a) Institutional Trustee. The Trustee may resign at any time by delivering to the Employer a written notice of resignation, to take effect at a date specified therein, which shall not be less than sixty (60) days after the delivery thereof, unless such notice shall be waived by the Employer. If the Trustee resigns, the Employer shall appoint a successor Trustee in a written instrument, copies of which shall be delivered to the Trustee and the successor Trustee.

The Trustee may be removed by the Employer by delivering to the Trustee a written notice of removal to take effect at a date specified therein, which shall not be less than sixty (60) days after delivery thereof, unless such notice shall be waived by the Trustee. In the event of such removal, the Employer shall appoint a successor Trustee in

18 a written instrument, copies of which shall be delivered to the Trustee and the successor Trustee.

In the case of the resignation or removal of the Trustee, the Trustee shall transfer all right, title and interest in the assets of the Trust Fund to the successor Trustee, provided that the Trustee may reserve such portion of the Trust Fund as the Trustee may reasonably deem advisable to provide for payment of all proper charges against the Trust Fund, and any balance of such reserve remaining after payment of such charges shall be paid over to the successor Trustee. Any successor Trustee shall have the same powers and duties hereunder as those conferred upon the initial Trustee.

(b) Individual Trustee. If an individual is appointed to serve as Trustee, such individual may resign at any time by delivering to the Employer a written notice of resignation, to take effect at a date specified therein. If such individual resigns, the Employer shall appoint an individual to serve as successor Trustee. In the event the Employer fails to appoint an individual to serve as successor Trustee, the remaining individuals serving as Trustee shall constitute the Trustee.

An individual appointed to serve as Trustee may be removed by the Employer by delivering to such individual a written notice of removal to take effect at a date specified therein, which shall not be less than sixty (60) days after delivery thereof, unless such notice shall be waived by such individual. In the event of such removal, the Employer shall appoint an individual to serve as successor Trustee. In the event the Employer fails to appoint an individual to serve as Trustee, the remaining individuals serving as Trustee shall constitute the Trustee.

In the case of the resignation or removal of an individual appointed to serve as Trustee, such individual, to the extent necessary, shall transfer all right, title and interest in the assets of the Trust Fund to the individual appointed to serve as successor Trustee. Any individual appointed to serve as successor Trustee shall have the same powers and duties hereunder as those conferred upon the initial individual serving as Trustee.

8.12 Fiscal Year of Trust. The Fiscal Year of the Trust shall coincide with the Plan Year.

WITNESS: CITY OF BIDDEFORD

______By______Its

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