As filed with the Securities and Exchange Commission on
December 29, 1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Pre - Effective Amendment No. / /
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Post - Effective Amendment No. 14 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 15 / X /
(Check appropriate box or boxes) ----
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PUTNAM HEALTH SCIENCES TRUST
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
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It is proposed that this filing will become effective
(check appropriate box)
/ / this post-effective amendment designates a new
- ---- effective date for a previously filed post-effective
amendment.
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JOHN R. VERANI, Vice President
PUTNAM HEALTH SCIENCES TRUST
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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The Registrant has registered an indefinite number or amount of securities under the Securities Act of 1933 pursuant to Rule 24f - 2. A Rule 24f - 2 notice for the fiscal year ended August 31, 1995 was filed on October 30, 1995 .
CALCULATION OF REGISTRATION FEE
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- -----------------------------------------------------------------------------------------
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of securities being price per offering registration
being registeredregistered unit* price** fee
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Shares of Beneficial
Interest 8,191,598 shs. $45.85 $290,000 $100.00
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* Based on offering price per share on December 15, 1995 .
** Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940. The
total amount of securities redeemed or repurchased during the Registrant's
previous fiscal year was 10,903,523 shares, 2,718,249 of which have
been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-2(c) under said Act
in the current fiscal year, and 8,185,274 of which are being used for such
reduction in this Amendment.
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PUTNAM HEALTH SCIENCES TRUST
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
PART A
N - 1A ITEM NO. LOCATION
1. Cover Page . . . . . . . . . . . Cover page
2. Synopsis . . . . . . . . . . . . Expenses summary
3. Condensed Financial Information Financial
highlights;
How performance
is shown
4. General Description of Registrant Objective;
How
the fund pursues
its objective
; Organization
and history
5. Management of the Fund . . . . . Expenses summary;
How the
fund is
managed; About Putnam
Investments, Inc.
5A. Management's Discussion of Fund
Performance . . . . . . . . . . (Contained in the
annual report
of the Registrant)
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6. Capital Stock and Other Securities Cover page ;
Organization and
history; How the
fund makes
distributions to
shareholders ; tax
information
7. Purchase of Securities Being Offered How to
buy shares;
Distribution
plans ; How to
sell shares; How to
exchange shares; How
the fund
values its shares
8. Redemption or Repurchase . . . . How to buy shares;
How to sell
shares; How to
exchange shares;
Organization and
history
9. Pending Legal Proceedings . . . Not applicable
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PART B
N - 1A ITEM NO. LOCATION
10. Cover Page . . . . . . . . . . . Cover page
11. Table of Contents . . . . . . . Cover page
12. General Information and History Organization and
history (Part A)
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13. Investment Objectives and Policies How the fund pursues its objective
(Part A); Investment restrictions; Miscellaneous investment practices
14. Management of the Registrant . . Management ( Trustees;
Officers);
Additional
officers
15. Control Persons and Principal. . . . . Management
(Trustees;
Holders of Securities Officers);
Charges and
expenses (Share
ownership)
16. Investment Advisory and Other. . . . .
Management
Services (Trustees;
Officers; The
management
contract;
Principal
underwriter;
Investor servicing
agent and
custodian);
Charges and
expenses;
Distribution
plans;
Independent
accountants and
financial
statements
17. Brokerage Allocation . . . . . . Management
(Portfolio
transactions);
Charges and
expenses
18. Capital Stock and Other Securities
Organization and
history (Part A);
How the fund
makes
distributions to
shareholders ; tax
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information (Part A); Suspension of redemptions
19. Purchase, Redemption , and Pricing How to buy
shares
of Securities Being Offered (Part A); How to sell
shares (Part A); How
to exchange shares
(Part A); How to
buy shares;
Determination of
net asset
value; Suspension
of redemptions
20. Tax Status . . . . . . . . . . . How the fund
makes distributions to
shareholders ; tax
information (Part A);
Taxes
21. Underwriters . . . . . . . . . . Management
Principal underwriter);
Charges and
expenses
22. Calculation of Performance Data How performance is
shown (Part A);
Investment
performance;
Standard
performance
measures
23. Financial Statements . . . . . . Independent
accountants and
financial
statements
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PART C
Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C of the Registration Statement.
PROSPECTUS
JANUARY 1, 1996
PUTNAM HEALTH SCIENCES TRUST
CLASS A , B AND M SHARES
INVESTMENT STRATEGY: GROWTH
This prospectus explains concisely what you should know before investing in Putnam Health Sciences Trust (the "fund") . Please read it carefully and keep it for future reference. You can find more detailed information in the January 1, 1996 statement of additional information (the "SAI") , as amended from time to time. For a free copy of the SAI or other information, call Putnam Investor Services at 1-800-225-1581. The SAI has been filed with the Securities and Exchange Commission and is incorporated into this prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED .
BOSTON * LONDON * TOKYO
ABOUT THE FUND EXPENSES SUMMARY 4 This section describes the sales charges, management fees, and annual operating expenses that apply to the fund's various classes of shares. Use it to help you estimate the impact of transaction costs on your investment over time. FINANCIAL HIGHLIGHTS 5 Study this table to see, among other things, how the fund performed each year for the past 10 years or since it began investment operations if it has been in operation for less than 10 years. OBJECTIVE 7 Read this section to make sure the fund's objective is consistent with your own. HOW THE FUND PURSUES ITS OBJECTIVE 7 This section explains in detail how the fund seeks its investment |
objective .
RISK FACTORS . 9 All investments entail some risk. Read this section to make sure you understand certain risks that may be involved when investing in the fund .
HOW PERFORMANCE IS SHOWN 13 This section describes and defines the measures used to assess the fund's performance. All data are based on the fund's past investment results and do not predict future performance. HOW THE FUND IS MANAGED 14 Consult this section for information about the fund's management, allocation of the fund's expenses, and how purchases and sales of securities are made for the fund. ORGANIZATION AND HISTORY 14 In this section, you will learn when the fund was introduced, how it is organized, how it may offer shares, and who its Trustees are. ABOUT YOUR INVESTMENT ALTERNATIVE SALES ARRANGEMENTS 16 Read this section for descriptions of the classes of shares this prospectus offers and for points you should consider when making your choice. |
HOW TO BUY SHARES 17 This section describes the ways you may purchase shares and tells you the minimum amounts required to open various types of accounts. It explains how sales charges are determined and how you may become eligible for reduced sales charges on each class of shares. DISTRIBUTION PLANS 21 This section tells you what distribution fees are charged against each class of shares . HOW TO SELL SHARES 23 In this section you can learn how to sell shares of the fund, either directly to the fund or through an investment dealer. HOW TO EXCHANGE SHARES 24 Find out in this section how you may exchange shares of the fund for shares of other Putnam funds. The section also explains how exchanges can be made without sales charges and the conditions under which sales charges may be required. HOW THE FUND VALUES ITS SHARES 25 This section explains how the fund determines the value of its shares. HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION 25 This section describes the various options you have in choosing how to receive dividends from the fund. It also discusses the federal tax status of the payments and counsels shareholders to |
seek specific advice about their own situation.
ABOUT PUTNAM INVESTMENTS, INC. 27
Read this section to learn more about the companies that provide the marketing, investment management, and shareholder account services to Putnam funds and their shareholders.
ABOUT THE FUND
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing
. The following table summarizes your maximum transaction
costs from investing in the fund and expenses incurred
based on the most recent fiscal year. The
examples show the cumulative expenses attributable to a
hypothetical $1,000 investment over specified periods.
CLASS A CLASS B CLASS M SHARES SHARES SHARES SHAREHOLDER TRANSACTION EXPENSES Maximum sales charge |
imposed on purchases
(as a percentage of
offering price) 5.75% NONE* 3.50%*
Deferred sales charge 5.0% in the
first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Total fund
Management 12b-1
Other operating
fees fees expenses expenses
---------- ----- -------------------
Class A 0.65% 0.25% 0.22% 1.12%
Class B 0.65% 1.00% 0.23% 1.88%
Class M 0.65% 0.75% 0.23% 1.63%
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The table is provided to help you understand the expenses of investing in the fund and your share of the operating expenses that the fund incurs. The 12b-1 fees for class M shares reflect amounts currently payable under its distribution plan. For class M shares, management fees and "Other expenses" are based on the corresponding expenses for class B shares.
EXAMPLES
Your investment of $1,000 would incur the following expenses, assuming 5% annual return and , except as indicated, redemption at the end of each period:
1 3 5 10
year years years years
CLASS A $68 $91 $116 $186
CLASS B $69 $89 $122
$200***
CLASS B (NO REDEMPTION) $19 $59
$102 $200***
CLASS M $51 $85 $121 $222
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The examples do not represent past or future expense levels. Actual expenses may be greater or less than those shown. Federal regulations require the examples to assume a 5% annual return, but actual annual return varies .
* The higher 12b-1 fees borne by class B and class M shares may cause long-term shareholders to pay more than the economic equivalent of the maximum permitted front-end sales charge on class A shares.
** A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares that were purchased without an initial sales charge . See "How to buy shares -- Class A shares."
*** Reflects conversion of class B shares to class A shares (which pay lower ongoing expenses) approximately eight years after purchase. See "Alternative sales arrangements."
FINANCIAL HIGHLIGHTS
The following table presents per share financial information for class A , B and M shares. This information has been audited and reported on by the fund's independent accountants. The " Report of independent accountants" and financial statements included in the fund's annual report to shareholders for the 1995 fiscal year are incorporated by reference into this prospectus. The fund's annual report , which contains additional unaudited performance information, is available without charge upon request.
Financial highlights
(For a share outstanding throughout the period)
July 3, 1995 March 1, 1993
(commencement of (commencement of
operations) to Year ended operations) to
August 31 August 31 August 31 Year ended August 31
1995 1994 1993+ 1995 1994 1993
Class M 1995 Class B Class A
Net asset value,
beginning of period $33.96 $29.47 $24.28 $24.02 $29.77 $24.40 $28.31
Investment operations
Net investment income (.02) .11 .10 .05 .23 .30 .26
Net realized and
unrealized gain (loss)
on investments 2.23 6.78 5.33 .21 6.99 5.36 (1.82)
Total from investment
operations 2.21 6.89 5.43 .26 7.22 5.66 (1.56)
Less distributions from:
Net investment income -- (.12) (.19) -- (.26) (.24) (.13)
Net realized gain on
investments -- (.52) (.05) -- (.52) (.05) (2.22)
Total distributions -- (.64) (.24) -- (.78) (.29) (2.35)
Net asset value,
end of period 36.17 $35.72 $29.47 $24.28 $36.21 $29.77 $24.40
Total investment return
at net asset value (%) (b) 6.51(c) 23.83 22.49 (1.08)(c) 24.81 23.38 (6.45)
Net assets, end of period
(in thousands) $321 $113,329 $55,424 $18,455 $929,484 $789,598 $764,443
Ratio of total expenses to
average net assets (%) .30(c) 1.88 1.87 .96(c) 1.12 1.12 1.13
Ratio of net investment
income to average
net assets (%) (.02)c (.05) .24 .21(c) .70 .96 .91
Portfolio turnover (%) 19.51 19.51 23.18 45.46 19.51 23.18 45.46
/TABLE
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Financial highlights (continued)
Year ended August 31
1992 1991 1990 1989 1988 1987 1986
Class A
Net asset value,
beginning of period $31.29 $22.82 $21.81 $18.55 $24.39 $22.46 $18.47
Investment operations
Net investment income .12 .25 .27 .39 .25(a) .17 .20
Net realized and
unrealized gain (loss)
on investments (.35) 9.07 2.85 5.21 (4.67) 4.70 6.67
Total from investment
operations (.23) 9.32 3.12 5.60 (4.42) 4.87 6.87
Less distributions from:
Net investment income (.27) (.35) (.30) (.29) (.12) (.20) (.22)
Net realized gain on
investments (2.48) (.50) (1.81) (2.05) (1.30) (2.74) (2.66)
Total distributions (2.75) (.85) (2.11) (2.34) (1.42) (2.94) (2.88)
Net asset value,
end of period $28.31 $31.29 $22.82 $21.81 $18.55 $24.39 $22.46
Total investment return
at net asset value (%) (b) (1.12) 41.99 15.01 34.15 (18.79) 27.68 45.12
Net assets, end of period
(in thousands) $970,412 $676,081 $335,080 $270,712 $244,169 $347,540$289,545
Ratio of total expenses to
average net assets (%) 1.20 1.18 1.18 1.14 1.08(a) 1.03 1.00
Ratio of net investment
income to average
net assets (%) .61 1.27 1.44 1.88 1.22(a) .82 1.01
Portfolio turnover (%) 42.12 26.59 37.30 25.11 20.85 33.35 31.14
+ Per-share net investment income has been determined on the basis of the weighted average number of shares
outstanding during the period.
(a) Reflects an expense limitation during the year ended August 31, 1988. As a result of such limitation, expenses of
the fund for that fiscal year reflect a reduction of $0.02 per share.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Not annualized.
/TABLE
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OBJECTIVE
PUTNAM HEALTH SCIENCES TRUST SEEKS CAPITAL APPRECIATION BY
INVESTING AT LEAST 80% OF ITS ASSETS (OTHER THAN ASSETS INVESTED
IN U.S. GOVERNMENT SECURITIES, SHORT-TERM DEBT OBLIGATIONS, AND
CASH OR MONEY MARKET INSTRUMENTS) IN COMMON STOCKS AND OTHER
SECURITIES OF COMPANIES IN THE HEALTH SCIENCES INDUSTRIES, EXCEPT
WHEN PUTNAM INVESTMENT MANAGEMENT, INC., THE FUND'S
INVESTMENT MANAGER ("PUTNAM MANAGEMENT"), BELIEVES ALTERNATIVE
STRATEGIES ARE APPROPRIATE TO PROTECT THE FUND AGAINST A
MARKET DECLINE.
The fund concentrates its investments in a limited group
of industries. The fund is not intended to be a complete
investment program, and there is no assurance it will achieve its
objective.
HOW THE FUND PURSUES ITS OBJECTIVE
BASIC INVESTMENT STRATEGY
THE FUND INVESTS MAINLY IN COMMON STOCKS OF COMPANIES IN
THE HEALTH SCIENCES INDUSTRIES, BUT MAY ALSO INVEST A PORTION OF
ITS ASSETS IN OTHER INDUSTRIES AND MAY INVEST IN FIXED-INCOME
SECURITIES. The fund seeks to purchase securities that
will rise in value; current income is only a minor consideration.
The fund invests primarily in common stocks, but may also
purchase convertible bonds, convertible preferred stocks,
warrants, preferred stocks and debt securities if Putnam
Management believes they would help achieve the fund's
objective of capital appreciation. The fund may hold a
portion of its assets in cash and money market instruments.
At times Putnam Management may judge that conditions in the
securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of its
shareholders. At such times Putnam Management may temporarily
use alternative strategies primarily designed to reduce
fluctuations in the value of the fund's assets.
In implementing these defensive strategies, the
fund may invest without limit in debt securities or
preferred stocks of companies in any industry, or increase the
portion of its assets held in cash or money market instruments,
or invest in other securities Putnam Management considers
consistent with such defensive strategies.
It is impossible to predict when, or for how long, the
fund will use these alternative strategies.
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THE HEALTH SCIENCES INDUSTRIES
THE FUND PROVIDES INVESTORS WITH A DIVERSIFIED PORTFOLIO
OF COMPANIES IN THE HEALTH SCIENCES INDUSTRIES. The health
sciences industries include companies that Putnam Management
considers to be principally engaged in the development,
production or distribution of products or services related to the
treatment or prevention of diseases, disorders or other medical
conditions. The following examples illustrate the wide range of
products and services provided by these industries:
o PHARMACEUTICALS, including ethical (prescription) and
proprietary (nonprescription) drugs, drug
administration products, and chemical or biological
components used in diagnostic testing.
o HEALTH CARE SERVICES, including hospitals, clinical
test laboratories, convalescent and mental health care
facilities, rehabilitation centers, and products and
services for home health care.
o APPLIED RESEARCH AND DEVELOPMENT, including scientific
research toward developing drugs, processes and
technologies with possible commercial applications.
o MEDICAL EQUIPMENT AND SUPPLIES, including sophisticated
electronic equipment used in chemical analysis and
diagnostic testing, surgical and medical instruments,
and other special products.
Putnam Management considers a particular company to be
"principally engaged" in the health sciences industries if at the
time of investment Putnam Management determines that at least 50%
of the company's assets, revenues or profits are derived from
those industries. Under normal market conditions, the
fund will invest at least 65% of its assets in securities
of issuers meeting at least one of these 50% tests .
Putnam Management also considers a company to be
"principally engaged" in these industries if it believes
that the company has the potential for capital
appreciation primarily as a result of particular products,
technology, patents or other market advantages in these
industries. The fund does not anticipate that
companies in the latter category will represent more than
15% of the fund's investments in the health sciences
industries.
FOREIGN INVESTMENTS
THE FUND MAY INVEST UP TO 20% OF ITS ASSETS IN SECURITIES
PRINCIPALLY TRADED IN FOREIGN MARKETS. The fund may
also purchase Eurodollar certificates of deposit without regard
to the 20% limit. Since foreign securities are normally
denominated and traded in foreign currencies, the values of
fund assets may be affected favorably or unfavorably by
currency exchange rates and exchange control regulations. There
may be less information publicly available about a foreign
company than about a U.S. company, and foreign companies are not
generally subject to accounting, auditing , and financial
reporting standards and practices comparable with those in
the United States.
The securities of some foreign companies are less liquid and
at times more volatile than securities of comparable U.S.
companies. Foreign brokerage commissions and other fees are also
generally higher than those in the United States. Foreign
settlement procedures and trade regulations may involve certain
risks (such as delay in payment or delivery of securities or in
the recovery of fund assets held abroad) and expenses not
present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments that could affect
the value of investments in certain foreign countries.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit
investments in securities of certain issuers located in
those foreign countries. Special tax considerations apply to
foreign securities.
The risks described above are typically increased for
investments in securities principally traded in ,
or issued by issuers located in, underdeveloped and
developing nations, which are sometimes referred to as "emerging
markets."
The fund may buy or sell foreign currencies, futures
contracts, foreign currency forward contracts and call
options on foreign currencies for hedging purposes in connection
with its foreign investments.
A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE RISKS
AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS INCLUDED
IN THE SAI .
PORTFOLIO TURNOVER
The length of time the fund has held a particular security
is not generally a consideration in investment decisions. A
change in the securities held by the fund is known as
"portfolio turnover." As a result of the fund's
investment policies,
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under certain market conditions the fund's portfolio
turnover rate may be higher than that of other mutual funds.
Portfolio turnover generally involves some expense to the
fund , including brokerage commissions or dealer mark-ups
and other transaction costs on the sale of securities and
reinvestment in other securities. These transactions may
result in realization of taxable capital gains. Portfolio
turnover rates for the 10 most recent fiscal years are
shown in the section , "Financial highlights ".
RISK FACTORS
WHILE THE FUND'S PORTFOLIO WILL NORMALLY INCLUDE
SECURITIES OF ESTABLISHED SUPPLIERS OF TRADITIONAL PRODUCTS AND
SERVICES, THE FUND MAY ALSO INVEST IN SMALLER COMPANIES
WHICH MAY BENEFIT FROM THE DEVELOPMENT OF NEW PRODUCTS AND
SERVICES. While many major U.S. corporations are involved in the
health sciences industries,
smaller and less seasoned companies represent a substantial
portion of this field, particularly in the area of emerging
medical technologies. These smaller companies may present
greater opportunities for capital appreciation, but may also
involve greater risks. They may have limited product lines,
markets or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and
in more limited volume than the securities of larger, more
established companies, and only in the over-the-counter market or
on a regional securities exchange. As a result, the prices of
these securities may fluctuate more erratically, and to a greater
degree, than the prices of securities of other issuers.
BECAUSE THE FUND'S INVESTMENTS ARE CONCENTRATED IN THE
HEALTH SCIENCES INDUSTRIES , THE VALUE OF ITS SHARES IS
ESPECIALLY AFFECTED BY FACTORS RELATING TO THOSE
INDUSTRIES AND MAY FLUCTUATE MORE WIDELY THAN THE VALUE OF SHARES
OF A PORTFOLIO WHICH INVESTS IN A BROADER RANGE OF INDUSTRIES.
For example, many products and services are subject to
risk of rapid obsolescence caused by technological and
scientific advances. In addition, the health sciences industries
are generally subject to greater government regulation than many
other industries . Changes in governmental policies may
have a material effect on the demand for or costs of
certain products and services. Regulatory approvals are
generally required before new drugs and medical devices or
procedures may be introduced and before the acquisition of
additional facilities and equipment by health care providers.
Changes in reinvestment rates and methods, including changes in
governmental payment systems and the increased use of managed
care arrangements, may affect the revenues and expenses of health
care service providers.
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STOCK INDEX FUTURES AND OPTIONS
THE FUND MAY BUY AND SELL STOCK INDEX FUTURES CONTRACTS
. An "index future" is a contract to buy or sell units of
a particular stock index at an agreed price on a specified future
date. Depending on the change in value of the index between the
time the fund enters into and terminates an index
future transaction, the fund realizes a gain or loss.
In addition to or as an alternative to purchasing or selling
index futures, the fund may buy and sell call and put options
on index futures or stock indexes. The fund may engage in
index futures and options transactions for hedging
purposes and for nonhedging purposes, such as to earn
additional income.
THE USE OF INDEX FUTURES AND RELATED OPTIONS INVOLVES CERTAIN
SPECIAL RISKS. FUTURES AND OPTIONS TRANSACTIONS INVOLVE COSTS
AND MAY RESULT IN LOSSES.
Certain risks arise because of the possibility of imperfect
correlations between movements in the prices of index futures and
options and movements in the prices of the underlying stock index
or of the portfolio securities that are the
subject of a hedge. The successful use of the strategies
described above further depends on Putnam Management's ability to
forecast market movements correctly.
Other risks arise from the potential inability to
close out index futures or options positions .
There can be no assurance that a liquid secondary market will
exist for any index future or option at any particular time.
The use of futures and options transactions for purposes other
than hedging entails greater risks. Certain provisions of
the Internal Revenue Code and certain regulatory requirements may
limit the use of index futures and options transactions.
A MORE DETAILED EXPLANATION OF INDEX FUTURES AND OPTIONS
TRANSACTIONS, INCLUDING THE RISKS ASSOCIATED WITH THEM, IS
INCLUDED IN THE SAI .
OTHER INVESTMENT PRACTICES
THE FUND MAY ALSO ENGAGE IN THE FOLLOWING
INVESTMENT PRACTICES, EACH OF WHICH INVOLVES CERTAIN SPECIAL
RISKS. THE SAI CONTAINS MORE DETAILED INFORMATION ABOUT
THESE PRACTICES, INCLUDING LIMITATIONS DESIGNED TO REDUCE THESE
RISKS.
OPTIONS. The fund may seek to increase its current return
by writing covered call and put options on securities it owns or
in which it may invest. The fund receives a premium from
writing a call or put option, which increases the return
if the option expires unexercised or is closed out at a net
profit.
When the fund writes a call option, it gives up the
opportunity to profit from any increase in the price of a
security above the exercise price of the option; when it writes a
put option, the fund takes the risk that it will be
required to purchase a security from the option holder at a price
above the current market price of the security. The fund
may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in
which it purchases an option having the same terms as the option
written.
The fund may also buy and sell put and call options
for hedging purposes. From time to time , the fund may
also buy and sell combinations of put and call options on the
same underlying security to earn additional income. The
aggregate value of the securities underlying the options may not
exceed 25% of fund assets. The use of these
strategies may be limited by applicable law.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS.
The fund may lend portfolio securities amounting to not
more than 25% of its assets to broker-dealers and may enter into
repurchase agreements on up to 25% of its assets. These
transactions must be fully collateralized at all times. The
fund may also purchase securities for future delivery,
which may increase its overall investment exposure and involves a
risk of loss if the value of the securities declines prior to the
settlement date. These transactions involve some risk to the
fund if the other party should default on its obligation
and the fund is delayed or prevented from recovering the
collateral or completing the transaction.
DIVERSIFICATION
The fund is a "diversified" investment company under the
Investment Company Act of 1940. This means that with respect to
75% of its total assets the fund may not invest more than 5% of
its total assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of the fund's total
assets is not subject to this restriction. To the extent the
fund invests a significant portion of its assets in the
securities of a particular issuer, the fund will be subject to an
increased risk of loss if the market value of such issuer's
securities declines.
DERIVATIVES
Certain of the instruments in which the fund will invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying asset, such as a security or an index. Further
information about these instruments and the risks involved in
their use is included elsewhere in this prospectus and in the
SAI.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT
INVESTMENT RISKS FOR ITS SHAREHOLDERS. These restrictions
prohibit the fund from acquiring more than 10% of
the voting securities of any one issuer .* They also prohibit
the fund from investing more than:
(a) (with respect to 75% of the fund's total assets)
5% of its total assets in securities of any one issuer
(other than securities issued or guaranteed as to interest and
principal by the U.S. government or its agencies or
instrumentalities);*
(b) 5% of its net assets in companies that, together with any
predecessors, have been in operation less than three years and in
equity securities (other than securities restricted as to resale)
that do not have readily available market quotations;
(c) 10% of its net assets in securities restricted as to
resale;*
(d) 25% of its total assets in any one industry, except the
health sciences industries;*
(e) 5% of its net assets in warrants or more than 2% of its
net assets in warrants not listed on the New York or American
Stock Exchanges; or
(f) 15% of its net assets in any combination of securities
that are not readily marketable, in securities restricted as to
resale (excluding securities determined by the
Trustees (or the person designated by the Trustees
to make such determinations) to be readily marketable), and in
repurchase agreements maturing in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the SAI for
the full text of these policies and the fund's other
fundamental investment policies. Except for investment
policies designated as fundamental in this prospectus or
the SAI , the investment policies described in this
prospectus and in the SAI are not fundamental
policies. The Trustees may change any non - fundamental
investment policies without shareholder approval. As a matter of
policy, the Trustees would not materially change the
fund's investment objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
THE FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE
INCLUDED IN ADVERTISEMENTS ABOUT THE FUND . "Total return"
for the one-, five- and ten-year periods (or for the life of a
class, if shorter) through the most recent calendar quarter
represents the average annual compounded rate of return on an
investment of $1,000 in the fund invested at the maximum
public offering price (in the case of class A and class
M shares) or reflecting the deduction of any applicable
contingent deferred sales charge (in the case of class B
shares). Total return may also be presented for other periods or
based on investment at reduced sales charge levels. Any
quotation of investment performance not reflecting the maximum
initial sales charge or contingent deferred sales charge would be
reduced if the sales charge were used.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND
DO NOT PREDICT FUTURE PERFORMANCE.
Investment performance, which will vary, is based on many
factors, including market conditions, the composition of the
fund's portfolio, the fund's operating expenses and
which class of shares the investor purchases . Investment
performance also often reflects the risks associated with the
fund's investment objective and policies. These factors
should be considered when comparing the fund's investment
results with those of other mutual funds and other
investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. The fund's performance
may be compared to that of various indexes. See
the SAI .
HOW THE FUND IS MANAGED
THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY
OVERSEEING THE CONDUCT OF THE FUND'S BUSINESS. Subject
to such policies as the Trustees may determine, Putnam Management
furnishes a continuing investment program for the fund and
makes investment decisions on its behalf. Subject to the control
of the Trustees, Putnam Management also manages the fund's
other affairs and business.
The fund pays Putnam Management a quarterly fee for these services based on the fund's average net assets. See "Expenses summary" and the SAI. |
The following officer of Putnam Management has had
primary responsibility for the day-to-day management of
the fund's portfolio since the year stated below:
Business experience
Year (at least 5 years)
------- -----------------
Joanne Soja 1993 Employed as an investment
Vice President professional by Putnam
Management since
1993. Prior to June
1993, she was a
Portfolio Manager/Analyst at
Chancellor Management
.
The fund pays all expenses not assumed by Putnam
Management, including Trustees' fees, auditing, legal,
custodial, investor servicing and shareholder reporting expenses,
and payments under its distribution plans (which are in
turn allocated to the relevant class of shares). The fund
also reimburses Putnam Management for the compensation and
related expenses of certain officers of the fund and their
staff who provide administrative services to the fund .
The total reimbursement is determined annually by the Trustees.
Putnam Management places all orders for purchases and sales of
the fund's securities. In selecting broker -
dealers, Putnam Management may consider research and
brokerage services furnished to it and its affiliates. Subject
to seeking the most favorable price and execution available,
Putnam Management may consider sales of shares of the fund
(and, if permitted by law, of the other Putnam funds) as a factor
in the selection of broker - dealers.
ORGANIZATION AND HISTORY
Putnam Health Sciences Trust is a Massachusetts business trust
organized on January 28, 1982. A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is
on file with the Secretary of State of The Commonwealth of
Massachusetts.
The fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest which may be divided without
shareholder approval into two or more classes of shares
having such preferences and special or relative rights and
privileges as the Trustees determine. The fund's shares
are currently divided into three classes. Only the fund's
class A, B and M shares are offered by this prospectus. The fund
may also offer other classes of shares with different
sales charges and expenses. Because of these different sales
charges and expenses, the investment performance of the classes
will vary. For more information, including your eligibility to
purchase any other class of shares, contact your investment
dealer or Putnam Mutual Funds (at 1-800-225-1581) .
Each share has one vote, with fractional shares voting
proportionally. Shares of each class will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
fund were liquidated, would receive the net assets of the
fund. The fund may suspend the sale of shares at
any time and may refuse any order to purchase shares. Although
the fund is not required to hold annual meetings of its
shareholders, shareholders holding at least 10% of the
outstanding shares entitled to vote have the right to call a
meeting to elect or remove Trustees, or to take other actions as
provided in the Agreement and Declaration of Trust.
If you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares), the fund may choose to redeem your
shares . You will receive at least 30 days' written
notice before the fund redeems your shares, and you may
purchase additional shares at any time to avoid a redemption.
The fund may also redeem shares if you own shares above a
maximum amount set by the Trustees. There is presently no
maximum, but the Trustees may establish one at any time, which
could apply to both present and future shareholders.
THE FUND'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President
of the Putnam funds. Chairman and Director of Putnam Management
and Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, Massachusetts Institute of Technology ; JAMESON
ADKINS BAXTER, President, Baxter Associates, Inc.; HANS H. ESTIN,
Vice Chairman, North American Management Corp.; JOHN A. HILL,
Principal and Managing Director, First Reserve Corporation;
ELIZABETH T. KENNAN, President Emeritus and Professor, Mount
Holyoke College; LAWRENCE J. LASSER,* Vice President of the
Putnam funds. President, Chief Executive Officer and Director of
Putnam Investments, Inc. and Putnam Management. Director, Marsh
& McLennan Companies, Inc.; ROBERT E. PATTERSON, Executive Vice
President, Cabot Partners Limited Partnership; DONALD S.
PERKINS,* Director of various corporations, including
AT&T, Kmart Corporation and Time Warner Inc.; GEORGE
PUTNAM, III,* President, New Generation Research, Inc.; ELI
SHAPIRO, Alfred P. Sloan Professor of Management, Emeritus,
Alfred P. Sloan School of Management, Massachusetts Institute
of Technology ; A.J.C. SMITH,* Chairman, Chief Executive
Officer and Director, Marsh & McLennan Companies, Inc.; and W.
NICHOLAS THORNDIKE, Director of various corporations and
charitable organizations, including Data General Corporation,
Bradley Real Estate, Inc. and Providence Journal Co. Also,
Trustee of Massachusetts General Hospital and Eastern Utilities
Associates. The fund's Trustees are also Trustees of the
other Putnam funds. Those marked with an asterisk (*) are or may
be deemed to be "interested persons" of the fund , Putnam
Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
ALTERNATIVE SALES ARRANGEMENTS
This prospectus offers investors three classes of
shares that bear sales charges in different forms and
amounts and that bear different levels of expenses:
CLASS A SHARES. An investor who purchases class A shares
pays a sales charge at the time of purchase. As a result,
class A shares are not subject to any charges when they
are redeemed , except for certain sales at net asset
value that are subject to a contingent deferred sales
charge ("CDSC") . Certain purchases of class A
shares qualify for reduced sales charges. Class A shares
bear a lower 12b-1 fee than class B and class M
shares. See "How to buy shares -- Class A shares " and
"Distribution plans."
CLASS B SHARES. Class B shares are sold without an initial sales
charge, but are subject to a CDSC if redeemed within a
specified period after purchase . Class B shares also bear a
higher 12b-1 fee than class A and class M shares. Class B
shares automatically convert into class A shares,
based on relative net asset value, approximately eight years
after purchase. For more information about the conversion of
class B shares, see the SAI. This discussion will include
information about how shares acquired through reinvestment of
distributions are treated for conversion purposes. The
discussion will also note certain circumstances under which a
conversion may not occur. Class B shares provide an investor
the benefit of putting all of the investor's dollars to work from
the time the investment is made . Until conversion, class B
shares will have a higher expense ratio and pay lower
dividends than class A and class M shares
because of the higher 12b-1 fee. See "How to buy shares -
- - Class B shares " and "Distribution plans."
CLASS M SHARES. An investor who purchases class M shares pays a
sales charge at the time of purchase that is lower than the sales
charge applicable to class A shares. Certain purchases of class
M shares qualify for reduced sales charges. Class M shares bear
a 12b-1 fee that is lower than class B shares but higher than
class A shares. Class M shares are not subject to any CDSC and
do not convert into any other class of shares. See "How to buy
shares -- Class M shares" and "Distribution plans."
WHICH ARRANGEMENT IS BEST FOR YOU? The decision as to
which class of shares provides a more suitable investment for an
investor depends on a number of factors, including the amount and
intended length of the investment. Investors making investments
that qualify for reduced sales charges might consider
class A or class M shares. Investors who prefer
not to pay an initial sales charge might consider class B
shares. Orders for class B shares for $250,000 or more
will be treated as orders for class A shares or declined.
For more information about these sales arrangements, consult your
investment dealer or Putnam Investor Services. Shares may
only be exchanged for shares of the same class of another Putnam
fund. See "How to exchange shares."
HOW TO BUY SHARES
You can open a fund account with as little as $500 and
make additional investments at any time with as little as $50.
You can buy fund shares three ways - through most
investment dealers, through Putnam Mutual Funds (at 1-800-225-
1581), or through a systematic investment plan. If you do not
have a dealer, Putnam Mutual Funds can refer you to one.
BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS. Complete an order
form and write a check for the amount you wish to
invest, payable to the fund. Return the completed form
and check to Putnam Mutual Funds, which will act as your
agent in purchasing shares through your designated investment
dealer.
BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking or savings account. Application
forms are available from your investment dealer or through Putnam
Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.
CLASS A SHARES
The public offering price of class A shares is the net
asset value plus a sales charge that varies depending on
the size of your purchase . The fund receives the net asset
value. The sales charge is allocated between your investment
dealer and Putnam Mutual Funds as shown in the following table,
except when Putnam Mutual Funds, in its discretion, allocates the
entire amount to your investment dealer.
SALES CHARGE AMOUNT OF
AS A PERCENTAGE OF: SALES CHARGE
------------------ - REALLOWED TO
NET DEALERS AS A
AMOUNT OF TRANSACTION AMOUNT OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) INVESTED PRICE OFFERING PRICE
- -----------------------------------------------------------------
Under 50,000 6.10% 5.75% 5.00%
50,000 but under 100,000 4.71 4.50 3.75
100,000 but under 250,000 3.63 3.50 2.75
250,000 but under 500,000 2.56 2.50 2.00
500,000 but under 1,000,000 2.04 2.00 1.75
- -------------------- --------------------------------------
- ------
There is no initial sales charge on purchases of class A
shares of $1 million or more. However, a CDSC of 1.00% or
0.50%, respectively, will be imposed if you redeem
these shares within the first or second year after purchase,
based on the lower of the shares' cost and current net asset
value. Any shares acquired by reinvestment of distributions will
be redeemed without a CDSC.
In addition, there are no sales charges on shares
purchased by participant-directed employee benefit plans with
at least 200 eligible employees.
Shares purchased by certain investors investing $1 million or
more who have made arrangements with Putnam Mutual Funds
and whose dealer of record waived the commission as described
below are not subject to the CDSC. In determining whether a CDSC
is payable, the fund will first redeem shares not subject
to any charge. Putnam Mutual Funds receives the entire amount of
any CDSC you pay. See the SAI for more information about
the CDSC.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of class A shares
of $1 million or more based on an investor's cumulative purchases
during the one-year period beginning with the date of the initial
purchase at net asset value. Each subsequent one-year measuring
period for these purposes will begin with the first net asset
value purchase following the end of the prior period. Such
commissions are paid at the rate of 1.00% of the amount under $3
million, 0.50% of the next $47 million and 0.25% thereafter.
|
On sales at net asset value to a participant-directed
qualified retirement plan initially investing less than $20
million in Putnam funds and other investments managed by Putnam
Management or its affiliates (including a plan with at least
200 eligible employees), Putnam Mutual Funds pays
commissions during each one-year measuring period, determined
as described above, at the rate of 1.00% of the first $2
million, 0.80% of the next $1 million and 0.50% thereafter.
On sales at net asset value to all other participant-directed
qualified retirement plans, Putnam Mutual Funds pays commissions
on the initial investment and on subsequent net quarterly sales
at the rate of 0.15%.
CLASS B SHARES
Class B shares are sold without an initial sales charge, although
a CDSC will be imposed if you redeem shares within a specified
period after purchase , as shown in the table below .
The following types of shares may be redeemed without charge at
any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described in
"How to buy shares- - General" below. For other shares, the
amount of the charge is determined as a percentage of the lesser
of the current market value or the cost of the shares being
redeemed.
YEAR 1 2 3 4 5 6 7+
- -------------------------------------------------------------
CHARGE 5% 4% 3% 3% 2% 1% 0%
In determining whether a CDSC is payable on any redemption, the
fund will first redeem shares not subject to any charge,
and then shares held longest during the CDSC period. For
this purpose, the amount of any increase in a share's value above
its initial purchase price is not regarded as a share exempt from
the CDSC. Thus, when a share that has appreciated in
value is redeemed during the CDSC period, a CDSC is
assessed only on its initial purchase price. For
information on how sales charges are calculated if you exchange
your shares, see "How to exchange shares." Putnam Mutual Funds
receives the entire amount of any CDSC you pay.
CLASS M SHARES
The public offering price of class M shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The sales
charge is allocated between your investment dealer and Putnam
Mutual Funds as shown in the following table, except when Putnam
|
Mutual Funds,
at its discretion, allocates the entire amount to
your investment dealer.
SALES CHARGE AMOUNT OF
AS A PERCENTAGE OF: SALES CHARGE
------------------- REALLOWED TO
NET DEALERS AS A
AMOUNT OF TRANSACTION AMOUNT OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) INVESTED PRICE OFFERING PRICE
- -----------------------------------------------------------------
Under 50,000 3.63% 3.50% 3.00%
50,000 but under 100,000 2.56 2.50 2.00
100,000 but under 250,000 1.52 1.50 1.00
250,000 but under 500,000 1.01 1.00 1.00
500,000 and above NONE NONENONE
GENERAL
YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES AND CLASS M SHARES
AT REDUCED SALES CHARGES.
Consult your investment dealer or Putnam Mutual Funds for details
about Putnam's combined purchase privilege, cumulative quantity
discount, statement of intention, group sales plan, employee
benefit plans, and other plans. Descriptions are also included
in the order form and in the SAI.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by Putnam Mutual Funds may include
amounts invested in other mutual funds participating in such
program for purposes of determining whether the plan may purchase
class A shares at net asset value . These
investments will also be included for purposes of the discount
privileges and programs described above.
Sales charges will not apply to class M shares purchased with
redemption proceeds received within the prior 90 days from non-
Putnam mutual funds on which the investor paid a front-end or a
contingent deferred sales charge or to class M shares purchased
by participant-directed qualified retirement plans with at least
50 eligible employees. The fund may sell class M shares at net
asset value to members of qualified groups.
The fund may sell class A, class B and class M shares at net
asset value without an initial sales charge or a CDSC to the
fund's current and retired Trustees (and their families),
current and retired employees (and their families) of Putnam
Management and affiliates, registered representatives and other
employees (and their families) of broker-dealers having sales
agreements with Putnam Mutual Funds, employees (and their
families) of financial institutions having sales agreements with
Putnam Mutual Funds (or otherwise having an arrangement with a
broker-dealer or financial institution with respect to sales of
fund shares), financial institution trust departments
investing an aggregate of $1 million or more in Putnam funds,
clients of certain administrators of tax-qualified plans,
employee benefit plans of companies with more than 750 employees,
tax-qualified plans when proceeds from repayments of loans to
participants are invested (or reinvested) in Putnam funds, "wrap
accounts" for the benefit of clients of broker-dealers, financial
institutions or financial planners adhering to certain standards
established by Putnam Mutual Funds, and investors meeting certain
requirements who sold shares of certain Putnam closed-end funds
pursuant to a tender offer by the closed-end fund.
In addition, the fund may sell shares at net asset
value without an initial sales charge or a CDSC in connection
with the acquisition by the fund of assets of an
investment company or personal holding company . The CDSC
will be waived on redemptions of shares arising out of the
death or post-purchase disability of a shareholder
or settlor of a living trust account, and on redemptions
in connection with certain withdrawals from IRA or other
retirement plans. Up to 12% of the value of shares
subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC. The SAI contains
additional information about purchasing the fund's shares at
reduced sales charges .
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
shares of the fund at net asset value.
If you are considering redeeming or exchanging shares or
transferring shares to another person shortly after purchase, you
should pay for those shares with a certified check to avoid any
delay in redemption, exchange or transfer. Otherwise the
fund may delay payment until the purchase price of those
shares has been collected or, if you redeem by telephone, until
15 calendar days after the purchase date. To eliminate the
need for safekeeping, the fund will not issue certificates for
your shares unless you request them.
Putnam Mutual Funds will from time to time , at its
expense , provide additional promotional incentives or
payments to dealers that sell shares of the Putnam funds.
These incentives or payments may include payments for
travel expenses, including lodging incurred in connection with
trips taken by invited registered representatives and their
guests to locations within and outside the United States for
meetings or seminars of a business nature. In some instances,
these incentives or payments may be offered only to certain
dealers who have sold or may sell significant amounts of shares.
Certain dealers may not sell all classes of shares.
DISTRIBUTION PLANS
CLASS A DISTRIBUTION PLAN. The class A plan
provides for payments by the fund to Putnam Mutual Funds
at the annual rate of up to 0.35% of average net assets
attributable to class A shares. The Trustees currently
limit payments under the class A plan to the annual
rate of 0.25% of such assets.
Putnam Mutual Funds makes quarterly payments to
qualifying dealers (including, for this purpose,
certain financial institutions) to compensate them for
services provided in connection with sales of class A
shares and the maintenance of shareholder accounts . The
payments are based on the average net asset value of
class A shares attributable to shareholders for
whom the dealers are designated as the dealer of record.
This calculation excludes until one year after purchase
shares purchased at net asset value , known as "NAV
shares," by shareholders investing $1 million or more .
Also excluded until one year after purchase are NAV shares
purchased by participant-directed qualified retirement plans
with at least 200 eligible employees . NAV shares
are not subject to the one-year exclusion provision in cases
where certain shareholders who invested $1 million or
more have made arrangements with Putnam Mutual Funds and
the dealer of record waived the sales commission.
Except as stated below, Putnam Mutual Funds makes the
quarterly payments at the annual rate of 0.20% of such
average net asset value for class A shares outstanding as
of December 31, 1989 and 0.25% of such average net asset value
of shares acquired after that date (including shares
acquired through reinvestment of distributions).
For participant-directed qualified retirement plans initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates,
Putnam Mutual Funds' payments to qualifying dealers on NAV
shares are 100% of the rate stated above if average plan
assets in Putnam funds (excluding money market funds) during the
quarter are less than $20 million, 60% of the stated rate if
average plan assets are at least $20 million but under $30
million, and 40% of the stated rate if average plan assets are
$30 million or more.
For all other participant-directed qualified retirement plans
purchasing NAV shares , Putnam Mutual Funds makes quarterly
payments to qualifying dealers at the annual rate of 0.10% of the
average net asset value of such shares.
|
CLASS B AND CLASS M DISTRIBUTION PLANS. The class B and class M plans provide for payments by the fund to Putnam Mutual Funds at the annual rate of up to 1.00% of average net assets attributable to class B shares and class M shares, as the case may be. The Trustees currently limit payments under the class M plan to the annual rate of 0.75% of such assets . Although class B shares are sold without an initial sales charge, Putnam Mutual Funds pays a sales commission equal to 4.00% of the amount invested to dealers who sell class B shares. These commissions are not paid on exchanges from other Putnam funds or on sales to investors exempt from the CDSC. The amount paid to dealers at the time of the sale of class M shares is set forth above under "How to buy shares -- Class M shares." In addition, to further compensate dealers (including qualifying financial institutions) for services provided in connection with sales of class B shares and class M shares and the maintenance of shareholder accounts, Putnam Mutual Funds makes quarterly payments to qualifying dealers . The payments are based on the average net asset value of class B shares and class M shares attributable to shareholders for whom the dealers are designated as the dealer of record. Putnam Mutual Funds makes the payments at an annual rate of 0.25% of such average net asset value of class B shares and class M shares, as the case may be. Putnam Mutual Funds also pays to dealers, as additional compensation with respect to the sale of class M shares, 0.40% of such average net asset value of class M shares . For class M shares, the total annual payment to dealers equals 0.65% of such average net asset value. GENERAL. Payments under the plans are intended to compensate Putnam Mutual Funds for services provided and expenses incurred by it as principal underwriter of fund shares, including the payments to dealers mentioned above. Putnam Mutual Funds may suspend or modify such payments to dealers. The payments are also subject to the continuation of the relevant distribution plan , the terms of service agreements between dealers and Putnam Mutual Funds, and any applicable limits imposed by the National Association of Securities Dealers, Inc. HOW TO SELL SHARES You can sell your shares to the fund any day the New York Stock Exchange is open, either directly to the fund or through your |
investment dealer. The fund will only redeem shares for
which it has received payment.
SELLING SHARES DIRECTLY TO THE FUND . Send a signed letter
of instruction or stock power form to Putnam Investor Services,
along with any certificates that represent shares you want to
sell. The price you will receive is the next net asset value
calculated after the fund receives your request in proper
form less any applicable CDSC. In order to receive that day's
net asset value, Putnam Investor Services must receive your
request before the close of regular trading on the New York Stock
Exchange.
If you sell shares having a net asset value of $100,000 or
more, the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. See the SAI for
more information about where to obtain a signature guarantee.
Stock power forms are available from your investment dealer,
Putnam Investor Services and many commercial banks.
If you want your redemption proceeds sent to an address other
than your address as it appears on Putnam's records, a signature
guarantee is required. Putnam Investor Services usually requires
additional documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
THE FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES THE
BUSINESS DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual
circumstances, the fund may suspend redemptions, or
postpone payment for more than seven days, as permitted by
federal securities law.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $100,000 from your account unless you have
notified Putnam Investor Services of an address change within the
preceding 15 days. Unless an investor indicates otherwise on the
account application , Putnam Investor Services will be
authorized to act upon redemption and transfer instructions
received by telephone from a shareholder, or any person claiming
to act as his or her representative, who can provide Putnam
Investor Services with his or her account registration and
address as it appears on Putnam Investor Services' records.
Putnam Investor Services will employ these and other
reasonable procedures to confirm that instructions communicated
by telephone are genuine; if it fails to employ reasonable
procedures, Putnam Investor Services may be liable for any losses
due to unauthorized or fraudulent instructions. For information,
consult Putnam Investor Services.
During periods of unusual market changes and shareholder
activity, you may experience delays in contacting Putnam Investor
Services by telephone . In this event, you may wish to
submit a written redemption request, as described above, or
contact your investment dealer, as described below. The
Telephone Redemption Privilege is not available if you were
issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified
or terminated without notice.
SELLING SHARES THROUGH YOUR INVESTMENT DEALER. Your dealer must
receive your request before the close of regular trading on the
New York Stock Exchange to receive that day's net asset value.
Your dealer will be responsible for furnishing all necessary
documentation to Putnam Investor Services, and may charge you for
its services.
HOW TO EXCHANGE SHARES
You can exchange your shares for shares of the same class of
certain other Putnam funds at net asset value beginning 15 days
after purchase. Not all Putnam funds offer all classes of
shares. If you exchange shares subject to a CDSC, the
transaction will not be subject to the CDSC. However, when you
redeem the shares acquired through the exchange, the redemption
may be subject to the CDSC, depending upon when you originally
purchased the shares . The CDSC will be computed using
the schedule of any fund into or from which you have exchanged
your shares that would result in your paying the highest CDSC
applicable to your class of shares. For purposes of computing
the CDSC, the length of time you have owned your shares will be
measured from the date of original purchase and will not be
affected by any exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services.
The form is available from Putnam Investor
Services. For federal income tax purposes, an exchange is
treated as a sale of shares and generally results in a capital
gain or loss. A Telephone Exchange Privilege is currently
available for amounts up to $500,000. Putnam Investor Services'
procedures for telephonic transactions are described above under
"How to sell shares." The Telephone Exchange Privilege is not
available if you were issued certificates for shares that
remain outstanding. Ask your investment dealer or Putnam
Investor Services for prospectuses of other Putnam funds. Shares
of certain Putnam funds are not available to residents of all
states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange
activity and in other circumstances where Putnam Management or
the Trustees believe doing so would be in the best interests of
the fund, the fund reserves the right to revise or
terminate the exchange privilege, limit the amount or number of
exchanges or reject any exchange. Shareholders would be notified
of any such action to the extent required by law. Consult Putnam
Investor Services before requesting an exchange. See the
SAI to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH
CLASS BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS
LIABILITIES, BY THE NUMBER OF ITS SHARES OUTSTANDING. SHARES ARE
VALUED AS OF THE CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK
EXCHANGE EACH DAY THE EXCHANGE IS OPEN.
Portfolio securities for which market quotations are readily
available are valued at market value. Short-term
investments that will mature in 60 days or less are valued at
amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following
procedures approved by the Trustees.
HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS;
TAX INFORMATION
The fund distributes any net investment income and any net
realized capital gains at least annually. Distributions from net
investment income, if any, are expected to be small.
Distributions from capital gains are made after applying any
available capital loss carryovers. Distributions paid on
class A shares will generally be greater than those paid
on class B and class M shares because expenses
attributable to class B and class M shares will
generally be higher.
YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS:
- Reinvest all distributions in additional shares
without a sales charge;
- Receive distributions from net investment income in
cash while reinvesting capital gains distributions in
additional shares without a sales charge; or
- Receive all distributions in cash.
You can change your distribution option by notifying Putnam
Investor Services in writing. If you do not select an option
when you open your account, all distributions will be reinvested.
All distributions not paid in cash will be reinvested in shares
of the class on which the distributions are paid. You will
receive a statement confirming reinvestment of distributions in
additional shares (or in shares of other Putnam funds for
Dividends Plus accounts) promptly following the quarter in which
the reinvestment occurs.
If a check representing a fund distribution is not cashed
within a specified period, Putnam Investor Services will notify
you that you have the option of requesting another check or
reinvesting the distribution in the fund or in another
Putnam fund. If Putnam Investor Services does not receive your
election, the distribution will be reinvested in the fund .
Similarly, if correspondence sent by the fund or Putnam
Investor Services is returned as "undeliverable," fund
distributions will automatically be reinvested in the fund
or in another Putnam fund.
The fund intends to qualify as a "regulated investment
company" for federal income tax purposes and to meet all other
requirements necessary for it to be relieved of federal
taxes on income and gains it distributes to shareholders. The
fund will distribute substantially all of its ordinary
income and capital gain net income on a current basis.
All fund distributions will be taxable to you as ordinary
income, except that any distributions of net long-term capital
gains will be taxable as such, regardless of how long you have
held the shares. Distributions will be taxable as described
above whether received in cash or in shares through the
reinvestment of distributions.
Early in each year Putnam Investor Services will notify
you of the amount and tax status of distributions paid to you
for the preceding year.
The foregoing is a summary of certain federal income tax
consequences of investing in the fund . You should consult
your tax adviser to determine the precise effect of an investment
in the fund on your particular tax situation (including
possible liability for state and local taxes).
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the
fund and of other Putnam funds. Putnam Fiduciary Trust
Company is the fund's custodian. Putnam Investor
Services, a division of Putnam Fiduciary Trust Company, is the
fund's investor servicing and transfer agent.
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Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company are subsidiaries of Putnam Investments, Inc., which is wholly owned by Marsh & McLennan Companies, Inc., a publicly- owned holding company whose principal businesses are international insurance and reinsurance brokerage, employee benefit consulting and investment management. |
MAKE THE MOST OF YOUR PUTNAM PRIVILEGES As a Putnam mutual fund shareholder, you have access to a number of services that can help you build a more effective and flexible financial program. Here are some of the ways you can use these privileges to make the most of your Putnam mutual fund investment. SYSTEMATIC INVESTMENT PLAN Invest as much as you wish ($25 or more) on any business day of the month except for the 29th, 30th, or 31st. The amount will be automatically transferred from your checking or savings account. SYSTEMATIC WITHDRAWAL Make regular withdrawals of $50 or more monthly, quarterly, or semiannually from an account valued at $10,000 or more. You may establish your withdrawal on any business day of the month except for the 29th, 30th, or 31st. SYSTEMATIC EXCHANGE Transfer assets automatically from one Putnam account to another on a regular, prearranged basis. There is no additional charge for this service. FREE EXCHANGE PRIVILEGE Exchange money between Putnam funds in the same class of shares without charge. The exchange privilege allows you to adjust your investments as your objectives change. A signature guarantee is required for exchanges of more than $500,000. DIVIDENDS PLUS Diversify your portfolio by investing dividends and other distributions from one Putnam fund automatically into another at net asset value. STATEMENT OF INTENTION To reduce a front-end sales charge, you agree to invest a minimum dollar amount over 13 months. Depending on your fund, the minimum is $25,000, $50,000, or $100,000. Whenever you make an investment under this arrangement, you or your investment advisor should notify Putnam that a Statement of Intention is in effect. Investors may not maintain, within the same fund, simultaneous plans for systematic investment or exchange and systematic withdrawal or exchange. These privileges are subject to change or termination. For more information about any of these services and privileges, call your investment advisor or a Putnam customer service representative toll free at 1-800-225-1581. |
PUTNAM FAMILY OF FUNDS PUTNAM GROWTH FUNDS Putnam Asia Pacific Growth Fund Putnam Capital Appreciation Fund Putnam Diversified Equity Trust Putnam Europe Growth Fund Putnam Global Growth Fund Putnam Health Sciences Trust Putnam International New Opportunities Fund Putnam Investors Fund Putnam Natural Resources Fund Putnam New Opportunities Fund Putnam OTC Emerging Growth Fund Putnam Overseas Growth Fund Putnam Vista Fund Putnam Voyager Fund Putnam Voyager Fund II PUTNAM GROWTH AND INCOME FUNDS Putnam Balanced Retirement Fund Putnam Convertible Income-Growth Trust Putnam Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income Putnam Growth and Income Fund II Putnam Utilities Growth and Income Fund PUTNAM INCOME FUNDS Putnam Adjustable Rate U.S. Government Income Fund Putnam American Government Income Fund Putnam Diversified Income Trust Putnam Federal Income Trust Putnam Global Governmental Income Trust Putnam High Yield Advantage Fund Putnam High Yield Trust Putnam Income Fund Putnam Intermediate U.S. Government Income Fund Putnam Preferred Income Fund Putnam U.S. Government Income Trust |
PUTNAM TAX-FREE INCOME FUNDS
Putnam Municipal Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax-Free High Yield Fund
Putnam Tax-Free Insured Fund
Putnam State tax-free income funds+
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New
York, Ohio, and
Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that
spread your money across a variety of stocks, bonds, and money
market investments seeking to help maximize your return and
reduce your risk.
THE THREE PORTFOLIOS:
Balanced Portfolio
Conservative Portfolio
Growth Portfolio
PUTNAM MONEY MARKET FUNDS
Putnam Money Market Fund
Putnam California Tax Exempt Money Market Fund
Putnam New York Tax Exempt Money Market Fund
Putnam Tax Exempt Money Market Fund
+Not available in all states.
Please call your financial advisor or Putnam to obtain a
prospectus for any Putnam fund. It contains more complete
information, including charges and expenses. Read it carefully
before you invest or send money.
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PUTNAM HEALTH SCIENCES TRUST
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
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PUTNAM HEALTH SCIENCES TRUST
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
JANUARY 1, 1996
This SAI is not a prospectus and is only authorized
for distribution when accompanied or preceded by the
prospectus of the fund dated January 1,
1996 , as revised from time to time. This SAI
contains information which may be useful to investors but which
is not included in the prospectus. If the fund has
more than one form of current prospectus , each reference
to the prospectus in this SAI shall include all
of the fund's prospectuses, unless otherwise noted. The
SAI should be read together with the applicable
prospectus . Investors may obtain a free copy of the
applicable prospectus from Putnam Investor Services,
Mailing address: P.O. Box 41203, Providence, RI 02940-1203.
Part I of this SAI contains specific information about the
fund . Part II includes information about the fund
and the other Putnam funds.
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TABLE OF CONTENTS
PART I
^
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . I-3
CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . .I-6
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . I-10
ADDITIONAL OFFICERS . . . . . . . . . . . . . . . . . . . . .
I-11
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . I- 11
PART II
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .II- 25
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . II- 30
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . .II- 40
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . .II- 41
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . II- 54
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . .II-
55
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . .II- 60
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . .II- 61
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . .II- 61
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . .II- 61
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . .II- 63
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .II- 67
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SAI
PART I
INVESTMENT RESTRICTIONS
AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE CHANGED
WITHOUT A VOTE OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES, THE FUND MAY NOT AND WILL NOT:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such
borrowings will be repaid before any additional investments are
purchased.
(2) Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 15% of its total assets (taken at cost) and
then only to secure borrowings permitted by restriction 1 above.
For the purposes of this restriction, collateral arrangements
with respect to margin for financial futures contracts or related
options and the deposit of securities in escrow in connection
with writing covered options are not deemed to be a pledge or
other encumbrance of assets.
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and
sales of securities and except it may make margin payments in
connection with financial futures contracts or related options.
(4) Make short sales of securities or maintain a short position
for the account of the fund unless at all times when a
short position is open it owns an equal amount of such securities
or owns securities which, without payment of any further
consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the
securities sold short.
(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
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(6) Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate and securities representing interests in real estate. (7) Purchase or sell commodities or commodity contracts, except financial futures contracts and related options. (8) Make loans, except by purchase of debt obligations in which the fund may invest consistent with its investment policies, by entering into repurchase agreements with respect to not more than 25% of its total assets (taken at current value), or through the lending of its portfolio securities with respect to not more than 25% of its total assets. (9) Invest in securities of any issuer if, to the knowledge of the fund , officers and Trustees of the fund and officers and directors of Putnam Management who beneficially own more than 0.5% of the securities of that issuer together own more than 5%. (10) With respect to 75% of its total assets, invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the fund (taken at current value) would be invested in the securities of such issuer, provided that this limitation does not apply to obligations issued or guaranteed as to interest and principal by the U.S. government or its agencies or instrumentalities. (11) Acquire more than 10% of the voting securities of any issuer. (12) Invest more than 25% of the value of its total assets in any one industry, except that the fund will invest at least 25% of the value of its total assets in common stocks of companies which Putnam Management determines are principally engaged in the health sciences industries, except when investing for defensive purposes. (13) Invest in the securities of other registered investment companies, except by purchases in the open market involving only customary brokers' commissions. (14) Purchase securities the disposition of which is restricted under federal securities laws if, as a result, such investments would exceed 10% of the value of the fund's net assets. (15) Buy or sell oil, gas or other mineral leases, rights or royalty contracts. |
(16) Make investments for the purpose of gaining control of a
company's management.
IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL, TO:
(1) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities restricted
as to resale (excluding securities determined by the Trustees of
the fund (or the person designated by the Trustees of the
fund to make such determinations) to be readily
marketable), and (c) repurchase agreements maturing in more than
seven days, if, as a result, more than 15% of the fund's
net assets (taken at current value) would be invested in
securities described in (a), (b) and (c) above.
(2) Invest in warrants (other than warrants acquired by the
fund as part of a unit or attached to securities at the
time of purchase) if as a result such investments (valued at the
lower of cost or market) would exceed 5% of the value of the
fund's net assets, provided that not more than 2% of the
fund's net assets may be invested in warrants not listed
on the New York or American Stock Exchanges.
(3) Invest in securities of any issuer which, together with any
predecessors or controlling persons, has been in operation for
less than three consecutive years and in equity securities for
which market quotations are not readily available (excluding
securities restricted as to resale) if, as a result, the
aggregate of such investments would exceed 5% of the value of the
fund's net assets; provided, however, that this
restriction shall not apply to any obligation of the U.S.
government or its instrumentalities or agencies. (Debt
securities having equity features are not considered "equity
securities" for purposes of this restriction.)
(4) Purchase or sell real property (including limited
partnership interests), except that the fund may (a)
purchase or sell readily marketable interests in real estate
investment trusts or readily marketable securities of companies
which invest in real estate , (b) purchase or sell
securities that are secured by interests in real estate or
interests therein, or (c) acquire real estate through exercise of
its rights as a holder of obligations secured by real estate or
interests therein or sell real estate so acquired.
Although certain of the fund's fundamental investment
restrictions permit it to borrow money to a limited
extent, it does not currently intend to do so and did not
do so last year.
---------------------
All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of the fund
means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the fund , or (2) 67% or more of
the shares present at a meeting if more than 50% of the
outstanding shares of the fund are represented at the
meeting in person or by proxy.
CHARGES AND EXPENSES
MANAGEMENT FEES
Under a Management Contract dated March 5, 1992 the
fund pays a quarterly fee to Putnam Management based on
the average net assets of the fund , as determined at the
close of each business day during the quarter, at the
annual rate of 0.70% of the first $500 million of average net
assets, 0.60% of the next $500 million, 0.55% of the next $500
million and 0.50% of any amount over $1.5 billion. For the
past three fiscal years, pursuant to the Management
Contract , the fund incurred the following fees:
FISCAL MANAGEMENT
YEAR FEE PAID
------ -----------
1995 $6,018,819
1994 $5,195,028
1993 $5,776,859
BROKERAGE COMMISSIONS
The following table shows brokerage commissions paid during the
fiscal periods indicated.
FISCAL BROKERAGE
YEAR COMMISSIONS
------ -----------
1995 $ 278,366
1994 $ 409,895
1993 $1,151,502
The following table shows transactions placed with brokers
and dealers during the most recent fiscal year to
recognize research, statistical and quotation services Putnam
Management considered to be particularly useful to it and its
affiliates.
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DOLLAR
VALUE PERCENT OF
OF THESE TOTAL AMOUNT OF
TRANSACTIONS TRANSACTIONS COMMISSIONS
- ------------ ------------ -----------
$74,368,897 34.50% $158,935
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The fund reimbursed Putnam Management in the following
amount for administrative services during fiscal
1995, including the following amount for
compensation of certain officers of the fund and
contributions to the Putnam Investments, Inc. Profit Sharing
Retirement Plan for their benefit :
PORTION OF TOTAL
REIMBURSEMENT FOR
COMPENSATION
TOTAL AND
REIMBURSEMENT CONTRIBUTIONS
------------- ----------------
$16,781 $16,209
TRUSTEE FEES
Each Trustee receives a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of other Putnam
funds. The Trustees periodically review their fees to
assure that such fees continue to be appropriate in light of
their responsibilities as well as in relation to fees paid to
trustees of other mutual fund complexes. The Trustees meet
monthly over a two-day period, except in August. The
Compensation Committee, which consists solely of Trustees not
affiliated with Putnam Management and is responsible for
recommending Trustee compensation, estimates that Committee and
Trustee meeting time together with the appropriate preparation
requires the equivalent of at least three business days per
Trustee meeting. The following table shows the year each Trustee
was first elected a Trustee of the Putnam funds, the fees paid to
each Trustee by the fund for fiscal 1995 and the fees paid to
each Trustee by all of the Putnam funds during calendar year
1995:
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COMPENSATION TABLE
Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- ---------------------------------------------------------------
Jameson A. Baxter/1994 $2,145 $150,854
Hans H. Estin/1972 2,113 150,854
John A. Hill/1985*** 2,098 149,854
Elizabeth T. Kennan/1992 2,082 148,854
Lawrence J. Lasser/1992 2,113 150,854
Robert E. Patterson/1984 2,145 152,854
Donald S. Perkins/1982 2,113 150,854
William F. Pounds/1971 2,129 149,854
George Putnam/1957 2,113 150,854
George Putnam, III/1984 2,113 150,854
Eli Shapiro/1995**** 753 95,372
A.J.C. Smith/1986 2,077 149,854
W. Nicholas Thorndike/1992 2,145 152,854
* Reflects amounts paid for fiscal year 1995. Includes an
annual retainer and an attendance fee for each meeting
attended.
** Reflects total payments received from all Putnam funds in
the most recent calendar year. As of December 31, 1995,
there were 99 funds in the Putnam family.
*** Includes amounts of compensation deferred pursuant to a
Trustee Compensation Deferral Plan. The total amount of
deferred compensation payable to Mr. Hill by all Putnam
funds as of August 31, 1995 was $17,217.31, including income
earned on such amounts.
**** Elected as a Trustee in April 1995.
The Trustees have approved Retirement Guidelines for Trustees of
the Putnam funds. These Guidelines provide generally that a
Trustee who retires after reaching age 72 and who has at least 10
years of continuous service will be eligible to receive a
retirement benefit from each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, unless
otherwise determined by the Trustees, will be an annual cash
benefit payable for life equal to one-half of the Trustee
retainer fees paid by each fund at the time of retirement.
Several retired Trustees are currently receiving benefits
pursuant to the Guidelines and it is anticipated that the current
Trustees will receive similar benefits upon their retirement. A
Trustee who retired in calendar 1995 and was eligible to receive
benefits under these Guidelines would have received an annual
benefit of $66,749, based upon the aggregate retainer fees paid
by the Putnam funds for such year. The Trustees reserve the
right to amend or terminate such Guidelines and the related
payments at any time, and may modify or waive the foregoing
eligibility requirements when deemed appropriate.
For additional information concerning the Trustees, see
"Management" in Part II of this SAI.
SHARE OWNERSHIP
At November 30, 1995, the officers and Trustees of the
fund as a group owned less than 1% of the outstanding
shares of each class , and to the knowledge of the
fund no person owned of record or beneficially 5% or more
of the shares of any class of the fund.
DISTRIBUTION FEES
During fiscal 1995, the fund paid the following 12b-1 fees
to Putnam Mutual Funds :
CLASS A CLASS B CLASS M
------- ------- -------
$2,090,917 $828,033 $249
CLASS A SALES CHARGES AND CONTINGENT DEFERRED SALES CHARGES
Putnam Mutual Funds received sales charges with respect to
class A shares in the following amounts during the periods
indicated:
SALES CHARGES
RETAINED BY PUTNAM CONTINGENT
TOTAL MUTUAL FUNDS DEFERRED
FISCALFRONT-END AFTER SALES
YEAR SALES CHARGESDEALER CONCESSIONSCHARGES
- ---------------------------------------------
1995 $2,239,832 $326,682 $50,125
1994 $1,732,475 $253,932 $10,477
1993 $4,184,663 $609,869 $ 188
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CLASS B CONTINGENT DEFERRED SALES CHARGES
Putnam Mutual Funds received contingent deferred sales
charges upon redemptions of class B shares in the
following amounts during the periods indicated:
FISCAL CONTINGENT DEFERRED
YEAR SALES CHARGES
------ -------------------
1995 $449,555
1994 $102,556
1993 $ 5,141
CLASS M SALES CHARGES
Putnam Mutual Funds received sales charges with
respect to class M shares in the following amount during the 1995
fiscal year:
SALES CHARGES
RETAINED BY PUTNAM
MUTUAL FUNDS
TOTAL AFTER
SALES CHARGES DEALER CONCESSIONS
- ------------ ------------------
$3,804 $626
INVESTOR SERVICING AND CUSTODY FEES AND EXPENSES
During the 1995 fiscal year, the fund incurred
$1,435,484 in fees and out - of - pocket
expenses for investor servicing and custody services provided by
Putnam Fiduciary Trust Company.
INVESTMENT PERFORMANCE
STANDARD PERFORMANCE MEASURES
(for periods ended August 31, 1995)
Class A Class B Class M+
Inception date: 4/8/82 3/1/93 7/3/95
TOTAL
RETURN NAV* POP** NAV CDSC NAV POP
- -----------------------------------------------------------------
1 year 24.81% 17.62% 23.83% 18.83% -- --
5 years 15.13 13.77 -- -- -- --
10 years 16.73 16.03 -- -- -- --
Life of class -- -- 18.64 17.71 6.51% 2.78%
+Performance data for class M shares for the period July 3, 1995
to August 31, 1995 represent cumulative, rather than average
annual, total return.
*net asset value
**public offering price
Data represent past performance and are not indicative of
future results. Total return at POP for class A and class M
shares reflects the deduction of the maximum sales charge of
5.75% and 3.50% , respectively. Total return at CDSC
for class B shares reflects the deduction of the applicable
contingent deferred sales charge (CDSC) . The maximum
class B CDSC is 5.0%. See "Standard performance
measures " in Part II of this SAI for information on
how performance is calculated. Past performance is
no guarantee of future results.
ADDITIONAL OFFICERS
In addition to the persons listed as officers of the fund in Part
II of this SAI, each of the following persons is also a Vice
President of the fund and Vice President of certain of the other
Putnam funds. Officers of Putnam Management hold the same
offices in Putnam Management's parent company, Putnam
Investments, Inc.
PETER CARMAN, Senior Managing Director of Putnam
Management. Prior to August 1, 1993, Mr. Carman was Chief
Investment Officer, Chairman of the U.S. Equity Investment Policy
Committee and a Director of Sanford C. Bernstein & Company, Inc.
JOHN J. MORGAN, JR., Managing Director of Putnam
Management.
JOANNE SOJA, Senior Vice President of Putnam Management.
Prior to June, 1993, Ms. Soja was a Portfolio Manager and Analyst
at Chancellor Management .
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
MA 02109, are the fund's independent accountants,
providing audit services, tax return review and other tax
consulting services and assistance and consultation in connection
with the review of various Securities and Exchange Commission
filings. The Report of Independent Accountants , financial
highlights and financial statements included in the
fund's Annual Report for the fiscal year ended August 31,
1995 , filed electronically on October 31, 1995
(File No. 811-3386), are incorporated by reference into this
SAI . The financial highlights included in the
prospectus and incorporated by reference into this SAI and
the financial statements incorporated by reference into the
prospectus and this SAI have been so included and
incorporated in reliance upon the report of the independent
accountants, given on their authority as experts in auditing and
accounting.
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TABLE OF CONTENTS
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-25
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-30
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-40
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-41
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .II-54
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-55
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-60
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-61
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-61
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-61
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-63
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-67
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THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
PART II
The following information applies generally to your fund and to
the other Putnam funds. In certain cases the discussion applies
to some but not all of the funds or their shareholders, and you
should refer to your prospectus to determine whether the matter
is applicable to you or your fund. You will also be referred to
Part I for certain information applicable to your particular
fund. Shareholders who purchase shares at net asset value
through employer-sponsored defined contribution plans should also
consult their employer for information about the extent to which
the matters described below apply to them.
MISCELLANEOUS INVESTMENT PRACTICES
YOUR FUND'S PROSPECTUS STATES WHICH OF THE FOLLOWING INVESTMENT
PRACTICES ARE AVAILABLE TO YOUR FUND. THE FACT THAT YOUR FUND IS
AUTHORIZED TO ENGAGE IN A PARTICULAR PRACTICE DOES NOT
NECESSARILY MEAN THAT IT WILL ACTUALLY DO SO. YOU SHOULD
DISREGARD ANY PRACTICE DESCRIBED BELOW WHICH IS NOT MENTIONED IN
THE PROSPECTUS.
SHORT-TERM TRADING
In seeking the fund's objectives(s), Putnam Management will buy
or sell portfolio securities whenever Putnam Management believes
it appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the fund
has owned the security. From time to time the fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the fund is known as "portfolio
turnover" and generally involves some expense to the fund. This
expense may include brokerage commissions or dealer markups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. As
a result of the fund's investment policies, under certain market
conditions the fund's portfolio turnover rate may be higher than
that of other mutual funds. Portfolio turnover rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. The fund's portfolio turnover
rate is not a limiting factor when Putnam Management considers a
change in the fund's portfolio.
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LOWER-RATED SECURITIES
The fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds"), to the extent described in the
prospectus. The lower ratings of certain securities held by the
fund reflect a greater possibility that adverse changes in the
financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates,
may impair the ability of the issuer to make payments of interest
and principal. The inability (or perceived inability) of issuers
to make timely payment of interest and principal would likely
make the values of securities held by the fund more volatile and
could limit the fund's ability to sell its securities at prices
approximating the values the fund had placed on such securities.
In the absence of a liquid trading market for securities held by
it, the fund at times may be unable to establish the fair value
of such securities.
Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' analysis at the time
of rating. Consequently, the rating assigned to any particular
security is not necessarily a reflection of the issuer's current
financial condition, which may be better or worse than the rating
would indicate. In addition, the rating assigned to a security
by Moody's Investors Service, Inc. or Standard & Poor's (or by
any other nationally recognized securities rating organization)
does not reflect an assessment of the volatility of the
security's market value or the liquidity of an investment in the
security. See the prospectus or Part I of this SAI for a
description of security ratings.
Like those of other fixed-income securities, the values of
lower-rated securities fluctuate in response to changes in
interest rates. A decrease in interest rates will generally
result in an increase in the value of the fund's assets.
Conversely, during periods of rising interest rates, the value of
the fund's assets will generally decline. The values of lower-
rated securities may often be affected to a greater extent by
changes in general economic conditions and business conditions
affecting the issuers of such securities and their industries.
Negative publicity or investor perceptions may also adversely
affect the values of lower-rated securities. Changes by
recognized rating services in their ratings of any fixed-income
security and changes in the ability of an issuer to make payments
of interest and principal may also affect the value of these
investments. Changes in the value of portfolio securities
generally will not affect income derived from these securities,
but will affect the fund's net asset value. The fund will not
necessarily dispose of a security when its rating is reduced
below its rating at the time of purchase. However, Putnam
Management will monitor the investment to determine whether its
retention will assist in meeting the fund's investment
objective(s).
Issuers of lower-rated securities are often highly leveraged, so
that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest
rates may be impaired. Such issuers may not have more
traditional methods of financing available to them and may be
unable to repay outstanding obligations at maturity by
refinancing. The risk of loss due to default in payment of
interest or repayment of principal by such issuers is
significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior
indebtedness.
At times, a substantial portion of the fund's assets may be
invested in securities as to which the fund, by itself or
together with other funds and accounts managed by Putnam
Management and its affiliates, holds all or a major portion.
Although Putnam Management generally considers such securities to
be liquid because of the availability of an institutional market
for such securities, it is possible that, under adverse market or
economic conditions or in the event of adverse changes in the
financial condition of the issuer, the fund could find it more
difficult to sell these securities when Putnam Management
believes it advisable to do so or may be able to sell the
securities only at prices lower than if they were more widely
held. Under these circumstances, it may also be more difficult
to determine the fair value of such securities for purposes of
computing the fund's net asset value. In order to enforce its
rights in the event of a default under such securities, the fund
may be required to participate in various legal proceedings or
take possession of and manage assets securing the issuer's
obligations on such securities. This could increase the fund's
operating expenses and adversely affect the fund's net asset
value. In the case of tax-exempt funds, any income derived from
the fund's ownership or operation of such assets would not be
tax-exempt. The ability of a holder of a tax-exempt security to
enforce the terms of that security in a bankruptcy proceeding may
be more limited than would be the case with respect to privately-
issued securities. In addition, the fund's intention to qualify
as a "regulated investment company" under the Internal Revenue
Code may limit the extent to which the fund may exercise its
rights by taking possession of such assets.
Certain securities held by the fund may permit the issuer at its
option to "call," or redeem, its securities. If an issuer were
to redeem securities held by the fund during a time of declining
interest rates, the fund may not be able to reinvest the proceeds
in securities providing the same investment return as the
securities redeemed.
If the fund's prospectus describes so-called "zero-coupon" bonds
and "payment-in-kind" bonds as possible investments, the fund may
invest without limit in such bonds unless otherwise specified in
the prospectus. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in
cash or in additional bonds. Because zero-coupon and payment-in-
kind bonds do not pay current interest in cash, their value is
subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest currently. Both
zero-coupon and payment-in-kind bonds allow an issuer to avoid
the need to generate cash to meet current interest payments.
Accordingly, such bonds may involve greater credit risks than
bonds paying interest currently in cash. The fund is required to
accrue interest income on such investments and to distribute such
amounts at least annually to shareholders even though such bonds
do not pay current interest in cash. Thus, the fund could be
required at times to liquidate investments in order to satisfy
its dividend requirements.
To the extent the fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent
on Putnam Management's investment analysis than would be the case
if the fund were investing in securities in the higher rating
categories. This may be particularly true with respect to tax-
exempt securities, as the amount of information about the
financial condition of an issuer of tax-exempt securities may not
be as extensive as that which is made available by corporations
whose securities are publicly traded.
INVESTMENTS IN MISCELLANEOUS FIXED INCOME SECURITIES
Unless otherwise specified in the prospectus or elsewhere in this
SAI, if the fund may invest in inverse floating obligations,
premium securities, or interest-only or principal-only classes of
mortgage-backed securities, it may do so without limit. The
fund, however, currently does not intend to invest more than 15%
of its assets in inverse floating obligations under normal market
conditions.
PRIVATE PLACEMENTS
The fund may invest in securities that are purchased in private
placements and, accordingly, are subject to restrictions on
resale as a matter of contract or under federal securities laws.
Because there may be relatively few potential purchasers for such
investments, especially under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, the fund could find it more difficult to
sell such securities when Putnam Management believes it advisable
to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. At times,
it may also be more difficult to determine the fair value of such
securities for purposes of computing the fund's net assets value.
MORTGAGE RELATED SECURITIES
The fund may invest in mortgage-backed securities, including
collateralized mortgage obligations ("CMOs") and certain stripped
mortgage-backed securities. CMOs and other mortgage-backed
securities represent a participation in, or are secured by,
mortgage loans.
Mortgage-backed securities have yield and maturity
characteristics corresponding to the underlying assets. Unlike
traditional debt securities, which may pay a fixed rate of
interest until maturity, when the entire principal amount comes
due, payments on certain mortgage-backed securities include both
interest and a partial repayment of principal. Besides the
scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure
of the underlying mortgage loans. If property owners make
unscheduled prepayments of their mortgage loans, these
prepayments will result in early payment of the applicable
mortgage-related securities. In that event the fund may be
unable to invest the proceeds from the early payment of the
mortgage-related securities in an investment that provides as
high a yield as the mortgage-related securities. Consequently,
early payment associated with mortgage-related securities may
cause these securities to experience significantly greater price
and yield volatility than that experienced by traditional fixed-
income securities. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage
and other social and demographic conditions. During periods of
falling interest rates, the rate of mortgage prepayments tends to
increase, thereby tending to decrease the life of mortgage-
related securities. During periods of rising interest rates, the
rate of mortgage prepayments usually decreases, thereby tending
to increase the life of mortgage-related securities. If the life
of a mortgage-related security is inaccurately predicted, the
fund may not be able to realize the rate of return it expected.
Mortgage-backed securities are less effective than other types of
securities as a means of "locking in" attractive long-term
interest rates. One reason is the need to reinvest prepayments
of principal; another is the possibility of significant
unscheduled prepayments resulting from declines in interest
rates. These prepayments would have to be reinvested at lower
rates. As a result, these securities may have less potential for
capital appreciation during periods of declining interest rates
than other securities of comparable maturities, although they may
have a similar risk of decline in market value during periods of
rising interest rates.
Prepayments may cause losses in securities purchased at a
premium. At times, some of the mortgage-backed securities in
which the fund may invest will have higher than market interest
rates and therefore will be purchased at a premium above their
par value. Unscheduled prepayments, which are made at par, will
cause the fund to experience a loss equal to any unamortized
premium.
CMOs may be issued by a U.S. government agency or instrumentality
or by a private issuer. Although payment of the principal of,
and interest on, the underlying collateral securing privately
issued CMOs may be guaranteed by the U.S. government or its
agencies or instrumentalities, these CMOs represent obligations
solely of the private issuer and are not insured or guaranteed by
the U.S. government, its agencies or instrumentalities or any
other person or entity.
Prepayments could cause early retirement of CMOs. CMOs are
designed to reduce the risk of prepayment for investors by
issuing multiple classes of securities, each having different
maturities, interest rates and payment schedules, and with the
principal and interest on the underlying mortgages allocated
among the several classes in various ways. Payment of interest
or principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of
the risk of default on the underlying mortgages. CMOS of
different classes or series are generally retired in sequence as
the underlying mortgage loans in the mortgage pool are repaid.
If enough mortgages are repaid ahead of schedule, the classes or
series of a CMO with the earliest maturities generally will be
retired prior to their maturities. Thus, the early retirement of
particular classes or series of a CMO held by the fund would have
the same effect as the prepayment of mortgages underlying other
mortgage-backed securities.
Prepayments could result in losses on stripped mortgage-backed
securities. Stripped mortgage-backed securities are usually
structured with two classes that receive different portions of
the interest and principal distributions on a pool of mortgage
loans. The fund may invest in both the interest-only or "IO"
class and the principal-only or "PO" class. The yield to
maturity on an IO class of stripped mortgage-backed securities is
extremely sensitive not only to changes in prevailing interest
rates but also to the rate of principal payments (including
prepayments) on the underlying assets. A rapid rate of principal
prepayments may have a measurable adverse effect on the fund's
yield to maturity to the extent it invests in IOs. If the assets
underlying the IO experience greater than anticipated prepayments
of principal, the fund may fail to recoup fully its initial
investment in these securities. Conversely, POs tend to increase
in value if prepayments are greater than anticipated and decline
if prepayments are slower than anticipated.
The secondary market for stripped mortgage-backed securities may
be more volatile and less liquid than that for other mortgage-
backed securities, potentially limiting the fund's ability to buy
or sell those securities at any particular time.
SECURITIES LOANS
The fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional
income. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of
the securities or possible loss of rights in the collateral
should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to
agreements requiring that the loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the fund an
amount equal to any dividends or interest received on securities
lent. The fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities may pass to the borrower, the
fund retains the right to call the loans at any time on
reasonable notice, and it will do so to enable the fund to
exercise voting rights on any matters materially affecting the
investment. The fund may also call such loans in order to sell
the securities.
FORWARD COMMITMENTS
The fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time
("forward commitments") if the fund holds, and maintains until
the settlement date in a segregated account, cash or high-grade
debt obligations in an amount sufficient to meet the purchase
price, or if the fund enters into offsetting contracts for the
forward sale of other securities it owns. In the case of to-be-
announced ("TBA") purchase commitments, the unit price and the
estimated principal amount are established when the fund enters
into a contract, with the actual principal amount being within a
specified range of the estimate. Forward commitments may be
considered securities in themselves, and involve a risk of loss
if the value of the security to be purchased declines prior to
the settlement date, which risk is in addition to the risk of
decline in the value of the fund's other assets. Where such
purchases are made through dealers, the fund relies on the dealer
to consummate the sale. The dealer's failure to do so may result
in the loss to the fund of an advantageous yield or price.
Although the fund will generally enter into forward commitments
with the intention of acquiring securities for its portfolio or
for delivery pursuant to options contracts it has entered into,
the fund may dispose of a commitment prior to settlement if
Putnam Management deems it appropriate to do so. The fund may
realize short-term profits or losses upon the sale of forward
commitments.
The fund may enter into TBA sale commitments to hedge its
portfolio positions or to sell securities it owns under delayed
delivery arrangements. Proceeds of TBA sale commitments are not
received until the contractual settlement date. During the time
a TBA sale commitment is outstanding, equivalent deliverable
securities, or an offsetting TBA purchase commitment deliverable
on or before the sale commitment date, are held as "cover" for
the transaction. Unsettled TBA sale commitments are valued at
current market value of the underlying securities. If the TBA
sale commitment is closed through the acquisition of an
offsetting purchase commitment, the fund realizes a gain or loss
on the commitment without regard to any unrealized gain or loss
on the underlying security. If the fund delivers securities
under the commitment, the fund realizes a gain or loss from the
sale of the securities based upon the unit price established at
the date the commitment was entered into.
REPURCHASE AGREEMENTS
The fund may enter into repurchase agreements up to the limit
specified in the prospectus. A repurchase agreement is a
contract under which the fund acquires a security for a
relatively short period (usually not more than one week) subject
to the obligation of the seller to repurchase and the fund to
resell such security at a fixed time and price (representing the
fund's cost plus interest). It is the fund's present intention
to enter into repurchase agreements only with commercial banks
and registered broker-dealers and only with respect to
obligations of the U.S. government or its agencies or
instrumentalities. Repurchase agreements may also be viewed as
loans made by the fund which are collateralized by the securities
subject to repurchase. Putnam Management will monitor such
transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total
amount of the repurchase obligation, including the interest
factor. If the seller defaults, the fund could realize a loss on
the sale of the underlying security to the extent that the
proceeds of sale including accrued interest are less than the
resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or
insolvency proceedings, the fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal
and interest if the fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's
estate.
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the fund may transfer uninvested cash
balances into a joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money
market instruments.
OPTIONS ON SECURITIES
WRITING COVERED OPTIONS. The fund may write covered call options
and covered put options on optionable securities held in its
portfolio, when in the opinion of Putnam Management such
transactions are consistent with the fund's investment
objective(s) and policies. Call options written by the fund give
the purchaser the right to buy the underlying securities from the
fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the fund at a
stated price.
The fund may write only covered options, which means that, so
long as the fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). In the case of put options, the fund will
hold cash and/or high-grade short-term debt obligations equal to
the price to be paid if the option is exercised. In addition,
the fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or
all of the risk of the option it has written. The fund may write
combinations of covered puts and calls on the same underlying
security.
The fund will receive a premium from writing a put or call
option, which increases the fund's return on the underlying
security in the event the option expires unexercised or is closed
out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the
current market value of the underlying security, the volatility
of the underlying security, the amount of time remaining until
expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the fund limits its
opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, the fund assumes
the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current
market value, resulting in a potential capital loss unless the
security subsequently appreciates in value.
The fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in
which it purchases an offsetting option. The fund realizes a
profit or loss from a closing transaction if the cost of the
transaction (option premium plus transaction costs) is less or
more than the premium received from writing the option. If the
fund writes a call option but does not own the underlying
security, and when it writes a put option, the fund may be
required to deposit cash or securities with its broker as
"margin," or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security
varies, the fund may have to deposit additional margin with the
broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently
imposed by the Federal Reserve Board and by stock exchanges and
other self-regulatory organizations.
PURCHASING PUT OPTIONS. The fund may purchase put options to
protect its portfolio holdings in an underlying security against
a decline in market value. Such protection is provided during
the life of the put option since the fund, as holder of the
option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be
profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this
manner, the fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
PURCHASING CALL OPTIONS. The fund may purchase call options to
hedge against an increase in the price of securities that the
fund wants ultimately to buy. Such hedge protection is provided
during the life of the call option since the fund, as holder of
the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the fund's options strategies depends on
the ability of Putnam Management to forecast correctly interest
rate and market movements. For example, if the fund were to
write a call option based on Putnam Management's expectation that
the price of the underlying security would fall, but the price
were to rise instead, the fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if the fund were to write a put option based on Putnam
Management's expectation that the price of the underlying
security would rise, but the price were to fall instead, the fund
could be required to purchase the security upon exercise at a
price higher than the current market price.
When the fund purchases an option, it runs the risk that it will
lose its entire investment in the option in a relatively short
period of time, unless the fund exercises the option or enters
into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
fund will lose part or all of its investment in the option. This
contrasts with an investment by the fund in the underlying
security, since the fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the fund's ability
to terminate option positions at times when Putnam Management
deems it desirable to do so. There is no assurance that the fund
will be able to effect closing transactions at any particular
time or at an acceptable price.
If a secondary market in options were to become unavailable, the
fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the
market for particular options or series of options. A market may
discontinue trading of a particular option or options generally.
In addition, a market could become temporarily unavailable if
unusual events -- such as volume in excess of trading or clearing
capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening
transactions. For example, if an underlying security ceases to
meet qualifications imposed by the market or the Options Clearing
Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options
market were to become unavailable, the fund as a holder of an
option would be able to realize profits or limit losses only by
exercising the option, and the fund, as option writer, would
remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by the fund could result in losses on the
options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as
well. As a result, the fund as purchaser or writer of an option
will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading
in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has
also been halted, the fund as purchaser or writer of an option
will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by
the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The fund,
as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's
expiration.
Foreign-traded options are subject to many of the same risks
presented by internationally-traded securities. In addition,
because of time differences between the United States and various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for
trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Over-the-counter ("OTC") options purchased by the fund and assets
held to cover OTC options written by the fund may, under certain
circumstances, be considered illiquid securities for purposes of
any limitation on the fund's ability to invest in illiquid
securities.
FUTURES CONTRACTS AND RELATED OPTIONS
Subject to applicable law, and unless otherwise specified in the
prospectus, the fund may invest without limit in the types of
futures contracts and related options identified in the
prospectus for hedging and non-hedging purposes. The use of
futures and options transactions for purposes other than hedging
entails greater risks. A financial futures contract sale creates
an obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery
month for a stated price. A financial futures contract purchase
creates an obligation by the purchaser to take delivery of the
type of financial instrument called for in the contract in a
specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date
are not determined until on or near that date. The determination
is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts
are traded in the United States only on commodity exchanges or
boards of trade -- known as "contract markets" -- approved for
such trading by the Commodity Futures Trading Commission (the
"CFTC"), and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant
contract market.
Although futures contracts (other than index futures) by their
terms call for actual delivery or acceptance of commodities or
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific
type of financial instrument or commodity with the same delivery
date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid
the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. If the fund is unable to enter into
a closing transaction, the amount of the fund's potential loss is
unlimited. The closing out of a futures contract purchase is
effected by the purchaser's entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price,
the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, he realizes a loss. In general 40% of
the gain or loss arising from the closing out of a futures
contract traded on an exchange approved by the CFTC is treated as
short-term gain or loss, and 60% is treated as long-term gain or
loss.
Unlike when the fund purchases or sells a security, no price is
paid or received by the fund upon the purchase or sale of a
futures contract. Upon entering into a contract, the fund is
required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of cash and/or U.S.
government securities. This amount is known as "initial margin."
The nature of initial margin in futures transactions is different
from that of margin in security transactions in that futures
contract margin does not involve the borrowing of funds to
finance the transactions. Rather, initial margin is similar to a
performance bond or good faith deposit which is returned to the
fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts
also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin," to and from the broker (or the custodian) are made on a
daily basis as the price of the underlying security or commodity
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to
the market." For example, when the fund has purchased a futures
contract on a security and the price of the underlying security
has risen, that position will have increased in value and the
fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the fund has
purchased a security futures contract and the price of the
underlying security has declined, the position would be less
valuable and the fund would be required to make a variation
margin payment to the broker.
The fund may elect to close some or all of its futures positions
at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the fund. The
fund may close its positions by taking opposite positions which
will operate to terminate the fund's position in the futures
contracts. Final determinations of variation margin are then
made, additional cash is required to be paid by or released to
the fund, and the fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
OPTIONS ON FUTURES CONTRACTS. The fund may purchase and write
call and put options on futures contracts it may buy or sell and
enter into closing transactions with respect to such options to
terminate existing positions. Options on future contracts give
the purchaser the right in return for the premium paid to assume
a position in a futures contract at the specified option exercise
price at any time during the period of the option. The fund may
use options on futures contracts in lieu of writing or buying
options directly on the underlying securities or purchasing and
selling the underlying futures contracts. For example, to hedge
against a possible decrease in the value of its portfolio
securities, the fund may purchase put options or write call
options on futures contracts rather than selling futures
contracts. Similarly, the fund may purchase call options or
write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible
increase in the price of securities which the fund expects to
purchase. Such options generally operate in the same manner as
options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an offsetting
option. There is no guarantee that such closing transactions can
be effected.
The fund will be required to deposit initial margin and
maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements
similar to those described above in connection with the
discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
Successful use of futures contracts by the fund is subject to
Putnam Management's ability to predict movements in various
factors affecting securities markets, including interest rates.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to the fund because the maximum amount at
risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of
a call or put option on a futures contract would result in a loss
to the fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the
hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the
sale of futures contracts.
There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render
certain market clearing facilities inadequate, and thereby result
in the institution by exchanges of special procedures which may
interfere with the timely execution of customer orders.
To reduce or eliminate a position held by the fund, the fund may
seek to close out such position. The ability to establish and
close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. U.S.
Treasury security futures contracts require the seller to
deliver, or the purchaser to take delivery of, the type of U.S.
Treasury security called for in the contract at a specified date
and price. Options on U.S. Treasury security futures contracts
give the purchaser the right in return for the premium paid to
assume a position in a U.S. Treasury security futures contract at
the specified option exercise price at any time during the period
of the option.
Successful use of U.S. Treasury security futures contracts by the
fund is subject to Putnam Management's ability to predict
movements in the direction of interest rates and other factors
affecting markets for debt securities. For example, if the fund
has sold U.S. Treasury security futures contracts in order to
hedge against the possibility of an increase in interest rates
which would adversely affect securities held in its portfolio,
and the prices of the fund's securities increase instead as a
result of a decline in interest rates, the fund will lose part or
all of the benefit of the increased value of its securities which
it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the fund
has insufficient cash, it may have to sell securities to meet
daily maintenance margin requirements at a time when it may be
disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for particular
securities. For example, if the fund has hedged against a
decline in the values of tax-exempt securities held by it by
selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its
tax-exempt securities decrease, the fund would incur losses on
both the Treasury security futures contracts written by it and
the tax-exempt securities held in its portfolio.
INDEX FUTURES CONTRACTS. An index futures contract is a contract
to buy or sell units of an index at a specified future date at a
price agreed upon when the contract is made. Entering into a
contract to buy units of an index is commonly referred to as
buying or purchasing a contract or holding a long position in
the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. The fund
may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective(s). The fund may also purchase and sell options on
index futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price
Index ("S&P 500") is composed of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500
assigns relative weightings to the common stocks included in the
Index, and the value fluctuates with changes in the market values
of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the
difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if
the fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150
and the S&P 500 is at $154 on that future date, the fund will
gain $2,000 (500 units x gain of $4). If the fund enters into a
futures contract to sell 500 units of the stock index at a
specified future date at a contract price of $150 and the S&P 500
is at $152 on that future date, the fund will lose $1,000 (500
units x loss of $2).
There are several risks in connection with the use by the fund of
index futures. One risk arises because of the imperfect
correlation between movements in the prices of the index futures
and movements in the prices of securities which are the subject
of the hedge. Putnam Management will, however, attempt to reduce
this risk by buying or selling, to the extent possible, futures
on indices the movements of which will, in its judgment, have a
significant correlation with movements in the prices of the
securities sought to be hedged.
Successful use of index futures by the fund is also subject to
Putnam Management's ability to predict movements in the direction
of the market. For example, it is possible that, where the fund
has sold futures to hedge its portfolio against a decline in the
market, the index on which the futures are written may advance
and the value of securities held in the fund's portfolio may
decline. If this occurred, the fund would lose money on the
futures and also experience a decline in value in its portfolio
securities. It is also possible that, if the fund has hedged
against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices
increase instead, the fund will lose part or all of the benefit
of the increased value of those securities it has hedged because
it will have offsetting losses in its futures positions. In
addition, in such situations, if the fund has insufficient cash,
it may have to sell securities to meet daily variation margin
requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
index futures and the portion of the portfolio being hedged, the
prices of index futures may not correlate perfectly with
movements in the underlying index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors
may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures
market are less onerous than margin requirements in the
securities market, and as a result the futures market may attract
more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the
imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast
of general market trends by Putnam Management may still not
result in a profitable position over a short time period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, the fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in
a manner identical to the use of options on index futures.
INDEX WARRANTS
The fund may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more
specified securities indices ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and
give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the
time of exercise. In general, if the value of the underlying
index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference
between the value of the index and the exercise price of the
warrant; if the value of the underlying index falls, the holder
of a put warrant will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The
holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the
exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than
the value of the underlying index. If the fund were not to
exercise an index warrant prior to its expiration, then the fund
would lose the amount of the purchase price paid by it for the
warrant.
The fund will normally use index warrants in a manner similar to
its use of options on securities indices. The risks of the
fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options,
however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution which issues the
warrant. Also, index warrants generally have longer terms than
index options. Although the fund will normally invest only in
exchange-listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit the
fund's ability to exercise the warrants at such time, or in such
quantities, as the fund would otherwise wish to do.
FOREIGN SECURITIES
Under its current policy, which may be changed without
shareholder approval, the fund may invest up to the limit of its
total assets specified in its prospectus in securities
principally traded in markets outside the United States.
Eurodollar certificates of deposit are excluded for purposes of
this limitation. Since foreign securities are normally
denominated and traded in foreign currencies, the value of the
fund's assets may be affected favorably or unfavorably by changes
in currency exchange rates, exchange control regulations and
restrictions or prohibitions on the repatriation of foreign
currencies. There may be less information publicly available
about a foreign company than about a U.S. company, and foreign
companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those
in the United States. The securities of some foreign companies
are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and
other fees are also generally higher than in the United States.
Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities
or in the recovery of the fund's assets held abroad) and expenses
not present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the fund's investments in certain foreign countries.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
fund's ability to invest in securities of certain issuers located
in those foreign countries. Special tax considerations apply to
foreign securities.
The risks described above, including the risks of nationalization
or expropriation of assets, are typically increased to the extent
that the fund invests in issuers located in less developed and
developing nations, whose securities markets are sometimes
referred to as "emerging securities markets." Investments in
securities located in such countries are speculative and subject
to certain special risks. Political and economic structures in
many of these countries may be in their infancy and developing
rapidly, and such countries may lack the social, political and
economic stability characteristic of more developed countries.
Certain of these countries have in the past failed to recognize
private property rights and have at times nationalized and
expropriated the assets of private companies.
In addition, unanticipated political or social developments may
affect the values of the fund's investments in these countries
and the availability to the fund of additional investments in
these countries. The small size, limited trading volume and
relative inexperience of the securities markets in these
countries may make the fund's investments in such countries
illiquid and more volatile than investments in more developed
countries, and the fund may be required to establish special
custodial or other arrangements before making investments in
these countries. There may be little financial or accounting
information available with respect to issuers located in these
countries, and it may be difficult as a result to assess the
value or prospects of an investment in such issuers.
FOREIGN CURRENCY TRANSACTIONS
Unless otherwise specified in the prospectus or Part I of this
SAI, the fund may engage without limit in currency exchange
transactions, including purchasing and selling foreign currency,
foreign currency options, foreign currency forward contracts and
foreign currency futures contracts and related options, to
protect against uncertainty in the level of future currency
exchange rates. In addition, the fund may write covered call and
put options on foreign currencies for the purpose of increasing
its current return.
Generally, the fund may engage in both "transaction hedging" and
"position hedging." When it engages in transaction hedging, the
fund enters into foreign currency transactions with respect to
specific receivables or payables, generally arising in connection
with the purchase or sale of portfolio securities. The fund will
engage in transaction hedging when it desires to "lock in" the
U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging the fund
will attempt to protect itself against a possible loss resulting
from an adverse change in the relationship between the U.S.
dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or
on which the dividend or interest payment is earned, and the date
on which such payments are made or received.
The fund may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in
that foreign currency. The fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes the fund may also purchase
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. A
put option on a futures contract gives the fund the right to
assume a short position in the futures contract until the
expiration of the option. A put option on a currency gives the
fund the right to sell the currency at an exercise price until
the expiration of the option. A call option on a futures
contract gives the fund the right to assume a long position in
the futures contract until the expiration of the option. A call
option on a currency gives the fund the right to purchase the
currency at the exercise price until the expiration of the
option.
When it engages in position hedging, the fund enters into foreign
currency exchange transactions to protect against a decline in
the values of the foreign currencies in which its portfolio
securities are denominated (or an increase in the value of
currency for securities which the fund expects to purchase). In
connection with position hedging, the fund may purchase put or
call options on foreign currency and on foreign currency futures
contracts and buy or sell forward contracts and foreign currency
futures contracts. The fund may also purchase or sell foreign
currency on a spot basis.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for the
fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of
the security or securities being hedged is less than the amount
of foreign currency the fund is obligated to deliver and a
decision is made to sell the security or securities and make
delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if
the market value of such security or securities exceeds the
amount of foreign currency the fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in
the underlying prices of the securities which the fund owns or
intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the
increase in value of such currency. See "Risk factors in options
transactions" above.
The fund may seek to increase its current return or to offset
some of the costs of hedging against fluctuations in current
exchange rates by writing covered call options and covered put
options on foreign currencies. The fund receives a premium from
writing a call or put option, which increases the fund's current
return if the option expires unexercised or is closed out at a
net profit. The fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms
as the option written.
The fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the fund. Cross hedging transactions by the fund involve the
risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in
the value of the currency or other asset or liability which is
the subject of the hedge.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values of
foreign currency options, forward contracts and futures
contracts) may be affected significantly, fixed, or supported
directly or indirectly by U.S. and foreign government actions.
Government intervention may increase risks involved in purchasing
or selling foreign currency options, forward contracts and
futures contracts, since exchange rates may not be free to
fluctuate in response to other market forces.
The value of a foreign currency option, forward contract or
futures contract reflects the value of an exchange rate, which in
turn reflects relative values of two currencies, the U.S. dollar
and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in
the exercise of foreign currency options, forward contracts and
futures contracts, investors may be disadvantaged by having to
deal in an odd-lot market for the underlying foreign currencies
in connection with options at prices that are less favorable than
for round lots. Foreign governmental restrictions or taxes could
result in adverse changes in the cost of acquiring or disposing
of foreign currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a price set at the time of the
contract. Foreign currency futures contracts traded in the
United States are designed by and traded on exchanges regulated
by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the fund either
may accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed
out only on an exchange or board of trade which provides a
secondary market in such contracts. Although the fund intends to
purchase or sell foreign currency futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a secondary market
on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse
price movements, the fund would continue to be required to make
daily cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign
currencies operate similarly to options on securities and are
subject to many of the risks described above. Foreign currency
options are traded primarily in the over-the-counter market,
although options on foreign currencies are also listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
The fund will only purchase or write foreign currency options
when Putnam Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid
secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence foreign exchange rates and
investments generally.
SETTLEMENT PROCEDURES. Settlement procedures relating to the
fund's investments in foreign securities and to the fund's
foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not
present in the fund's domestic investments. For example,
settlement of transactions involving foreign securities or
foreign currencies may occur within a foreign country, and the
fund may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the fund at one
rate, while offering a lesser rate of exchange should the fund
desire to resell that currency to the dealer.
RESTRICTED SECURITIES
The SEC Staff currently takes the view that any delegation by the
Trustees of the authority to determine that a restricted security
is readily marketable (as described in the investment
restrictions of the funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
funds' Trustees that, if the Trustees decide to delegate such
determinations to Putnam Management or another person, they would
do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future,
the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.
TAXES
TAXATION OF THE FUND. The fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order so to
qualify and to qualify for the special tax treatment accorded
regulated investment companies and their shareholders, the fund
must, among other things:
(a) Derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from the sale or
other disposition of certain assets (including stock or
securities and certain options, futures contracts, forward
contracts and foreign currencies) held for less than three
months;
(c) distribute with respect to each taxable year at least 90% of the sum of its taxable net investment income, its net tax-exempt income, and the excess, if any, of net short-term capital gains over net long-term capital losses for such year; and (d) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the fund's assets is represented by cash and cash items, U.S. government securities, securities of other regulated investment companies, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of the fund's total assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested in the securities (other than those of the U.S. Government or other regulated investment companies) of any one issuer or of two or more issuers which the fund controls and which are engaged in the same, similar, or related trades or businesses. If the fund qualifies as a regulated investment company that is accorded special tax treatment, the fund will not be subject to federal income tax on income paid to its shareholders in the form of dividends (including capital gain dividends). If the fund failed to qualify as a regulated investment company accorded special tax treatment in any taxable year, the fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders as ordinary income. In addition, the fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company that is accorded special tax treatment. If the fund fails to distribute in a calendar year substantially all of its ordinary income for such year and substantially all of its capital gain net income for the one-year period ending October 31 (or later if the fund is permitted so to elect and so elects), plus any retained amount from the prior year, the fund will be subject to a 4% excise tax on the undistributed amounts. A dividend paid to shareholders by the fund in January of a year generally is deemed to have been paid by the fund on December 31 of the preceding year, if the dividend was declared and payable to shareholders of record on a date in October, November or December of that preceding year. The fund intends generally to make distributions sufficient to avoid imposition of the 4% excise tax. EXEMPT-INTEREST DIVIDENDS. The fund will be qualified to pay exempt-interest dividends to its shareholders only if, at the close of each quarter of the fund's taxable year, at least 50% of the total value of the fund's assets consists of obligations the interest on which is exempt from federal income tax. Distributions that the fund properly designates as exempt- interest dividends are treated as interest excludable from shareholders' gross income for federal income tax purposes but may be taxable for federal alternative minimum tax purposes and for state and local purposes. If the fund intends to be qualified to pay exempt-interest dividends, the fund may be limited in its ability to enter into taxable transactions involving forward commitments, repurchase agreements, financial futures and options contracts on financial futures, tax-exempt bond indices and other assets. Part or all of the interest on indebtedness, if any, incurred or continued by a shareholder to purchase or carry shares of a fund paying exempt-interest dividends is not deductible. The portion of interest that is not deductible is equal to the total interest paid or accrued on the indebtedness, multiplied by the percentage of the fund's total distributions (not including distributions from net long-term capital gains) paid to the shareholder that are exempt-interest dividends. Under rules used by the Internal Revenue Service for determining when borrowed funds are considered used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though such funds are not directly traceable to the purchase of shares. In general, exempt-interest dividends, if any, attributable to interest received on certain private activity obligations and certain industrial development bonds will not be tax-exempt to any shareholders who are "substantial users" of the facilities financed by such obligations or bonds or who are "related persons" of such substantial users. A fund which is qualified to pay exempt-interest dividends will inform investors within 60 days of the fund's fiscal year-end of the percentage of its income distributions designated as tax-exempt. The percentage is applied uniformly to all distributions made during the year. The percentage of income designated as tax-exempt for any particular distribution may be substantially different from the percentage of the fund's income that was tax-exempt during the period covered by the distribution. HEDGING TRANSACTIONS. If the fund engages in hedging transactions, including hedging transactions in options, futures contracts, and straddles, or other similar transactions, it will be subject to special tax rules (including mark-to-market, straddle, wash sale, and short sale rules), the effect of which may be to accelerate income to the fund, defer losses to the fund, cause adjustments in the holding periods of the fund's securities, or convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders. The fund will endeavor to make any available elections pertaining to such transactions in a manner believed to be in the best interests of the fund. Under the 30% of gross income test described above (see "Taxation of the fund"), the fund will be restricted in selling assets held or considered under Code rules to have been held for less than three months, and in engaging in certain hedging transactions (including hedging transactions in options and futures) that in some circumstances could cause certain fund assets to be treated as held for less than three months. Certain of the fund's hedging activities (including its transactions, if any, in foreign currencies or foreign currency-denominated instruments) are likely to produce a difference between its book income and its taxable income. If the fund's book income exceeds its taxable income, the distribution (if any) of such excess will be treated as (i) a dividend to the extent of the fund's remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter as a return of capital to the extent of the recipient's basis in the shares, and (iii) thereafter as gain from the sale or exchange of a capital asset. If the fund's book income is less than its taxable income, the fund could be required to make distributions exceeding book income to qualify as a regulated investment company that is accorded special tax treatment. RETURN OF CAPITAL DISTRIBUTIONS. If the fund makes a distribution to you in excess of its current and accumulated "earnings and profits" in any taxable year, the excess distribution will be treated as a return of capital to the extent of your tax basis in your shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces your tax basis in your shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by you of your shares. SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. The fund's investment in securities issued at a discount and certain other obligations will (and investments in securities purchased at a discount may) require the fund to accrue and distribute income not yet received. In order to generate sufficient cash to make the requisite distributions, the fund may be required to sell securities in its portfolio that it otherwise would have continued to hold. CAPITAL LOSS CARRYOVER. Distributions from capital gains are made after applying any available capital loss carryovers. The amounts and expiration dates of any capital loss carryovers available to the fund are shown in Note 1 (Federal income taxes) to the financial statements included in Part I of this SAI or incorporated by reference into this SAI. FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING TRANSACTIONS. The fund's transactions in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures contracts and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. If more than 50% of the fund's assets at year end consists of the debt and equity securities of foreign corporations, the fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portion of qualified taxes paid by the fund to foreign countries. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes. A shareholder's ability to claim a foreign tax credit or deduction in respect of foreign taxes paid by the fund may be subject to certain limitations imposed by the Code, as a result of which a shareholder may not get a full credit or deduction for the amount of such taxes. Shareholders who do not itemize on their federal income tax returns may claim a credit (but no deduction) for such foreign taxes. Investment by the fund in "passive foreign investment companies" could subject the fund to a U.S. federal income tax or other charge on the proceeds from the sale of its investment in such a company; however, this tax can be avoided by making an election to mark such investments to market annually or to treat the passive foreign investment company as a "qualified electing fund." A "passive foreign investment company" is any foreign corporation: (i) 75 percent of more of the income of which for the taxable year is passive income, or (ii) the average percentage of the assets of which (generally by value, but by adjusted tax basis in certain cases) that produce or are held for the production of passive income is at least 50 percent. Generally, passive income for this purpose means dividends, interest (including income equivalent to interest), royalties, rents, annuities, the excess of gains over losses from certain property transactions and commodities transactions, and foreign currency gains. Passive income for this purpose does not include rents and royalties received by the foreign corporation from active business and certain income received from related persons.
SALE OR REDEMPTION OF SHARES. The sale, exchange or redemption
of fund shares may give rise to a gain or loss. In general, any
gain or loss realized upon a taxable disposition of shares will
be treated as long-term capital gain or loss if the shares have
been held for more than 12 months, and otherwise as short-term
capital gain or loss. However, if a shareholder sells shares at
a loss within six months of purchase, any loss will be disallowed
for Federal income tax purposes to the extent of any exempt-
interest dividends received on such shares. In addition, any
loss (not already disallowed as provided in the preceding
sentence) realized upon a taxable disposition of shares held for
six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain
distributions received by the shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable
disposition of fund shares will be disallowed if other shares of
the same fund are purchased within 30 days before or after the
disposition. In such a case, the basis of the newly purchased
shares will be adjusted to reflect the disallowed loss.
SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. Special tax rules
apply to investments though defined contribution plans and other
tax-qualified plans. Shareholders should consult their tax
adviser to determine the suitability of shares of a fund as an
investment through such plans and the precise effect of an
investment on their particular tax situation.
BACKUP WITHHOLDING. The fund generally is required to withhold
and remit to the U.S. Treasury 31% of the taxable dividends and
other distributions paid to any individual shareholder who fails
to furnish the fund with a correct taxpayer identification number
(TIN), who has under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject to
such withholding. Shareholders who fail to furnish their correct
TIN are subject to a penalty of $50 for each such failure unless
the failure is due to reasonable cause and not wilful neglect.
An individual's taxpayer identification number is his or her
social security number.
MANAGEMENT
TRUSTEES NAME (AGE)
*+GEORGE PUTNAM (69), Chairman and President. Chairman and
Director of Putnam Management and Putnam Mutual Funds. Director,
The Boston Company, Inc., Boston Safe Deposit and Trust Company,
Freeport-McMoRan, Inc., General Mills, Inc., Houghton Mifflin
Company, Marsh & McLennan Companies, Inc. and Rockefeller Group,
Inc.
+WILLIAM F. POUNDS (67), Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX,
M/A-COM, Inc., and Sun Company, Inc.
JAMESON A. BAXTER (52), Trustee. President, Baxter Associates,
Inc. (consultants to management). Director of Avondale Federal
Savings Bank, ASHTA Chemicals, Inc. and Banta Corporation.
Chairman Emeritus of the Board of Trustees, Mount Holyoke
College.
+HANS H. ESTIN (67), Trustee. Vice Chairman, North American
Management Corp. (a registered investment adviser). Director of
The Boston Company, Inc. and Boston Safe Deposit and Trust
Company.
ELIZABETH T. KENNAN (57), Trustee. President Emeritus and
Professor, Mount Holyoke College. Director, the Kentucky Home
Life Insurance Companies, NYNEX Corporation, Northeast Utilities
and Talbots. Trustee of the University of Notre Dame.
*LAWRENCE J. LASSER (52), Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc.
JOHN A. HILL (53), Trustee. Chairman and Managing Director,
First Reserve Corporation (a registered investment adviser).
Director, Lantana Corporation, Maverick Tube Corporation, Snyder
Oil Corporation and various First Reserve Funds.
+ROBERT E. PATTERSON (50), Trustee. Executive Vice President,
Cabot Partners Limited Partnership (a registered investment
adviser).
*DONALD S. PERKINS (68), Trustee. Director of various
corporations, including American Telephone & Telegraph Company,
AON Corp., Cummins Engine Company, Inc., Illinois Power Company,
Inland Steel Industries, Inc., Kmart Corporation, LaSalle Street
Fund, Inc., Springs Industries, Inc., TBG, Inc. and Time Warner
Inc.
*#GEORGE PUTNAM III (44), Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information). Director,
World Environment Center.
ELI SHAPIRO (79), Trustee. Alfred P. Sloan Professor of
Management, Emeritus, Alfred P. Sloan School of Management,
Massachusetts Institute of Technology. Director of Nomura
Dividend Fund, Inc. (a privately held registered investment
company managed by Putnam Management) and former Trustee of the
Putnam funds (1984-1990).
*A.J.C. SMITH (61), Trustee. Chairman, Chief Executive Officer
and Director, Marsh & McLennan Companies, Inc.
W. NICHOLAS THORNDIKE (62), Trustee. Director of various
corporations and charitable organizations, including Courier
Corporation and Providence Journal Co. Also, Trustee and
President of Massachusetts General Hospital and Trustee of
Bradley Real Estate Trust and Eastern Utilities Associates.
OFFICERS NAME (AGE)
CHARLES E. PORTER (57), Executive Vice President. Managing
Director of Putnam Investments, Inc. and Putnam Management.
PATRICIA C. FLAHERTY (48), Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Management.
WILLIAM N. SHIEBLER (53), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President and
Director of Putnam Mutual Funds.
GORDON H. SILVER (48), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. and Putnam
Management.
JOHN R. VERANI (56), Vice President. Senior Vice President of
Putnam Investments, Inc. and Putnam Management.
PAUL M. O'NEIL (42), Vice President. Vice President of Putnam
Investments, Inc. and Putnam Management.
JOHN D. HUGHES (60), Senior Vice President and Treasurer.
BEVERLY MARCUS (51), Clerk and Assistant Treasurer.
*Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund,
Putnam Management or Putnam Mutual Funds.
+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the fund and may exercise all of the powers of
the Trustees.
#George Putnam, III is the son of George Putnam.
-----------------
Certain other officers of Putnam Management are officers of the
fund. SEE "ADDITIONAL OFFICERS" IN PART I OF THIS SAI. The
mailing address of each of the officers and Trustees is One Post
Office Square, Boston, Massachusetts 02109.
Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Prior to January, 1992, Ms.
Baxter was Vice President and Principal, Regency Group, Inc. and
Consultant, The First Boston Corporation. Prior to May, 1991,
Dr. Pounds was Senior Advisor to the Rockefeller Family and
Associates, Chairman of Rockefeller Trust Company and Director of
Rockefeller Group, Inc. During the past five years Dr. Shapiro
has provided economic and financial consulting services to
various clients. Prior to November, 1990, Mr. Shiebler was
President and Chief Operating Officer of the Intercapital
Division of Dean Witter Reynolds, Inc., Vice President of the
Dean Witter funds and Director of Dean Witter Trust Company.
Each Trustee of the fund receives an annual fee and an additional
fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings and for special services rendered
in that connection. All of the Trustees are Trustees of all the
Putnam funds and each receives fees for his or her services. FOR
DETAILS OF TRUSTEES' FEES PAID BY THE FUND AND INFORMATION
CONCERNING RETIREMENT GUIDELINES FOR THE TRUSTEES, SEE "CHARGES
AND EXPENSES" IN PART I OF THIS SAI.
The Agreement and Declaration of Trust of the fund provides that
the fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the fund or that such indemnification would
relieve any officer or Trustee of any liability to the fund or
its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The
fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
PUTNAM MANAGEMENT AND ITS AFFILIATES
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than would be the case
individually; the resulting diversification helps reduce
investment risk. Putnam Management has been managing mutual funds
since 1937. Today, the firm serves as the investment manager for
the funds in the Putnam Family, with over $78 billion in assets
in nearly 4.5 million shareholder accounts at June 30, 1995. An
affiliate, The Putnam Advisory Company, Inc., manages domestic
and foreign institutional accounts and mutual funds, including
the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers. At
June 30, 1995, Putnam Management and its affiliates managed over
$109 billion in assets, including over $16 billion in tax-exempt
securities and over $47 billion in retirement plan assets.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company are subsidiaries of Putnam Investments, Inc., a holding company which is in turn wholly owned by Marsh & McLennan Companies, Inc., a publicly-owned holding company whose principal operating subsidiaries are international insurance and reinsurance brokers, investment managers and management consultants. Trustees and officers of the fund who are also officers of Putnam Management or its affiliates or who are stockholders of Marsh & McLennan Companies, Inc. will benefit from the advisory fees, sales commissions, distribution fees, custodian fees and transfer agency fees paid or allowed by the fund. THE MANAGEMENT CONTRACT Under a Management Contract between the fund and Putnam Management, subject to such policies as the Trustees may determine, Putnam Management, at its expense, furnishes continuously an investment program for the fund and makes investment decisions on behalf of the fund. Subject to the control of the Trustees, Putnam Management also manages, supervises and conducts the other affairs and business of the fund, furnishes office space and equipment, provides bookkeeping and clerical services (including determination of the fund's net asset value, but excluding shareholder accounting services) and places all orders for the purchase and sale of the fund's portfolio securities. Putnam Management may place fund portfolio transactions with broker-dealers which furnish Putnam Management, without cost to it, certain research, statistical and quotation services of value to Putnam Management and its affiliates in advising the fund and other clients. In so doing, Putnam Management may cause the fund to pay greater brokerage commissions than it might otherwise pay. FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE MANAGEMENT CONTRACT, SEE "CHARGES AND EXPENSES" IN PART I OF THIS SAI. Putnam Management's compensation under the Management Contract may be reduced in any year if the fund's expenses exceed the limits on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the fund are qualified for offer or sale. The term "expenses" is defined in the statutes or regulations of such jurisdictions, and generally excludes brokerage commissions, taxes, interest, extraordinary expenses and, if the fund has a distribution plan, payments made under such plan. The only such limitation as of the date of this SAI (applicable to any fund registered for sale in California) was 2.5% of the first $30 million of average net assets, 2% of the next $70 million and 1.5% of any excess over $100 million. Under the Management Contract, Putnam Management may reduce its compensation to the extent that the fund's expenses exceed such lower expense limitation as Putnam Management may, by notice to the fund, declare to be effective. The expenses subject to this limitation are exclusive of brokerage commissions, interest, taxes, deferred organizational and extraordinary expenses and, if the fund has a distribution plan, payments required under such plan. For the purpose of determining any such limitation on Putnam Management's compensation, expenses of the fund shall not reflect the application of commissions or cash management credits that may reduce designated fund expenses. THE TERMS OF ANY EXPENSE LIMITATION FROM TIME TO TIME IN EFFECT ARE DESCRIBED IN EITHER THE PROSPECTUS OR PART I OF THIS SAI. In addition to the fee paid to Putnam Management, the fund reimburses Putnam Management for the compensation and related expenses of certain officers of the fund and their assistants who provide certain administrative services for the fund and the other Putnam funds, each of which bears an allocated share of the foregoing costs. The aggregate amount of all such payments and reimbursements is determined annually by the Trustees. THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S MOST RECENT FISCAL YEAR IS INCLUDED IN "CHARGES AND EXPENSES" IN PART I OF THIS SAI. Putnam Management pays all other salaries of officers of the fund. The fund pays all expenses not assumed by Putnam Management including, without limitation, auditing, legal, custodial, investor servicing and shareholder reporting expenses. The fund pays the cost of typesetting for its prospectuses and the cost of printing and mailing any prospectuses sent to its shareholders. Putnam Mutual Funds pays the cost of printing and distributing all other prospectuses. The Management Contract provides that Putnam Management shall not be subject to any liability to the fund or to any shareholder of the fund for any act or omission in the course of or connected with rendering services to the fund in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its duties on the part of Putnam Management. The Management Contract may be terminated without penalty by vote of the Trustees or the shareholders of the fund, or by Putnam Management, on 30 days' written notice. It may be amended only by a vote of the shareholders of the fund. The Management Contract also terminates without payment of any penalty in the event of its assignment. The Management Contract provides that it will continue in effect only so long as such continuance is approved at least annually by vote of either the Trustees or the shareholders, and, in either case, by a majority of the Trustees who are not "interested persons" of Putnam Management or the fund. In each of the foregoing cases, the vote of the shareholders is the affirmative vote of a "majority of the outstanding voting securities" as defined in the Investment Company Act of 1940. PERSONAL INVESTMENTS BY EMPLOYEES OF PUTNAM MANAGEMENT Employees of Putnam Management are permitted to engage in personal securities transactions, subject to requirements and restrictions set forth in Putnam Management's Code of Ethics. The Code of Ethics contains provisions and requirements designed to identify and address certain conflicts of interest between personal investment activities and the interests of investment advisory clients such as the funds. Among other things, the Code of Ethics, consistent with standards recommended by the Investment Company Institute's Advisory Group on Personal Investing, prohibits certain types of transactions absent prior approval, imposes time periods during which personal transactions may not be made in certain securities, and requires the submission of duplicate broker confirmations and quarterly reporting of securities transactions. Additional restrictions apply to portfolio managers, traders, research analysts and others involved in the investment advisory process. Exceptions to these and other provisions of the Code of Ethics may be granted in particular circumstances after review by appropriate personnel. PORTFOLIO TRANSACTIONS INVESTMENT DECISIONS. Investment decisions for the fund and for the other investment advisory clients of Putnam Management and its affiliates are made with a view to achieving their respective investment objectives. Investment decisions are the product of many factors in addition to basic suitability for the particular client involved. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling the security. In some instances, one client may sell a particular security to another client. It also sometimes happens that two or more clients simultaneously purchase or sell the same security, in which event each day's transactions in such security are, insofar as possible, averaged as to price and allocated between such clients in a manner which in Putnam Management's opinion is equitable to each and in accordance with the amount being purchased or sold by each. There may be circumstances when purchases or sales of portfolio securities for one or more clients will have an adverse effect on other clients. BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock exchanges, commodities markets and futures markets and other agency transactions involve the payment by the fund of negotiated brokerage commissions. Such commissions vary among different brokers. A particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. Transactions in foreign investments often involve the payment of fixed brokerage commissions, which may be higher than those in the United States. There is generally no stated commission in the case of securities traded in the over-the-counter markets, but the price paid by the fund usually includes an undisclosed dealer commission or mark-up. In underwritten offerings, the price paid by the fund includes a disclosed, fixed commission or discount retained by the underwriter or dealer. It is anticipated that most purchases and sales of securities by funds investing primarily in tax-exempt securities and certain other fixed-income securities will be with the issuer or with underwriters of or dealers in those securities, acting as principal. Accordingly, those funds would not ordinarily pay significant brokerage commissions with respect to securities transactions. SEE "CHARGES AND EXPENSES" IN PART I OF THIS SAI FOR INFORMATION CONCERNING COMMISSIONS PAID BY THE FUND. It has for many years been a common practice in the investment advisory business for advisers of investment companies and other institutional investors to receive brokerage and research services (as defined in the Securities Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that execute portfolio transactions for the clients of such advisers and from third parties with which such broker-dealers have arrangements. Consistent with this practice, Putnam Management receives brokerage and research services and other similar services from many broker-dealers with which Putnam Management places the fund's portfolio transactions and from third parties with which these broker-dealers have arrangements. These services include such matters as general economic and market reviews, industry and company reviews, evaluations of investments, recommendations as to the purchase and sale of investments, newspapers, magazines, pricing services, quotation services, news services and personal computers utilized by Putnam Management's managers and analysts. Where the services referred to above are not used exclusively by Putnam Management for research purposes, Putnam Management, based upon its own allocations of expected use, bears that portion of the cost of these services which directly relates to their non-research use. Some of these services are of value to Putnam Management and its affiliates in advising various of their clients (including the fund), although not all of these services are necessarily useful and of value in managing the fund. The management fee paid by the fund is not reduced because Putnam Management and its affiliates receive these services even though Putnam Management might otherwise be required to purchase some of these services for cash.
Putnam Management places all orders for the purchase and sale of
portfolio investments for the fund and buys and sells investments
for the fund through a substantial number of brokers and dealers.
In so doing, Putnam Management uses its best efforts to obtain
for the fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable
price and execution, Putnam Management, having in mind the fund's
best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the fund to pay
a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly Putnam
Management will use its best effort to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the fund, less any direct expenses approved by the
Trustees, shall be recaptured by the fund through a reduction of
the fee payable by the fund under the Management Contract.
Putnam Management seeks to recapture for the fund soliciting
dealer fees on the tender of the fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
the most favorable price and execution available and such other
policies as the Trustees may determine, Putnam Management may
consider sales of shares of the fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the fund.
PRINCIPAL UNDERWRITER
Putnam Mutual Funds is the principal underwriter of shares of the
fund and the other continuously offered Putnam funds. Putnam
Mutual Funds is not obligated to sell any specific amount of
shares of the fund and will purchase shares for resale only
against orders for shares. SEE "CHARGES AND EXPENSES" IN PART I
OF THIS SAI FOR INFORMATION ON SALES CHARGES AND OTHER PAYMENTS
RECEIVED BY PUTNAM MUTUAL FUNDS.
INVESTOR SERVICING AGENT AND CUSTODIAN
Putnam Investor Services, a division of Putnam Fiduciary Trust
Company ("PFTC"), is the fund's investor servicing agent
(transfer, plan and dividend disbursing agent), for which it
receives fees which are paid monthly by the fund as an expense of
all its shareholders. The fee paid to Putnam Investor Services
is determined on the basis of the number of shareholder accounts,
the number of transactions and the assets of the fund. Putnam
Investor Services has won the DALBAR Quality Tested Service Seal
every year since the award's 1990 inception. Over 10,000 tests
of 38 separate shareholder service components demonstrated that
Putnam Investor Services tied for highest scores, with two other
mutual fund companies, in all categories.
PFTC is the custodian of the fund's assets. In carrying out its
duties under its custodian contract, PFTC may employ one or more
subcustodians whose responsibilities include safeguarding and
controlling the fund's cash and securities, handling the receipt
and delivery of securities and collecting interest and dividends
on the fund's investments. PFTC and any subcustodians employed
by it have a lien on the securities of the fund (to the extent
permitted by the fund's investment restrictions) to secure
charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by the
fund. The fund expects that such advances will exist only in
unusual circumstances. Neither PFTC nor any subcustodian
determines the investment policies of the fund or decides which
securities the fund will buy or sell. PFTC pays the fees and
other charges of any subcustodians employed by it. The fund may
from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the fund's
portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The
fund pays PFTC an annual fee based on the fund's assets,
securities transactions and securities holdings and reimburses
PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
SEE "CHARGES AND EXPENSES" IN PART I OF THIS SAI FOR INFORMATION
ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND CUSTODY
RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS ALLOWED BY
PFTC.
DETERMINATION OF NET ASSET VALUE
The fund determines the net asset value per share of each class
of shares once each day the New York Stock Exchange (the
"Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas. The fund determines net
asset value as of the close of regular trading on the Exchange,
currently 4:00 p.m. However, equity options held by the fund are
priced as of the close of trading at 4:10 p.m., and futures
contracts on U.S. government and other fixed-income securities
and index options held by the fund are priced as of their close
of trading at 4:15 p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of Putnam Management, most
nearly represent the market values of such securities.
Currently, such prices are determined using the last reported
sale price or, if no sales are reported (as in the case of some
securities traded over-the-counter), the last reported bid price,
except that certain securities are valued at the mean between the
last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following
procedures approved by the Trustees. Liabilities are deducted
from the total, and the resulting amount is divided by the number
of shares of the class outstanding.
Reliable market quotations are not considered to be readily
available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain foreign
securities. These investments are valued at fair value on the
basis of valuations furnished by pricing services, which
determine valuations for normal, institutional-size trading units
of such securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by institutional
traders.
If any securities held by the fund are restricted as to resale,
Putnam Management determines their fair value following
procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the fund
could reasonably expect to realize from an orderly disposition of
such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of
the restrictions on disposition of the securities (including any
registration expenses that might be borne by the fund in
connection with such disposition). In addition, specific factors
are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of
the same class, the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any
available analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign
securities) is substantially completed each day at various times
prior to the close of the Exchange. The values of these
securities used in determining the net asset value of the fund's
shares are computed as of such times. Also, because of the
amount of time required to collect and process trading
information as to large numbers of securities issues, the values
of certain securities (such as convertible bonds, U.S. government
securities, and tax-exempt securities) are determined based on
market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange which will
not be reflected in the computation of the fund's net asset
value. If events materially affecting the value of such
securities occur during such period, then these securities will
be valued at their fair value following procedures approved by
the Trustees.
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the Investment
Company Act of 1940.
HOW TO BUY SHARES
GENERAL
The prospectus contains a general description of how investors
may buy shares of the fund and states whether the fund offers
more than one class of shares. This SAI contains additional
information which may be of interest to investors.
Class A shares and class M shares are generally sold with a sales
charge payable at the time of purchase (except for class A shares
and class M shares of money market funds). As used in this SAI
and unless the context requires otherwise, the term "class A
shares" includes shares of funds that offer only one class of
shares. The prospectus contains a table of applicable sales
charges. For information about how to purchase class A or class
M shares of a Putnam fund at net asset value through an
employer's defined contribution plan, please consult your
employer. Certain purchases of class A shares and class M shares
may be exempt from a sales charge or, in the case of class A
shares, may be subject to a contingent deferred sales charge
("CDSC"). See "General--Sales without sales charges or
contingent deferred sales charges," "Additional Information About
Class A and Class M shares," and "Contingent Deferred Sales
Charges--Class A shares."
Class B shares and class C shares are sold subject to a CDSC
payable upon redemption within a specified period after purchase.
The prospectus contains a table of applicable CDSCs.
Class B shares will automatically convert into class A shares at
the end of the month eight years after the purchase date. Class
B shares acquired by exchanging class B shares of another Putnam
fund will convert into class A shares based on the time of the
initial purchase. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the
date of the initial purchase to which such shares relate. For
this purpose, class B shares acquired through reinvestment of
distributions will be attributed to particular purchases of class
B shares in accordance with such procedures as the Trustees may
determine from time to time. The conversion of class B shares to
class A shares is subject to the condition that such conversions
will not constitute taxable events for Federal tax purposes.
Class Y shares, which are not subject to sales charges or a CDSC,
are available only to certain defined contribution plans. See
the prospectus that offers class Y shares for more information.
Certain purchase programs described below are not available to
defined contribution plans. Consult your employer for
information on how to purchase shares through your plan.
The fund is currently making a continuous offering of its shares.
The fund receives the entire net asset value of shares sold. The
fund will accept unconditional orders for shares to be executed
at the public offering price based on the net asset value per
share next determined after the order is placed. In the case of
class A shares and class M shares, the public offering price is
the net asset value plus the applicable sales charge, if any. No
sales charge is included in the public offering price of other
classes of shares. In the case of orders for purchase of shares
placed through dealers, the public offering price will be based
on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of
regular trading on the Exchange. If the dealer receives the
order after the close of the Exchange, the price will be based on
the net asset value next determined. If funds for the purchase
of shares are sent directly to Putnam Investor Services, they
will be invested at the public offering price based on the net
asset value next determined after receipt. Payment for shares of
the fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated
in the prospectus, except that (i) individual investments under
certain employee benefit plans or Tax Qualified Retirement Plans
may be lower, (ii) persons who are already shareholders may make
additional purchases of $50 or more by sending funds directly to
Putnam Investor Services (see "Your investing account" below),
and (iii) for investors participating in systematic investment
plans and military allotment plans, the initial and subsequent
purchases must be $25 or more. Information about these plans is
available from investment dealers or from Putnam Mutual Funds.
As a convenience to investors, shares may be purchased through a
systematic investment plan. Pre-authorized monthly bank drafts
for a fixed amount (at least $25) are used to purchase fund
shares at the applicable public offering price next determined
after Putnam Mutual Funds receives the proceeds from the draft
(normally the 20th of each month, or the next business day
thereafter). Further information and application forms are
available from investment dealers or from Putnam Mutual Funds.
Except for funds that declare a distribution daily, distributions
to be reinvested are reinvested without a sales charge in shares
of the same class as of the ex-dividend date using the net asset
value determined on that date, and are credited to a
shareholder's account on the payment date. Dividends for Putnam
money market funds are credited to a shareholder's account on the
payment date. Distributions for all other funds that declare a
distribution daily are reinvested without a sales charge as of
the next day following the period for which distributions are
paid using the net asset value determined on that date, and are
credited to a shareholder's account on the payment date.
PAYMENT IN SECURITIES. In addition to cash, the fund may accept
securities as payment for fund shares at the applicable net asset
value. Generally, the fund will only consider accepting
securities to increase its holdings in a portfolio security, or
if Putnam Management determines that the offered securities are a
suitable investment for the fund and in a sufficient amount for
efficient management.
While no minimum has been established, it is expected that the
fund would not accept securities with a value of less than
$100,000 per issue as payment for shares. The fund may reject in
whole or in part any or all offers to pay for purchases of fund
shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and
may discontinue accepting securities as payment for fund shares
at any time without notice. The fund will value accepted
securities in the manner described in the section "Determination
of Net Asset Value" for valuing shares of the fund. The fund
will only accept securities which are delivered in proper form.
The fund will not accept options or restricted securities as
payment for shares. The acceptance of securities by certain
funds in exchange for fund shares is subject to additional
requirements. In the case of Putnam American Government Income
Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation
Funds, Putnam Capital Appreciation Fund, Putnam Preferred Income
Fund, Putnam Diversified Equity Trust, Putnam Equity Income Fund,
Putnam Europe Growth Fund, The Putnam Fund for Growth & Income,
Putnam Global Governmental Income Trust, Putnam Growth and Income
Fund II, Putnam High Yield Advantage Fund, Putnam Investment
Funds, Putnam Intermediate Tax Exempt Fund, Putnam Investment-
Grade Bond Fund, Putnam Municipal Income Fund, Putnam Natural
Resources Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas
Growth Fund, Putnam Tax Exempt Income Fund and Putnam Tax-Free
Income Trust, transactions involving the issuance of fund shares
for securities or assets other than cash will be limited to a
bona-fide re-organization or statutory merger and to other
acquisitions of portfolio securities that meet all the following
conditions: (a) such securities meet the investment objective(s)
and policies of the fund; (b) such securities are acquired for
investment and not for resale; (c) such securities are liquid
securities which are not restricted as to transfer either by law
or liquidity of market; and (d) such securities have a value
which is readily ascertainable, as evidenced by a listing on the
American Stock Exchange, the New York Stock Exchange or The
Nasdaq Stock Market, Inc. In addition, Putnam Global
Governmental Income Trust may accept only investment grade bonds
with prices regularly stated in publications generally accepted
by investors, such as the London Financial Times and the
Association of International Bond Dealers manual, or securities
listed on the New York or American Stock Exchanges or on The
Nasdaq Stock Market, Inc. Putnam Diversified Income Trust may
accept only bonds with prices regularly stated in publications
generally accepted by investors. For federal income tax
purposes, a purchase of fund shares with securities will be
treated as a sale or exchange of such securities on which the
investor will realize a taxable gain or loss. The processing of
a purchase of fund shares with securities involves certain delays
while the fund considers the suitability of such securities and
while other requirements are satisfied. For information
regarding procedures for payment in securities, contact Putnam
Mutual Funds. Investors should not send securities to the fund
except when authorized to do so and in accordance with specific
instructions received from Putnam Mutual Funds.
SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES.
The fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the fund; officers of
the fund; directors and current and retired U.S. full-time
employees of Putnam Management, Putnam Mutual Funds, their
parent corporations and certain corporate affiliates;
family members of and employee benefit plans for the
foregoing; and partnerships, trusts or other entities in
which any of the foregoing has a substantial interest;
(ii) employee benefit plans, for the repurchase of shares
in connection with repayment of plan loans made to plan
participants (if the sum loaned was obtained by redeeming
shares of a Putnam fund sold with a sales charge) (not
offered by tax-exempt funds);
(iii) clients of administrators of tax-qualified employee
benefit plans which have entered into agreements with
Putnam Mutual Funds (not offered by tax-exempt funds);
(iv) registered representatives and other employees of
broker-dealers having sales agreements with Putnam Mutual
Funds; employees of financial institutions having sales
agreements with Putnam Mutual Funds or otherwise having an
arrangement with any such broker-dealer or financial
institution with respect to sales of fund shares; and
their spouses and children under age 21 (Putnam Mutual
Funds is regarded as the dealer of record for all such
accounts);
(v) investors meeting certain requirements who sold shares
of certain Putnam closed-end funds pursuant to a tender
offer by such closed-end fund;
(vi) a trust department of any financial institution
purchasing shares of the fund in its capacity as trustee
of any trust, if the value of the shares of the fund and
other Putnam funds purchased or held by all such trusts
exceeds $1 million in the aggregate; and
(vii) "wrap accounts" maintained for clients of broker-
dealers, financial institutions or financial planners who
have entered into agreements with Putnam Mutual Funds with
respect to such accounts.
In addition, the fund may issue its shares at net asset value
without an initial sales charge or a CDSC in connection with the
acquisition of substantially all of the securities owned by other
investment companies or personal holding companies, and the CDSC
will be waived on redemptions of shares arising out of death or
disability or in connection with certain withdrawals from IRA or
other retirement plans. Up to 12% of the value of class B shares
subject to a systematic withdrawal plan may also be redeemed each
year without a CDSC. The fund may sell class M shares at net
asset value to members of qualified groups. See "Group
purchases of class A and class M shares" below.
PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense,
pay concessions in addition to the payments disclosed in the
prospectus to dealers which satisfy certain criteria established
from time to time by Putnam Mutual Funds relating to increasing
net sales of shares of the Putnam funds over prior periods, and
certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES
The underwriter's commission is the sales charge shown in the
prospectus less any applicable dealer discount. Putnam Mutual
Funds will give dealers ten days' notice of any changes in the
dealer discount. Putnam Mutual Funds retains the entire sales
charge on any retail sales made by it.
Putnam Mutual Funds offers several plans by which an investor may
obtain reduced sales charges on purchases of class A shares and
class M shares. The variations in sales charges reflect the
varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any
time.
COMBINED PURCHASE PRIVILEGE. The following persons may qualify
for the sales charge reductions or eliminations shown in the
prospectus by combining into a single transaction the purchase of
class A shares or class M shares with other purchases of any
class of shares:
(i) an individual, or a "company" as defined in Section
2(a)(8) of the Investment Company Act of 1940 (which
includes corporations which are corporate affiliates of
each other);
(ii) an individual, his or her spouse and their children
under twenty-one, purchasing for his, her or their own
account;
(iii) a trustee or other fiduciary purchasing for a single
trust estate or single fiduciary account (including a
pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code of 1986, as amended (the
"Code"));
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including tax-
exempt organizations qualifying under Section 403(b)(7) (a
"403(b) plan") of the Code; and
(v) employee benefit plans of a single employer or of
affiliated employers, other than 403(b) plans.
A combined purchase currently may also include shares of any
class of other continuously offered Putnam funds (other than
money market funds) purchased at the same time through a single
investment dealer, if the dealer places the order for such shares
directly with Putnam Mutual Funds.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A
purchaser of class A shares or class M shares may qualify for a
cumulative quantity discount by combining a current purchase (or
combined purchases as described above) with certain other shares
of any class of Putnam funds already owned. The applicable sales
charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of:
(a) all shares held by the investor in all of the
Putnam funds (except money market funds); and
(b) any shares of money market funds acquired by
exchange from other Putnam funds; and
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another shareholder
eligible to participate with the investor in a "combined
purchase" (see above).
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through an investment
dealer, when each purchase is made the investor or dealer must
provide Putnam Mutual Funds with sufficient information to verify
that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to Putnam Investor
Services when making direct cash investments.
STATEMENT OF INTENTION. Investors may also obtain the reduced
sales charges for class A shares or class M shares shown in the
prospectus for investments of a particular amount by means of a
written Statement of Intention, which expresses the investor's
intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any
class of the fund or any other continuously offered Putnam fund
(excluding money market funds). Each purchase of class A shares
or class M shares under a Statement of Intention will be made at
the public offering price applicable at the time of such purchase
to a single transaction of the total dollar amount indicated in
the Statement of Intention. A Statement of Intention may include
purchases of shares made not more than 90 days prior to the date
that an investor signs a Statement; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.
An investor may receive a credit toward the amount indicated in
the Statement of Intention equal to the maximum public offering
price as of the close of business on the previous day of all
shares he or she owns on the date of the Statement of Intention
which are eligible for purchase under a Statement of Intention
(plus any shares of money market funds acquired by exchange of
such eligible shares). Investors do not receive credit for
shares purchased by the reinvestment of distributions. Investors
qualifying for the "combined purchase privilege" (see above) may
purchase shares under a single Statement of Intention.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount, and must be invested immediately. Class A shares or
class M shares purchased with the first 5% of such amount will be
held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased. When the full amount indicated has
been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the
investor pays the sales charge that, without regard to the
Statement of Intention, would apply to the total investment made
to date.
To the extent that an investor purchases more than the dollar
amount indicated on the Statement of Intention and qualifies for
a further reduced sales charge, the sales charge will be adjusted
for the entire amount purchased at the end of the 13-month
period, upon recovery from the investor's dealer of its portion
of the sales charge adjustment. Once received from the dealer,
which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at
the then current offering price applicable to the actual amount
of the aggregate purchases. These additional shares will not be
considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement
of Intention. No sales charge adjustment will be made unless and
until the investor's dealer returns any excess commissions
previously received.
To the extent that an investor purchases less than the dollar
amount indicated on the Statement of Intention within the 13-
month period, the sales charge will be adjusted upward for the
entire amount purchased at the end of the 13-month period. This
adjustment will be made by redeeming shares from the account to
cover the additional sales charge, the proceeds of which will be
paid to the investor's dealer and Putnam Mutual Funds in
accordance with the prospectus. If the account exceeds an amount
that would otherwise qualify for a reduced sales charge, that
reduced sales charge will be applied.
Statements of Intention are not available for certain employee
benefit plans.
Statement of Intention forms may be obtained from Putnam Mutual
Funds or from investment dealers. Interested investors should
read the Statement of Intention carefully.
GROUP PURCHASES OF CLASS A AND CLASS M SHARES. Members of
qualified groups may purchase class A shares of the fund at a
group sales charge rate of 4.50% of the public offering price
(4.71% of the net amount invested). The dealer discount on such
sales is 3.75% of the offering price. Members of qualified
groups may also purchase class M shares at net asset value.
To receive the class A or class M group rate, group members must
purchase shares through a single investment dealer designated by
the group. The designated dealer must transmit each member's
initial purchase to Putnam Mutual Funds, together with payment
and completed application forms. After the initial purchase, a
member may send funds for the purchase of shares directly to
Putnam Investor Services. Purchases of shares are made at the
public offering price based on the net asset value next
determined after Putnam Mutual Funds or Putnam Investor Services
receives payment for the shares. The minimum investment
requirements described above apply to purchases by any group
member. Only shares purchased under the class A group discount
are included in calculating the purchased amount for the purposes
of these requirements.
Qualified groups include the employees of a corporation or a sole proprietorship, members and employees of a partnership or association, or other organized groups of persons (the members of which may include other qualified groups) provided that: (i) the group has at least 25 members of which, with respect to the class A discount only, at least 10 members participate in the initial purchase; (ii) the group has been in existence for at least six months; (iii) the group has some purpose in addition to the purchase of investment company shares at a reduced sales charge; (iv) the group's sole organizational nexus or connection is not that the members are credit card holders of a company, policy holders of an insurance company, customers of a bank or broker-dealer, clients of an investment adviser or security holders of a company; (v) with respect to the class A discount only, the group agrees to provide its designated investment dealer access to the group's membership by means of written communication or direct presentation to the membership at a meeting on not less frequently than an annual basis; (vi) the group or its investment dealer will provide annual certification in form satisfactory to Putnam Investor Services that the group then has at least 25 members and, with respect to the class A discount only, that at least ten members participated in group purchases during the immediately preceding 12 calendar months; and (vii) the group or its investment dealer will provide periodic certification in form satisfactory to Putnam Investor Services as to the eligibility of the purchasing members of the group. Members of a qualified group include: (i) any group which meets the requirements stated above and which is a constituent member of a qualified group; (ii) any individual purchasing for his or her own account who is carried on the records of the group or on the records of any constituent member of the group as being a good standing employee, partner, member or person of like status of the group or constituent member; or (iii) any fiduciary purchasing shares for the account of a member of a qualified group or a member's beneficiary. For example, a qualified group could consist of a trade association which would have as its members individuals, sole proprietors, partnerships and corporations. The members of the group would then consist of the individuals, the sole proprietors and their employees, the members of the partnerships and their employees, and the corporations and their employees, as well as the trustees of employee benefit trusts acquiring class A shares for the benefit of any of the foregoing. A member of a qualified group may, depending upon the value of class A shares of the fund owned or proposed to be purchased by the member, be entitled to purchase class A shares of the fund at non-group sales charge rates shown in the prospectus which may be lower than the group sales charge rate, if the member qualifies as a person entitled to reduced non-group sales charges. Such a group member will be entitled to purchase at the lower rate if, at the time of purchase, the member or his or her investment dealer furnishes sufficient information for Putnam Mutual Funds or Putnam Investor Services to verify that the purchase qualifies for the lower rate. Interested groups should contact their investment dealer or Putnam Mutual Funds. The fund reserves the right to revise the terms of or to suspend or discontinue group sales at any time. EMPLOYEE BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The term "employee benefit plan" means any plan or arrangement, whether or not tax-qualified, which provides for the purchase of class A shares. The term "affiliated employer" means employers who are affiliated with each other within the meaning of Section 2(a)(3)(C) of the Investment Company Act of 1940. The term "individual account plan" means any employee benefit plan whereby (i) class A shares are purchased through payroll deductions or otherwise by a fiduciary or other person for the account of participants who are employees (or their spouses) of an employer, or of affiliated employers, and (ii) a separate investing account is maintained in the name of such fiduciary or other person for the account of each participant in the plan. The table of sales charges in the prospectus applies to sales to employee benefit plans, except that the fund may sell class A shares at net asset value to employee benefit plans, including individual account plans, of employers or of affiliated employers which have at least 750 employees to whom such plan is made available, in connection with a payroll deduction system of plan funding (or other system acceptable to Putnam Investor Services) by which contributions or account information for plan participation are transmitted to Putnam Investor Services by methods acceptable to Putnam Investor Services. The fund may also sell class A shares at net asset value to participant- directed qualified retirement plans with at least 200 eligible employees and the fund may sell class M shares at net asset value to participant-directed qualified retirement plans with at least 50 eligible employees. A participant-directed qualified retirement plan participating in a "multi-fund" program approved by Putnam Mutual Funds may include amounts invested in the other mutual funds participating in such program for purposes of determining whether the plan may purchase class A shares at net asset value based on the size of the purchase as described in the prospectus. These investments will also be included for purposes of the discount privileges and programs described above. Additional information about participant-directed qualified retirement plans and individual account plans is available from investment dealers or from Putnam Mutual Funds. |
CONTINGENT DEFERRED SALES CHARGES
CLASS A SHARES. Class A shares purchased at net asset value by
shareholders investing $1 million or more, including purchases
pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, are subject to a CDSC of
1.00% or 0.50%, respectively, if redeemed within the first or
second year after purchase. The class A CDSC is imposed on the
lower of the cost and the current net asset value of the shares
redeemed. The CDSC does not apply to shares sold without a sales
charge through participant-directed qualified retirement plans
and shares purchased by certain investors investing $1 million or
more that have made arrangements with Putnam Mutual Funds and
whose dealer of record waived the commission described in the
next paragraph.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of class A shares of $1
million or more based on an investor's cumulative purchases of
such shares, including purchases pursuant to any Combined
Purchase Privilege, Right of Accumulation or Statement of
Intention, during the one-year period beginning with the date of
the initial purchase at net asset value and each subsequent one-
year period beginning with the first net asset value purchase
following the end of the prior period. Such commissions are paid
at the rate of 1.00% of the amount under $3 million, 0.50% of the
next $47 million and 0.25% thereafter. On sales at net asset
value to a participant-directed qualified retirement plan
initially investing less than $20 million in Putnam funds and
other investments managed by Putnam Management or its affiliates,
(including a plan with at least 250 eligible employees), Putnam
Mutual Funds pays commissions during each one-year measuring
period, determined as described above, at the rate of 1.00% of
the first $2 million, 0.80% of the next $1 million and 0.50%
thereafter, except that commissions on sales prior to December 1,
1995 are based on cumulative purchases during the life of the
account and are paid at the rate of 1.00% of the amount under $3
million and 0.50% thereafter. On sales at net asset value to all
other participant-directed qualified retirement plans, Putnam
Mutual Funds pays commissions on the initial investment and on
subsequent net quarterly sales (gross sales minus gross
redemptions during the quarter) at the rate of 0.15%. Money
market fund shares are excluded from all commission calculations,
except for determining the amount initially invested by a
participant-directed qualified retirement plan. Commissions on
sales at net asset value to such plans are subject to Putnam
Mutual Funds' right to reclaim such commissions if the shares are
redeemed within two years.
Different CDSC and commission rates may apply to shares purchased
before April 1, 1994.
CLASS B AND CLASS C SHARES. Investors who set up an Automatic
Cash Withdrawal Plan ("ACWP") for a class B and class C share
account (see "Plans available to shareholders -- Automatic Cash
Withdrawal Plan") may withdraw through the ACWP up to 12% of the
net asset value of the account (calculated as set forth below)
each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions)
will be redeemed first and will count toward the 12% limitation.
If there are insufficient shares not subject to a CDSC, shares
subject to the lowest CDSC liability will be redeemed next until
the 12% limit is reached. The 12% figure is calculated on a pro
rata basis at the time of the first payment made pursuant to an
ACWP and recalculated thereafter on a pro rata basis at the time
of each ACWP payment. Therefore, shareholders who have chosen an
ACWP based on a percentage of the net asset value of their
account of up to 12% will be able to receive ACWP payments
without incurring a CDSC. However, shareholders who have chosen
a specific dollar amount (for example, $100 per month from a fund
that pays income distributions monthly) for their periodic ACWP
payment should be aware that the amount of that payment not
subject to a CDSC may vary over time depending on the net asset
value of their account. For example, if the net asset value of
the account is $10,000 at the time of payment, the shareholder
will receive $100 free of the CDSC (12% of $10,000 divided by 12
monthly payments). However, if at the time of the next payment
the net asset value of the account has fallen to $9,400, the
shareholder will receive $94 free of any CDSC (12% of $9,400
divided by 12 monthly payments) and $6 subject to the lowest
applicable CDSC. This ACWP privilege may be revised or
terminated at any time.
ALL SHARES. No CDSC is imposed on shares of any class subject to
a CDSC ("CDSC Shares") to the extent that the CDSC Shares
redeemed (i) are no longer subject to the holding period
therefor, (ii) resulted from reinvestment of distributions on
CDSC Shares, or (iii) were exchanged for shares of another Putnam
fund, provided that the shares acquired in such exchange or
subsequent exchanges (including shares of a Putnam money market
fund) will continue to remain subject to the CDSC, if applicable,
until the applicable holding period expires. In determining
whether the CDSC applies to each redemption of CDSC Shares, CDSC
Shares not subject to a CDSC are redeemed first.
The fund will waive any CDSC on redemptions, in the case of
individual, joint or Uniform Transfers to Minors Act accounts, in
the event of death or post-purchase disability of a shareholder,
for the purpose of paying benefits pursuant to tax-qualified
retirement plans ("Benefit Payments"), or, in the case of living
trust accounts, in the event of the death or post-purchase
disability of the settlor of the trust). Benefit payments
currently include, without limitation, (1) distributions from an
IRA due to death or disability, (2) a return of excess
contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under Section 401(a) of the Code
or from a 403(b) plan due to death, disability, retirement or
separation from service. These waivers may be changed at any
time. Additional waivers may apply to IRA accounts opened prior
to February 1, 1994.
DISTRIBUTION PLANS
If the fund or a class of shares of the fund has adopted a
distribution plan, the prospectus describes the principal
features of the plan. This SAI contains additional information
which may be of interest to investors.
Continuance of a plan is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not
interested persons of the fund and who have no direct or indirect
interest in the plan or related arrangements (the "Qualified
Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a plan must be likewise approved by
the Trustees and the Qualified Trustees. No plan may be amended
in order to increase materially the costs which the fund may bear
for distribution pursuant to such plan without also being
approved by a majority of the outstanding voting securities of
the fund or the relevant class of the fund, as the case may be.
A plan terminates automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of
a majority of the Qualified Trustees or by a vote of a majority
of the outstanding voting securities of the fund or the relevant
class of the fund, as the case may be.
If plan payments are made to reimburse Putnam Mutual Funds for
payments to dealers based on the average net asset value of fund
shares attributable to shareholders for whom the dealers are
designated as the dealer of record, "average net asset value"
attributable to a shareholder account means the product of (i)
the fund's average daily share balance of the account and (ii)
the fund's average daily net asset value per share (or the
average daily net asset value per share of the class, if
applicable). For administrative reasons, Putnam Mutual Funds may
enter into agreements with certain dealers providing for the
calculation of "average net asset value" on the basis of assets
of the accounts of the dealer's customers on an established day
in each quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
INVESTOR SERVICES
SHAREHOLDER INFORMATION
Each time shareholders buy or sell shares, they will receive a
statement confirming the transaction and listing their current
share balance. (Under certain investment plans, a statement may
only be sent quarterly.) Shareholders will receive a statement
confirming reinvestment of distributions in additional fund
shares (or in shares of other Putnam funds for Dividends Plus
accounts) promptly following the quarter in which the
reinvestment occurs. To help shareholders take full advantage of
their Putnam investment, they will receive a Welcome Kit and a
periodic publication covering many topics of interest to
investors. The fund also sends annual and semiannual reports
that keep shareholders informed about its portfolio and
performance, and year-end tax information to simplify their
recordkeeping. Easy-to-read, free booklets on special subjects
such as the Exchange Privilege and IRAs are available from Putnam
Investor Services. Shareholders may call Putnam Investor
Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m.
and 7:00 p.m. Boston time for more information, including account
balances.
YOUR INVESTING ACCOUNT
The following information provides more detail concerning the
operation of a Putnam Investing Account. For further information
or assistance, investors should consult Putnam Investor Services.
Shareholders who purchase shares through a defined contribution
plan should note that not all of the services or features
described below may be available to them, and they should contact
their employer for details.
A shareholder may reinvest a cash distribution without a
front-end sales charge or without the reinvested shares being
subject to a CDSC, as the case may be, by delivering to Putnam
Investor Services the uncashed distribution check, endorsed to
the order of the fund. Putnam Investor Services must receive the
properly endorsed check within 1 year after the date of the
check.
The Investing Account also provides a way to accumulate shares of
the fund. In most cases, after an initial investment of $500, a
shareholder may send checks to Putnam Investor Services for $50
or more, made payable to the fund, to purchase additional shares
at the applicable public offering price next determined after
Putnam Investor Services receives the check. Checks must be
drawn on a U.S. bank and must be payable in U.S. dollars.
Putnam Investor Services acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, shares will be
purchased through the investment dealer designated by the
shareholder. Shareholders may change investment dealers at any
time by written notice to Putnam Investor Services, provided the
new dealer has a sales agreement with Putnam Mutual Funds.
Shares credited to an account are transferable upon written
instructions in good order to Putnam Investor Services and may be
sold to the fund as described under "How to sell shares" in the
prospectus. Money market funds and certain other funds will not
issue share certificates. A shareholder may send to Putnam
Investor Services any certificates which have been previously
issued for safekeeping at no charge to the shareholder.
Putnam Mutual Funds, at its expense, may provide certain
additional reports and administrative material to qualifying
institutional investors with fiduciary responsibilities to assist
these investors in discharging their responsibilities.
Institutions seeking further information about this service
should contact Putnam Mutual Funds, which may modify or terminate
this service at any time.
Putnam Investor Services may make special services available to
shareholders with investments exceeding $1,000,000. Contact
Putnam Investor Services for details.
The fund pays Putnam Investor Services' fees for maintaining
Investing Accounts.
REINSTATEMENT PRIVILEGE
An investor who has redeemed shares of the fund may reinvest
(within 1 year) the proceeds of such sale in shares of the same
class of the fund, or may be able to reinvest (within 1 year) the
proceeds in shares of the same class of one of the other
continuously offered Putnam funds (through the Exchange Privilege
described in the prospectus), including, in the case of shares
subject to a CDSC, the amount of CDSC charged on the redemption.
Any such reinvestment would be at the net asset value of the
shares of the fund(s) the investor selects, next determined after
Putnam Mutual Funds receives a Reinstatement Authorization. The
time that the previous investment was held will be included in
determining any applicable CDSC due upon redemptions and, in the
case of class B shares, the eight-year period for conversion to
class A shares. Shareholders will receive from Putnam Mutual
Funds the amount of any CDSC paid at the time of redemption as
part of the reinstated investment, which may be treated as
capital gains to the shareholder for tax purposes. Exercise of
the Reinstatement Privilege does not alter the federal income tax
treatment of any capital gains realized on a sale of fund shares,
but to the extent that any shares are sold at a loss and the
proceeds are reinvested in shares of the fund, some or all of the
loss may be disallowed as a deduction. Consult your tax adviser.
Investors who desire to exercise the Reinstatement Privilege
should contact their investment dealer or Putnam Investor
Services.
EXCHANGE PRIVILEGE
Except as otherwise set forth in this section, by calling Putnam
Investor Services, investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided
that no certificates are outstanding for such shares and no
address change has been made within the preceding 15 days.
During periods of unusual market changes and shareholder
activity, shareholders may experience delays in contacting Putnam
Investor Services by telephone to exercise the Telephone Exchange
Privilege.
Putnam Investor Services also makes exchanges promptly after
receiving a properly completed Exchange Authorization Form and,
if issued, share certificates. If the shareholder is a
corporation, partnership, agent, or surviving joint owner, Putnam
Investor Services will require additional documentation of a
customary nature. Because an exchange of shares involves the
redemption of fund shares and reinvestment of the proceeds in
shares of another Putnam fund, completion of an exchange may be
delayed under unusual circumstances if the fund were to suspend
redemptions or postpone payment for the fund shares being
exchanged, in accordance with federal securities laws. Exchange
Authorization Forms and prospectuses of the other Putnam funds
are available from Putnam Mutual Funds or investment dealers
having sales contracts with Putnam Mutual Funds. The prospectus
of each fund describes its investment objective(s) and policies,
and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain Putnam funds are not available to residents of
all states. The fund reserves the right to change or suspend the
Exchange Privilege at any time. Shareholders would be notified
of any change or suspension. Additional information is available
from Putnam Investor Services.
Shares of the fund must be held at least 15 days by the
shareholder requesting an exchange. There is no holding period
if the shareholder acquired the shares to be exchanged through
reinvestment of distributions, transfer from another shareholder,
prior exchange or certain employer-sponsored defined contribution
plans. In all cases, the shares to be exchanged must be
registered on the records of the fund in the name of the
shareholder requesting the exchange.
Shareholders of other Putnam funds may also exchange their shares
at net asset value for shares of the fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is a sale on which
the investor generally will realize a capital gain or loss
depending on whether the net asset value at the time of the
exchange is more or less than the investor's basis. The Exchange
Privilege may be revised or terminated at any time. Shareholders
would be notified of any such change or suspension.
DIVIDENDS PLUS
Shareholders may invest the fund's distributions of net
investment income or distributions combining net investment
income and short-term capital gains in shares of the same class
of another continuously offered Putnam fund (the "receiving
fund") using the net asset value per share of the receiving fund
determined on the date the fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares unless
the fund paying the distribution is a money market fund. The
prospectus of each fund describes its investment objective(s) and
policies, and shareholders should obtain a prospectus and
consider these objective(s) and policies carefully before
investing their distributions in the receiving fund. Shares of
certain Putnam funds are not available to residents of all
states.
The minimum account size requirement for the receiving fund will
not apply if the current value of your account in the fund paying
the distribution is more than $5,000.
Shareholders of other Putnam funds (except for money market
funds, whose shareholders must pay a sales charge or become
subject to a CDSC) may also use their distributions to purchase
shares of the fund at net asset value.
For federal tax purposes, distributions from the fund which are
reinvested in another fund are treated as paid by the fund to the
shareholder and invested by the shareholder in the receiving fund
and thus, to the extent comprised of taxable income and deemed
paid to a taxable shareholder, are taxable.
The Dividends PLUS program may be revised or terminated at any
time.
PLANS AVAILABLE TO SHAREHOLDERS
The plans described below are fully voluntary and may be
terminated at any time without the imposition by the fund or
Putnam Investor Services of any penalty. All plans provide for
automatic reinvestment of all distributions in additional shares
of the fund at net asset value. The fund, Putnam Mutual Funds or
Putnam Investor Services may modify or cease offering these plans
at any time.
AUTOMATIC CASH WITHDRAWAL PLAN ("ACWP"). An investor who owns or
buys shares of the fund valued at $10,000 or more at the current
public offering price may open an ACWP plan and have a designated
sum of money ($50 or more) paid monthly, quarterly, semi-annually
or annually to the investor or another person. (Payments from
the fund can be combined with payments from other Putnam funds
into a single check through a designated payment plan.) Shares
are deposited in a plan account, and all distributions are
reinvested in additional shares of the fund at net asset value
(except where the plan is utilized in connection with a
charitable remainder trust). Shares in a plan account are then
redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates;
however, if shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary,
except in the case of a profit-sharing or pension plan where
payment will be made to a designee. As withdrawal payments may
include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
The redemption of shares in connection with a plan generally will
result in a gain or loss for tax purposes. Some or all of the
losses realized upon redemption may be disallowed pursuant to the
so-called wash sale rules if shares of the same fund from which
shares were redeemed are purchased (including through the
reinvestment of fund distributions) within a period beginning 30
days before, and ending 30 days after, such redemption. In such
a case, the basis of the replacement shares will be increased to
reflect the disallowed loss. Continued withdrawals in excess of
income will reduce and possibly exhaust invested principal,
especially in the event of a market decline. The maintenance of
a plan concurrently with purchases of additional shares of the
fund would be disadvantageous to the investor because of the
sales charge payable on such purchases. For this reason, the
minimum investment accepted while a plan is in effect is $1,000,
and an investor may not maintain a plan for the accumulation of
shares of the fund (other than through reinvestment of
distributions) and a plan at the same time. The cost of
administering these plans for the benefit of those shareholders
participating in them is borne by the fund as an expense of all
shareholders. The fund, Putnam Mutual Funds or Putnam Investor
Services may terminate or change the terms of the plan at any
time. A plan will be terminated if communications mailed to the
shareholder are returned as undeliverable.
Investors should consider carefully with their own financial
advisers whether the plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The fund and
Putnam Investor Services make no recommendations or
representations in this regard.
TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT
OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.)
Investors may purchase shares of the fund through the following
Tax Qualified Retirement Plans, available to qualified
individuals or organizations:
Standard and variable profit-sharing (including 401(k))
and money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. Putnam Investor Services will furnish
services under each plan at a specified annual cost. Putnam
Fiduciary Trust Company serves as trustee under each of these
Plans.
Forms and further information on these Plans are available from
investment dealers or from Putnam Mutual Funds. In addition,
specialized professional plan administration services are
available on an optional basis; contact Putnam Defined
Contribution Plan Services at 1-800-225-2465, extension 8600.
A 403(b) Retirement Plan is available for employees of public
school systems and organizations which meet the requirements of
Section 501(c)(3) of the Internal Revenue Code. Forms and
further information on the 403(b) Plan are also available from
investment dealers or from Putnam Mutual Funds. Shares of the
fund may also be used in simplified employee pension (SEP) plans.
For further information on the Putnam prototype SEP plan, contact
an investment dealer or Putnam Mutual Funds.
Consultation with a competent financial and tax adviser regarding
these Plans and consideration of the suitability of fund shares
as an investment under the Employee Retirement Income Security
Act of 1974, or otherwise, is recommended.
SIGNATURE GUARANTEES
Redemption requests for shares having a net asset value of
$100,000 or more must be signed by the registered owners or their
legal representatives and must be guaranteed by a bank,
broker/dealer, municipal securities dealer or broker, government
securities dealer or broker, credit union, national securities
exchange, registered securities association, clearing agency,
savings association or trust company, provided such institution
is acceptable under and conforms with Putnam Fiduciary Trust
Company's signature guarantee procedures. A copy of such
procedures is available upon request. If you want your
redemption proceeds sent to an address other than your address as
it appears on Putnam's records, you must provide a signature
guarantee. Putnam Investor Services usually requires additional
documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
SUSPENSION OF REDEMPTIONS
The fund may not suspend shareholders' right of redemption, or
postpone payment for more than seven days, unless the New York
Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange
is restricted or during any emergency which makes it
impracticable for the fund to dispose of its securities or to
determine fairly the value of its net assets, or during any other
period permitted by order of the Commission for protection of
investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the fund. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the fund or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of fund property for all loss
and expense of any shareholder held personally liable for the
obligations of the fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund would be unable to
meet its obligations. The likelihood of such circumstances is
remote.
STANDARD PERFORMANCE MEASURES
Yield and total return data for the fund may from time to time be
presented in Part I of this SAI and in advertisements. In the
case of funds with more than one class of shares, all performance
information is calculated separately for each class. The data is
calculated as follows.
Total return for one-, five- and ten-year periods (or for such
shorter periods as the fund has been in operation or shares of
the relevant class have been outstanding) is determined by
calculating the actual dollar amount of investment return on a
$1,000 investment in the fund made at the beginning of the
period, at the maximum public offering price for class A shares
and class M shares and net asset value for other classes of
shares, and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of
one year is equal to the actual return of the fund during that
period. Total return calculations assume deduction of the fund's
maximum sales charge or CDSC, if applicable, and reinvestment of
all fund distributions at net asset value on their respective
reinvestment dates.
The fund's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by
(i) calculating the aggregate amount of dividends and interest
earned by the fund during the base period less expenses for that
period, and (ii) dividing that amount by the product of (A) the
average daily number of shares of the fund outstanding during the
base period and entitled to receive dividends and (B) the per
share maximum public offering price for class A shares or class M
shares, as appropriate, and net asset value for other classes of
shares on the last day of the base period. The result is
annualized on a compounding basis to determine the yield. For
this calculation, interest earned on debt obligations held by the
fund is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities
such as the Government National Mortgage Association ("GNMAs"),
based on cost). Dividends on equity securities are accrued daily
at their stated dividend rates. The amount of expenses used in
determining the fund's yield includes, in addition to expenses
actually accrued by the fund, an estimate of the amount of
expenses that the fund would have incurred if brokerage
commissions had not been used to reduce such expenses.
If the fund is a money market fund, yield is computed by
determining the percentage net change, excluding capital changes,
in the value of an investment in one share over the seven-day
period for which yield is presented (the "base period"), and
multiplying the net change by 365/7 (or approximately 52 weeks).
Effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result.
If the fund is a tax-exempt fund, the tax-equivalent yield during
the base period may be presented for shareholders in one or more
stated tax brackets. Tax-equivalent yield is calculated by
adjusting the tax-exempt yield by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce an after-tax yield equal, for that shareholder, to the
tax-exempt yield. The tax-equivalent yield will differ for
shareholders in other tax brackets.
At times, Putnam Management may reduce its compensation or assume
expenses of the fund in order to reduce the fund's expenses. The
per share amount of any such fee reduction or assumption of
expenses during the fund's past ten fiscal years (or for the life
of the fund, if shorter) is reflected in the table in the section
entitled "Financial highlights" in the prospectus. Any such fee
reduction or assumption of expenses would increase the fund's
yield and total return during the period of the fee reduction or
assumption of expenses.
All data are based on past performance and do not predict future
results.
COMPARISON OF PORTFOLIO PERFORMANCE
Independent statistical agencies measure the fund's investment
performance and publish comparative information showing how the
fund, and other investment companies, performed in specified time
periods. Three agencies whose reports are commonly used for such
comparisons are set forth below. From time to time, the fund may
distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED
ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED PERFORMANCE
MEASURES DESCRIBED IN THE PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, generally reflecting
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, including year-to-date,
1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset
category.
MORNINGSTAR, INC. distributes mutual fund ratings twice a
month. The ratings are divided into five groups:
highest, above average, neutral, below average and lowest.
They represent a fund's historical risk/reward ratio
relative to other funds in its broad investment class as
determined by Morningstar, Inc. Morningstar ratings cover
a variety of performance periods, including 3-year, 5-
year, 10-year and overall performance. The performance
factor for the overall rating is a weighted-average
assessment of the fund's 3-year, 5-year, and 10-year total
return performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the
fund. The ratings are derived from a purely quantitative
system that does not utilize the subjective criteria
customarily employed by rating agencies such as Standard &
Poor's and Moody's Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual
fund rankings and is distributed monthly. The rankings
are based entirely on total return calculated by
Weisenberger for periods such as year-to-date, 1-year,
3-year, 5-year and 10-year. Mutual funds are ranked in
general categories (e.g., international bond,
international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of
sales charges or fees.
Independent publications may also evaluate the fund's
performance. The fund may from time to time refer to results
published in various periodicals, including Barrons, Financial
World, Forbes, Fortune, Investor's Business Daily, Kiplinger's
Personal Finance Magazine, Money, U.S. News and World Report and
The Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may
be used to present a comparative benchmark of fund performance.
The performance figures of an index reflect changes in market
prices, reinvestment of all dividend and interest payments and,
where applicable, deduction of foreign withholding taxes, and do
not take into account brokerage commissions or other costs.
Because the fund is a managed portfolio, the securities it owns
will not match those in an index. Securities in an index may
change from time to time.
THE CONSUMER PRICE INDEX, prepared by the U.S. Bureau of
Labor Statistics, is a commonly used measure of the rate
of inflation. The index shows the average change in the
cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
THE DOW JONES INDUSTRIAL AVERAGE is an index of 30 common
stocks frequently used as a general measure of stock
market performance.
THE DOW JONES UTILITIES AVERAGE is an index of 15 utility
stocks frequently used as a general measure of stock
market performance.
CS FIRST BOSTON HIGH YIELD INDEX is a market-weighted
index including publicly traded bonds having a rating
below BBB by Standard & Poor's and Baa by Moody's.
THE LEHMAN BROTHERS CORPORATE BOND INDEX is an index of
publicly issued, fixed-rate, non-convertible
investment-grade domestic corporate debt securities
frequently used as a general measure of the performance of
fixed-income securities.
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX is an
index of publicly issued U.S. Treasury obligations, debt
obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed-rate, non-convertible,
investment-grade corporate debt securities and U.S.
dollar-denominated, SEC-registered non-convertible debt
issued by foreign governmental entities or international
agencies used as a general measure of the performance of
fixed-income securities.
THE LEHMAN BROTHERS INTERMEDIATE TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations with
maturities of up to ten years and is used as a general
gauge of the market for intermediate-term fixed-income
securities.
THE LEHMAN BROTHERS LONG-TERM TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations
(excluding flower bonds and foreign-targeted issues) that
are U.S. dollar-denominated and have maturities of 10
years or greater.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX
includes 15- and 30-year fixed rate securities backed by
mortgage pools of the Government National Mortgage
Association, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX is an index of
approximately 20,000 investment-grade, fixed-rate
tax-exempt bonds.
THE LEHMAN BROTHERS TREASURY BOND INDEX is an index of
publicly issued U.S. Treasury obligations (excluding
flower bonds and foreign-targeted issues) that are U.S.
dollar denominated, have a minimum of one year to
maturity, and are issued in amounts over $100 million.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an
index of approximately 1,482 equity securities listed on
the stock exchanges of the United States, Europe, Canada,
Australia, New Zealand and the Far East, with all values
expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX is an
index of approximately 1,045 equity securities issued by
companies located in 18 countries and listed on the stock
exchanges of Europe, Australia, and the Far East. All
values are expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is
an index of approximately 627 equity securities issued by
companies located in one of 13 European countries, with
all values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX is
an index of approximately 418 equity securities issued by
companies located in 5 countries and listed on the
exchanges of Australia, New Zealand, Japan, Hong Kong,
Singapore/Malaysia. All values are expressed in U.S.
dollars.
THE NASDAQ INDUSTRIAL AVERAGE is an index of stocks traded
in The Nasdaq Stock Market, Inc. National Market System.
THE SALOMON BROTHERS LONG-TERM HIGH-GRADE CORPORATE BOND
INDEX is an index of publicly traded corporate bonds
having a rating of at least AA by Standard & Poor's or Aa
by Moody's and is frequently used as a general measure of
the performance of fixed-income securities.
THE SALOMON BROTHERS LONG-TERM TREASURY INDEX is an index
of U.S. government securities with maturities greater than
10 years.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX is an
index that tracks the performance of the 14 government
bond markets of Australia, Austria, Belgium Canada,
Denmark, France, Germany, Italy, Japan, Netherlands,
Spain, Sweden, United Kingdom and the United States.
Country eligibility is determined by market capitalization
and investability criteria.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (non
$U.S.) is an index of foreign government bonds calculated
to provide a measure of performance in the government bond
markets outside of the United States.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX is an
index of common stocks frequently used as a general
measure of stock market performance.
STANDARD & POOR'S 40 UTILITIES INDEX is an index of 40
utility stocks.
In addition, Putnam Mutual Funds may distribute to shareholders
or prospective investors illustrations of the benefits of
reinvesting tax-exempt or tax-deferred distributions over
specified time periods, which may include comparisons to fully
taxable distributions. These illustrations use hypothetical
rates of tax-advantaged and taxable returns and are not intended
to indicate the past or future performance of any fund.
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DEFINITIONS
"Putnam Management" -- Putnam Investment Management,
Inc., the fund's investment
manager.
"Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the
fund's principal underwriter.
"Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company,
Company" the fund's custodian.
"Putnam Investor Services" -- Putnam Investor Services, a
division of Putnam Fiduciary
Trust Company, the fund's
investor servicing agent.
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PUTNAM HEALTH SCIENCES TRUST
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statements and
Supporting Schedules:
(1) Financial Statements:
Statement of assets and liabilities --
August 31, 1995(a) .
Statement of operations -- year ended
August 31, 1995(a) .
Statement of changes in net assets -- years
ended August 31, 1995 and August 31,
1994(a) .
Financial highlights (a)(b).
Notes to financial statements(a).
(2) Supporting Schedules:
Schedule I -- Portfolio of investments
owned -- August 31, 1995(a) .
Schedules II through IX omitted because
the required matter is not present.
- ---------------------
(a) Incorporated by reference into
Parts A and B.
(b) Included in Part A.
(b) Exhibits:
1. Agreement and Declaration of Trust, as
amended April 3, 1992 - - Incorporated
by reference to Post-Effective Amendment No.
11 to the Registrant's Registration
Statement.
2. By-Laws , as amended through February
1, 1994 - - Incorporated by reference to
Post-Effective Amendment No. 13 to the
Registrant's Registration Statement.
3. Not applicable.
|
4a. Class A Specimen share certificate -
-Incorporated by reference to Post-
Effective Amendment No. 12 to the
Registrant's Registration Statement.
4b. Class B Specimen share certificate
- - Incorporated by reference to Post-
Effective
Amendment No. 12 to the
Registrant's
Registration Statement.
4c. Class M Specimen share certificate --
Exhibit 1.
4d . Portions of Agreement and Declaration of
Trust
Relating to
Shareholders' Rights
- -
Incorporated by
reference to Post-
Effective Amend
ment
No.
12 to
the
Regis
trant
's
Regis
trati
on
State
ment.
4e. Portions of By-Laws Relating to
Shareholders' Rights - - Incorporated by
reference to Post-Effective Amendment No. 13
to the Registrant's Registration
Statement.
5. Management Contract dated March 5,
1992 - - Incorporated by reference to
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement.
6a. Distributor's Contract dated May 6,
1994 - - Incorporated by
reference to Post-Effective Amendment No.
13 to the Registrant's Registration
Statement.
6b. Form of Specimen Dealer Sales Contract
--Exhibit 2.
6c. Form of Specimen Financial Institution
Sales Contract - - Exhibit 3 .
7. Not applicable.
8. Custodian Agreement with Putnam
Fiduciary Trust Company dated May 3, 1991, as
amended July 13, 1992 - - Incorporated
by reference to Post-Effective Amendment No.
12 to the Registrant's Registration
Statement.
9. Investor Servicing Agreement dated
June 3, 1991 with Putnam Fiduciary Trust
Company - - Incorporated by reference to
Post-Effective Amendment No. 10 to the
Registrant's Registration Statement.
10. Opinion of Ropes & Gray, including consent -
- Exhibit 4.
11. Not applicable.
12. Not applicable.
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13. Investment Letter from Putnam Investment
Management, Inc. to the Registrant - -
Incorporated by reference to Post-
Effective Amendment No. 12 to the
Registrant's Registration Statement.
14a. Form of Prototype Individual
Retirement Account Plan - - Incorporated by
reference to Post-Effective Amendment No. 13
to the Registrant's Registration Statement.
14b. Form of Prototype Basic Plan
Documents and related Plan Agreements
- - Exhibit 5.
15a. Class A Distribution Plan and
Agreement dated March 1, 1993 - -
Incorporated by reference to Post-Effective
Amendment No. 13 to the Registrant's
Registration Statement.
15b. Class B Distribution Plan and
Agreement dated January 1, 1993 - -
Incorporated by reference to Post-
Effective Amendment No. 12 to the
Registrant's Registration Statement.
15c. Class M Distribution Plan and Agreement
dated June 30, 1995 -- Exhibit 6.
15d. Form of Specimen Dealer Service Agreement
-- Exhibit 7.
15e. Form of Specimen Financial Institution
Service Agreement - - Exhibit 8 .
16. Schedules for computation of performance
quotations - - Exhibit 9 .
17a . Financial Data Schedule for Class A
shares - - Exhibit 10 .
17b. Financial Data Schedule for Class B
shares - -
Exhibit 11 .
17c. Financial Data Schedule for Class M
shares --
Exhibit 12.
18. Rule 18f-3(d) Plan -- Exhibit 13.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of November 30, 1995, the number of record
holders of each class of securities of the Registrant is as
follows:
NUMBER OF RECORD HOLDERS
-----------------------------
CLASS A CLASS B CLASS M
------- ------- -------
79,287 15,089 167
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ITEM 27. INDEMNIFICATION
The information required by this item is incorporated herein
by reference from the Registrant's initial Registration
Statement on Form N-1 under the Investment Company Act of 1940
(File No. 811-3386).
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Item 28. Business and Other Connections of Investment Adviser
Except as set forth below, the directors and officers
of the Registrant's investment adviser have been engaged during
the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors or officers of
the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is One
Post Office Square, Boston, Massachusetts 02109.
NAME NON-PUTNAM BUSINESS AND OTHER
CONNECTIONS
Gail S. Attridge Prior to November, 1993, International
Vice President Analyst, Keystone Custodian Funds,
200 Berkeley Street, Boston, MA
02116
James D. Babcock Prior to June, 1994, Interest
Assistant Vice President Supervisor, Salomon Brothers, Inc.
7 World Trade Center, New York, NY
10048
Robert K. Baumbach Prior to August, 1994, Vice President
Vice President and Analyst, Keystone Custodian
Funds, 200 Berkeley St., Boston, MA
02110
Janet S. Becker Prior to July, 1995, National Account
Assistant Vice President Manager for Booz-Allen & Hamilton,
American Express Travel Management
Services, 100 Cambridge Park Drive,
02140; Prior to August, 1994,
Account Manager, Hilton at Dedham
Place, Dedham, MA 02026
Sharon A. Berka Prior to January, 1994, Vice
Vice President President - Compensation Manager,
BayBanks, Inc., 175 Federal Street,
Boston, MA 02110
Matthew G. Bevin Prior to February, 1995, Consultant,
Assistant Vice President SEI Corporation, 680 East Swedesford
Road, Wayne, PA 19807
Thomas Bogan Prior to November, 1994, Analyst
Senior Vice President Lord, Abbett & Co., 767 Fifth
Avenue, New York, NY 10153
Michael F. Bouscaren Prior to May, 1994, President and
Senior Vice President Chairman of the Board of Directors
at Salomon Series Funds, Inc. and a
Director of Salomon Brothers Asset
Management, 7 World Trade Center,
New York, NY 10048
Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109
Andrea Burke Prior to August, 1994, Vice President
Vice President and Portfolio Manager, Back Bay
Advisors, 399 Boylston St., Boston,
MA 02116
Susan Chapman Prior to June, 1995, Vice President,
Senior Vice President Forbes, Walsh, Kelly & Company,
Inc., 17 Battery Place, New York, NY
10004
Steven Cheshire Prior to January, 1994, Assistant
Vice President Vice President, Wellington
Management, 75 State Street, Boston,
MA 02109
Louis F. Chrostowski Prior to August, 1995, Manager of
Vice President Compensation and Benefits, Itek
Optical Systems, 10 MacGuire Rd.,
Lexington, MA 02173
Judith S. Deming Prior to May, 1995, Asset Manager,
Assistant Vice President Fidelity Management & Research
Company, 82 Devonshire St., Boston,
MA 02109
John A. DeTore Prior to January, 1994, Director of
Managing Director Quantitative Portfolio Management,
Wellington Management, 75 State
Street, Boston, MA 02109
Theodore J. Deutz Prior to January, 1995, Senior Vice
Vice President President, Metropolitan West
Securities, Inc. 10880 Wilshire
Blvd., Suite 200, Los Angeles, CA
90024
Michael G. Dolan Prior to February, 1994, Senior
Assistant Vice President Financial Analyst, General Electric
Company, 1000 Western Ave., Lynn, MA
01905
Joseph J. Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacramento, CA
95813
Michael T. Fitzgerald Prior to September, 1994, Senior
Senior Vice President Vice President, Vantage Global
Advisers, 1201 Morningside Dr.,
Manhattan Beach, CA 90266
Roland Gillis Prior to March, 1995, Vice President
Senior Vice President and Senior Portfolio Manager,
Keystone Group, Inc., 200 Berkeley
St., Boston, MA 02116
Mark D. Goodwin Prior to May, 1994, Manager, Audit &
Assistant Vice President Operations Analysis, Mitre
Corporation, 202 Burlington Rd.,
Bedford, MA 01730
Stephen A. Gorman Prior to July, 1994, Financial
Assistant Vice President Analyst, Boston Harbor Trust
Company, 100 Federal St., Boston, MA
02110
Jill Grossberg Prior to March, 1995, Associate
Assistant Vice President Counsel, 440 Financial Group of
and Associate Counsel Worcester, Inc., 440 Lincoln St.,
Worcester, MA 01653; Prior to
November, 1993, Counsel, Berman
DeValerio & Pease, One Liberty
Square, Boston, MA 02109
Deborah R. Healey Prior to June, 1994, Senior Equity
Senior Vice President Trader, Fidelity Management &
Research Company, 82 Devonshire St.,
Boston, MA 02109
Lisa A. Heitman Prior to July, 1994, Securities
Senior Vice President Analyst, Lord, Abbett & Company, 767
Fifth Ave., New York, NY 10153
Pamela Holding Prior to May, 1995, Senior Securities
Vice President Analyst, Kemper Financial Services,
Inc., 120 South LaSalle St.,
Chicago, IL 60603
Michael F. Hotchkiss Prior to May, 1994, Vice President,
Vice President Massachusetts Financial Services,
500 Boylston St., Boston, MA 02116
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Walter Hunnewell, Jr. Prior to April, 1994, Managing
Vice President Director, Veronis, Suhler &
Associates, 350 Park Avenue, New
York, NY 10022
Joseph Joseph Prior to October, 1994, Managing
Vice President Director, Vert Independent Capital
Research, 53 Wall St., New York, NY
10052
Mary E. Kearney Prior to February, 1995, Partner,
Managing Director Price Waterhouse, 160 Federal St.,
Boston, MA 02110
D. William Kohli Prior to September, 1994, Executive
Managing Director Vice President and Co-Director of
Global Bond Management, Franklin
Advisors/Templeton Investment
Counsel, 777 Mariners Island Blvd.,
San Mateo, CA 94404
Karen R. Korn Prior to June, 1994, Vice President,
Vice President Assistant to the President, Designs,
Inc. 1244 Boylston St., Chestnut
Hill, MA 02167
Peter B. Krug Prior to January, 1995, Owner and
Vice President Director, Griswold Special Care, 42
Ethan Allen Drive, Acton, MA 01720
Catherine A. Latham Prior to August, 1995, Director of
Vice President Human Resources, Electronic Data
Systems, 1601 Trapello Rd., Waltham,
MA 02154
Kevin Lemire Prior to March, 1995, Corporate
Assistant Vice President Facilities Manager, Bose
Corporation, The Mountain,
Framingham, MA 01701; Prior to June,
1994, Facilities Manager, The
Pioneer Group, 60 State St., Boston,
MA 02109
Lawrence J. Lasser Director, Marsh & McLennan Companies,
President, Director Inc., 1221 Avenue of the Americas,
and Chief Executive New York, NY 10020; Director,
Officer INROADS/Central New England, Inc.,
99 Bedford St., Boston,MA 02111
Jeffrey R. Lindsey Prior to April, 1994, Vice President
Vice President and Board Member, Strategic
Portfolio Management, 900 Ashwood
Parkway, Suite 290, Atlanta, GA
30338
James W. Lukens Prior to February, 1995, Vice
Senior Vice President President of Institutional
Marketing, Keystone Group, Inc., 200
Berkeley St., Boston, MA 02116
Michael Martino Prior to January, 1994, Executive
Managing Director Vice President and Chief Investment
Officer until 1992
Helen Mazareas Prior to May, 1995, Librarian,
Assistant Vice President Scudder, Stevens & Clark, 2
International Place, Boston, MA
02110; Prior to January, 1994,
Systems Librarian, Goodwin, Procter
& Hoar, Exchange Place, Boston, MA
02109
Alexander J. McAuley Prior to June, 1995, Vice President,
Senior Vice President Deutsche Bank Securities Corp. -
Deutsche Asset Management, 1290
Avenue of the Americas, New York, NY
10019
Susan A. McCormack Prior to May, 1994, Associate
Vice President Investment Banker, Merrill Lynch &
Co., 350 South Grand Ave., Suite
2830, Los Angeles, CA 90071
Carol McMullen Prior to June, 1995, Senior Vice,
Managing Director President and Senior Portfolio
Manager, Baring Asset Management,
125 High Street, Boston, MA 02110
Darryl Mikami Prior to June, 1995, Vice President,
Senior Vice President Fidelity Management & Research
Company, 82 Devonshire St., Boston,
MA 02109
Carol H. Miller Prior to July, 1995, Business
Assistant Vice President Development Officer, Bank of Boston
- Connecticut, 100 Pearl St.,
Hartford, CT 06101
Seung H. Minn Prior to June, 1995, Vice President
Vice President in Portfolio Management and
Research, Templeton Quantitative
Advisors, Inc.,
Maziar Minovi Prior to January, 1995, Associate
Vice President Privatization Specialist, The
International Bank for
Reconstruction and Development, 1818
H St. N.W., Washington, DC 20433
Kenneth Mongtomery Prior to July, 1995, Senior Vice
Managing Director President and Director of World Wide
Sales, Chemcial Banking Corporation,
Paul G. Murphy Prior to January, 1995, Section
Assistant Vice President Manager, First Data Corp., 53 State
Street, Boston, MA 02109
C. Patrick O'Donnell, Jr. Prior to May, 1994, President,
Managing Director Exeter Research, Inc., 163 Water
Street, Exeter, New Hampshire, 03833
Brian O'Keefe Prior to December, 1993, Vice
Vice President President - Foreign Exchange Trader,
Bank of Boston, 100 Federal Street,
Boston, MA 02109
Margaret Pietropaolo Prior to January, 1994, Data Base/
Assistant Vice President Production Analyst, Wellington
Management, 75 State Street, Boston,
MA 02109
Jane E. Price Prior to February, 1995, Associate
Assistant Vice President ERISA Attorney, Hale & Dorr,
60 State St., Boston, MA 02109
Keith Quinton Prior to July, 1995, Vice President,
Senior Vice President Falconwood Securities Corporation.,
Paul T. Quistberg Prior to July, 1995, Assistant
Assistant Vice President Investment Officer, The Travelers
Insurance Group.,
George Putnam Chairman and Director, Putnam Mutual
Chairman and Director Funds Corp.; Director, The Boston
Company, Inc., One Boston Place,
Boston, MA 02108; Director, Boston
Safe Deposit and Trust Company, One
Boston Place, Boston, MA 02108;
Director, Freeport-McMoRan, Inc.,
200 Park Avenue, New York, NY 10166;
Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis, MN
55440; Director, Houghton Mifflin
Company, One Beacon Street, Boston,
MA 02108; Director, Marsh & McLennan
Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020;
Director, Rockefeller Group, Inc.,
1230 Avenue of the Americas, New
York, NY 10020
Thomas Rosalanko Prior to February, 1995, Senior
Senior Vice President Account Manager, SEI Corporation,
680 East Swedesford Road, Wayne, PA
19807
Michael Scanlon Prior to February, 1995, Senior
Assistant Vice President Financial Analyst, Massachusetts
Financial Services, 500 Boylston
St., Boston, MA 02116
Robert M. Shafto Prior to January, 1995, Account
Assistant Vice President Manager, IBM Corporation, 404 Wyman
St., Waltham, MA 02254
Karen F. Smith Prior to May, 1994, Consultant and
Assistant Vice President Portfolio Manager, Wyatt Asset
Services, Inc., 1211 W.W. 5th Ave.,
Portland, OR 97204
Margaret Smith Prior to September, 1995, Vice
Senior Vice President President, State Street Research,
One Financial Center, Boston, MA
02111
Steven Spiegel Prior to December, 1994, Managing
Senior Managing Director Director/Retirement, Lehman
Brothers, Inc., 200 Vesey St., World
Financial Center, New York, NY 10285
George W. Stairs Prior to July, 1994, Equity Research
Vice President Analyst, ValueQuest Limited,
Roundy's Hill, Marblehead, MA 01945
James H. Steggall Prior to May, 1995, Senior Municipal
Assistant Vice President Analyst, Colonial Management
Associates, Inc., One Financial
Center, Boston, MA 02111; Prior to
May, 1994, Controller, Wheelabrator
Environmental Systems, Libery Lane,
Hampton, NH 03842
Karen Stewart Prior to May, 1995, Equity Research
Assistant Vice President Analyst, Chancellor Capital
Management, 1166 Avenue of the
Americas, New York, NY 10036
Roger Sullivan Prior to December, 1994, Vice
Senior Vice President President, State Street Research &
Management Co., One Financial
Center, Boston, MA 02111
Robert Swift Prior to August, 1995, Far East Team
Senior Vice President Leader and Portfolio Manager, IAI
International/Hill Samuel Investment
Advisors, 10 Fleet Place, London,
England
Jerry H. Tempelman Prior to May, 1994, Senior Money
Assistant Vice President Market Trader, State Street Bank &
Trust Co., 225 Franklin, Street,
Boston, MA 02110
Michael Temple Prior to June, 1995, Vice President,
Vice President Duff & Phelps, 55 East Monroe,
Chicago, IL 60613
Hillary F. Till Prior to May, 1994, Fixed-Income
Vice President Derivative Trader, Bank of Boston,
100 Federal Street, Boston, MA
02109; Prior to December, 1993,
Equity Analyst, Harvard Management
Company, 600 Atlantic St., Boston,
MA 02109
Lisa L. Trubiano Prior to July, 1995, Senior Marketing
Vice President Consultant, John Hancock Mutual Life
Insurance Company,
Elizabeth A. Underhill Prior to August, 1994, Vice President
Senior Vice President and Senior Equity Analyst, State
Street Bank and Trust Company, 225
Franklin St., Boston, MA 02110
Charles C. Van Vleet Prior to August, 1994, Vice President
Senior Vice President and Fixed-Income Manager, Alliance
Capital Management, 1345 Avenue of
the Americas, New York, NY 10105
Francis P. Walsh Prior to November, 1994, Research
Vice President Analyst, Furman, Selz, Inc. 230 Park
Avenue, New York, NY 10169; Prior to
December, 1993, Strategic Marketing
Analyst, Lotus Development,
Corporation 55 Cambridge Parkway,
Cambridge, MA 02142
Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140
|
Item 29. Principal Underwriter (a) Putnam Mutual Funds Corp. is the principal underwriter for each of the following investment companies, including the Registrant: Putnam Adjustable Rate U.S. Government Fund, Putnam American Government Income Fund, Putnam American Renaissance Fund, Putnam Arizona Tax Exempt Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds, Putnam Balanced Retirement Fund, Putnam California Tax Exempt Income Trust, Putnam California Tax Exempt Money Market Fund, Putnam Capital Appreciation Fund, Putnam Capital Manager Trust, Putnam Convertible Income-Growth Trust, Putnam Diversified Equity Trust, Putnam Diversified Income Trust, Putnam Equity Income Fund, Putnam Europe Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax Exempt Income Fund, The Putnam Fund for Growth and Income, The George Putnam Fund of Boston, Putnam Global Governmental Income Trust, Putnam Global Growth Fund, Putnam Growth Fund, Putnam Growth and Income Fund, Putnam Health Sciences Trust, Putnam High Yield Trust, Putnam High Yield Advantage Fund, Putnam Income Fund, Putnam Intermediate Tax Exempt Income Fund, Putnam Intermediate U.S. Government Income Fund, Putnam Investment Funds, Putnam Investment-Grade Bond Fund, Putnam Investors Fund, Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund, Putnam Money Market Fund, Putnam Municipal Income Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund, Putnam New York Tax Exempt Income Trust, Putnam New York Tax Exempt Money Market Fund, Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax Exempt Income Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas Growth Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred Income Fund, Putnam Research Fund, Putnam Tax Exempt Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free Income Trust, Putnam U.S. Government Income Trust, Putnam Utilities Growth and Income Fund, Putnam Vista Fund, Putnam Voyager Fund |
|
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(b) The directors and officers of the Registrant's principal underwriter are: Positions and Offices Positions and Offices Name with Underwriter with Registrant John V. Adduci Assistant Vice President None Christopher S. Alpaugh Vice President None Paulette C. Amisano Vice President None Ronald J. Anwar Vice President None Steven E. Asher Senior Vice President None Scott A. Avery Vice President None Hallie L. Baron Assistant Vice President None Ira G. Baron Senior Vice President None John L. Bartlett Senior Vice President None Dale Beardon Senior Vice President None Steven M. Beatty Vice President None Matthew F. Beaudry Vice President None Janet S. Becker Assistant Vice President None John J. Bent Vice President None Thomas A. Beringer Vice President None Sharon A. Berka Vice President None Maureen L. Boisvert Vice President None John F. Boneparth Managing Director None Keith R. Bouchard Vice President None Linda M. Brady Assistant Vice President None Leslee R. Bresnahan Senior Vice President None James D. Brockelman Senior Vice President None Scott C. Brown Vice President None Gail D. Buckner Senior Vice President None Robert W. Burke Senior Managing Director None Ellen S. Callahan Vice President None Thomas C. Callahan Assistant Vice President None Peter J. Campagna Vice President None Robert Capone Vice President None Charles A. Carey Vice President None Patricia A. Cartwright Assistant Vice President None Janet Casale-Sweeney Vice President None Stephen J. Chaput Assistant Vice President None Louis F. Chrostowski Vice President None Daniel J. Church Vice President None James E. Clinton Assistant Vice President None Kathleen M. Collman Managing Director None Mark L. Coneeny Vice President None Donald A. Connelly Senior Vice President None Karen E. Connolly Assistant Vice President None Anna Coppola Vice President None F. Nicholas Corvinus Senior Vice President None Thomas A. Cosmer Vice President None Chad H. Cristo Assistant Vice President None Lisa M. D'Allesandro Assistant vice President None Jessica E. Dahill Vice President None Kenneth L. Daly Senior Vice President None Edward H. Dane Vice President None Nancy M. Days Assistant Vice President None Pamela De Oliveira-Smith Assistant Vice President None Richard D. DeSalvo Vice President None Joseph C. DeSimone Assistant Vice President None Daniel J. Delianedis Vice President None Judith S. Deming Assistant Vice President None Teresa F. Dennehy Assistant Vice President None J. Thomas Despres Senior Vice President None Michael G. Dolan Assistant Vice President None Scott M. Donaldson Vice President None Emily J. Durbin Vice President None Dwyer Cabana, Susan Vice President None David B. Edlin Senior Vice President None James M. English Senior Vice President None Vincent Esposito Managing Director None Mary K. Farrell Assistant Vice President None Michael J. Fechter Vice President None Susan H. Feldman Vice President None Paul F. Fichera Senior Vice President None C. Nancy Fisher Senior Vice President None Mitchell B. Fishman Senior Vice President None Joseph C. Fiumara Vice President None Patricia C. Flaherty Senior Vice President None Samuel F. Gagliardi Vice President None Karen M. Gardner Assistant Vice President None Judy S. Gates Vice President None Richard W. Gauger Assistant Vice President None Joseph P. Gennaco Vice President None Stephen E. Gibson Managing Director None Mark P. Goodfellow Assistant Vice President None Robert Goodman Managing Director None Mark D. Goodwin Assistant Vice President None Anthony J. Grace Assistant Vice President None Linda K. Grace Assistant Vice President None Robert G. Greenly Vice President None Jill Grossberg Assistant Vice President None Jeffrey P. Gubala Vice President None James E. Halloran Vice President None Thomas W. Halloran Vice President None Meghan C. Hannigan Assistant Vice President None Bruce D. Harrington Assistant Vice President None Marilyn M. Hausammann Senior Vice President None Howard W. Hawkins, III Vice President None Deanna R. Hayes-Castro Vice President None Paul P. Heffernan Vice President None Susan M. Heimanson Vice President None Joanne Heyman Assistant Vice President None Bess J.M. Hochstein Vice President None Maureen A. Holmes Assistant Vice President None Paula J. Hoyt Assistant Vice President None William J. Hurley Senior Vice President None Gregory E. Hyde Senior Vice President None Dwight D. Jacobsen Senior Vice President None Douglas B. Jamieson Senior Managing Director, Director None Jay M. Johnson Vice President None Kevin M. Joyce Senior Vice President None Karen R. Kay Senior Vice President None Mary E. Kearney Managing Director None John P. Keating Vice President None A. Siobahn Kelly Assistant Vice President None Brian J. Kelly Vice President None Anne Kinsman Assistnat Vice President None Deborah H. Kirk Senior Vice President None Jill A. Koontz Assistant Vice President None Linda G. Kraunelis Assistant Vice President None Howard H. Kreutzberg Senior Vice President None Marjorie B. Krieger Assistant Vice President None Charles Lacasia Assistant Vice President None Arthur B. Laffer, Jr. Vice President None Catherine A. Lathan Vice President None James D. Lathrop Vice President None Charles C. Ledbetter Vice President None Kevin Lemire Assistant Vice President None Eric S. Levy Vice President None Edward V. Lewandowski Senior Vice President None Edward V. Lewandowski, Jr. Vice President None Samuel L. Lieberman Vice President None David M. Lifsitz Assistant Vice President None Ann Marie Linehan Assistant Vice President None Maura A. Lockwood Vice President None Rufino R. Lomba Vice President None Peter V. Lucas Senior Vice President None Robert F. Lucey Senior Managing Director, Director None Kathryn A. Lucier Assistant Vice President None Alana Madden Vice President None Ann Malatos Assistant Vice President None Bonnie Mallin Vice President None Renee L. Maloof Assistant Vice President None Frederick S. Marius Assistant Vice President None Karen E. Marotta Vice President None Kathleen M. McAnulty Assistant Vice President None Anne B. McCarthy Assistant Vice President None Paul McConville Vice President None Marla J. McDougall Assistant Vice President None Walter S. McFarland Vice President None Mark J. McKenna Senior Vice President None Gregory J. McMillan Vice President None Claye A. Metelmann Vice President None J. Chris Meyer Senior Vice President None Bart D. Miller Vice President None Douglas W. Miller Vice President None Jeffery M. Miller Senior Vice President None Ronald K. Mills Vice President None Peter M. Moore Assistant Vice President None Mitchell Moret Senior Vice President None Donald E. Mullen Vice President None Paul G. Murphy Assistant Vice President None Brendan R. Murray Vice President None Robert Nadherny Vice President None Alexander L. Nelson Managing Director None John P. Nickodemus Vice President None Michael C. Noonis Assistant Vice President None Kristen P. O'Brien Vice President None Kevin L. O'Shea Senior Vice President None Nathan D. O'Steen Assistant Vice President None Joseph R. Palombo Managing Director None Scott A. Papes Vice President None Cynthia O. Parr Vice President None John D. Pataccoli Vice President None John G. Phoenix Vice President None Joseph Phoenix Senior Vice President None Jeffrey E. Place Senior Vice President None Keith Plapinger Vice President None Jane E. Price Assistant Vice President None Douglas H. Powell Vice President None Susannah Psomas Vice President None Scott M. Pulkrabek Vice President None George Putnam Director Chairman & President George A. Rio Senior Vice President None Debra V. Rothman Vice President None Robert B. Rowe Vice President None Kevin A. Rowell Senior Vice President None Thomas C. Rowley Vice President None Charles A. Ruys de Perez Senior Vice President None Deborah A. Ryan Assistant Vice President None Robert M. Santosuosso Assistant Vice President None Debra J. Sarkisian Assistant Vice President None Catherine A. Saunders Senior Vice President None Robbin L. Saunders Assistant Vice President None Karl W. Saur Vice President None Michael Scanlon Assistant Vice President None Shannon D. Schofield Vice President None Christine A. Scordato Vice President None Joseph W. Scott Assistant Vice President None John B. Shamburg Vice President None Kathleen G. Sharpless Managing Director None John F. Sharry Managing Director None Stuart D. Sheppard Assistant Vice President None William N. Shiebler Director and President Vice President Daniel S. Shore Vice President None Mark J. Siebold Assistant Vice President None Gordon H. Silver Senior Managing Director Vice President John Skistimas, Jr. Assistant Vice President None Steven Spiegel Senior Managing Director None Nicholas T. Stanojev Senior Vice President None Paul R. Stickney Vice President None Brian L. Sullivan Vice President None Guy Sullivan Seniior Vice President None Kevin J. Sullivan Vice President None Moira Sullivan Vice President None James S. Tambone Managing Director None B. Iris Tanner Assistant Vice President None Louis Tasiopoulos Managing Director None David S. Taylor Vice President None John R. Telling Vice President None Richard B. Tibbetts Senior Vice President None Patrice M. Tirado Vice President None Janet E. Tosi Assistant Vice President None John C. Tredinnick Vice President None Bonnie L. Troped Vice President None Christine M. Twigg Assistant Vice Presient None Larry R. Unger Vice President None Douglas J. Vander Linde Senior Vice President None Edward F. Whalen Vice President None Robert J. Wheeler Senior Vice President None John B. White Vice President None Kirk E. Williamson Senior Vice President None Leigh T. Williamson Vice President None Jane Wolfson Vice President None Benjamin I. Woloshin Vice President None William H. Woolverton Senior Vice President None Timothy R. Young Vice President None SooHee L. Zebedee Vice President None Laura J. Zografos Vice President None |
The principal business address of each person listed above is One Post Office Square, Boston, MA 02109, except for:
Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303
Mr. Anwar, 131 Crystal Road, Colmar, PA 18915
Mr. Avery, 7031 Spring Ridge Rd., Cary NC 27511
Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667
Mr. Bartlett, 7 Fairfield St., Boston, MA 02116
Mr. Beatty, 200 High St., Winchester, MA 01890
Mr. Beringer, 4915 Dupont Avenue South, Minneapolis, MN 55409
Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610
Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401
Mr. Brockelman, 94 Middleton Rd., Boxford, MA 01921
Mr. Brown, 2012 West Grove Drive, Gibson, PA 15044
Ms. Buckner, 21012 West Grove Drive, Gibsonia, PA 15044
Mr. Campagna, 2091-B Lake Park Drive, Smyrna, GA 30080
Ms. Castro, 26 Gould Road, Andover, MA 01810
Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211
Mr. Cristo, 11 Schenck Ave., Great Neck, NY 11021
Mr. Coneeny, 10 Amherst St., Arlington, MA 02174
Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238
Mr. Corvinus, 208 Water St., Newburyport, MA 01950
Ms. Dahill, 270-1 C Iven Ave., St. David's, PA 19087
Mr. Deliandis, 206 Promontory Drive, Newport Beach, CA 92660
Mr. DeSalvo, 54 Morriss Place, Maddison, NJ 07940
Mr. DeSimone, Pheasant Run Apartments, Inlet Ridge Drive,
Maryland Heights, MO 63043
Ms. Dwyer-Cabana, 7730 Herrick Park, Hudson, OH 44236
Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807
Mr. English, 1184 Pintail Circle, Boulder, CO 80303
Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807
Mr. Gubala, 4308 Rickover Drive, Dallas, TX 75244
Mr. J. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362
Mr. T. Halloran, 19449 Misty Lake Dr., Strongsville, OH 44136
Mr. Hyde, 3305 Sulky, Marietta, GA 30067
Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017
Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923
Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206
Mr. Kelley, 3356 North Lakeharbor Lane, Boise, ID 83703
Ms. Kelly, 31 Jeffrey's Neck Road, Ipswich, MA 01938
Ms. Kinsman, 9599 Brookview Circle, Woodbury, MN 55125
Ms. Kirk, 124 Rivermist Dr., Buffalo, NY 14202
Ms. Kraunelis, 584 East Eighth St., South Boston, MA 02127
Mr. Lathrop, 14814 Straub Hill Lane, Chesterfield, MO 63017
Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010
Mr. Lewandowski, Jr., 1 Kara East, Irvine, CA 92720
Mr. Lieberman, 200 Roy St., Seattle, WA 98109
Ms. Madden, 8649 North Himes Avenue, Tampa, FL 33614
Mr. McConville, 515 S. Arlington Heights Rd., Arlington
Heights, IL 6005
Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421
Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063
Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223
Mr. B. Miller, 24815 Acropolis Drive, Mission Viejo, CA 92691
Mr. D. Miller, 70 Williams St., Greenwich, CT 06380
Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558
Mr. Murray, 710 Cheyenne Drive, Franklin Lakes, NJ 07417
Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117
Mr. Nickodemus, 463 Village Oaks Court, Ann Arbor, MI 48103
Mr. O'Steen, 2091-B Lake Park Drive, Smyrna, GA 30080
Mr. Papes, 3102 Wood View Bridge Drive, Kansas City, KS 66103
Mr. Pataccoli, 333 39th St., Manhattan Beach, CA 90266
Mr. Joe Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. John Phoenix, 709 South Rome Avenue, Tampa, FL 33606
Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075
Mr. Pulkrabek, 190 Jefferson Lane, Streamwood, IL 60107
Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowe, 109 Shore Drive, Longwood, FL 32779
Mr. Rowell, 2240 Union St., San Francisco, CA 94123
Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122
Ms. Sarkisian, 1 Goodridge Ct., Boston, MA 02113
Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538
Ms. Schofield, 618 Rimington Lane, Decatur, GA 30030
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
Mr. Shore, 2870 Pharr Court South, N.W., Atlanta, GA 30305
Mr. Stickney, 1314 Log Cabin Lane, St. Louis, MO 63124
Mr. B. Sullivan, 777 Pinoake Road, Pittsburgh, PA 15243
Mr. G. Sullivan, 35 Marlborough St., Boston, MA 02116
Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574
Ms. Sweeney, 31 Heritage Way, Marblehead, MA 01945
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tasiopolous, 5 Homestead Farms Drive, Norwell, MA 02061
Mr. Tredinnick, 2995 Glenwood Drive, Boulder, CO 80301
Mr. Telling, 5 Spindriff Court, Williamsville, NY 14221
Mr. Unger, 212 E. Broadway, New York, NY 10002
Mr. Williamson, 111 Maple Ridge Way, Covington, LA 70433
Mr. White, 10 Mannion Place, Littleton, MA 01460
Mr. Woloshin, 100 West 89th St., New York, NY 10024
Ms. Zografos, 12712 Coeur de Monde Ct., St. Louis, MO 63146
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are Registrant's Clerk, Beverly Marcus; Registrant's investment adviser, Putnam Investment Management, Inc.; Registrant's principal underwriter, Putnam Mutual Funds Corp.; Registrant's custodian, Putnam Fiduciary Trust Company ("PFTC"); and Registrant's transfer and dividend disbursing agent, Putnam Investor Services, a division of PFTC. The address of the Clerk, investment adviser, principal underwriter, custodian and transfer and dividend disbursing agent is One Post Office Square, Boston, Massachusetts 02109.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to furnish to each person to whom a prospectus of the Registrant is delivered a copy of the Registrant's latest annual report to shareholders, upon request and without charge.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus and Statement of Additional Information constituting parts of Post-Effective Amendment No. 14 to the Registration Statement of Putnam Health Sciences Trust on Form N-1A (File No. 2-75863) of our report dated October 17, 1995, on our audit of the financial statements and financial highlights of the Fund, which report is included in the Annual Report for Putnam Health Sciences Trust for the period ended August 31, 1995 , which is incorporated by reference in the Registration Statement.
We also consent to the references to our firm under the caption "Independent Accountants and Financial Statements" in the Statement of Additional Information and under the heading "Financial highlights" in such Prospectus .
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts December 22, 1995
NOTICE
A copy of the Agreement and Declaration of Trust of Putnam Health Sciences Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Registrant.
POWER OF ATTORNEY
I, the undersigned Trustee of Putnam Health Sciences Trust, hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Health Sciences Trust and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection therewith , with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof.
WITNESS my hand and seal on the date set forth below.
SIGNATURE TITLE DATE
/s/ Eli Shapiro
--------------------- Trustee May 4, 1995
Eli Shapiro
|
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, and The Commonwealth of Massachusetts, on the 28th day of December, 1995 .
PUTNAM HEALTH SCIENCES TRUST
By:
Gordon H. Silver, Vice
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement of Putnam Health Sciences Trust has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE
George Putnam President and Chairman of the
Board; Principal
Executive Officer; Trustee
William F. Pounds Vice Chairman; Trustee
John D. Hughes Senior Vice President;
Treasurer and
Principal Financial Officer
Paul G. Bucuvalas Assistant Treasurer and
Principal Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
George Putnam, III Trustee
Eli Shapiro Trustee
A.J.C. Smith Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver,
as Attorney-in-Fact
December 28, 1995
|
PUTNAM INVESTMENTS
(Logo)
PUTNAM HEALTH SCIENCES TRUST
Class M Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 746778 40 6
THIS CERTIFIES THAT
is the owner of Class M shares of beneficial interest in Putnam Health Sciences Trust, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of January 28, 1982, as amended and restated April 3, 1992, establishing Putnam Health Sciences Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Trust. This certificate is not valid unless countersigned by the Investor Servicing Agent.
In Witness Whereof the Trustees of Putnam Health Sciences Trust have caused the following facsimile signatures to be affixed to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
|
s:\shared\funds\new\A0Lex1
DEALER SALES CONTRACT
Between: PUTNAM MUTUAL FUNDS CORP. and
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
As general distributor of The Putnam Family of Mutual Funds (the "Funds"), we agree to sell you shares of beneficial interest issued by the Funds (the "Shares"), subject to any limitations imposed by any of the Funds and to confirmation by us in each instance of such sales. By your acceptance hereof, you agree to all of the following terms and conditions:
1. OFFERING PRICE AND FEES
The public offering price at which you may offer the Shares is the net asset value thereof, as computed from time to time, plus any applicable sales charge described in the then-current Prospectus of the applicable Fund. As compensation for each sale of Shares made by you, you will be allowed the dealer discount if any, on such Shares described in the then-current Prospectus of the Fund whose Shares are sold. We reserve the right to revise the dealer discount referred to herein upon ten days' written notice to you. We will furnish you upon request with the public offering prices for the Shares, and you agree to quote such prices in connection with any Shares offered by you for sale. Your attention is specifically called to the fact that each sale is always made subject to confirmation by us at the public offering price next computed after receipt of the order. There is no sales charge or dealer discount to dealers on the reinvestment of dividends and distributions.
In addition to the dealer discount, if any, allowed pursuant to the foregoing provisions of this Section 1, we may, at our expense, provide additional promotional incentives or payments to dealers. If non-cash concessions are provided, each dealer earning such a concession may elect to receive an amount in cash equivalent to the cost of providing such concessions. Notice of the availability of concessions will be given to you by us. All dealer discounts, promotional incentives, payments and concessions will be made by us in accordance with National Association of Securities Dealers, Inc. ("NASD") guidelines and rules.
2. MANNER OF OFFERING, SELLING AND PURCHASING SHARES
We have delivered to you a copy of each Fund's current Prospectus and will provide you with such number of copies of each Fund's Prospectus, Statement of Additional Information and shareholder reports and of supplementary sales materials prepared by us, as you may reasonably request. You will offer and sell the Shares only in accordance with the terms and conditions of the current Prospectus and Statement of Additional Information of the applicable Fund. Neither you nor any other person is authorized to give any information or to make any representations other than those contained in such Prospectuses, Statements of Additional Information and shareholder reports or in such supplementary sales materials. You agree that you will not use any other offering materials for the Funds without our written consent.
You hereby agree:
(i) to exercise your best efforts to find purchasers for the Shares of the Funds,
(ii) to furnish to each person to whom any sale is made a copy of the then-current Prospectus of the applicable fund,
(iii) to transmit to us promptly upon receipt any and all orders received by you, and
(iv) to pay to us the offering price, less any dealer discount to which you are entitled, within three (3) business days of our confirmation of your order, or such shorter time as may be required by law. If such payment is not received within said time period, we reserve the right, without prior notice, to cancel the sale, or at our option to return the Shares to the issuer for redemption or repurchase. In the latter case, we shall have the right to hold you responsible for any loss resulting to us. Should payment be made by check on your local bank, liquidation of Shares may be delayed pending clearance of your check. You agree to issue confirmations promptly for all accepted purchase orders for accounts held in street name. You shall make all sales subject to our confirmation. All orders are subject to acceptance or rejection by us in our sole discretion, and by the Funds in their sole discretion. The procedure stated herein relating to the pricing and handling of orders shall be subject to instructions which we may forward to you from time to time.
3. COMPLIANCE WITH LAW
You hereby represent that you are registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and are licensed and qualified as a broker-dealer or otherwise authorized to offer and sell the Shares under the laws of each jurisdiction in which the Shares will be offered and sold by you. You further confirm that you are a member in good standing of the NASD and agree to maintain such membership in good standing or, in the alternative, you are a foreign dealer not eligible for membership in the NASD.
You agree that in selling Shares you will comply with all applicable laws, rules and regulations, including the applicable provisions of the Securities Act of 1933, as amended, the applicable rules and regulations of the NASD, and the applicable rules and regulations of any jurisdiction in which you sell, directly or indirectly, any Shares. You agree not to offer for sale or sell the Shares in any jurisdiction in which the Shares are not qualified for sale or in which you are not qualified as a broker-dealer.
4. RELATIONSHIP WITH DEALERS
In offering and selling Shares under this Contract, you shall be acting as principal and nothing herein shall be construed to constitute you or any of your agents, employees or representatives as our agent or employee, or as an agent or employee of the Funds. As general distributor of the Funds, we shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the distribution of the Shares. We shall not be under any obligation to you, except for obligations expressly assumed by us in this Contract.
5. TERMINATION
Either party hereto may terminate this Contract, without cause, upon ten days' written notice to the other party. We may terminate this Contract for cause upon the violation by you of any of the provisions hereof, such termination to become effective on the date such notice of termination is mailed to you. This Contract shall terminate automatically if either Party ceases to be a member of the NASD.
6. ASSIGNABILITY
This Contract is not assignable or transferable, except that we may assign or transfer this Contract to any successor which becomes general distributor of the Funds.
7. GOVERNING LAW
This Contract and the rights and obligations of the parties hereunder shall be governed by and construed under the laws of The Commonwealth of Massachusetts.
If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
We accept and agree to the foregoing Contract as of the date set forth below.
Please indicate which best Dealer:-------------
describes your firm's entity:
/ / Partnership --------------------
/ / Corporation
By: --------------------
/ / Other - please specify: Authorized
Signature, Title
---------------------
-------------------------
Please provide your organization's
Tax Identification Number on the -------------------------
following line: Address
- ---------------------------- Dated:-------------------
|
Please return the signed Putnam copy to Putnam Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203
Approval:--------------------- Date required:----------------
NF-22.94
FINANCIAL INSTITUTION SALES CONTRACT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
As general distributor of The Putnam Family of Mutual Funds (the "Funds"), we agree that you will make available to your customers, under an agency relationship with your customers, shares of beneficial interest issued by the Funds (the "Shares"), subject to any limitations imposed by any of the Funds and to confirmation by us of each transaction. By your acceptance hereof, you agree to all of the following terms and conditions:
1. OFFERING PRICES AND FEES
The public offering price at which you may make the Shares available to your customers is the net asset value thereof, as computed from time to time, plus any applicable sales charge described in the then-current Prospectus of the applicable Fund. In the case of purchases by you, as agent for your customers, of Shares sold with a sales charge, you shall receive an agency commission consisting of a portion of the public offering price, determined on the same basis as the "dealer discount" described in the then-current Prospectus of the Fund, and such other compensation to dealers as may be described therein, which shall be payable to you at the same time and on the same basis as the same is paid to such dealers, consistent with applicable law, rules and regulations. In determining the amount of any agency commission payable to you hereunder, we reserve the right to exclude any purchases for any accounts which we reasonably determine are not made in accordance with the terms of the applicable Fund Prospectus and the provisions of this Contract. We reserve the right to revise the agency commission referred to herein upon ten days' written notice to you. We will furnish you upon request with the public offering prices for the Shares, and you agree to quote such prices in connection with any Shares made available by you as agent for your customers. Your attention is specifically called to the fact that each purchase of Shares by your customers is always made subject to confirmation by us at the public offering price next computed after receipt of the order. There is no sales charge or agency commission to you on the reinvestment of dividends and distributions.
2. MANNER OF MAKING SHARES AVAILABLE FOR PURCHASE
We will, upon request, deliver to you a copy of each Fund's then- current Prospectus and will provide you with such number of copies of each Fund's then-current Prospectus, Statement of Additional Information and shareholder reports and of supplementary sales materials prepared by us, as you may reasonably request. It shall be your obligation to ensure that all such information and materials are distributed to your customers who own Shares, in accordance with securities and/or banking law and regulations and any other applicable regulations. Neither you nor any other person is authorized to give any information or to make any representations other than those contained in such Prospectuses, Statements of Additional Information and shareholder reports or in such supplementary sales materials. You shall not furnish or cause to be furnished to any person, display or publish any information or materials relating to any Fund (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials as may be furnished to you by us or the Fund, and such other information and materials as may be approved in writing by us.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you deliver or cause to be delivered to such customer, at or prior to the time of such purchase, a copy of the then-current Prospectus of the applicable Fund unless such customer has acknowledged receipt of the Prospectus of such Fund. You hereby represent that you understand your obligation to deliver a prospectus to customers who purchase Shares pursuant to federal securities laws and you have taken all necessary steps to comply with such prospectus delivery requirements;
(ii) to transmit to us promptly upon receipt any and all orders received by you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the purchase of Shares any taxpayer identification number certification and backup withholding information required under the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and the regulations promulgated thereunder, or other sections of the Code which may become applicable, and to provide us or our designee with timely written notice of any failure to obtain such taxpayer identification number certification or information in order to enable the implementation of any required backup withholding in accordance with the Code and the regulations thereunder; and
(iv) to pay to us the offering price, less any agency commission to which you are entitled, within three (3) business days of our confirmation of your customer's order, or such shorter time as may be required by law. You may, subject to our approval, remit the total public offering price to us, and we will return to you your agency commission. If such payment is not received within said time period, we reserve the right, without prior notice, to cancel the sale, or at our option to return the Shares to the issuer for redemption or repurchase. In the latter case, we shall have the right to hold you responsible for any loss resulting to us. Should payment be made by local bank check, liquidation of Shares may be delayed pending clearance of your check.
Unless otherwise mutually agreed in writing or except as provided below, each transaction placed by you shall be promptly confirmed by us in writing to you, and shall be confirmed to the customer promptly upon receipt by us of instructions from you as to such customer. In the case of a purchase order by customer's application, each transaction shall be promptly confirmed in writing directly to the customer and a copy of each confirmation shall be sent simultaneously to you. We reserve the right, at our discretion and without notice, to suspend the sale of Shares or withdraw entirely the sale of Shares of any or all of the Funds. All orders are subject to acceptance or rejection by us in our sole discretion, and by the Funds in their sole discretion. The procedure stated herein relating to the pricing and handling of orders shall be subject to instructions which we may forward to you from time to time.
3. COMPLIANCE WITH LAW
You hereby represent that you are either (1) a "bank" as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and at the time of each transaction in shares of the Funds, are not required to register as a broker- dealer under the Exchange Act or regulations thereunder; or (2) registered as a broker-dealer under the Exchange Act, a member in good standing of the National Association of Securities Dealers, Inc. ("NASD") and affiliated with a bank.
(a) If you are a bank, not required to register as a broker- dealer under the Exchange Act: You further represent and warrant to us that with respect to any sales in the United States, you will use your best efforts to ensure that any purchase of Shares by your customers constitutes a suitable investment for such customers. You shall not effect any transaction in, or induce any purchase or sale of, any Shares by means of any manipulative, deceptive or other fraudulent device or contrivance, and shall otherwise deal equitably and fairly with your customers with respect to transactions in Shares of a Fund.
(b)If you are a NASD member broker-dealer affiliated with a bank and registered under the Exchange Act: You further represent and warrant to us that with respect to any sales in the United States, you agree to abide by all of the applicable laws, rules and regulations including applicable provisions of the Securities Act of 1933, as amended, and the applicable rules and regulations of the NASD, including, without limitation, its Rules of Fair Practice, and the applicable rules and regulations of any jurisdiction in which you make Shares available for sale to your customers. You agree not to make available for sale to your customers the Shares in any jurisdiction in which the Shares are not qualified for sale or in which you are not qualified as a broker-dealer. We shall have no obligation or responsibility as to your right to make Shares of any Funds available to your customers in any jurisdiction. You agree to notify us immediately in the event of (i) your expulsion or suspension from the NASD or your becoming subject to any enforcement action by the Securities and Exchange Commission, NASD, or any other self- regulatory organization, or (ii) your violation of any applicable federal or state law, rule or regulation including, but not limited to, those of the SEC, NASD or other self-regulatory organization, arising out of or in connection with this Agreement, or which may otherwise affect in any material way your ability to act in accordance with the terms of this Contract.
You shall not make Shares of any Fund available to your customers, including your fiduciary customers, except in compliance with all federal and state laws and rules and regulations of regulatory agencies or authorities applicable to you, or any of your affiliates engaging in such activity, which may affect your business practices. You confirm that you are not in violation of any banking law or regulations as to which you are subject.
4. RELATIONSHIP WITH CUSTOMER
With respect to any and all transactions in the Shares of any Fund pursuant to this Contract, it is understood and agreed in each case that: (a) you shall be acting solely as agent for the account of your customer; (b) each transaction shall be initiated solely upon the order of your customer; (c) we shall execute transactions only upon receiving instructions from you acting as agent for your customer or upon receiving instructions directly from your customer; (d) as between you and your customer, your customer will have full beneficial ownership of all Shares; (e) each transaction shall be for the account of your customer and not for your account; and (f) unless otherwise agreed in writing we will serve as a clearing broker for you on a fully disclosed basis, and you shall serve as the introducing agent for your customers' accounts. Subject to the foregoing, however, and except for Shares sold subject to a contingent deferred sales charge, you may maintain record ownership of such customers' Shares in an account registered in your name or the name of your nominee, for the benefit of such customers. With respect to Shares sold subject to a contingent deferred sales charge, you agree not to hold shares of such Funds in an account registered in your name or in the name of your nominee for the benefit of certain of your customers. You understand that such Shares must be held in a separate account for each shareholder of such Funds. Each transaction shall be without recourse to you provided that you act in accordance with the terms of this Agreement. You represent and warrant to us that you will have full right, power and authority to effect transactions (including, without limitation, any purchases and redemptions) in Shares on behalf of all customer accounts provided by you.
5. RELATIONSHIP WITH FINANCIAL INSTITUTION
Neither this Contract nor the performance of the services of the respective parties hereunder shall be considered to constitute an exclusive arrangement, or to create a partnership, association or joint venture between you and us. In making available Shares of the Funds under this Contract, nothing herein shall be construed to constitute you or any of your agents, employees or representatives as our agent or employee, or as an agent or employee of the Funds, and you shall not make any representations to the contrary. As general distributor of the Funds, we shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the distribution of the Shares. We shall not be under any obligation to you, except for obligations expressly assumed by us in this Contract.
6. TERMINATION
Either party hereto may terminate this Contract, without cause, upon ten days' written notice to the other party. We may terminate this Contract for cause upon the violation by you of any of the provisions hereof, such termination to become effective on the date such notice of termination is mailed to you. If you are registered as a broker-dealer and affiliated with a bank, this Contract shall terminate automatically if either Party ceases to be a member of the NASD.
7. ASSIGNABILITY
This Contract is not assignable or transferable, except that we may assign or transfer this Contract to any successor which becomes general distributor of the Funds.
8. MISCELLANEOUS
(a)All communications mailed to us should be sent to the above address. Any notice to you shall be duly given if mailed or delivered to you at the address specified by you below.
(b) This Contract constitutes the entire agreement and understanding between the parties and supercedes any and all prior agreements between the parties.
(c) This Contract and the rights and obligations of the parties hereunder shall be governed by and construed under the laws of The Commonwealth of Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Contract as of the date set forth below.
Financial Institution: ---------------------------
By: ----------------------------
Authorized Signature, Title
----------------------------
----------------------------
Address
Dated: ----------------------------
|
Please return the signed Putnam copy of this sales Contract to Putnam Mutual Funds Corp., P. O. Box 41203, Providence, RI 02940-1203
NF-59.94
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
December 28, 1995
Putnam Health Sciences Trust (the "Fund")
One Post Office Square
Boston, Massachusetts 02109
Gentlemen:
You have informed us that you propose to offer and sell from time to time 8,191,598 of your shares of beneficial interest (the "Shares"), for cash or securities at the net asset value per share, determined in accordance with your Bylaws, which Shares are in addition to your shares of beneficial interest which you have previously offered and sold or which you are currently offering.
We have examined copies of (i) your Agreement and
Declaration of Trust as on file at the office of the Secretary of
State of The Commonwealth of Massachusetts, which provides for an
unlimited number of authorized shares of beneficial interest, and
(ii) your Bylaws, which provide for the issue and sale by the
Fund of such Shares.
We assume that appropriate action will be taken to register or qualify the sale of the Shares under any applicable state and federal laws regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a legally organized and validly existing voluntary association with transferable shares of beneficial interest under the laws of The Commonwealth of Massachusetts and is authorized to issue an unlimited number of shares of beneficial interest.
2. Upon the issue of any of the Shares referred to in the first paragraph hereof for cash or securities at net asset value, and the receipt of the appropriate consideration therefor as provided in your Bylaws, such Shares so issued will be validly issued, fully paid and nonassessable by the Fund.
The Fund is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Fund or its Trustees. The Agreement and Declaration of Trust provides for indemnification out of the property of the Fund for all loss and expense of any shareholder of the Fund held personally liable for the obligations of the Fund solely by reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations.
ROPES & GRAY
Putnam Health Sciences Trust -2- December 28, 1995
We understand that this opinion is to be used in connection with the registration of the Shares for offering and sale pursuant to the Securities Act of 1933, as amended, and the provisions of Rule 24e-2 under the Investment Company Act of 1940, as amended. We consent to the filing of this opinion with and as a part of Post-Effective Amendment No. 14 to your Registration Statement No. 2-75863.
Very truly yours,
/s/ Ropes & Gray Ropes & Gray |
4019502.02
PUTNAM BASIC PLAN DOCUMENT #05
PUTNAM BASIC PLAN DOCUMENT #05
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTRODUCTION 1
ARTICLE 2. DEFINITIONS 2
2.1. Account 2
2.2. Affiliated Employer 2
2.3. Authorized Leave of Absence 2
2.4. Base Contribution Percentage 3
2.5. Beneficiary 3
2.6. CODA 3
2.7. Code 3
2.8. Compensation 3
2.9. Date of Employment 3
2.10. Deductible Employee Contribution Account 4
2.11. Disabled 4
2.12. Earned Income 4
2.13. Earnings 4
2.14. Effective Date 5
2.15. Eligibility Period 5
2.16. Employee 5
2.17. Employer 5
2.18. Employer Contribution Account 6
2.19. Employer Stock 6
2.20. ERISA 6
2.21. Excess Earnings 6
2.22. Forfeiture 6
2.23. Hour of Service 6
2.24. Insurance Trustee 8
2.25. Integration Level 8
2.26. Investment Company 8
2.27. Investment Company Shares 8
2.28. Investment Products 8
2.29. Leased Employee 8
2.30. One-Year Eligibility Break 9
2.31. One-Year Vesting Break 9
2.32. Owner-Employee 9
2.33. Participant 9
2.34. Participant Contribution 9
2.35. Participant Contribution Account 9
2.36. Plan 9
2.37. Plan Administrator 10
2.38. Plan Agreement 10
2.39. Plan Year 10
2.40. Policy 10
2.41. Profit Sharing Contribution 10
2.42. Putnam 10
2.43. Qualified Domestic Relations Order 10
2.44. Qualified Participant 10
2.45. Recordkeeper 11
2.46. Retirement 11
2.47. Rollover Account 11
2.48. Self-Employed Individual 11
2.49. Shareholder-Employee 11
2.50. Social Security Wage Base 11
2.51. Trust and Trust Fund 11
2.52. Trustee 11
2.53. Valuation Date 11
2.54. Year of Service 11
2.55. Deferral Agreement 12
2.56. Elective Deferral 12
2.57. Elective Deferral Account 12
2.58. Employer Matching Contribution 13
2.59. Employer Matching Account 13
2.60. Highly Compensated Employee 13
2.61. Non-Highly Compensated Employee 16
2.62. Qualified Matching Contribution 16
2.63. Qualified Matching Account 16
2.64. Qualified Nonelective Contribution 16
2.65. Qualified Nonelective Contribution Account 16
ARTICLE 3. PARTICIPATION 17
3.1. Initial Participation 17
3.2. Special Participation Rule 17
3.3. Resumed Participation 18
3.4. Benefits for Owner-Employees 18
3.5. Changes in Classification 18
ARTICLE 4. CONTRIBUTIONS 20
4.1. Provisions Applicable to All Plans 20
4.2. Provisions Applicable Only to Profit Sharing
Plans 21
4.3. Provisions Applicable Only to Money Purchase
Pension Plans
25
4.4. Rollover Contributions 28
4.5. No Deductible Employee Contributions 28
4.6. Paired Plans 28
ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA) 29
5.1. Applicability; Allocations 29
5.2. CODA Participation 29
5.3. Annual Limit on Elective Deferrals 29
5.4. Distribution of Certain Elective Deferrals 30
5.5. Satisfaction of ADP and ACP Tests 31
5.6. Actual Deferral Percentage Test Limit 31
5.7. Distribution of Excess Contributions 33
5.8. Matching Contributions 34
5.9. Participant Contributions 35
5.10. Recharacterization of Excess Contributions 35
5.11. Average Contribution Percentage Test Limit
and Aggregate Limit 36
5.12. Distribution of Excess Aggregate
Contributions 39
5.13. Restriction on Distributions 40
5.14. Hardship Distributions 41
5.15. Special Effective Dates 42
ARTICLE 6. LIMITATIONS ON ALLOCATIONS 43
6.1. No Additional Plan 43
6.2. Additional Master or Prototype Plan 44
6.3. Additional Non-Master or Non-Prototype Plan 45
6.4. Additional Defined Benefit Plan 46
6.5. Definitions 46
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 51
7.1. Retirement 51
7.2. Death 51
7.3. Other Termination of Employment 52
ARTICLE 8. VESTING 53
8.1. Vested Balance 53
8.2. Vesting of Accounts of Returned Former
Employees 53
8.3. Forfeiture of Non-Vested Amounts 54
8.4. Special Rule in the Event of a Withdrawal 55
8.5. Vesting Election 56
ARTICLE 9. PAYMENT OF BENEFITS 57
9.1. Distribution of Accounts 57
9.2. Restriction on Immediate Distributions 57
9.3. Optional Forms of Distribution 59
9.4. Distribution Procedure 59
9.5. Lost Distributee 60
9.6. Direct Rollovers 60
9.7. Distributions Required by a Qualified
Domestic
Relations Order 61
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 62
10.1. Applicability 62
10.2. Qualified Joint and Survivor Annuity 63
10.3. Qualified Preretirement Survivor Annuity 63
10.4. Definitions 63
10.5. Notice Requirements 65
10.6. Transitional Rules 66
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 69
11.1. General Rules 69
11.2. Required Beginning Date 69
11.3. Limits on Distribution Periods 70
11.4. Determination of Amount to Be Distributed
Each Year 71
11.5. Death Distribution Provisions 72
11.6. Transitional Rule 74
ARTICLE 12. WITHDRAWALS AND LOANS 76
12.1. Withdrawals from Participant Contribution
Accounts 76
12.2. Withdrawals on Account of Hardship 76
12.3. Withdrawals After Reaching Age 591/2 76
12.4. Loans 76
12.5. Procedure; Amount Available 79
12.6. Protected Benefits 79
12.7. Restrictions Concerning Transferred Assets 79
ARTICLE 13. TRUST FUND AND INVESTMENTS 80
13.1. Establishment of Trust Fund 80
13.2. Management of Trust Fund 80
13.3. Investment Instructions 81
13.4. Valuation of the Trust Fund 83
13.5. Distributions on Investment Company Shares 84
13.6. Registration and Voting of Investment
Company Shares 84
13.7. Investment Manager 84
13.8. Employer Stock 84
13.9. Insurance Contracts 87
13.10. Registration and Voting of Non-Putnam
Investment Company Shares 88
ARTICLE 14. INSURANCE POLICIES 90
14.1. Purchase of Insurance Policies 90
14.2. Limitation on Premiums 90
14.3. Policy Options 90
14.4. Insurability 90
14.5. Dividends on Policies 91
14.6. Trustee of Policy 91
14.7. Obligations with Respect to Policies 91
14.8. Distribution of Proceeds on Participant's
Death 91
14.9. Conversion of Policies 91
14.10. Conflict with Policies 92
14.11. Insurance Loans to Owner-Employees 92
ARTICLE 15. TOP-HEAVY PLANS 93
15.1. Superseding Effect 93
15.2. Definitions 93
15.3. Minimum Allocation 96
15.4. Adjustment of Fractions 97
15.5. Minimum Vesting Schedules 97
ARTICLE 16. ADMINISTRATION OF THE PLAN 99
16.1. Plan Administrator 99
16.2. Claims Procedure 99
16.3. Employer's Responsibilities 100
16.4. Recordkeeper 100
16.5. Prototype Plan 101
ARTICLE 17. TRUSTEE AND INSURANCE TRUSTEE 102
17.1. Powers and Duties of the Trustee 102
17.2. Limitation of Responsibilities 103
17.3. Fees and Expenses 104
17.4. Reliance on Employer 104
17.5. Action Without Instructions 104
17.6. Advice of Counsel 105
17.7. Accounts 105
17.8. Access to Records 106
17.9. Successors 106
17.10. Persons Dealing with Trustee or Insurance
Trustee 106
17.11. Resignation and Removal; Procedure 106
17.12. Action of Trustee Following Resignation
or Removal 106
17.13. Action of Insurance Trustee Following
Resignation or Removal 106
17.14. Effect of Resignation or Removal 106
17.15. Fiscal Year of Trust 107
17.16. Limitation of Liability 107
17.17. Indemnification 107
ARTICLE 18. AMENDMENT 108
18.1. General 108
18.2. Delegation of Amendment Power 109
ARTICLE 19. TERMINATION OF THE PLAN AND TRUST 110
19.1. General 110
19.2. Events of Termination 110
19.3. Effect of Termination 110
19.4. Approval of Plan 111
ARTICLE 20. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS;
MERGERS 112
20.1. General 112
20.2. Amounts Transferred 112
20.3. Merger or Consolidation 112
ARTICLE 21. MISCELLANEOUS 113
21.1. Notice of Plan 113
21.2. No Employment Rights 113
21.3. Distributions Exclusively From Plan 113
21.4. No Alienation 113
21.5. Provision of Information 113
21.6. No Prohibited Transactions 113
21.7. Governing Law 113
21.8. Gender 114
|
PUTNAM BASIC PLAN DOCUMENT #05
ARTICLE 1. INTRODUCTION
By executing the Plan Agreement, the Employer has
established a retirement plan (the "Plan") according to the terms
and conditions of the Plan Agreement and this Putnam Basic Plan
Document #05, for the purpose of providing a retirement fund for
the benefit of Participants and Beneficiaries.
ARTICLE 2. DEFINITIONS
The terms defined in Sections 2.1 through 2.54 appear generally throughout the document. Sections 2.55 through 2.65 and Article 5 contain definitions of terms used only in a CODA and Section 10.4 contains additional definitions related to distributions from the Plan. Articles 6 and 11 contain additional definitions of terms used only in those Articles.
2.1. Account means any of, and Accounts means all of, aParticipant's Employer Contribution Account, Participant Contribution Account, Rollover Account, Deductible Employee Contribution Account and if the Plan contains a CODA, the accounts maintained for the Participant pursuant to Article 5.
2.2 Affiliated Employer, for purposes of the Plan other than Article 6, means the Employer and a trade or business, whether or not incorporated, which is any of the following:
(a) A member of a group of controlled corporations (within the meaning of Section 414(b) of the Code) which includes the Employer; or
(b) A trade or business under common control (within the meaning of Section 414(c) of the Code) with the Employer; or
(c) A member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Employer; or
(d) An entity otherwise required to be aggregated with the Employer pursuant to Section 414(o) of the Code.
In determining an Employee's service for vesting and for eligibility to participate in the Plan, all employment with Affiliated Employers will be treated as employment by the Employer.
For purposes of Article 6 only, the definitions in paragraphs (a) and (b) of this Section 2.2 shall be modified by adding at the conclusion of the parenthetical phrase in each such paragraph the words "as modified by Section 415(h) of the Code."
2.3. Authorized Leave of Absence means a leave of absence from employment granted in writing by an Affiliated Employer.Authorized Leave of Absence shall be granted on account of military service for any period during which an Employee's right to re-employment is guaranteed by law, and for such other reasons and periods as an Affiliated Employer shall consider proper, provided that Employees in similar situations shall be similarly treated.
2.4. Base Contribution Percentage means the percentage so specified in the Plan Agreement.
2.5. Beneficiary means a person entitled to receive benefits under the Plan upon the death of a Participant, in accordance with Section 7.2 and Articles 10 and 11.
2.6. CODA means a cash or deferred arrangement that meets the requirements of Section 401(k) of the Code, adopted as part of a profit sharing plan.
2.7. Code means the Internal Revenue Code of 1986, as amended.
2.8. Compensation means all of an Employee's compensation
determined in accordance with the definition elected by the
Employer in the Plan Agreement. For purposes of that election,
"Form W-2 earnings" means "wages" as defined in Section 3401(a)
of the Code in connection with income tax withholding at the
source, and all other compensation paid to the Employee by the
Employer in the course of its trade or business, for which the
Employer is required to furnish the Employee with a written
statement under Sections 6041(d), 6051(a)(3) and 6052 of the
Code, determined without regard to exclusions based on the nature
or location of the employment or the services performed (such as
the exception for agricultural labor in Section 3401(a)(2) of the
Code). Compensation shall include only amounts actually paid to
the Employee during the Plan Year, except that if the Employer so
elects in the Plan Agreement, in an Employee's initial year of
participation in the Plan, Compensation shall include only
amounts actually paid to the Employee from the Employee's
effective date of participation pursuant to Section 3.1 to the
end of the Plan Year. In addition, if the Employer so elects in
the Plan Agreement, Compensation shall include any amount which
is contributed to an employee benefit plan for the Employee by
the Employer pursuant to a salary reduction agreement, and which
is not includible in the gross income of the Employee under
Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. (For
a self-employed person, the relevant term is Earned Income, as
defined in Section 2.12.)
2.9. Date of Employment means the first date on which an
Employee performs an Hour of Service; or, in the case of an
Employee who has incurred one or more One-Year Eligibility Breaks
and who is treated as a new Employee under the rules of Section
3.3, the first date on which he performs an Hour of Service after
his return to employment.
2.10. Deductible Employee Contribution Account means an
account maintained on the books of the Plan on behalf of a
Participant, in which are recorded amounts contributed by him to
the Plan on a tax-deductible basis under prior law, and the
income, expenses, gains and losses thereon.
2.11. Disabled means unable to engage in any
substantialgainful activity by reason of any medically
determinable physical or mental impairment that can be expected
to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months. The
permanence and degree of such impairment shall be supported by
medical evidence.
2.12. Earned Income means a Self-Employed Individual's
net earnings from self-employment in the trade or business with
respect to which the Plan is established, excluding items not
included in gross income and the deductions allocable to such
items, and reduced by (i) contributions by the Employer to
qualified plans, to the extent deductible under Section 404 of
the Code, and (ii) the deduction allowed to the taxpayer under
Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.13. Earnings for determining all benefits provided
under the Plan for all Plan Years beginning after December 31,
1988, means the first $200,000 (as adjusted by the Secretary of
the Treasury at the same time and in the same manner as under
Section 415(d) of the Code, except that the dollar increase
effective on any January 1 is effective for all Plan Years
beginning in the calendar year in which that January 1 occurs,
and the first such dollar increase is effective on January 1,
1990) of the sum of the Compensation and the Earned Income
received by an Employee during a Plan Year. Notwithstanding the
foregoing, for Plan Years beginning after December 31, 1993,
Earnings means the first $150,000 (as adjusted periodically by
the Secretary of the Treasury for inflation) of the sum of the
Compensation and Earned Income received by an Employee during a
Plan Year. To calculate an allocation to a Participant's Account
for any Plan Year shorter than 12 months, the dollar limit on
Earnings must be multiplied by a fraction of which the
denominator is 12 and the numerator is the number of months in
the Plan Year. In determining the Earnings of a Participant, the
rules of Section 414(q)(6) of the Code shall apply, except that
in applying those rules the term "family" shall include only the
Participant's spouse and the Participant's lineal descendants who
have not reached age 19 by the last day of the Plan Year. If, as
a result of the application of such rules, the applicable
Earnings limitation described above is exceeded, then the
limitation shall be prorated among the affected individuals in
proportion to each such individual's Earnings as determined under
this Section prior to the application of this limitation.
2.14. Effective Date means the date so designated in the Plan Agreement. If the Plan Agreement indicates that the Employer is adopting the Plan as an amendment of an existing plan, the provisions of the existing plan apply to all events preceding the Effective Date, except as to specific provisions of the Plan which set forth a retroactive effective date in accordance with Section 1140 of the Tax Reform Act of 1986.
2.15. Eligibility Period means a period of service with the Employer which an Employee is required to complete in order to commence participation in the Plan. A 12-month Eligibility Period is a period of 12 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, in which he is credited with at least 1,000 Hours of Service or the number of Hours of Services set forth in the Plan Agreement. A 6-month Eligibility Period is a period of 6 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, or on the 6-month anniversary of such Date of Employment or any anniversary thereof, in which he is credited with at least 500 Hours of Service or the number of Hours of Service set forth in the Plan Agreement. If the Employer has selected another period of service as the Eligibility Period under the Plan, Eligibility Period means the period so designated in which the Employee is credited with the number of hours designated in the Plan Agreement. Notwithstanding the foregoing, if an Employee is credited with 1,000 Hours of Service during a 12-consecutive- month period following his Date of Employment or any anniversary thereof, he shall be credited with an Eligibility Period. In the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service in the case of a 12-month Eligibility Period, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. If the Employer so elects in the Plan Agreement, an Employee's most recent Date of Employment for purposes of this Section 2.15 shall be the first date on which he performed services for a business acquired by the Employer.
2.16. Employee means a common law Employee of an Affiliated Employer; in the case of an Affiliated Employer which is a sole proprietorship, the sole proprietor thereof; in the case of an Affiliated Employer which is a partnership, a partner thereof; and a Leased Employee of an Affiliated Employer. The term "Employee" includes an individual on Authorized Leave of Absence, a Self-Employed Individual and an Owner-Employee.
2.17. Employer means the Employer named in the Plan Agreement and any successor to all or the major portion of its assets or business which assumes the obligations of the Employer under the Plan Agreement.
2.18. Employer Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded the amounts allocated for his benefit from contributions by the Employer (other than contributions pursuant to Article 5), Forfeitures by former Participants (if the Plan provides for reallocation of Forfeitures), amounts reapplied under Section 6.1(d), and the income, expenses, gains and losses incurred thereon.
2.19. Employer Stock means securities constituting "qualifying employer securities" of an Employer within the meaning of Section 407(d)(5) of ERISA.
2.20. ERISA means the Employee Retirement Income Security Act of 1974, as amended.
2.21. Excess Earnings means a Participant's Earnings in excess of the Integration Level of the Plan.
2.22 Forfeiture means a nonvested amount forfeited by a former Participant, pursuant to Section 8.3, or an amount forfeited by a former Participant or Beneficiary who cannot be located, pursuant to Section 9.5.
2.23 Hour of Service means each hour described in paragraphs
(a), (b), (c), (d) or (e) below, subject to paragraphs (f) and
(g) below.
a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed.
(b) Each hour for which an Employee is paid, or
entitled to payment, by an Affiliated Employer on account of a
period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this paragraph
for any single continuous period of absence (whether or not such
period occurs in a single computation period) unless the
Employee's absence is not an Authorized Leave of Absence. Hours
under this paragraph shall be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations, which
are incorporated herein by this reference.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliated Employer. The same Hours of Service shall not be
credited under both paragraph (a) or paragraph (b), as the case
may be, and under this paragraph (c); and no more than 501 Hours
of Service shall be credited under this paragraph (c) with
respect to payments of back pay, to the extent that such pay is
agreed to or awarded for a period of time described in paragraph
(b) during which the Employee did not perform or would not have
performed any duties. These hours shall be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made.
(d) Each hour during an Authorized Leave of Absence. Such hours shall be credited at the rate of a customary full work week for an Employee.
(e) Solely for purposes of determining whether a One Year Vesting Break or a One-Year Eligibility Break has occurred, each hour which otherwise would have been credited to an Employee but for an absence from work by reason of: the pregnancy of the Employee, the birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of the child by the Employee, or caring for a child for a period beginning immediately after its birth or placement. If the Plan Administrator cannot determine the hours which would normally have been credited during such an absence, the Employee shall be credited with eight Hours of Service for each day of absence. No more than 501 Hours of Service shall be credited under this paragraph by reason of any pregnancy or placement. Hours credited under this paragraph shall be treated as Hours of Service only in the Plan Year or Eligibility Period or both, as the case may be, in which the absence from work begins, if necessary to prevent the Participant's incurring a One-Year Vesting Break or One-Year Eligibility Break in that period, or, if not, in the period immediately following that in which the absence begins. The Employee must timely furnish to the Employer information reasonably required to establish (i) that an absence from work is for a reason specified above, and (ii) the number of days for which the absence continued.
(f) Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment, or as otherwise specified in the Plan Agreement.
(g) If the Employer maintains the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer. If the Employer does not maintain the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer only to the extent that the Employer so elects in the Plan Agreement.
(h) Hours of Service shall be credited to a Leased Employee as though he were an Employee.
2.24. Insurance Trustee means the person named in the Plan Agreement as Insurance Trustee, and any successor thereto.
2.25. Integration Level means the Earnings amount selected by the Employer in the Plan Agreement.
2.26. Investment Company means an open-end registered investment company for which Putnam Mutual Funds Corp., or its affiliate acts as principal underwriter, or for which Putnam Investment Management, Inc., or its affiliate serves as an investment adviser; provided that its prospectus offers its shares under the Plan.
2.27. Investment Company Shares means shares issued by an Investment Company.
2.28. Investment Products means any of the
investment products specified by the Employer in accordance with
Section 13.2, from the group of those products sponsored,
underwritten or managed by Putnam as shall be made available by
Putnam under the Plan, and such other products as shall be
expressly agreed to in writing by Putnam for availability under
the Plan. The term "Investment Products" does not include any
Policy selected pursuant to Article 14.
2.29. Leased Employee means any person (other than
an Employee of the recipient) who pursuant to an agreement
between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with
Section 414(n)(6) of the Code) on a substantially full time basis
for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of
the recipient Employer. The compensation of a Leased Employee
for purposes of the Plan means the Compensation (as defined in
Section 2.8) of the Leased Employee attributable to services
performed for the recipient Employer. Contributions or benefits
provided to a leased Employee by the leasing organization which
are attributable to services performed for the recipient Employer
shall be treated as provided by the recipient Employer. Provided
that leased Employees do not constitute more than 20% of the
recipient's nonhighly compensated workforce, a leased Employee
shall not be considered an Employee of the recipient if he is
covered by a money purchase pension plan providing: (1) a
nonintegrated Employer contribution rate of at least 10% of
compensation (as defined in Section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or
Section 403(b) of the Code), (2) immediate participation, and (3)
full and immediate vesting.
2.30. One-Year Eligibility Break means a 12-month
Eligibility Period during which an individual is not credited
with more than 500 Hours of Service; provided, however, that in
the case of an Employee in a seasonal industry, there shall be
substituted for 500 the number of Hours of Service specified in
any regulations of the Secretary of Labor dealing with breaks in
service, and provided further that if the Employer has elected in
the Plan Agreement to establish a number less than 500 as the
requisite Hours of Service for crediting a 12-month Eligibility
Period, that number shall be substituted for 500.
2.31. One-Year Vesting Break means a Year of
Service measuring period, as elected by the Employer in the Plan
Agreement, during which an individual is not credited with more
than 500 Hours of Service; provided, however, that in the case of
an Employee in a seasonal industry, there shall be substituted
for 500 the number of Hours of Service specified in any
regulations for the Secretary of Labor dealing with breaks in
service, and provided further that if the Employer has elected in
the Plan Agreement to establish a number less than 500 as the
requisite Hours of Service for crediting a Year of Service, that
number shall be substituted for 500.
2.32. Owner-Employee means the sole proprietor of
an Affiliated Employer that is a sole proprietorship, or a
partner owning more than 10% of either the capital or profits
interest of an Affiliated Employer that is a partnership. The
Plan Administrator shall be responsible for identifying
Owner-Employees to the Recordkeeper.
2.33. Participant means each Employee who has met
the requirement for participation in Article 3. An Employee is
not a Participant for any period before the entry date applicable
to him.
2.34. Participant Contribution means an after-tax
contribution made by a Participant in accordance with Sections
4.2(e), 4.3(e) or 5.9.
2.35. Participant Contribution Account means an
account maintained on the books of the Plan, in which are
recorded Participant Contributions by a Participant and any
income, expenses, gains or losses incurred thereon.
2.36. Plan means the form of defined contribution
retirement plan and trust agreement adopted by the Employer,
consisting of the Plan Agreement and the Putnam Basic Plan
Document #05 as set forth herein, together with any and all
amendments and supplements thereto.
2.37. Plan Administrator means the Employer or its appointee pursuant to Section 16.1.
2.38. Plan Agreement means the separate agreement
entered into between the Employer and the Trustee (and the
Insurance Trustee, if any) and accepted by Putnam, under which
the Employer adopts the Plan and selects among its optional
provisions.
2.39. Plan Year means the period of 12 consecutive
months specified by the Employer in the Plan Agreement, as well
as any initial short plan year period specified by the Employer
in the Plan Agreement.
2.40. Policy means an ordinary life insurance, term
insurance, retirement income or endowment policy or an individual
or group annuity contract issued by a life insurance company in
connection with the Plan, or an interest therein. An ordinary
life insurance policy within the meaning of this definition
provides non-decreasing death benefits and non-increasing
premiums. Policy shall also include any other insurance policy
expressly agreed to in writing by Putnam.
2.41. Profit Sharing Contribution means a
contribution made for the benefit of a Participant by the
Employer pursuant to Section 4.2(a).
2.42. Putnam means Putnam Mutual Funds Corp., or a
company affiliated with it which Putnam Mutual Funds Corp. has
designated as its agent to perform specified actions or
procedures in connection with the prototype Plan.
2.43. Qualified Domestic Relations Order means any
judgment, decree or order (including approval of a property
settlement agreement) which constitutes a "qualified domestic
relations order" within the meaning of Code Section 414(p). A
judgment, decree or order shall not fail to be a Qualified
Domestic Relations Order merely because it requires a
distribution to an alternate payee (or the segregation of
accounts pending distribution to an alternate payee) before the
Participant is otherwise entitled to a distribution under the
Plan.
2.44. Qualified Participant means any Participant
who is an active Employee on the last day of the Plan Year in
question or who is credited with more than 500 Hours of Service
during the Plan Year in question or whose Retirement or death
occurred during the Plan Year in question. If the Plan is not
adopted to replace an existing plan, this Section 2.44 is
effective on the Effective Date. If the Plan replaces an
existing plan, this Section 2.44 is effective on the first day of
the first Plan Year that begins after December 31, 1988, or if
later, on the Effective Date, and the provision of the existing
plan that this Section 2.44 replaces shall continue to apply
until that time.
2.45. Recordkeeper means the person or entity
designated by the Employer in the Plan Agreement to perform the
duties described in Section 16.4, and any successor thereto. If
Putnam is the Recordkeeper, the terms and conditions of its
service will be as specified in a service agreement between the
Employer and Putnam.
2.46. Retirement means ceasing to be an Employee in
accordance with Section 7.1.
2.47. Rollover Account means an account established for anEmployee who makes a rollover contribution to the Plan pursuant to Section 4.4.
2.48. Self-Employed Individual means an individual whose personal services are a material income-producing factor in the trade or business for which the Plan is established, and who has Earned Income for the taxable year from that trade or business, or would have Earned Income but for the fact that the trade or business had no net profits for the taxable year.
2.49. Shareholder-Employee means any officer or Employee of an electing small business corporation, within the meaning of Section 1362 of the Code, who on any day during a taxable year of the Employer owns (or is considered as owning under Section 318(a)(1) of the Code) more than 5% of the outstanding stock of the Employer. The Plan administrator shall be responsible for identifying Shareholder-Employees to the Recordkeeper.
2.50. Social Security Wage Base means the maximum
amount considered as wages under Section 3121(a)(1) of the Code
as in effect on the first day of the Plan Year.
2.51. Trust and Trust Fund mean the trust fund
established under Section 13.1.
2.52. Trustee means the person, or the entity with
trustee powers, named in the Plan Agreement as trustee, and any
successor thereto.
2.53. Valuation Date means each day when the New
York Stock Exchange is open, or such other date or dates as the
Employer may designate by written agreement with the
Recordkeeper.
2.54. Year of Service means a Plan Year or an 12-
month Eligibility Period, as elected by the Employer in the Plan
Agreement, in which an Employee is credited with at least 1,000
Hours of Service; provided, however, that if the Employer has
elected in the Plan Agreement to establish a number less than
1,000 as the requisite for crediting a Year of Service, that
number shall be substituted for 1,000, and provided further that
in the case of an Employee in a seasonal industry (as defined
under regulations prescribed by the Secretary of Labor) in which
the customary extent of employment during a calendar year is
fewer than 1,000 Hours of Service, the number specified in any
regulations prescribed by the Secretary of Labor dealing with
years of service shall be substituted for 1,000. An Employee's
Years of Service shall include service credited prior to the
Effective Date under any predecessor plan. If the initial Plan
Year is shorter than 12 months, each Employee who is credited
with at least 1,000 Hours of Service in the 12-month period
ending on the last day of the initial Plan Year shall be credited
with a Year of Service with respect to the initial Plan Year.
If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall not include:
(a) Service in any Plan Year (or comparable period prior to the Effective Date) completed before the Employee reached age 18;
(b) Service completed during a period in which the Employer did not maintain the Plan or any predecessor plan (as defined under regulations prescribed by the Secretary of the Treasury).
If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall include employment by a business acquired by the Employer, before the date of the acquisition.
The following definitions apply only to cash or deferred arrangements under Section 401(k) (CODA):
2.55. Deferral Agreement means an Employee's
agreement to make one or more Elective Deferrals in accordance
with Section 5.2.
2.56. Elective Deferral means any contribution made
to the Plan by the Employer at the election of a Participant, in
lieu of cash compensation, including contributions made pursuant
to a Deferral Agreement or other deferral mechanism.
2.57. Elective Deferral Account means an account
maintained on the books of the Plan, in which are recorded a
Participant's Elective Deferrals and the income, expenses, gains
and losses incurred thereon.
2.58. Employer Matching Contribution means a
contribution made by the Employer (i) to the Plan pursuant to
Section 5.8, or (ii) to another defined contribution plan on
account of a Participant's "elective deferrals" or "employee
contributions," as those terms are used in Section 401(m)(4) of
the Code.
2.59. Employer Matching Account means an account
maintained on the books of the Plan, in which are recorded the
Employer Matching Contributions made on behalf of a Participant
and the income, expenses, gains and losses incurred thereon.
2.60. Highly Compensated Employee means any highly
compensated active Employee or highly compensated former Employee
as defined in subsection (a) below; provided, however, that if
the Employer so elects in the Plan Agreement, Highly Compensated
Employee means any highly compensated Employee under the
simplified method described in subsection (b) below.
a) Regular Method. A highly compensated active Employee
includes any Employee who performs service for the Employer
during the determination year and who during the look-back year:
(i) received compensation from the Employer in excess of $75,000
(as adjusted pursuant to Section 415(d) of the Code); (ii)
received compensation from the Employer in excess of $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and was a member
of the top-paid group for such year; or (iii) was an officer of
the Employer and received compensation during such year that is
greater than 50% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term also includes (A) Employees
who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back
year," and among the 100 Employees who received the most
compensation from the Employer during the determination year; and
(B) Employees who are 5% owners at any time during the look-back
year or determination year. If no officer has satisfied the
compensation requirement of (iii) above during either a
determination year or look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
A highly compensated former Employee includes any Employee who separated from service (or was deemed to have separated) before the determination year, performed no service for the Employer during the determination year, and was a highly compensated active Employee for either the year of separation from service or any determination year ending on or after the Employee's 55th birthday.
If during a determination year or look-back year an Employee is a family member of either a 5% owner who is an active or former Employee, or a Highly Compensated Employee who is one of the 10 most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employer during the year, then the family member and the 5% owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten Highly Compensated Employee. For purposes of this Section 2.60(a), family members include the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants.
For purposes of this subsection (a), the "determination year" shall be the Plan Year, and the "look-back year" shall be the 12-month period immediately preceding the determination year; provided, however, that in a Plan for which the Plan Year is the calendar year, the current Plan Year shall be both the "determination year" and the "look-back year" if the Employer so elects in the Plan Agreement.
(b) Simplified Method. An Employee is a Highly
Compensated Employee under this simplified method if (i) the
Employee is a 5% owner during the Plan Year; (ii) the Employee's
compensation for the Plan Year exceeds $75,000 (as adjusted
pursuant to Section 415(d) of the Code); (iii) the Employee's
compensation for the Plan Year exceeds $50,000 (as adjusted
pursuant to Section 415(d) of the Code) and the Employee is in
the top-paid group of Employees; or (iv) the Employee is an
officer of the Employer and received compensation during the Plan
Year that is greater than 50% of the dollar limitation under Code
Section 415(b)(1)(A).
The lookback provisions of Code Section 414(q) do not apply to determining Highly Compensated Employees under this simplified method. An Employer that applies this simplified method for determining Highly Compensated Employees may choose to apply this method on the basis of the Employer's workforce as of a single day during the Plan Year ("snapshot day"). In applying this simplified method on a snapshot basis, the Employer shall determine who is a Highly Compensated Employee on the basis of the data as of the snapshot day. If the determination of who is a Highly Compensated Employee is made earlier than the last day of the Plan Year, the Employee's compensation that is used to determine an Employee's status must be projected for the Plan Year under a reasonable method established by the Employer.
Notwithstanding the foregoing, in addition to those Employees who are determined to be highly compensated on the Plan's snapshot day, as described above, where there are Employees who are not employed on the snapshot day but who are taken into account for purposes of testing under Section 5.6 or 5.11, the Employer must treat as a Highly Compensated Employee any Eligible Employee for the Plan Year who:
(1) terminated prior to the snapshot day and
was a Highly Compensated Employee in the prior
year;
(2) terminated prior to the snapshot day and (i) was a
|
5% owner, (ii) had compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) was an officer and had compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer; or
(3) becomes employed subsequent to the snapshot day
and (i) is a 5% owner, (ii) has compensation for the Plan Year
greater than or equal to the projected compensation of any
Employee who is treated as a Highly Compensated Employee on the
snapshot day (except for Employees who are Highly Compensated
Employees solely because they are 5% owners or officers), or
(iii) is an officer and has compensation greater than or equal to
the projected compensation of any other officer who is a Highly
Compensated Employee on the snapshot day solely because that
person is an officer.
If during a Plan Year an Employee is a family member of
either a 5% owner who is an Employee, or a Highly Compensated
Employee who is one of the ten most highly paid Highly
Compensated Employees ranked on the basis of compensation paid by
the Employees during the year, then the family member and the 5%
owner or top-ten-Highly-Compensated-Employee shall be treated as
a single Employee receiving compensation and Plan contributions
or benefits equal to the sum of the compensation and
contributions or benefits of the family member and the 5% owner
or top-ten-Highly-Compensated-Employee. For purposes of this
Section 2.60(b), family members include the spouse, lineal
ascendants and descendants of the Employee and the spouses of
such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. The Plan Administrator is responsible for identifying the Highly Compensated Employees and reporting such data to the Recordkeeper.
2.61. Non-Highly Compensated Employee means an Employee who is not a Highly Compensated Employee.
2.62. Qualified Matching Contribution means a contribution made by the Employer that: (i) is allocated with respect to a Participant's Elective Deferrals or Participant Contributions or both (as elected by the Employer in the Plan Agreement), (ii) is fully vested at all times and (iii) is distributable only in accordance with Section 5.11.
2.63. Qualified Matching Account means an account maintained on the books of the Plan, in which are recorded the Qualified Matching Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto.
2.64. Qualified Nonelective Contribution means a
contribution (other than an Employer Matching Contribution or
Qualified Matching Contribution) made by the Employer, that: (i)
a Participant may not elect to receive in cash until it is
distributed from the Plan; (ii) is fully vested at all times; and
(iii) is distributable only in accordance with Section 5.11.
2.65. Qualified Nonelective Contribution Account means an account maintained on the books of the Plan, in which are recorded the Qualified Nonelective Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto.
ARTICLE 3. PARTICIPATION
3.1. Initial Participation. Upon completion of the eligibility for Plan participation requirements specified in the Plan Agreement, an Employee shall begin participation in the Plan as of the entry date specified in the Plan Agreement, or as of the Effective Date, whichever is later; provided, however, that:
(a) If the Plan is adopted as an amendment of a predecessor plan of the Employer, every Employee who was participating under the predecessor plan when it was so amended shall become a Participant in the Plan as of the Effective Date, whether or not he has satisfied the age and service requirements specified in the Plan Agreement; and
(b) Unless the Employer specifies otherwise in the Plan Agreement, any individual who is (i) a nonresident alien receiving no earned income from an Affiliated Employer which constitutes income from sources within the United States, or (ii) included in a unit of Employees covered by a collective bargaining agreement between the Employer and Employee representatives (excluding from the term "Employee representatives" any organization of which more than half of the members are Employees who are owners, officers, or executives of an Affiliated Employer), if retirement benefits were the subject of good faith bargaining and no more than 2% of the Employees covered by the collective bargaining agreement are professionals as defined in Section 1.410(b)-9 of the Income Tax Regulations, shall not participate in the Plan until the later of the date on which he ceases to be described in clause (i) or (ii), whichever is applicable, or the entry date specified by the Employer in the Plan Agreement; and
(c) If the Plan is not adopted as an amendment of a predecessor plan of the Employer, all Employees on the Effective Date shall begin participation on the Effective Date, if the Employer so elects in the Plan Agreement; and
(d) A Participant shall cease to participate in the Plan when he becomes a member of a class of Employees ineligible to participate in the Plan, and shall resume participation immediately upon his return to a class of Employees eligible to participate in the Plan.
3.2. Special Participation Rule. With respect to a Plan in which the Employer has specified full and immediate vesting in the Plan Agreement, an Employee who incurs a One-Year Eligibility Break before completing the number of Eligibility Periods required under Section 3.1 shall not thereafter be credited with any Eligibility Period completed before the One-Year Eligibility Break.
3.3. Resumed Participation. A former Employee who incurs a One-Year Eligibility Break after having become a Participant shall participate in the Plan as of the date on which he again becomes an Employee, if (i) his Employer Contribution Account or Employer Matching Account had become partially or fully vested before he incurred a One-Year Vesting Break, or (ii) he incurred fewer than five consecutive One-Year Eligibility Breaks. In any other case, when he again becomes an Employee he shall be treated as a new Employee under Section 3.1.
3.4. Benefits for Owner-Employees. If the Plan
provides contributions or benefits for one or more
Owner-Employees who control both the trade or business with
respect to which the Plan is established and one or more other
trades or businesses, the Plan and plans established with respect
to such other trades or businesses must, when looked at as a
single plan, satisfy Sections 401(a) and (d) of the Code with
respect to the Employees of this and all such other trades or
businesses. If the Plan provides contributions or benefits for
one or more Owner-Employees who control one or more other trades
or businesses, the Employees of each such other trade or business
must be included in a plan which satisfies Sections 401(a) and
(d) of the Code and which provides contributions and benefits not
less favorable than those provided for such Owner-Employees under
the Plan. If an individual is covered as an Owner-Employee under
the plans of two or more trades or businesses which he does not
control and such individual controls a trade or business, then
the contributions or benefits of the Employees under the plan of
the trade or business which he does control must be as favorable
as those provided for him under the most favorable plan of the
trade or business which he does not control. For purposes of
this Section 3.4, an Owner-Employee, or two or more
Owner-Employees, shall be considered to control a trade or
business if such Owner-Employee, or such two or more Owner-
Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital interest or the profits interest in such partnership.
For purposes of the preceding sentence, an Owner-Employee or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee or such two or more Owner-Employees are considered to control within the meaning of the preceding sentence.
3.5. Changes in Classification. If a Participant ceases to be a member of a classification of Employees eligible to participate in the Plan, but does not incur a One-Year Eligibility Break, he will continue to be credited with Years of Service for vesting while he remains an Employee, and he will resume participation as of the date on which he again becomes a member of a classification of Employees eligible to participate in the Plan. If such a Participant incurs a One-Year Eligibility Break, Section 3.3 will apply. If a Participant who ceases to be a member of a classification of Employees eligible to participate in the Plan becomes a member of a classification of Employees eligible to participate in another plan of the Employer, his Account, if any, under the Plan shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account.
If an Employee who is not a member of a classification of Employees eligible to participate in the Plan satisfies the age and service requirements specified in the Plan Agreement, he will begin to participate immediately upon becoming a member of an eligible classification. If such an Employee has account balances under another plan of the Employer, such account balances shall be transferred to the Plan upon the Employee's commencement of participation in the Plan, if such other plan permits such transfer.
ARTICLE 4. CONTRIBUTIONS
4.1. Provisions Applicable to All Plans.
(a) Payment and Crediting of Contributions. The Employer shall pay to the order of the Trustee the aggregate contributions to the Trust Fund (other than the premium payments on any Policy) for each Plan Year. Each contribution shall be accompanied by written instructions from the Employer, in the manner prescribed by Putnam. Neither the Trustee nor Putnam shall be under any duty to inquire into the correctness of the amount or the timing of any contribution, or to collect any amount if the Employer fails to make a contribution as provided in the Plan.
(b) Responsibility for Premium Payments. Contributions to be applied to the payment of the premiums on any Policy shall be paid by the Employer directly to the insurer in cash. In determining the amount of any premium due under any Policy with respect to any Participant, the Employer and the Insurance Trustee may rely conclusively upon information furnished by the provider of the Policy. For purposes of Sections 4.2, 4.3 and Article 5, all Employer contributions used to pay premiums on Policies shall be treated as contributions made to the appropriate Participant's Employer Contribution Account. If the Employer omits any premium payment or makes any mistake concerning a premium payment, neither the Employer nor the Insurance Trustee shall have any liability in excess of the premium to be paid.
(c) Time for Payment. Elective Deferrals will be transferred to the Trustee or the insurer as soon as such contributions can reasonably be segregated from the general assets of the Employer, but in any event within 90 days after the date on which the Compensation to which such contributions relate is paid. The aggregate of all other contributions with respect to a Plan Year shall be transferred to the Trustee or the insurer no later than the due date (including extensions) for filing the Employer's federal income tax return for that Plan Year.
(d) Limitations on Allocations. All allocations shall be subject to the limitations in Article 6.
(e) Establishment of Accounts. The Employer will
establish and maintain (or cause to be established and
maintained) for each Participant individual accounts adequate to
disclose his interest in the Trust Fund, including such of the
following separate accounts as shall apply to the Participant:
Employer Contribution Account, Participant Contribution Account,
Deductible Employee Contribution Account, and Rollover Account;
and in a Plan with a CODA, Elective Deferral Account, Qualified
Nonelective Account, Qualified Matching Account and Employer
Matching Account. The maintenance of such accounts shall be only
for recordkeeping purposes, and the assets of separate accounts
shall not be required to be segregated for purposes of
investment.
(f) Restoration of Accounts. Notwithstanding any
other provision of the Plan, for any Plan Year in which it is
necessary to restore any portion of a Participant's Account
pursuant to Section 8.3(b) or 9.5, to the extent that the amount
of Forfeitures available is insufficient to accomplish such
restoration, the Employer shall contribute the amount necessary
to eliminate the insufficiency, regardless of whether the
contribution is currently deductible by the Employer under
Section 404 of the Code. Forfeitures shall be considered
available for allocation pursuant to Sections 4.2 and 5.8 in a
Plan Year only after all necessary restoration of Accounts has
been accomplished.
4.2. Provisions Applicable Only to Profit Sharing Plans.
a) Amount of Annual Contribution. The Employer will contribute for each Plan Year an amount determined in accordance with the formula specified by the Employer in the Plan Agreement, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404 of the Code. If the Employer so elects in the Plan Agreement, the amount of Forfeitures occurring in a Plan Year (including, if the Employer elects in the Plan Agreement, Forfeitures of Employer Matching Accounts) shall be applied to reduce the Employer's Profit Sharing Contribution by a like amount, and such Forfeitures shall be treated as a portion of the Profit Sharing Contribution for purposes of paragraphs (b) and (c).
(b) Allocation of Profit Sharing Contributions; General Rule. As of the last day of each Plan Year, the Profit Sharing Contribution (and any amounts reapplied under Section 6.1(d)) for the Plan Year shall be allocated as indicated by the Employer in the Plan Agreement. To the extent that the Employer has so elected in the Plan Agreement, the amount of Forfeitures occurring in a Plan Year shall be treated as additional Profit Sharing Contributions and shall be allocated under this paragraph.
(c) Plans Integrated with Social Security. Subject to Section 4.6 and if the Employer elects in the Plan Agreement an allocation formula integrated with Social Security, Employer contributions (and any amounts reapplied under Section 6.1(d)) shall be allocated as of the last day of the Plan Year, as follows:
(1) Top-Heavy Integration Formula. If the Plan
is required to provide a minimum allocation for the Plan Year
pursuant to the Top-Heavy Plan rules of Article 15, or if the
Employer has specified in the Plan Agreement that this paragraph
(1) will apply whether or not the Plan is Top-Heavy, then:
(A) First, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Earnings (or, if less, the entire amount to be allocated).
(B) Next, among the Employer Contribution Accounts of all Qualified Participants who have Excess Earnings, in the ratio that each Qualified Participant's Excess Earnings bears to all Qualified Participants' Excess Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Excess Earnings (or, if less, the entire amount remaining to be allocated). In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, all of such Qualified Participant's Earnings shall be taken into account.
(C) Next, among the Employer Contribution
Accounts of all Qualified Participants, in the ratio that the sum
of each Qualified Participant's Earnings and Excess Earnings
bears to the sum of all Qualified Participants' Earnings and
Excess Earnings. The total amount allocated in this manner shall
not exceed the lesser of (i) the sum of all Participants'
Earnings and Excess Earnings multiplied by the Top-Heavy Maximum
Disparity Percentage determined under subparagraph (1)(E), or
(ii) the entire amount remaining to be allocated. In the case of
any Qualified Participant who has exceeded the cumulative
permitted disparity limit described in subparagraph (5) below,
two times such Qualifying Participant's Earnings shall be taken
into account.
(D) Finally, any amount remaining shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings.
(E) The Top-Heavy Maximum Disparity Percentage shall be the lesser of (i) 2.7% or (ii) the applicable percentage from the following table:
If the Plan s
Integration Level is The
applicable
More than: But not more than:
percentage is:
$0 The greater of $10,000 2.7%
or 20% of the Social
Security Wage Base
The greater of $10,000 80% of the Social
1.3%
or 20% of the Social Security Security Wage Base
Wage Base
80% of the Social Security Less than the Social
2.4%
Security Wage Base Security Wage Base
|
If the Plan's Integration Level is equal to the Social Security Wage Base, the Top-Heavy Maximum Disparity Percentage is 2.7%.
(2) Non-Top-Heavy Integration Formula. If the Plan is
not required to provide a minimum allocation for the Plan Year
pursuant to the Top-Heavy Plan rules of Article 15, and the
Employer has not specified in the Plan Agreement that paragraph
(1) will apply whether or not the Plan is Top-Heavy, then:
(A) An amount equal to (i) the Maximum Disparity Percentage determined under subparagraph (2)(C) multiplied by the sum of all Qualified Participants' Earnings and Excess Earnings, or (ii) if less, the entire amount to be allocated, shall be allocated among the Employer Contribution Account of all Participants in the ratio that the sum of each Qualified Participant's Earnings and Excess Earnings bears to the sum of all Qualified Participants' Earnings and Excess Earnings. In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, two times such Qualified Participant's Earnings shall be taken into account.
(B) Any amount remaining after the allocation in paragraph (2)(A) shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings.
(C) The Maximum Disparity Percentage shall be the lesser of (i) 5.7% or (ii) the applicable percentage from the following table:
If the Plan s
Integration Level is The applicable
More than: But not more than: percentage is:
$0 The greater of $10,000 2.7%
or 20% of the Social
Security Wage Base
The greater of $10,000 80% of the Social
or 20% of the Social Security Wage Base
1.3%
Security Wage Base
80% of the Social Less than the Social
2.4%
Security Wage Base Security Wage Base
|
If the Plan's Integration Level is equal to the Social Security Wage Base, the Maximum Disparity Percentage is 5.7%.
(3) In this Section 4.2, "Earnings" means Earnings as defined in Section 2.13.
(4) Annual overall permitted disparity
limit. Notwithstanding subparagraphs (1) through (3)
above, for any Plan Year this Plan benefits any
Participant who benefits under another qualified plan
or simplified employee pension (as defined in
Section 408(k) of the Code) maintained by the Employer
that provides for permitted disparity (or imputes
disparity), Employer Contributions and Forfeitures will
be allocated among the Employer Contribution Accounts
of all Qualified Participants in the ratio that such
Qualified Participant's Earnings bears to the Earnings
of all Participants. For all purposes under the Plan,
a Participant is treated as benefiting under a plan
(including this Plan) for any plan year during which
the Participant receives or is deemed to receive an
allocation under a plan in accordance with
Section 1.410(b)-3(a) of the Treasury Regulations.
(5) Cumulative Permitted Disparity Limit. Effective for Plan years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension plan (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefitted under a defined benefit or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit.
(d) Allocation of Forfeitures. Forfeitures shall be
allocated among the Employer Contribution Accounts of all
Qualified Participants in accordance with paragraph (a) or (b),
whichever applies to Profit Sharing Contributions. Forfeitures
may be allocated pursuant to paragraphs (c)(1)(B), (c)(1)(C) and
(c)(2)(A) only to the extent that the limitation described
therein has not been fully utilized by the allocation of Profit
Sharing Contributions and amounts reapplied under Section 6.1(d).
(e) Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code, as set out in Section 5.11 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contributions Accounts will be fully vested at all times.
4.3. Provisions Applicable Only to Money Purchase Pension Plans.
(a) Amount of Annual Contributions. The Employer will
contribute for each Plan Year an amount described in paragraph
(b) or (c) below, whichever is applicable, less any amounts
reapplied for the Plan Year under Section 6.1(d), not to exceed
the amount deductible under Section 404(c) of the Code. If the
Employer so elects in the Plan Agreement, the amount of
Forfeitures occurring in a Plan Year shall be applied to reduce
the Employer's contribution by a like amount, and such
Forfeitures shall be treated as a portion of the Employer
Contribution for purposes of paragraphs (b) and (c).
(b) Allocation of Contributions; General Rule. The Employer shall contribute an amount equal to the product of the Earnings of all Qualified Participants and the Base Contribution Percentage, and the contribution shall be allocated as of the last day of the Plan Year among the Employer Contribution Accounts of all Qualified Participants in the ratio that the Earnings of each Qualified Participant bears to the Earnings of all Qualified Participants. This general rule does not apply to a Plan that is integrated with Social Security.
(c) Plans Integrated with Social Security. Subject to
Section 4.6 and if the Employer has elected in the Plan Agreement
to integrate the Plan with Social Security, the Employer shall
contribute an amount equal to the sum of the following amounts,
and the contribution shall be allocated as of the last day of the
Plan Year as follows:
(1) To the Employer Contribution Account of each Qualified Participant, an amount equal to the product of the Base Contribution Percentage and his Earnings, and
(2) To the Employer Contribution Account of each Qualified Participant who has Excess Earnings, the product of his Excess Earnings and the lesser of (i) the Base Contribution Percentage or (ii) the Money Purchase Maximum Disparity Percentage determined under paragraph (d).
(3) The Base Contribution Percentage shall be no less than three percent (3%) in either of the following circumstances: (i) any Plan Year of a Plan for which the Plan Agreement does not specify that the Employer will perform annual Top-Heavy testing, or (ii) any Plan Year in which the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 15.
(4) Notwithstanding subparagraphs (1) through (3)
above, in the case of any Participant who has exceeded the
cumulative permitted disparity limit described in paragraph
(h) below, the amount shall be each Qualified Participant's
Earnings multiplied by the percentage determined in
subparagraph (2) above.
(d) The Money Purchase Maximum Disparity Percentage is equal to the lesser of (i) 5.7% or (ii) the applicable percentage from the following table:
If the Plan s
Integration Level is The applicable
more than: But not more than: percentage is:
$0 The greater of $10,000 5.7%
or 20% of the Social
Security Wage Base
The greater of $10,000 80% of the Social 4.3%
or 20% of the Social Security Wage Base
Security Wage Base
80% of the Social Less than the Social 5.4%
Security Wage Base Security Wage Base
|
If the Plan's Integration Level is equal to the Social Security Wage Base, the Money Purchase Maximum Disparity Percentage is 5.7%.
(e) Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code, as set out in Section 5.11 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contributions Accounts will be fully vested at all times.
(f) Separate Allocation of Forfeitures. If the Employer has not elected in the Plan Agreement to use Forfeitures to reduce the amount of its contribution, Forfeitures shall be allocated among the Employer Contribution Accounts of all Qualified Participants in proportion of their Earnings.
(g) Annual overall permitted disparity limit.
Notwithstanding the preceding paragraphs, for any Plan Year
this Plan benefits any Participant who benefits under
another qualified plan or simplified employee pension (as
defined in Section 408(k) of the Code) maintained by the
Employer that provides for permitted disparity (or imputes
disparity), the Employer shall contribute for each Qualified
Participant an amount equal to the Qualified Participant's
Earnings multiplied by the lesser of (i) the Base
Contribution Percentage or (ii) the Money Purchase Maximum
Disparity Percentage determined under paragraph (d). For
all purposes under the Plan, a Participant is treated as
benefiting under a plan (including this Plan) for any plan
year during which the Participant receives or is deemed to
receive an allocation under a plan in accordance with
Section 1.410(b)-3(a) of the Treasury Regulations.
(h) Cumulative Permitted Disparity Limit. Effective for Plan Years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 total cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefited under a defined benefit plan or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit.
4.4. Rollover Contributions. An Employee in an eligible class may contribute at any time cash or other property (which is not a collectible within the meaning of Section 408(m) of the Code) acceptable to the Trustee representing qualified rollover amounts under Sections 402, 403, or 408 of the Code. Amounts so contributed shall be credited to a Rollover Account for the Participant.
4.5. No Deductible Employee Contributions. The PlanAdministrator shall not accept deductible employee contributions, other than those held in a Deductible Employee Contribution Account transferred from a predecessor plan of the Employer.
4.6. Paired Plans. An Employer may adopt as paired plans Putnam Profit Sharing and 401(k) Plan (Plan Agreement #001) and Putnam Money Purchase Pension Plan (Plan Agreement #002) or Putnam Basic Profit Sharing and 401(k) Plan (Plan Agreement #003) and Putnam Money Purchase Pension Plan (Plan Agreement #002). Only one of the two paired plans may be integrated with Social Security. In any Plan Year in which Putnam paired plans are Top- Heavy (as defined in Section 15.2(b)), each employee who is not a Key Employee (as defined in Section 15.2(a)) and who is eligible to participate in both plans will have allocated to his account in the Putnam Money Purchase Pension Plan a minimum contribution that meets the requirements of Section 15.3.
ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA)
5.1. Applicability; Allocations. This Article 5 applies toany plan for which the Employer has elected in the Plan Agreement to include a CODA. The Employer may specify in the Plan Agreement that contributions will be made to the Plan only under the CODA, or that contributions may be made under Section 4.2 as well as under the CODA. Allocations to Participants' Accounts of contributions made pursuant to this Article 5 shall be made as soon as administratively feasible after their receipt by the Trustee, but in any case no later than as of the last day of the Plan Year for which the contributions were made.
5.2. CODA Participation. Each Employee who has met the eligibility requirements of Article 3 may make Elective Deferrals to the Plan by completing and returning to the Plan Administrator a Deferral Agreement form which provides that the Participant's cash compensation from the Employer will be reduced by the amount indicated in the Deferral Agreement, and that the Employer will contribute an equivalent amount to the Trust on behalf of the Participant. The following rules will govern Elective Deferrals:
(a) Subject to the limits specified in the Plan Agreement and set forth in Section 5.3, a Deferral Agreement may apply to any amount or percentage of either or both of the Earnings payable to a Participant in each year, or one or more bonuses payable to a Participant from time to time as specified by the Employer.
(b) In accordance with such reasonable rules as the Plan Administrator shall specify, a Deferral Agreement will become effective as soon as is administratively feasible after the Deferral Agreement is returned to the Plan Administrator, and will remain effective until it is modified or terminated. No Deferral Agreement may become effective retroactively.
(c) A Participant may modify his Deferral Agreement by completing and returning to the Plan Administrator a new Deferral Agreement form as of any of the dates specified in the Plan Agreement, and any such modification will become effective as described in paragraph (b).
(d) A Participant may terminate his Deferral Agreement at any time upon advance written notice to the Plan Administrator, and any such termination will become effective as described in paragraph (b).
5.3. Annual Limit on Elective Deferrals. During any taxable year of a Participant, his Elective Deferrals under the Plan and any other qualified plan of an Affiliated Employer shall not exceed the dollar limit contained in Section 402(g) of the Code in effect at the beginning of the taxable year. With respect to any taxable year, a Participant's Elective Deferrals for purposes of this Section 5.3 include all Employer contributions made on his behalf pursuant to an election to defer under any qualified CODA as described in Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement (SARSEP) as described in Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan under Section 457 of the Code, any plan described under Section 501(c)(18) of the Code, and any Employer contributions made on behalf of the Participant for the purchase of an annuity contract under Section 403(b) of the Code pursuant to a salary reduction agreement. The amount of Elective Deferrals of a Participant who receives a hardship distribution pursuant to Section 5.14 shall be reduced, for the taxable year next following the distribution, by the amount of Elective Deferrals made in the taxable year of the hardship distribution.
5.4. Distribution of Certain Elective Deferrals. "Excess
Elective Deferrals" means those Elective Deferrals described in
Section 5.3 that are includible in a Participant's gross income
under Section 402(g) of the Code, to the extent that the
Participant's aggregate elective deferrals for a taxable year
exceed the dollar limitation under that Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, whether or not they are distributed under this Section 5.4.
A Participant may designate to the Plan any Excess Elective
Deferrals made during his taxable year by notifying the Employer
on or before the following March 15 of the amount of the Excess
Elective Deferrals to be so designated. A Participant who has
Excess Elective Deferrals for a taxable year, taking into account
only his Elective Deferrals under the Plan and any other plans of
the Affiliated Employers, shall be deemed to have designated the
entire amount of such Excess Elective Deferrals.
Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were so designated or deemed designated for the preceding year. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is the Participant's Excess Elective Deferrals for the year and the denominator of which is the Participant's Account balance attributable to Elective Deferrals without regard to any income or loss occurring during the year.
To the extent that the return to a Participant of his
Elective Deferrals would reduce an Excess Amount (as defined in
Section 6.5(f)), such Excess Deferrals shall be distributed to
the Participant in accordance with Article 6.
5.5. Satisfaction of ADP and ACP Tests. In each Plan Year, the Plan must satisfy the ADP test described in Section 5.6 and the ACP test described in Section 5.9. The Employer may cause the Plan to satisfy the ADP or ACP test or both tests for a Plan Year by any of the following methods or by any combination of them:
(a) By the distribution of Excess Contributions in accordance with Section 5.7, or the distribution of Excess Aggregate Contributions in accordance with Section 5.12, or both; or
(b) By recharacterization of Excess Contributions in accordance with Section 5.10; or
(c) If the Employer has so elected in the Plan Agreement, by making Qualified Nonelective Contributions or Qualified Matching Contributions or both, in accordance with the Plan Agreement and this Section 5.5.
5.6. Actual Deferral Percentage Test Limit. The ActualDeferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:
(a) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points.
The following special rules shall apply to the computation of the ADP:
(c) "Actual Deferral Percentage" means, for a
specified group of Participants for a Plan Year, the average
of the ratios (calculated separately for each Participant in
the group) of (1) the amount of Employer contributions
actually paid over to the Trust on behalf of the Participant
for the Plan Year to (2) the Participant's Earnings for the
Plan Year (or, provided that the Employer applies this
method to all Employees for a Plan Year, the Participant's
Earnings for that portion of the Plan Year during which he
was eligible to participate in the Plan). Employer
contributions on behalf of any Participant shall include:
(i) his Elective Deferrals, including Excess Elective
Deferrals of Highly Compensated Employees, but excluding (A)
Excess Elective Deferrals of Non-Highly Compensated
Employees that arise solely from Elective Deferrals made
under the Plan or another plan maintained by an Affiliated
Employer, and (B) Elective Deferrals that are taken into
account in the Average Contribution Percentage test
described in Section 5.11 (provided the ADP test is
satisfied both with and without exclusion of these Elective
Deferrals), and excluding Elective Deferrals returned to a
Participant to reduce an Excess Amount as defined in Section
6.5(f); and (ii) if the Employer has elected to make
Qualified Nonelective Contributions, such amount of
Qualified Nonelective Contributions, if any, as shall be
necessary to enable the Plan to satisfy the ADP test; and
(iii) if the Employer has elected to make Qualified Matching
Contributions, such amount of Qualified Matching
Contributions, if any, as shall be necessary to enable the
Plan to satisfy the ADP test. For purposes of computing
Actual Deferral Percentages, an Employee who would be a
Participant but for his failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
(d) In the event that the Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 5.6 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year.
(e) The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) allocated to his Accounts under two or more CODAs described in Section 401(k) of the Code that are maintained by the Affiliated Employers shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single CODA. If a Highly Compensated Employee participates in two or more CODAs that have different Plan Years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs.
(f) For purposes of determining the ADP of a Participant who is a 5% owner or one of the ten most highly- paid Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) and the Compensation of such a Participant shall include the Elective Deferrals (and, if applicable, Qualified Nonelective Contributions and Qualified Matching Contributions, or both) and Compensation for the Plan Year of his Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the ADP both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees.
(g) For purposes of the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12-month period immediately following the Plan Year to which those contributions relate.
(h) The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in satisfying the test.
(i) The determination and treatment of the ADP amounts
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
5.7. Distribution of Excess Contributions. "Excess
Contributions" means, with respect to any Plan Year, the excess
of:
(a) The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for the Plan Year, over
(b) The maximum amount of Employer contributions permitted by the ADP test, determined by reducing contributions made on behalf of Highly Compensated Employees in order of their ADPs, beginning with the highest of such percentages.
Notwithstanding any other provision of the Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts Excess Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Contributions is the income or loss allocable to the Participant's Elective Deferral Account (and, if applicable, his Qualified Nonelective Account or Qualified Matching Account or both) for the Plan Year multiplied by a fraction, the numerator of which is the Participant's Excess Contributions for the year and the denominator is the Participant's account balance attributable to Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if any of these are included in the ADP test) without regard to any income or loss occurring during the Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of them. Excess Contributions shall be allocated to a Participant who is a family member subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Elective Deferrals (and other amounts treated as his Elective Deferrals) bear to the combined Elective Deferrals (and other amounts treated as Elective Deferrals) of all of the Participants aggregated to determine his family members' combined ADP. Excess Contributions shall be treated as Annual Additions under the Plan.
Excess Contributions shall be distributed from the Participant's Elective Deferral Account and Qualified Matching Account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Nonelective Account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral Account and Qualified Matching Account.
5.8. Matching Contributions. If so specified in the Plan Agreement, the Employer will make Matching Contributions to the Plan in accordance with the Plan Agreement, but no Matching Contribution shall be made with respect to an Elective Deferral or a Participant Contribution that is returned to a Participant because it represents an Excess Elective Deferral, an Excess Contribution, and Excess Aggregate Contribution or an Excess Amount (as defined in Section 6.5(f)); and if a Matching Contribution has nevertheless been made with respect to such an Elective Deferral or Participant Contribution, the Matching Contribution shall be forfeited, notwithstanding any other provision of the Plan.
(a) Employer Matching Contributions. Employer Matching Contributions will be allocated among the Employer Matching Accounts of Participants in proportion to their Elective Deferrals or Participant Contributions, if applicable. Employer Matching Accounts shall become vested according to the vesting schedule specified in the Plan Agreement, but regardless of that schedule shall be fully vested upon the Participant's Retirement (or, if earlier, his fulfillment of the requirements for early retirement, if any, or attainment of the normal retirement age specified in the Plan Agreement), his death during employment with an Affiliated Employer, and in accordance with Section 19.3. Forfeitures of Employer Matching Contributions, other than Excess Aggregate Contributions, shall be made in accordance with Section 8.3. Forfeitures of Employer Matching Accounts for a Plan Year shall be applied to reduce the total Employer Matching Contribution for the Plan Year, applied to reduce the Employer's Profit Sharing Contribution for the Plan Year, or allocated among the Employer Matching Accounts of Participants in addition to the Employer Matching Contribution for the Plan Year, as elected by the Employer in the Plan Agreement. If the Employer so elects in the Plan Agreement, to the extent that the amount of Forfeitures for a Plan Year other than Forfeitures of Employer Matching Accounts exceeds the amount applied to reduce Employer Profit Sharing Contributions for such Plan Year as provided in Section 4.2(a), such excess shall be applied to reduce the total Employer Matching Contribution for the Plan Year.
(b) Qualified Matching Contributions. Qualified Matching Contributions will be allocated among the Qualified Matching Contribution Accounts of Participants as specified by the Employer in the Plan Agreement.
5.9. Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions, together with any matching contributions (as defined in Section 401(m)(4) of the Code), shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code, as set forth in Section 5.11 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contribution Accounts will be fully vested at all times.
5.10. Recharacterization of Excess Contributions. Provided that the Plan Agreement permits all Participants to make Participant Contributions, the Employer may treat a Participant's Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan as a Participant Contribution. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that a recharacterized amount in combination with other Participant Contributions made by that Employee would exceed any stated limit under the Plan on Participant Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which the Excess Contributions arose, and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing by the Employer of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for his tax year in which the Participant would have received them in cash.
5.11. Average Contribution Percentage Test Limit and Aggregate Limit. The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:
(a) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points.
The following rules shall apply to the computation of the
ACP:
(c) "Average Contribution Percentage" means the average of the Contribution Percentages of the Eligible Participants in a group.
(d) "Contribution Percentage" means the ratio (expressed as a percentage) of a Participant's Contribution Percentage Amounts to the Participant's Earnings for the Plan Year (or, provided that the Employer applies this method to all Employees for a Plan Year, the Participant's Earnings for that portion of the Plan Year during which he was eligible to participate in the Plan).
(e) "Contribution Percentage Amounts" means the sum of the Participant Contributions, Employer Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Employer Matching Contributions allocated to the Participant's Account, taken into account in the year in which the allocation is made. If the Employer has elected in the Plan Agreement to make Qualified Nonelective Contributions, such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ACP test shall be in the Contribution Percentage Amounts. Elective Deferrals shall also be included in the Contribution Percentage Amounts to the extent, if any, needed to enable the Plan to satisfy the ACP test, so long as the ADP test is met before the Elective Deferrals are used in the ACP test, and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test.
(f) "Eligible Participant" means any Employee who is eligible to make a Participant Contribution, or an Elective Deferral, if Elective Deferrals are taken into account in the calculation of the Contribution Percentage, or to receive an Employer Matching Contribution (or a Forfeiture thereof) or a Qualified Matching Contribution.
(g) "Aggregate Limit" means the sum of (i) 125% of the greater of the ADP of the Non-Highly Compensated Employees for the Plan Year, or the ACP of Non-Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA, and (ii) the lesser of 200% of, or two plus, the lesser of the ADP or ACP. "Lesser" is substituted for "greater" in clause (i) of the preceding sentence, and "greater" is substituted for "lesser" after the phrase "two plus the" in clause (ii) of the preceding sentence, if that formulation will result in a larger Aggregate Limit.
(h) If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by an Affiliated Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the Aggregate Limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amount is reduced shall be treated as an Excess Aggregate Contribution. In determining the Aggregate Limit, the ADP and ACP of Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. The Aggregate Limit will be considered satisfied if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-Highly Compensated Employees.
(i) For purposes of this section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or CODAs described in Section 401(k) of the Code, that are maintained by an Affiliated Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more CODAs that have different plan years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs.
(j) In the event that the Plan satisfies the
requirements of Sections 401(m), 401(a)(4) or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with the Plan, then
this Section 5.11 shall be applied by determining the
Contribution Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy
Section 401(m) of the Code only if they have the same Plan
Year.
(k) For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the ten most highly-paid Highly Compensated Employers, the Contribution Percentage Amounts and Compensation of the Participant shall include the Contribution Percentage Amounts and Compensation for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the Contribution Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees.
(l) For purposes of the ACP test, Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year.
(m) The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in the ACP test.
(n) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
5.12. Distribution of Excess Aggregate Contributions. Notwithstanding any other provision of the Plan, Excess AggregateContributions, plus any income and minus any loss allocable thereto, shall be forfeited if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Aggregate Contributions is the income or loss allocable to the Participant's Employer Matching Contribution Account, Qualified Matching Contribution Account (if any, and if all amounts therein are not used in the ADP test), and, if applicable, Qualified Nonelective Account, Participant Contribution Account and Elective Deferral Account for the Plan Year, multiplied by a fraction, the numerator of which is the Participant's Excess Aggregate Contributions for the year and the denominator of which is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during the Plan Year. Excess Aggregate Contributions shall be allocated to a Participant who is subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Employer Matching Contributions (and other amounts treated as his Employer Matching Contributions) bear to the combined Employer Matching Contributions (and other amounts treated as Employer Matching Contributions) of all of the Participants aggregated to determine its family members' combined ACP. If excess amounts attributable to Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan.
Forfeitures of Excess Aggregate Contributions that are Employer Matching Contributions shall either be reallocated to the accounts of Non-Highly Compensated Employees or applied to reduce Employer Contributions, as elected by the Employer in the Plan Agreement.
Excess Aggregate Contributions shall be forfeited if forfeitable, or distributed on a pro-rata basis from the Participant's Participant Contribution Account, Employer Matching Account, and Qualified Matching Account (and, if applicable, the Participant's Qualified Nonelective Account or Elective Deferral Account, or both).
Excess Aggregate Contributions means, with respect to any Plan Year, the excess of:
(a) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage and actually made on behalf of Highly Compensated Employees for the Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the ACP test and the Aggregate Limit (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages).
Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 5.4, and then determining Excess Contributions pursuant to Section 5.7.
5.13. Restriction on Distributions. Except as provided in Sections 5.4, 5.7 and 5.12, no distribution may be made from a Participant's Elective Deferral Account, Qualified Nonelective Account or Qualified Matching Account until the occurrence of one of the following events:
(a) The Participant's Disability, death or termination of employment with the Affiliated Employers;
(b) Termination of the Plan without the establishment
of another defined contribution plan other than an employee
stock ownership plan as defined in Section 4975(e) or
Section 409 of the Code, or a simplified employee pension
plan as defined in Section 408(k) of the Code;
(c) The Participant's attainment of age 59 1/2 (if the Employer has elected in the Plan Agreement to permit such distributions); or
(d) In the case of an Employer that is a corporation,
the disposition by the Employer to an unrelated entity of
(i) substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used in a trade or business
of the Employer, if the Employer continues to maintain the
Plan after the disposition, but only with respect to
Employees who continue employment with the entity acquiring
such assets; or (ii) the Employer's interest in a subsidiary
(within the meaning of Section 409(d)(3) of the Code), if
the Employer continues to maintain the Plan after the
disposition, but only with respect to Employees who continue
employment with such subsidiary.
In addition, if the Employer has elected in the Plan Agreement to permit such distributions, a distribution may be made from a Participant's Elective Deferral Account in the event of his financial hardship as described in Section 5.14. All distributions upon any of the events listed above are subject to the conditions of Article 10, Joint and Survivor Annuity Requirements. In addition, distributions made after March 31, 1988, on account of an event described in subsection (b) or (d) above must be made in a lump sum.
5.14. Hardship Distributions. If the Employer has so elected in the Plan Agreement, upon a Participant's written request the Employer may permit a distribution from his Elective Deferral Account and from his Employer Matching Account. The terms and conditions of Section 12.2 and the special vesting rule contained in Section 8.4 shall apply to hardship distributions from an Employer Contribution Account or an Employer Matching Account. The further terms of this Section 5.14 shall apply to hardship distributions from an Elective Deferral Account. No hardship distribution shall be made from a Qualified Nonelective Account or a Qualified Matching Account.
(a) The maximum amount that may be distributed on
account of hardship from an Elective Deferral Account after
December 31, 1988, shall not exceed the sum of (1) the
amount credited to the Account as of December 31, 1988, and
(2) the aggregate amount of the Elective Deferrals made by
the Participant after December 31, 1988, and before the
hardship distribution.
(b) Hardship distributions shall be permitted only on account of the following financial needs:
(1) Expenses for medical care described in
Section 213(d) of the Code for the Participant, his
spouse, children and dependents, or necessary for these
persons to obtain such care;
(2) Purchase of the principal residence of the Participant (excluding regular mortgage payments);
(3) Payment of tuition and related educational fees and room and board expenses for the upcoming 12 months of post-secondary education for the Participant, his spouse, children or dependents; or
(4) Payments necessary to prevent the Participant's eviction from, or the foreclosure of a mortgage on, his principal residence.
(c) Hardship distributions shall be subject to the
spousal consent requirements contained in Sections
411(a)(11) and 417 of the Code, to the same extent that
those requirements apply to a Participant pursuant to
Section 10.1.
(d) A hardship distribution will be made to a Participant only upon satisfaction of the following conditions:
(1) The Participant has obtained all nontaxable loans and all distributions other than hardship distributions available to him from all plans maintained by the Affiliated Employers;
(2) The hardship distribution does not exceed the amount of the Participant's financial need as described in paragraph (b) plus any amounts necessary to pay federal, state and local income taxes and penalties reasonably anticipated to result from the distribution;
(3) All plans maintained by the Affiliated Employers provide that the Participant's Elective Deferrals and voluntary after-tax contributions will be suspended for a period of 12 months following his receipt of a hardship distribution; and
(4) All plans maintained by the Affiliated
Employers provide that the amount of Elective Deferrals
that the Participant may make in his taxable year
immediately following the year of a hardship
distribution will not exceed the applicable limit under
Section 402(g) of the Code for the taxable year,
reduced by the amount of Elective Deferrals made by the
Participant in the taxable year of the hardship
distribution.
5.15. Special Effective Dates. If the Plan is adopted
as an amendment of an existing plan, the provisions of Sections
5.3 and Section 5.7 through 5.11 are effective as of the first
day of the first Plan Year beginning after December 31, 1986.
ARTICLE 6. LIMITATIONS ON ALLOCATIONS
6.1. No Additional Plan. 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), or an individual medical account (as defined in
Section 415(l)(2) of the Code) which provides an Annual Addition
as defined in Section 6.5(a), maintained by an Affiliated
Employer:
(a) The amount of Annual Additions (as defined in
Section 6.5(a)) which may be credited to the Participant's
Accounts for any Limitation Year will not exceed the lesser
of the Maximum Annual Additions or any other limitation
contained in this Plan. If the Employer contribution that
would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for
the Limitation Year to exceed the Maximum Annual Additions,
the amount contributed or allocated will be reduced so that
the Annual Additions for the Limitation Year will equal the
Maximum Annual Additions.
(b) Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant
on the basis of a reasonable estimation of the Participant's
Section 415 Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Additions for the Limitation Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Limitation Year.
(d) If pursuant to paragraph (c), or as a result of the reallocation of Forfeitures, or as a result of a reasonable error in determining the amount of Elective Deferrals that may be made by a Participant, the Annual Additions exceed the Maximum Annual Additions, the Excess Amount will be disposed of as follows:
(1) Any Participant Contributions and Elective Deferrals, to the extent they would reduce the Excess Amount, will be returned to the Participant.
(2) If after the application of (1) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant's Accounts 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 (1) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any Forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.
(4) If a suspense account is in existence at
any time during a Limitation Year pursuant to this
Section 6.1(d), it will participate in the allocation
of the Trust's investment gains and losses. If a
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 may not be distributed
to Participants or former Participants.
6.2. Additional Master or Prototype Plan. If in addition to this Plan a Participant is covered under another qualified Master or Prototype defined contribution plan or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(1)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer during any Limitation Year:
(a) The Annual Additions which may be credited to a Participant's Accounts under this Plan for any such Limitation Year will not exceed the Maximum Annual Additions reduced by the Annual Additions credited to a Participant's accounts 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 an Affiliated Employer are less than the Maximum Annual Additions, and the Employer contribution that would otherwise be contributed or allocated to the Participant's Accounts 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 Plan Year will equal the Maximum Annual Additions. 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 Annual Additions, no amount will be contributed or allocated to the Participant's Accounts under this Plan for the Limitation Year.
(b) Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant in the manner described in Section 6.1(b).
(c) As soon as is administratively feasible after the end of the Plan Year, the Maximum Annual Additions for the Plan Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Plan Year.
(d) If, pursuant to Section 6.2(c) or as a result of the allocation of Forfeitures, or of a reasonable error in determining the amount of Elective Deferrals that may be made by him, a Participant's Annual Additions 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 under any qualified Master or Prototype defined contribution plan, except that Annual Additions to any welfare benefit fund or individual medical account will be deemed to have 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 X and Y, where (X) is the total Excess Amount allocated as of such date, and (Y) is the ratio of: (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified Master or Prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be disposed of in the manner described in Section 6.1(d).
6.3. Additional Non-Master or Non-Prototype Plan. If the Participant is covered under another qualified defined contribution plan maintained by an Affiliated Employer which is not a Master or Prototype plan, Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with Section 6.2 as though the other plan were a Master or Prototype plan, unless the Employer provides other limitations in the Plan Agreement.
6.4. Additional Defined Benefit Plan. If an Affiliated Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with the Plan Agreement.
6.5. Definitions.
(a) Annual Additions means the sum of the following amounts credited to a Participant's Accounts for the Limitation Year:
(1) Employer contributions;
(2) For any Limitation Year beginning after
December 31, 1986, Participant Contributions;
(3) Forfeitures;
(4) Amounts allocated after March 31, 1984,
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to any individual medical account, as defined in
Section 415(1)(2) of the Code, which is part of a
pension or annuity plan maintained by an Affiliated
Employer;
(5) Amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post retirement medical benefits allocated to the separate account of a key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by an Affiliated Employer; and
(6) In a Plan that includes a CODA, Excess Elective Deferrals, Excess Contributions (including recharacterized Elective Deferrals) and Excess Aggregate Contributions.
For this purpose, any Excess Amount applied under Sections 6.1(d) or 6.2(e) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. Any rollover contribution will not be considered an Annual Addition.
(b) Section 415 Compensation means, for a
Self-Employed Individual, his Earned Income; and for any
other Participant, his "Form W-2 earnings" as defined in
Section 2.8, if the Employer has elected in item 4 of the
Plan Agreement a definition of Compensation based on "Form
W-2 earnings"; or if the Employer has not so elected, his
wages, salaries, and fees for professional services and
other amounts received for personal services actually
rendered in the course of employment with the Employer
maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements
or other expense allowances under a nonaccountable plan as
described in Income Tax Regulations Section 1.62-2(c)), and
excluding the following:
(1) Employer contributions to a plan of deferred compensation which are not includible in the Participant'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 compensations;
(2) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and
(4) 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
contributions are actually excludable from the gross
income of the Participant).
For purposes of applying the limitations of this Article 6,
Section 415 Compensation for a Limitation Year is the Section 415
Compensation actually paid or made available during such
Limitation Year.
(c) Defined Benefit Fraction means a fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Affiliated Employers, and the denominator of which is the lesser of 125% of the dollar limitation in effect for the Limitation Year under Sections 415(b) and (d) of the Code, or 140% of the Participant's Highest Average Compensation including any adjustments under Section 415(b) of the Code. Notwithstanding the foregoing, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any change in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation means $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year.
(e) Defined Contribution Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant's accounts under all the defined contribution plans (whether or not terminated) maintained by Affiliated Employers for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Affiliated Employers, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, and individual medical accounts, as defined in Section 415(l)(2) of the Code), and the denominator of which is the sum of the Maximum Annual Additions for the current and all prior Limitation Years of service with the Affiliated Employers (regardless of whether a defined contribution plan was maintained by any Affiliated Employer). The Maximum Annual Additions in any Plan Year is the lesser of 125% of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code, or 35% of the Participant's Section 415 Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined contribution plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to product of the excess of the sum of the fractions over 1.0, multiplied by the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat 100% of nondeductible Employee contributions as Annual Additions.
(f) Excess Amount means, with respect to any Participant, the amount by which Annual Additions exceed the Maximum Annual Additions.
(g) Highest Average Compensation means the average compensation for the three consecutive Years of Service with the Employer that produces the highest average. A Year of Service with the Employer is the period of 12 consecutive months specified as the Limitation Year in the Plan Agreement.
(h) Limitation Year means the period of 12 consecutive months specified in the Plan Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different period of 12 consecutive months, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made.
(i) Master or Prototype plan means a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service.
(j) Maximum Annual Additions, which is the maximum
annual addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year,
means an amount not exceeding the lesser of (a) the Defined
Contribution Dollar Limitation or (b) 25% of the Participant's
Section 415 Compensation for the Limitation Year. The
compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits (within the meaning of Section
401(h) or Section 419A(f)(2) of the Code) which is otherwise
treated as an Annual Addition under Section 415(l)(1) or Section
419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Annual Additions will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction:
number of months in the short Limitation Year
(k) Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight 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 employment
until normal retirement age under the Plan (or current
age, if later), and
(2) The Participant's Section 415
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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.
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS
7.1. Retirement. After his Retirement, the amount credited to a Participant's Accounts will be distributed to him in accordance with Article 9. The termination of a Participant's employment with the Affiliated Employers after he has (i) attained the normal retirement age specified in the Plan Agreement, (ii) fulfilled the requirements for early retirement (if any) specified in the Plan Agreement, or (iii) become Disabled will constitute his Retirement. Upon a Participant's Retirement (or, if earlier, his attainment of the normal retirement age specified in the Plan Agreement or fulfillment of the requirements for early retirement, if any, specified in the Plan Agreement) the Participant's Accounts shall become fully vested, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant who separates from service with any vested balance in his Accounts, after satisfying the service requirements for early retirement (if any is specified in the Plan Agreement) but before satisfying the age requirement for early retirement (if any is specified in the Plan Agreement), shall be entitled to a fully vested early retirement benefit upon his satisfaction of such age requirement.
7.2. Death. If a Participant dies before the distribution
of his Accounts has been completed, his Beneficiary will be
entitled to distribution of benefits in accordance with Article
9. A Participant's Accounts will become fully vested upon his
death before termination of his employment with the Affiliated
Employers, regardless of the vesting schedule specified by the
Employer in the Plan Agreement.
A Participant may designate a Beneficiary by completing and returning to the Plan Administrator a form provided for this purpose. The form most recently completed and returned to the Plan Administrator before the Participant's death shall supersede any earlier form. If a Participant has not designated any Beneficiary before his death, or if no Beneficiary so designated survives the Participant, his Beneficiary shall be his surviving spouse, or if there is no surviving spouse, his estate. A married Participant may designate a Beneficiary other than his spouse only if his spouse consents in writing to the designation, and the spouse's consent acknowledges the effect of the consent and is witnessed by a notary public or a representative of the Plan. The beneficiary or beneficiaries named in the designation to which the spouse has so consented may not be changed without further written spousal consent unless the terms of the spouse's original written consent expressly permit such a change, and acknowledge that the spouse voluntarily relinquishes the right to limit the consent to a specific beneficiary. The marriage of a Participant shall nullify any designation of a beneficiary previously executed by the Participant. If it is established to the satisfaction of the Plan Administrator that the Participant has no spouse or that the spouse cannot be located, the requirement of spousal consent shall not apply. Any spousal consent, or establishment that spousal consent cannot be obtained, shall apply only to the particular spouse involved.
7.3. Other Termination of Employment. A Participant whose employment terminates for any reason other than his Retirement or death will be entitled to distribution, in accordance with Article 9, of benefits equal to the amount of the vested balance of his Accounts as determined under Article 8.
ARTICLE 8. VESTING
8.1. Vested Balance. The vested balance of a Participant's Accounts will be determined as follows:
(a) General Rule. A Participant's Participant Contribution Account and Rollover Account shall be fully vested at all times. The vested portion of his Employer Contribution Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates. The vesting schedule specified in the Plan Agreement applies to all benefits within the meaning of Section 411(a)(7) of the Code, except those attributable to Participant Contributions.
(b) Special Rules for CODA. In a Plan that includes a CODA, a Participant's Elective Deferral Account, Qualified Nonelective Account, and Qualified Matching Account shall be fully vested at all times. The vested portion of his Employer Matching Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates.
(c) Retirement. All of a Participant's Accounts shall become fully vested upon his Retirement or his earlier attainment of early retirement age (if any) or the normal retirement age elected by the Employer in the Plan Agreement.
For so long as a former Employee does not receive a distribution (or a deemed distribution) of the vested portion of his Accounts, the undistributed portion shall be held in a separate account which shall be invested pursuant to Section 13.3 and shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants.
8.2. Vesting of Accounts of Returned Former Employees. The following rules apply in determining the vested portion of the Accounts of a Participant who incurs one or more consecutive One- Year Vesting Breaks and then returns to employment with an Affiliated Employer:
(a) If the Participant incurred fewer than five consecutive One-Year Vesting Breaks, then all of his Years of Service will be taken into account in determining the vested portion of his Accounts, as soon as he has completed one Year of Service following his return to employment.
(b) If the Participant incurred five or more
consecutive One-Year Vesting Breaks, then:
(1) (No Year of Service completed after his
return to employment will be taken into account in
determining the vested portion of his Accounts as of
any time before he incurred the first One-Year Vesting
Break;
(2) Years of Service completed before he incurred the first One-Year Vesting Break will not be taken into account in determining the vested portion of his Accounts as of any time after his return to employment (i) unless some portion of his Employer Contribution Account or Employer Matching Account had become vested before he incurred the first One-Year Vesting Break, and (ii) until he has completed one Year of Service following his return to employment; and
(3) Separate sub-accounts will be maintained
for the Participant's pre-break and post-break Employer
Contribution Account and Employer Matching Account,
until both sub-accounts become fully vested. Both
sub-accounts will share in the earnings and losses of
the Trust Fund.
8.3. Forfeiture of Non-Vested Amounts. The portion of
aformer Employee's Accounts that has not become vested under
Section 8.1 shall become a Forfeiture in accordance with the
following rules, and shall be reallocated in accordance with
Section 4.2, Section 4.3 or Article 5 (whichever applies) no
later than the end of the Plan Year in which it becomes a
Forfeiture.
(a) If Distribution Is Made. If any or all of the vested portion of a Participant's Accounts is distributed in accordance with Section 9.1 or 9.2 before the Participant incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture in the Plan Year in which the distribution occurs. For purposes of this Section 8.3, if the value of the vested portion of a Participant's Accounts is zero, he shall be deemed to have received a distribution of the entire vested balance of his Accounts on the day his employment terminates. If the Participant elects to have distributed less than the entire vested portion of his Employer Contribution Account or Employer Matching Accounts, the part of the nonvested portion that will become a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of the entire vested portion of such Accounts.
(b) Right of Repayment. If a Participant who receives a distribution pursuant to paragraph (a) returns to employment with an Affiliated Employer, the balance of his Employer Contribution Account and Employer Matching Account will be restored to the amount of such balance on the date of distribution, if he repays to the Plan the full amount of the distribution, before the earlier of (i) the fifth anniversary of his return to employment or (ii) the date he incurs five consecutive One-Year Vesting Breaks following the date of distribution. If an Employee is deemed to receive a distribution pursuant to this Section 8.3, and he resumes employment covered under this Plan before the date he incurs five consecutive One-Year Vesting Breaks, upon his reemployment the Employer-derived account balance of the Employee will be restored to the amount on the date of such deemed distribution. Such restoration will be made, first, from the amount of any Forfeitures available for reallocation as of the last day of the Plan Year in which repayment is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(f).
(c) If No Distribution Is Made. If no distribution (or deemed distribution) is made to a Participant before he incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture at the end of the Plan Year that constitutes his fifth consecutive One-Year Vesting Break.
(d) Adjustment of Accounts. Before a Forfeiture is incurred, a Participant's Accounts shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants.
(e) Accumulated Deductible Contributions. For Plan Years beginning before January 1, 1989, a Participant's vested Account balance shall not include accumulated deductible contributions within the meaning of Section 72(o)(5)(B) of the Code.
8.4. Special Rule in the Event of a Withdrawal. If a withdrawal pursuant to Section 12.2 or 12.3 is made from a Participant's Employer Contribution Account or Employer Matching Account before the Account is fully vested, and the Participant may increase the vested percentage in the Account, then a separate account will be established at the time of the withdrawal, and at any relevant time after the withdrawal the vested portion of the separate account will be equal to the amount "X" determined by the following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the withdrawal.
8.5. Vesting Election. If the Plan is amended to change any vesting schedule, or is amended in any way that directly or indirectly affects the computation of a Participant's vested percentage, each Participant who has completed not less than three Years of Service may elect, within a reasonable period after the adoption of the amendment or change, in a writing filed with the Employer to have his vested percentage computed under the Plan without regard to such amendment. For a Participant who is not credited with at least one Hour of Service in a Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting
"five Years of Service" for "three Years of Service." 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) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or (c) 60 days
after the Participant is issued written notice of the amendment
by the Employer.
ARTICLE 9. PAYMENT OF BENEFITS
9.1. Distribution of Accounts. A Participant or Beneficiary who has become eligible for a distribution of benefits pursuant to Article 7 may elect to receive such benefits at any time, subject to the terms and conditions of this Article 9, Article 10 and Article 11. Unless a Participant or Beneficiary elects otherwise, distribution of benefits will begin no later than the 60th day after the end of the Plan Year in which the latest of the following events occurs:
(a) The Participant attains age 65 (or if earlier, the normal retirement age specified by the Employer in the Plan Agreement); or
(b) The tenth anniversary of the year in which the Participant commenced participation in the Plan; or
(c) The Participant's employment with the Affiliated Employers terminates. A Beneficiary who is the surviving spouse of a Participant may elect to have distribution of benefits begin within the 90-day period following the Participant's death.
For purposes of this Section 9.1, the failure of a
Participant (and his spouse, if spousal consent is required
pursuant to Article 10) to consent to a distribution while a
benefit is "immediately distributable" within the meaning of
Section 9.2 shall be considered an election to defer commencement
of payment. If the Employer has so specified in the Plan
Agreement, the vested portion of a Participant's Accounts will be
distributed in a lump sum in cash no later than 60 days after the
end of the Plan Year in which his employment terminates, if at
the time the Participant first became entitled to a distribution
the value of such vested portion derived from Employer and
Employee contributions does not exceed $3,500. Commencement of
distributions in any case shall be subject to Section 9.4.
9.2. Restriction on Immediate Distributions. A Participant's account balance is considered "immediately distributable" if any part of the account balance could be distributed to the Participant (or his surviving spouse) before the Participant attains, or would have attained if not deceased, the later of the normal retirement age specified in the Plan Agreement or age 62.
(a) If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and his spouse (or where either the Participant or the spouse has died), the survivor must consent to any such distribution, unless an exception described in paragraph (b) applies. The consent of the Participant and his spouse shall be obtained in writing within the 90-day period ending on the annuity starting date, which is the first day of the first period for which an amount is paid as an annuity (or any other form). The Plan Administrator shall notify the Participant and the spouse, no less than 30 days and no more than 90 days before the annuity starting date, 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 of the optional forms of benefit available under the Plan and an explanation of their relative values, in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the required notification is given, provided that:
(1) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and
(2) the Participant, after receiving the notice, affirmatively elects a distribution.
(b) Notwithstanding paragraph (a), only the
Participant need consent to the commencement of a
distribution in the form of a 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 10.1(b) 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 spouse shall be required to the extent that a
distribution is required to satisfy Section 401(a)(9) or
Section 415 of the Code. In addition, upon termination of
the Plan, if the Plan does not offer an annuity option
purchased from a commercial provider), and no Affiliated
Employer maintains another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code), a Participant's account balance
shall be distributed to the Participant without his consent.
If any Affiliated Employer maintains another defined
contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), a
Participant's account balance shall be transferred to that
defined contribution plan without his consent, unless he
consents to an immediate distribution. 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(o)(5)(B) of
the Code.
9.3. Optional Forms of Distribution. Provided that the
Employer has so elected in the Plan Agreement, if at the time a
Participant first becomes entitled to a distribution the value of
his vested Account balance derived from Employer and Employee
contributions does not exceed $3,500, distribution shall be made
in a lump sum in cash. Subject to the preceding sentence and to
the rules of Article 10 concerning joint and survivor annuities,
a Participant or Beneficiary may elect to receive benefits in any
of the following optional forms:
(a) A lump sum payment in cash or in kind or in a combination of both;
(b) A series of installments over a period certain that meets the requirements of Article 11; or
(c) A nontransferable annuity contract, purchased by the Plan Administrator from a commercial provider, with terms complying with the requirements of Article 11; provided, however, that an annuity for the life of any person shall be available as an optional form of distribution only if the Employer has so elected in the Plan Agreement.
(d) In the event that the Plan is adopted as an
amendment to an existing plan, each optional form of
distribution available under the existing plan shall be made
available under the Plan, and may be made available where
necessary through the purchase by the Plan Administrator of
an appropriate annuity contract in accordance with paragraph
(c). If the Plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, target benefit
plan, stock bonus plan, or profit sharing plan which is
subject to the survivor annuity requirements of
Sections 401(a)(11) and 417 of the Code, the provisions of
Article 10 shall apply.
9.4. Distribution Procedure. The Trustee shall make or
commence distributions to or for the benefit of Participants only
on receipt of an order from the Employer in writing or by such
other means as shall be acceptable to the Trustee, certifying
that a distribution of a Participant's benefits is payable
pursuant to the Plan, and specifying the time and manner of
payment. The amount to be distributed shall be determined as of
the Valuation Date coincident with or next following the
Employer's order. The Trustee shall be fully protected in acting
upon the directions of the Employer in making benefit
distributions, and shall have no duty to determine the rights or
benefits of any person under the Plan or to inquire into the
right or power of the Employer to direct any such distribution.
The Trustee shall be entitled to assume conclusively that any
determination by the Employer with respect to a distribution
meets the requirements of the Plan. The Trustee shall not be
required to make any payment hereunder in excess of the net
realizable value of the assets of the Account in question at the
time of such payment, nor to make any payment in cash unless the
Employer has furnished instructions as to the assets to be
converted to cash for the purposes of making payment.
9.5. Lost Distributee. In the event that the
PlanAdministrator is unable with reasonable effort to locate a
person entitled to distribution under the Plan, the Accounts
distributable to such a person shall become a Forfeiture at the
end of the third Plan Year after the Plan Administrator's efforts
to locate such person began; provided, however, that the amount
of the Forfeiture shall be restored in the event that such person
thereafter submits a claim for benefits under the Plan. Such
restoration will be made, first, from the amount of Forfeitures
available for reallocation as of the last day of the Plan Year in
which the claim is made, to the extent thereof; and to the extent
that Forfeitures are not available or are insufficient to restore
the balance, from contributions made by the Employer pursuant to
Section 4.1(f). A Forfeiture occurring under this Section 9.5
shall be reallocated as though it were an Employer contribution.
9.6. Direct Rollovers. This Section 9.6 applies to distributions made on or after January 1, 1993. 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 Section 9.6, the following definitions shall apply:
(a) 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 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 distributees and the distributee's Designated Beneficiary (as defined in Section 11.3), 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, and 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).
(b) 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 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. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.
(c) 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 Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are distributees with regard to the interest of the spouse or former spouse.
(d) Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
9.7. Distributions Required by a Qualified Domestic
Relations Order. To the extent required by a Qualified Domestic
Relations Order, the Plan Administrator shall make distributions
from a Participant's Accounts to any alternate payee named in
such order in a manner consistent with the distribution options
otherwise available under the Plan, regardless of whether the
Participant is otherwise entitled to a distribution at such time
under the Plan.
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS
10.1. Applicability.
(a) Generally. The provisions of Sections 10.2 through 10.5 shall generally apply to a Participant who is credited with at least one Hour of Service on or after August 23, 1984, and such other Participants as provided in Section 10.6.
(b) Exception for Certain Plans. The provisions of
Sections 10.2 through 10.5 shall not apply to a Participant if:
(i) the Participant does not or cannot elect payment of benefits
in the form of a life annuity, and (ii) on the death of the
Participant, his Vested Account Balance will be paid to his
surviving spouse (unless there is no surviving spouse, or the
surviving spouse has consented to the designation of another
Beneficiary in a manner conforming to a Qualified Election) and
the surviving spouse may elect to have distribution of the Vested
Account Balance (adjusted in accordance with Section 13.4 for
gains or losses occurring after the Participant's death) commence
within the 90-day period following the date of the Participant's
death. The Participant may waive the spousal death benefit
described in this paragraph (b) at any time, provided that no
such waiver shall be effective unless it satisfies the conditions
applicable under Section 10.4(c) to a Participant's waiver of a
Qualified Preretirement Survivor Annuity. The exception in this
paragraph (b) shall not be operative with respect to a
Participant in a profit sharing plan if the Plan:
(1) Is a direct or indirect transferee of a defined benefit plan, money purchase pension plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code; or
(2) Is adopted as an amendment of a plan that did not qualify for the exception in this paragraph (b) before the amendment was adopted.
For purposes of this paragraph (b), Vested Account Balance shall have the meaning provided in Section 10.4(f). The provisions of Sections 10.2 through 10.6 set forth the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code.
(c) Exception for Certain Amounts. The provisions of
Sections 10.2 through 10.5 shall not apply to any
distribution made on or after the first day of the first
Plan Year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated
deductible employee contributions as defined in Section
72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan or a target
benefit plan, provided that the exceptions applicable to
certain profit sharing plans under paragraph (b) are
applicable with respect to the separate account (for this
purpose, Vested Account Balance means the Participant's
separate account balance attributable solely to accumulated
deductible employee contributions within the meaning of
Section 72(o)(5)(B) of the Code).
10.2. Qualified Joint and Survivor Annuity. Unless an
optional form of benefit is selected pursuant to a Qualified
Election within the 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 life annuity. In either case, the Participant may
elect to have such an annuity distributed upon his attainment of
the Earliest Retirement Age under the Plan.
10.3. Qualified Preretirement Survivor Annuity. Unless
an optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, the Vested Account
Balance of a Participant who dies before the Annuity Starting
Date shall be applied toward the purchase of an annuity for the
life of his surviving spouse (a "Qualified Preretirement Survivor
Annuity"). The surviving spouse may elect to have such an
annuity distributed within a reasonable period after the
Participant's death. For purposes of this Article 10, the term
"spouse" means the current spouse or surviving spouse of a
Participant, except 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.
10.4. Definitions. The following definitions apply:
(a) "Election Period" means the period beginning on
the first day of the Plan Year in which a Participant
attains age 35 and ending on the date of the Participant's
death. If a Participant separates from service before the
first day of the Plan Year in which he reaches age 35, the
Election Period with respect to his account balance as of
the date of separation shall begin on the date of
separation. A Participant who will not attain age 35 as of
the end of a 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 35. Such an election shall not be valid
unless the Participant receives a written explanation of the
Qualified Preretirement Survivor Annuity in such terms as
are comparable to the explanation required under Section
10.5. Qualified Preretirement Survivor Annuity coverage
will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new
waiver on or after that date shall be subject to the full
requirements of this article.
(b) "Earliest Retirement Age" means the earliest date on which the Participant could elect to receive Retirement benefits under the Plan.
(c) "Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any such waiver shall not be effective unless: (1) the Participant's spouse consents in writing to the waiver; (2) the waiver designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent); (3) the spouse's consent acknowledges the effect of the waiver; and (4) 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 waiver designates a form of benefit payment which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent). If it 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 these provisions (and any establishment that the consent of a spouse may not be obtained) shall be effective only with respect to the particular spouse involved. A consent that permits designations by the Participant without any requirement of further consent by the spouse must acknowledge that the spouse has the right to limit the 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 those rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at 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 Section 10.5.
(d) "Qualified Joint and Survivor Annuity" means an immediate annuity for the life of a Participant, with a survivor annuity for the life of the spouse which is not less than 50% and not more than 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 that can be purchased with the Participant's Vested Account Balance. The percentage of the survivor annuity under the Plan shall be 50%.
(e) "Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity (or any other form).
(f) "Vested Account Balance" means the aggregate value of the Participant's vested account balance 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 10 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.
(g) "Straight life annuity" means an annuity payable
in equal installments for the life of the Participant that
terminates upon the Participant's death.
10.5. Notice Requirements. In the case of a Qualified
Joint and Survivor Annuity, no less than 30 days and no more than
90 days before a Participant's Annuity Starting Date the Plan
Administrator shall provide to him a written explanation of (i)
the terms and conditions of a Qualified Joint and Survivor
Annuity, (ii) the Participant's right to make, and the effect of,
an election to waive the Qualified Joint and Survivor Annuity
form of benefit, (iii) the rights of the Participant's spouse,
and (iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity.
In the case of a Qualified Preretirement Survivor Annuity, within the applicable period for a Participant the Plan Administrator shall provide to him a written explanation of the Qualified Preretirement Survivor Annuity, in terms and manner comparable to the requirements applicable to the explanation of a Qualified Joint and Survivor Annuity as described in the preceding paragraph. 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 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after an individual becomes a Participant; (iii) a reasonable period ending after this Article 10 first applies to the Participant. Notwithstanding the foregoing, in the case of a Participant who separates from service before attaining age 35, notice must be provided within a reasonable period ending after his separation from service.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described in
(ii) and (iii) is the end of the two-year period beginning one
year before the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates
from service before the Plan Year in which he reaches age 35,
notice shall be provided within the two-year period beginning one
year before the separation and ending one year after the
separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for the
Participant shall be redetermined.
10.6. Transitional Rules.
(a) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the preceding Sections of this Article 10, must be given the opportunity to elect to have those Sections apply if the Participant is credited with at least one Hour of Service under the Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and the Participant had at least ten years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under the Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with paragraph (d) of this Section 10.6.
(c) The respective opportunities to elect (as described in paragraphs (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to be paid to those Participants.
(d) Any Participant who has so elected pursuant to paragraph (b) of this Section 10.6, and any Participant who does not elect under paragraph (a), or who meets the requirements of paragraph (a) except that he does not have at least ten years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements, if his benefits would otherwise have been payable in the form of a life annuity:
(1) Automatic joint and survivor annuity. If
benefits in the form of a life annuity become payable
to a married Participant who:
(A) begins to receive payments
|
under the Plan on or after normal retirement age; or
(B) dies on or after normal retirement age while still working for the Employer; or
(C) begins to receive payments on or after the qualified early retirement age; or
(D) separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits;
then such benefits will be received under the Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period, which must begin at least six months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time.
(2) Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect during the election period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment.
(3) For purposes of this Section 10.6, qualified early retirement age is the latest of the earliest date under the Plan on which the Participant may elect to receive Retirement benefits, the first day of the 120th month beginning before the Participant reaches normal retirement age, or the date the Participant begins participation.
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS
11.1. General Rules. Subject to Article 10, Joint and
Survivor Annuity Requirements, the requirements of this Article
11 shall apply to any distribution of a Participant's interest
and will take precedence over any inconsistent provisions of the
Plan. Unless otherwise specified, the provisions of this Article
11 apply to calendar years beginning after December 31, 1984.
All distributions required under this Article 11 shall be
determined and made in accordance with the Income Tax Regulations
issued under Section 401(a)(9) of the Code (including proposed
regulations, until the adoption of final regulations), including
the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
11.2. Required Beginning Date. The entire interest of a Participant must be distributed, or begin to be distributed, no later than the Participant's required beginning date, determined as follows.
(a) General Rule. 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 70 1/2.
(b) Transitional Rules. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (1) or (2) below:
(1) Non-5% owners. The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of his Retirement or his attainment of age 70 1/2 occurs.
(2) 5% owners. The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of:
(A) the calendar year in which the Participant attains age 70 1/2, or
(B) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant who is not a 5% owner, who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990.
(c) Rules for 5% Owners. A Participant is treated as
a 5% owner for purposes of this Section 11.2 if he is a 5%
owner as defined in Section 416(i) of the Code (determined
in accordance with Section 416 but without regard to whether
the Plan is top heavy) at any time during the Plan Year
ending with or within the calendar year in which he attains
age 66 1/2, or any subsequent Plan Year. Once distributions
have begun to a 5% owner under this Section 11.2, they must
continue, even if the Participant ceases to be a 5% owner in
a subsequent year.
11.3. Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions not made in a single
sum may be made only over one or a combination of the following
periods:
(a) the life of the Participant,
(b) the life of the Participant and his 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 his Designated Beneficiary.
"Designated Beneficiary" means the individual who is
designated as the Beneficiary under the Plan in accordance with
Section 401(a)(9) of the Code and the regulations issued
thereunder (including proposed regulations, until the adoption of
final regulations) and Section 7.2.
"Distribution Calendar Year" means a calendar year for which a minimum distribution is required under Section 401(a)(9) of the Code and this Section 11.3. For distributions 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 11.5.
"Life Expectancy" and "Joint and Last Survivor Expectancy" are 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 his spouse, in the case of distributions described in Section 11.5(b)) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Any such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy of a nonspouse beneficiary may not be recalculated.
11.4. Determination of Amount to Be Distributed Each
Year. If the Participant's 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. Paragraphs
(a) through (d) apply to distributions in forms other than the
purchase of an annuity contract.
(a) If a Participant's Benefit is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and his Designated Beneficiary, or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar 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.
(b) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant.
(c) 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 (1) the Applicable Life Expectancy or
(2) 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 Income
Tax Regulations. Distributions after the death of the
Participant shall be distributed using the Applicable Life
Expectancy in paragraph (a) above as the relevant divisor,
without regard to Proposed Regulations Section 1.401(a)(9)-2.
(d) 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.
(e) If the Participant's Benefit is distributed in the form of an annuity contract 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 regulations issued thereunder (including proposed regulations, until the adoption of final regulations).
"Applicable Life Expectancy" means 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 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. If annuity payments commence in accordance with Section 11.4(e) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest in the Plan, the applicable calendar year is the year of purchase.
"Participant's Benefit" means the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year), increased by the amount of any contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. For purposes of the preceding sentence, 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 Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year.
11.5. Death Distribution Provisions.
(a) Distribution Beginning before Death. If the Participant dies after distribution of his interest has begun, the remaining portion of his interest will continue to be distributed at least as rapidly as under the method of distribution being used before the Participant's death.
(b) Distribution Beginning after Death. If the Participant dies before distribution of his interest begins, distribution of his entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death, except to the extent that an election is made to receive distributions in accordance 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 Designated Beneficiary's 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; or
(2) If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this
Section 11.5 by the time of his 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
11.5, or (ii) December 31 of the calendar year which contains the
fifth 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 anniversary of the Participant's death.
(c) For purposes of paragraph (b), if the surviving spouse dies after the Participant, but before payments to the spouse begin, the provisions of paragraph (b), with the exception of subparagraph (2) therein, shall be applied as if the surviving spouse were the Participant.
(d) For purposes of this Section 11.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse of the Participant if the amount becomes payable to the surviving spouse when the child reaches the age of majority.
(e) For the purposes of this Section 11.5,
distribution of a Participant's interest is considered to begin
on the Participant's required beginning date (or, if paragraph
(c) above is applicable, the date distribution is required to
begin to the surviving spouse pursuant to paragraph (b) above).
If distribution in the form of an annuity contract described in
Section 11.4(e) irrevocably commences to the Participant before
the required beginning date, the date distribution is considered
to begin is the date distribution actually commences.
11.6. Transitional Rule. Notwithstanding the other requirements of this Article 11, and subject to the requirements of Article 10, Joint and Survivor Annuity Requirements, distribution on behalf of any Participant, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the Trust under Section 401(a)(9) of the Internal Revenue Code of 1954 as in effect before its amendment by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of the Employee.
(c) The designation specified in paragraph (b) was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984.
(d) The Employee had accrued a benefit under the Plan as of December 31, 1983.
(e) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority.
A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary to whom such distribution is being made will be presumed to have designated the method of distribution under which the distribution is being made, if the method of distribution was specified in writing and the distribution satisfies the requirements in paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution must satisfy the requirements of Section 401(a)(9) of the Code and the regulations thereunder. If a designation is revoked after the date distributions are required to begin, the Trust must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Section 401(a)(9) of the Code and the regulations thereunder, but for the designation described in paragraphs (b) through (e). For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any changes in the designation generally will be considered to be a revocation of the designation, but the mere substitution or addition of another beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as the substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case of an amount transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l of the Proposed Income Tax Regulations shall apply.
ARTICLE 12. WITHDRAWALS AND LOANS
12.1. Withdrawals from Participant Contribution
Accounts. Subject to the requirements of Article 10, a
Participant may upon written notice (or in such other manner as
shall be made available and agreed upon by the Employer and
Putnam) to the Employer withdraw any amount from his Participant
Contribution Account. A withdrawn amount may not be repaid to
the Plan. No Forfeiture will occur solely as a result of an
Employee's withdrawal of Participant Contributions.
12.2. Withdrawals on Account of Hardship. If the
Employer has so elected in the Plan Agreement, upon a
Participant's written request (or in such other manner as shall
be made available and agreed upon by the Employer and Putnam),
the Plan Administrator may permit a withdrawal of funds from the
vested portion of the Participant's Accounts on account of the
Participant's financial hardship, which must be demonstrated to
the satisfaction of the Plan Administrator. In considering such
requests, the Plan Administrator shall apply uniform standards
that do not discriminate in favor of Highly Compensated
Employees. In a Plan with a CODA, if hardship withdrawals are
permitted from both the Employer Contribution Account and the
Elective Deferral Account, they shall be made first from a
Participant's Employer Contribution Account and thereafter from a
Participant's Elective Deferral Account, subject to the
additional requirements set forth in Section 5.14. The
requirements of Section 5.14(b), (c), (d)(1) and (d)(2) shall
also apply to hardship distributions from a Participant's
Employer Contribution Account and Employer Matching Account. In
a Plan with a CODA, if hardship withdrawals are permitted from
more than one of the Elective Deferral Account, Employer Matching
Account, and Employer Contribution Account, they shall be made
first from a Participant's Employer Contribution Account, and
thereafter from the Employer Matching Account, and finally from
the Elective Deferral Account, subject to the additional
requirements of Section 5.14. A withdrawn amount may not be
repaid to the Plan.
12.3. Withdrawals After Reaching Age 59 1/2. If so
specified by the Employer in the Plan Agreement, a Participant
who has reached age 59 1/2 may upon written request to the Employer
(or in such other manner as shall be made available and agreed
upon by the Employer and Putnam) withdraw during his employment
any amount not exceeding the vested balance of his Accounts. A
withdrawn amount may not be repaid to the Plan.
12.4. Loans. If the Employer has so elected in the Plan
Agreement, the Employer may direct the Trustee to make a loan to
a Participant or Beneficiary from the vested portion of his
Accounts, subject to the following terms and conditions and to
such reasonable additional rules and regulations as the Plan
Administrator may establish for the orderly operation of the
program:
(a) The Plan Administrator shall administer the loan program subject to the terms and conditions of this Section 12.4.
(b) A Participant's or Beneficiary's request for a loan shall be submitted to the Plan Administrator by means of a written application on a form supplied by the Plan Administrator (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). Applications shall be approved or denied by the Plan Administrator on the basis of its assessment of the borrower's ability to collateralize and repay the loan, as revealed in the loan application.
(c) Loans shall be made to all Participants and
Beneficiaries on a reasonably equivalent basis. Loans shall not
be made available to Highly Compensated Employees (as defined in
Section 414(q) of the Code) in amounts greater than the amounts
made available to other Employees (relative to the borrower's
Account balance).
(d) Loans must be evidenced by the Participant's promissory note for the amount of the loan payable to the order of the Trustee, and adequately secured by assignment of not more than fifty percent (50%) of the Participant's entire right, title and interest in and to the Trust Fund, exclusive of any asset as to which Putnam is not the Trustee.
(e) Loans must bear a reasonable interest rate comparable to the rate charged by commercial lenders in the geographical area for similar loans. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates is justified by conditions that would customarily be taken into account by a commercial lender in the Employer's geographical area.
(f) The period for repayment for any loan shall not exceed five years, except in the case of a loan used to acquire a dwelling unit which within a reasonable time is to be used as the principal residence of the Participant, in which case the repayment period shall not exceed ten years. The terms of a loan shall require that it be repaid in level payments of principal and interest not less frequently then quarterly throughout the repayment period, except that alternative arrangements for repayment may apply in the event that the borrower is on unpaid leave of absence for a period not to exceed one year.
(g) To the extent that a Participant would be required under Article 10 to obtain the consent of his spouse to a distribution of an immediately distributable benefit other than a Qualified Joint and Survivor Annuity, the consent of the Participant's spouse shall be required for the use of his Account as security for a loan. The spouse's consent must be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured, and obtained in accordance with the requirements of Section 10.4(c) for a Qualified Election. Any such consent shall thereafter be binding on the consenting spouse and
any subsequent spouse of the Participant. A new consent shall be required for use of the Account as security for any extension, renewal, renegotiation or revision of the original loan.
(h) If valid spousal consent has been obtained in accordance with Section 12.4(g), then notwithstanding any other provision of the 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. If less than 100% of the Participant's vested 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 vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse.
(i) In the event of default on a loan by a Participant
who is an active Employee, foreclosure on the Participant's
Account as security will not occur until the Employer has
reported to the Trustee the occurrence of an event permitting
distribution from the Plan in accordance with Article 9 or
Section 5.13.
(j) No loan shall be made to an Owner-Employee or a Shareholder-Employee unless a prohibited transaction exemption is obtained by the Employer.
(k) No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated.
(1) Loans shall be considered investments directed by a Participant pursuant to Section 13.3. The amount loaned shall be charged solely against the Accounts of the Participant, and repaid amounts and interest shall be credited solely thereto.
12.5. Procedure; Amount Available. Withdrawals and loans shall be made subject to the terms and conditions applicable to distributions pursuant to Section 9.4, except that the amount of any withdrawal or loan shall be determined by reference to the vested balance of the Participant's Account as of the most recent Valuation Date preceding the withdrawal or loan, and shall not exceed the amount of the vested account balance.
12.6. Protected Benefits. Notwithstanding any provision
to the contrary, if an Employer amends an existing retirement
plan ("prior plan") by adopting this Plan, to the extent any
withdrawal option or form of payment available under the prior
plan is an optional form of benefit within the meaning of Code
Section 411(d)(6), such option or form of payment shall continue
to be available to the extent required by such Code Section.
12.7. Restrictions Concerning Transferred Assets. Notwithstanding any provision to the contrary, if an Employer amends an existing defined benefit or money purchase pension plan ("prior pension plan") by adopting this Plan, accrued benefits attributable to the assets and liabilities transferred from the prior pension plan (which accrued benefits include the account balance of such Participant in the Plan attributable to such accrued benefits as of the date of the transfer and any earnings on such account balance subsequent to the transfer) shall be distributable only on or after the events upon which distributions are or were permissible under the prior pension plan.
ARTICLE 13. TRUST FUND AND INVESTMENTS
13.1. Establishment of Trust Fund. The Employer and the Trustee hereby agree to the establishment of a Trust Fund consisting of all amounts as shall be contributed or transferred from time to time to the Trustee pursuant to the Plan, and all earnings thereon. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan, and no such assets shall ever revert to the Employer, except that:
(a) contributions made by the Employer by mistake of fact, as determined by the Employer, may be returned to the Employer within one (1) year of the date of payment,
(b) contributions that are conditioned on their deductibility under Section 404 of the Code may be returned to the Employer, to the extent disallowed, within one (1) year of the disallowance of the deduction,
(c) contributions that are conditioned on the initial qualification of the Plan under the Code, and all investment gains attributable to them, may be returned to the Employer within one (1) year after such qualification is denied by determination of the Internal Revenue Service, but only if an application for determination of such qualification is made within the time prescribed by law for filing the Employer's federal income tax return for its taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe, and
(d) amounts held in a suspense account may be returned to the Employer on termination of the Plan, to the extent that they may not then be allocated to any Participant's Account in accordance with Article 6.
All Employer contributions under the Plan other than those made pursuant to Section 4.1(f) are hereby expressly conditioned on the initial qualification of the Plan and their deductibility under the Code. Investment gains attributable to contributions returned pursuant to Subsections (a) and (b) shall not be returned to the contributing Employer, and investment losses attributable to such contributions shall reduce the amount returned.
13.2. Management of Trust Fund. Except to the extent of any investment in Policies pursuant to Article 14, the assets of the Trust Fund shall be held in trust by the Trustee and accounted for in accordance with this Article 13, and shall be invested in accordance with Section 13.3 in the Investment Products specified by the Employer in the Plan Agreement and from time to time thereafter in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). The Employer shall have the exclusive authority and discretion to select the Investment Products available under the Plan. In making that selection, the Employer shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Employer shall cause the available Investment Products to be diversified sufficiently to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. It is especially intended that the Trustee shall have no discretionary authority to determine the investment of Trust assets. Notwithstanding the foregoing, assets of the Trust Fund shall also be invested in Employer Stock if so elected by the Employer and agreed to by Putnam under the service agreement executed by the Employer and Putnam pursuant to the establishment of the Plan.
13.3. Investment Instructions. Except as Article 14 may apply, all amounts held in the Trust Fund under the Plan shall be invested in Investment Products. If the Employer has elected in the Plan Agreement to make investment decisions with respect to Elective Deferrals, Participant Contributions, Rollover Contributions, Profit Sharing and other Employer Contributions, Employer Matching Contributions, Deductible Employee Contributions, Qualified Matching Contributions and/or Qualified Nonelective Contributions, investment instructions as to the Accounts for such contributions shall be the fiduciary responsibility of the Employer, and each of such affected Accounts shall have a pro rata interest in all assets of the Trust (other than Policies under Article 14) to which the Employer's instructions apply. To the extent the Employer has not elected to make investment decisions for all of the Accounts of the Plan, then assets of the Trust over which the Employer has not elected to make investment decisions shall be invested solely in accordance with the instructions of the Participant to whose Accounts they are allocable, as delivered to Putnam in accordance with its service agreement with the Employer. Instructions shall apply to future contributions, past accumulations, or both, according to their terms, and shall be communicated by the Employer to Putnam in accordance with procedures prescribed in the service agreement between the Employer and Putnam. Instructions shall be effective prospectively, coincident with or within a reasonable time after their receipt in good order by Putnam. An instruction once received shall remain in effect until it is changed by the provision of a new instruction. New instructions shall be accepted by Putnam at the time and in the manner provided in the Plan Agreement. To the extent any assets of the Trust are to be invested solely in accordance with the instructions of the Participants, the Plan is intended to constitute a plan described in section 404(c) of ERISA and Title 29 of the Code of Federal Regulations section 2550.404c-1. In such case, the Employer shall be the Plan fiduciary responsible for providing the Participants with all information required to be given pursuant to ERISA section 404(c) and Title 29 of the Code of Federal Regulations section 2550.404c-1.
In the event that the Employer adopts a Putnam prototype plan as an amendment to or restatement of an existing plan, the Employer shall specify one or more Investment Products to serve as the sole investments for all Participants' Accounts during the period in which existing records of the Plan are transferred to the Recordkeeper. During that period, new investment instructions as to existing assets of the Plan cannot be carried out, nor can distributions be made from the Plan except to the extent permitted under the terms of the
service agreement between the Employer and Putnam. The Employer and the Recordkeeper shall use their best efforts to minimize the duration of the period to which the preceding sentence applies.
To the extent specifically authorized and provided in the service agreement between the Employer and Putnam, the Employer may direct the Trustee to establish as an Investment Product a fund all of the assets of which shall be invested in shares of stock of the Employer that constitute "qualifying employer securities" within the meaning of section 407(d)(5) of ERISA ("Employer Stock"). The Plan Administrator as named fiduciary shall continually monitor the suitability of acquiring and holding Employer Stock under the fiduciary duty rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2) of ERISA) and the requirements of section 404(c) of ERISA, and shall be responsible for ensuring that the procedures relating to the purchase, holding and sale of Employer Stock, and the exercise of any and all rights with respect to such Employer Stock shall be in accordance with section 404(c) of ERISA unless the Employer retains voting, tender or similar rights with respect to the Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the direction of the Plan Administrator with respect to the acquisition and holding of Employer Stock. The Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Plan Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting and tender or retention of Employer Stock.
Putnam shall be under no duty to question or review the investment directions given by the Employer or to make suggestions to the Employer in connection therewith. Putnam shall not be liable for any loss, or by reason of any breach, that arises from the Employer's exercise or non-exercise of rights under this Article 13, or from any direction of the Employer unless it is clear on the face of the direction that the actions to be taken under the direction are prohibited by the fiduciary duty rules of Section 404(a) of ERISA. All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of, securities or other property held in an investment fund shall be credited to and reinvested in such investment fund, and all expenses of the Trust that are properly allocated to a particular investment fund shall be so allocated and charged. The Employer may at any time direct Putnam to eliminate any investment fund or funds, and Putnam shall thereupon dispose of the assets of such investment fund and reinvest the proceeds thereof in accordance with the directions of the Employer.
Neither the Employer nor the Trustee nor Putnam shall be responsible for questioning any instructions of a Participant or for reviewing the investments selected therein, or for any loss resulting from instructions of a Participant or from the failure of a Participant to provide or to change instructions. Neither Putnam nor the Trustee shall have any duty to question any instructions received from the Employer or a Participant or to review the investments selected thereby, nor shall Putnam or the Trustee be responsible for any loss resulting from instructions received from the Employer or a Participant or from the failure of the Employer or a Participant to provide or to change instructions. In the event that Putnam or the Trustee receives a contribution under the Plan as to which no instructions are delivered, or such instructions as are delivered are unclear to Putnam or the Trustee, such contribution shall be invested until clear instructions are received in the default investment option set forth in the service agreement between the Employer and Putnam, or if no such option is so set forth, the Employer, by execution of the Plan Agreement, shall affirmatively elect to have such contributions invested in the Putnam Money Market Fund. Neither Putnam nor the Trustee shall have any discretionary authority or responsibility in the investment of the assets of the Trust Fund.
13.4. Valuation of the Trust Fund. As of each Valuation
Date, the Trustee shall determine the fair market value of the
Trust Fund, and the net earnings or losses and expenses of the
Trust Fund for the period elapsed since the most recent previous
Valuation Date shall be allocated among the Accounts of
Participants. Earnings, losses and expenses which pertain to
investments which are specifically held for a given Participant's
Account shall be allocated solely to that Account. In the event
that an investment is not specifically held for a given
Participant's Account, the earnings, losses and expenses
pertaining to that investment shall be allocated among all
Participants' Accounts in the ratio that each such Account bears
to the total of all Accounts of all Participants. Each
Participant's Accounts shall be adjusted pursuant to this Section
13.4 until such time as they are either fully distributed or
forfeited, regardless of whether the Participant continues to be
an Employee.
13.5. Distributions on Investment Company Shares.
Subject to Section 9.3, all dividends and capital gains or other
distributions received on any Investment Company Shares credited
to Participant's Account will (unless received in additional
Investment Company Shares) be reinvested in full and fractional
shares of the same Investment Company at the price determined as
provided in the then current prospectus of the Investment
Company. The shares so received or purchased upon such
reinvestment will be credited to such accounts. If any dividends
or capital gain or other distributions may be received on such
Investment Company Shares at the election of the shareholder in
additional shares or in cash or other property, the Trustee will
elect to receive such dividends or distributions in additional
Investment Company Shares.
13.6. Registration and Voting of Investment Company
Shares. All Investment Company Shares shall be registered in the
name of the Trustee or its nominee. Subject to any requirements
of applicable law, the Trustee will transmit to the Employer
copies of any notices of shareholders' meetings, proxies and
proxy-soliciting materials, prospectuses and the annual or other
reports to shareholders, with respect to Investment Company
Shares held in the Trust Fund. The Trustee shall act in
accordance with directions received from Participants or the
Employer, as the case may be, with respect to matters to be voted
upon by the shareholders of the Investment Company. Such
directions must be in writing on a form approved by the Trustee,
signed by the addressee and delivered to the Trustee within the
time prescribed by it. The Trustee will not vote Investment
Company Shares as to which it receives no written directions.
13.7. Investment Manager. The Employer, with the consent of Putnam, may appoint an investment manager, as defined in Section 3(38) of the Employee Retirement Income Security Act of 1974, with respect to all or a portion of the assets of the Trust Fund. The Trustee shall have no liability in connection with any action or nonaction pursuant to directions of such an investment manager.
13.8. Employer Stock.
(a) Voting Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(a) shall govern the voting of Employer Stock held by Putnam as Trustee under the Plan. The Trustee shall vote Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of Employer Stock and shall direct the Trustee as to the voting of Employer Stock in accordance with the provisions of this Section 13.8(a). In either case, the Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting of Employer Stock. The remainder of this Section 13.8(a) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the voting of Employer Stock. For purposes of this Section 13.8(a), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock.
When the issuer of Employer Stock files preliminary proxy solicitation materials with the Securities and Exchange Commission, the Employer shall cause a copy of all the materials to be simultaneously sent to the Trustee, and the Trustee shall prepare a voting instruction form based upon these materials. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the number of full and fractional shares of Employer Stock credited to the Participant's accounts, whether or not vested. For purposes of this Section 13.8(a), the number of shares of Employer Stock deemed credited to a Participant's accounts shall be determined as of the date of record determined by the Employer for which an allocation has been completed and Employer Stock has actually been credited to Participant's accounts. Procedures for the execution of purchases and sales of Employer Stock shall be as set forth in the service agreement between the Employer and Putnam. The Employer shall provide the Trustee with a copy of any materials provided to Participants and shall certify to the Trustee that the materials have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee as to the manner in which to vote that number of shares of Employer Stock held under the Plan (whether or not vested) equal to a fraction, of which the numerator is the number of shares of Employer Stock credited to his Account and the denominator is the number of shares of Employer Stock credited to all Participants' Accounts. Such directions shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) and shall be held in confidence by the Trustee and not divulged to the Employer, or any officer or employee thereof, or any other persons. Upon its receipt of directions, the Trustee shall vote the shares of Employer Stock as directed by the Participant. The Trustee shall not vote those shares of Employer Stock credited to the Accounts of Participants for which no voting directions are received. With respect to shares of Employer Stock held in the Trust which are not credited to a Participant's Account, the Plan Administrator shall retain the status of named fiduciary and shall direct the voting of such Employer Stock.
(b) Tendering Rights. Notwithstanding any other
provision of the Plan, the provisions of this Section 13.8(b)
shall govern the tendering of Employer Stock by Putnam as Trustee
under the Plan. In the event of a tender offer, the Trustee
shall tender Employer Stock in accordance with the directions of
the Employer unless the Employer has elected in the Plan
Agreement that Participants shall be appointed named fiduciaries
as to the tendering of Employer Stock in accordance with the
provisions of this Section 13.8(b). The remainder of this
Section 13.8(b) applies only if the Employer elects in the Plan
Agreement that Participants shall direct the Trustee as to the
tendering of Employer Stock. For purposes of this Section
13.8(b), the term "Participant" includes any Beneficiary with an
Account in the Plan which is invested in Employer Stock.
Upon commencement of a tender offer for any Employer Stock, the Employer shall notify each Plan Participant, and use its best efforts to distribute timely or cause to be distributed to Participants the same information that is distributed to shareholders of the issuer of Employer Stock in connection with the tender offer, and after consulting with the Trustee shall provide at the Employer's expense a means by which Participants may direct the Trustee whether or not to tender the Employer Stock credited to their accounts (whether or not vested). The Employer shall provide to the Trustee a copy of any material provided to Participants and shall certify to the Trustees that the materials have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock credited to his accounts. Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) as is agreed upon by the Trustees and the Employer. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock credited to his accounts may, at any time before the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer before the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that he may give to the Trustee. The Trustee shall not tender shares of Employer Stock credited to a Participant's accounts for which it has received no directions from the Plan Participant. The Trustee shall tender that number of shares of Employer Stock not credited to Participants' accounts determined by multiplying the total number of such shares by a fraction, the numerator of which is the number of shares of Employer Stock credited to Participants' accounts for which the Trustee has received directions from Participants to tender (which directions have not been withdrawn as of the date of this determination), and the denominator of which is the total number of shares of Employer Stock credited to Participants' accounts.
A direction by a Participant to the Trustee to tender shares of Employer Stock credited to his accounts shall not be considered a written election under the Plan by the Participant to withdraw or to have distributed to him any or all of such shares. The Trustee shall credit to each account of the Plan Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that account. Pending receipt of directions through the Administrator from the Participant as to the investment of the proceeds of the tendered shares, the Trustee shall invest the proceeds as the Administrator shall direct. To the extent that any Participant gives no direction as to the tendering of Employer stock that he has the right to direct under this Section 13.8(a), the Trustee shall not tender such Employer Stock.
(c) Other Rights. With respect to all rights in
connection with Employer Stock other than the right to vote and
the right to tender, Participants are hereby appointed named
fiduciaries to the same extent (if any) as provided in the
foregoing paragraphs of this Section 13.8 with regard to the
right to vote, and the Trustee shall follow the directions of
Participants and the Plan Administrator with regard to the
exercise of such rights to the same extent as with regard to the
right to vote.
13.9. Insurance Contracts. If so provided in the Plan
Agreement, the Plan Administrator may direct the Trustee to
receive and hold or apply assets of the Trust to the purchase of
individual or group insurance or annuity contracts ("policies" or
"contracts") issued by any insurance company and in a form
approved by the Plan Administrator (including contracts under
which the contract holder is granted options to purchase
insurance or annuity benefits), or financial agreements which are
backed by group insurance or annuity contracts ("financial
agreements"). If such investments are to be made, the Plan
Administrator shall direct the Trustee to execute and deliver
such applications and other documents as are necessary to
establish record ownership, to value such policies, contracts or
financial agreements under the method of valuation selected by
the Plan Administrator, and to record or report such values to
the Plan Administrator or any investment manager selected by the
Plan Administrator, in the form and manner agreed to by the Plan
Administrator.
The Plan Administrator may direct the Trustee to exercise or may exercise directly the powers of contract holder under any policy, contract or financial agreement, and the Trustee shall exercise such powers only upon direction of the Plan Administrator. The Trustee shall have no authority to act in its own discretion, with respect to the terms, acquisition, valuation, continued holding and/or disposition of any such policy, contract or financial agreement or any asset held thereunder. The Trustee shall be under no duty to question any direction of the Plan Administrator or to review the form of any such policy, contract or financial agreement or the selection of the issuer thereof, or to make recommendations to the Plan Administrator or to any issuer with respect to the form of any such policy, contract or financial agreement.
The Trustee shall be fully protected in acting in accordance with written directions of the Plan Administrator, and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. In the event that the Plan Administrator directs that any monies or property be paid or delivered to the contract holder other than for the benefit of specific individual beneficiaries, the Trustee agrees to accept such monies or property as assets of the Trust subject to all the terms hereof.
13.10 Registration and Voting of Non-Putnam Investment
Company Shares. All shares of registered investment companies
other than Investment Companies shall be registered in the name
of the Trustee or its nominee. Subject to any requirements of
applicable law and to the extent provided in an agreement between
Putnam and a third party investment provider, the Trustee shall
transmit to the Employer copies of any notices of shareholders'
meetings, proxies or proxy-soliciting materials, prospectuses or
the annual or other reports to shareholders, with respect to
shares of registered investment companies other than Investment
Companies held in the Trust Fund. Notwithstanding any other
provision of the Plan, the Trustee shall vote shares of
registered investment companies other than Investment Companies
in accordance with the directions of the Employer unless the
Employer has elected in the Plan Agreement that Participants
shall be appointed named fiduciaries as to the voting of such
shares. Directions as to voting such shares must be in writing
on a form approved by the Trustee or such other manner acceptable
to the Trustee, signed by the addressee and delivered to the
Trustee within the time prescribed by it. The Trustee shall vote
those shares of registered investment companies other than
Investment Companies for which no voting directions are received
in the same proportion as it votes those shares for which it has
received voting directions.
ARTICLE 14. INSURANCE POLICIES
14.1. Purchase of Insurance Policies. At the time of establishment of the Plan, if elected by the Employer and agreed to by Putnam under the service agreement executed by the Employer and Putnam pursuant to the establishment of the Plan, the Employer shall purchase for each Participant such Policy or Policies, if any, as a Participant shall request and annually thereafter such additional Policies as a Participant shall request, subject to the limitations of Section 14.2. All Policies shall have the same day and month of issue, insofar as reasonably possible. The premiums on all Policies shall be paid at the same intervals (for example, annually, semi-annually, quarterly or monthly), but the interval may be changed with respect to all Policies from time to time.
14.2. Limitation on Premiums. The premiums paid for
Policies in respect of any Participants shall be limited so that
premiums paid on any ordinary insurance Policies (that is,
Policies with both nonincreasing premiums and nondecreasing death
benefits) on the life of the Participant shall be 49% or less of
the Employer's total contributions for the Participant (and
Forfeitures allocated and amounts reapplied to his Employer
Contribution Account), and premiums paid on term insurance
Policies on the life of the Participant shall be less than 25% of
such amount; provided that if both ordinary life insurance
Policies and term Policies are purchased for any Participant, the
total premiums on term Policies plus one-half the premiums on
ordinary life Policies shall be less than 25% of such amount. If
at any time the total premiums to be paid by the Employer for a
Participant shall equal or exceed the above limitations, then the
life insurance coverage of that Participant shall be reduced so
that the total premiums shall not equal or exceed the
limitations. The required reduction shall be made by changing
all or a portion of the life insurance on the Participant to paid-
up life insurance or by cancelling all or a portion of any term
life insurance.
14.3. Policy Options. At the election of the
Participant covered hereunder, a Policy may contain a waiver of
premium disability benefit provision or a provision for
additional indemnity in the event of accidental death, or both,
if available on the type of Policy selected and if permitted by
the insurer.
14.4. Insurability. If any Participant who has elected
that a Policy be purchased is found by the insurer not to be
insurable at standard rates, the Employer shall, if permitted by
the rules of the insurer, purchase a similar Policy which
provides a lesser death benefit and which can be purchased for
the same premium.
14.5. Dividends on Policies. Dividends and other credits payable on any Policy shall be applied to the purchase of additional benefits under the Policy unless the Participant requests that they be applied in reduction of premiums.
14.6. Trustee of Policy. Upon direction by the Plan
Administrator, the Insurance Trustee shall apply for and be the
owner of each Policy purchased under the terms of the Plan. Each
Policy must provide that proceeds will be payable to the
Insurance Trustee; however, the Insurance Trustee shall be
required to pay over all such proceeds to the Participant's
Beneficiary in accordance with the distribution provisions of the
Plan including, without limitation, Section 10.3. Under no
circumstances shall the Trust retain any part of the proceeds.
In the event of any conflict between the terms of the Plan and
the terms of any Policy purchased hereunder, the Plan provisions
shall control. The Insurance Trustee shall be fully protected in
acting in accordance with written instructions of the Plan
Administrator and shall be under no liability for any loss of any
kind which may result by reason of any action taken or omitted by
it in accordance with any direction of the Plan Administrator, or
by reason of inaction in the absence of written directions from
the Plan Administrator.
14.7. Obligations with Respect to Policies. Except as
may be otherwise provided in any conditional or binding receipt
issued by an insurer, there shall be no coverage and no death
benefit payable under any Policy to be purchased from such
insurer until such Policy shall have been delivered and the
premium therefor shall have been paid. The Employer and the
Insurance Trustee shall not have any responsibility as to the
effectiveness of any Policy purchased from an insurer, nor shall
either of them have any liability or obligation to pay any amount
to any Participant or his beneficiary by reason of any failure or
refusal by the insurer to make such payment.
14.8. Distribution of Proceeds on Participant's Death.
In the event of the death of a Participant before the conversion
provided for in Section 14.9, there shall be payable to the
beneficiary named in any Policy on his life the benefits provided
by the terms of such Policy.
14.9. Conversion of Policies. Except as provided in
Section 19.3, if any Policies of a Participant (other than
retirement income, endowment or annuity Policies) are held for
his benefit at the time distribution is to commence, the Policies
may be converted by the Insurance Trustee into cash, paid to the
Trustee, credited to the Employer Contribution Account of the
Participant, invested in accordance with the written instructions
of the Employer (and if no such instructions have been given or
if such instructions are not clear, invested in Investment
Company Shares in the same proportion as the most recent
contributions to the Participant's Accounts) and distributed
pursuant to Article 9, subject to the terms and conditions of
Article 10. Retirement income, endowment or annuity Policies
will be distributed directly to the Participant at the time
distribution is to commence.
14.10. Conflict with Policies. In the event of any
conflict between the terms of the Plan and the terms of any
Policies hereunder, the Plan provisions shall control.
14.11. Insurance Loans to Owner-Employees. If an Owner- Employee or Shareholder-Employee receives, either directly or indirectly, any amount from an insurer as a loan under a Policy, the amount so received shall be considered a distribution under the Plan. Any assignment or pledge (or agreement to assign or pledge) by an Owner-Employee or Shareholder-Employee of any interest in the Plan shall be considered a distribution of such interest.
ARTICLE 1. TOP-HEAVY PLANS
15.1. Superseding Effect. For any Plan Year beginning
after December 31, 1983, in which Plan is determined to be a Top-
Heavy Plan under Section 15.2(b), the provisions of this Article
15 will supersede any conflicting provisions in the Plan or the
Plan Agreement.
15.2. Definitions. For purposes of this Article 15, the
terms below shall be defined as follows:
(a) Key Employee means any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the determination period was: (1) an officer of the
Employer having annual compensation greater than 50% of the
amount in effect under Section 415(b)(1)(A) of the Code; (2)
an owner (or considered an owner under Section 318 of the
Code) of one of the ten largest interests in the Employer
having annual compensation exceeding the dollar limitation
under Section 415(c)(1)(A) of the Code; (3) a 5% owner of
the Employer; or (4) a 1% owner of the Employer having
annual compensation of more than $150,000. Annual
compensation means compensation satisfying the definition
elected by the Employer in item 4 of the Plan Agreement, but
including amounts contributed by the Employer pursuant to a
salary reduction agreement which are excludable from the
Employee's gross income under Section 125, Section
402(a)(8), Section 402(h) or Section 403(b) of the Code.
The determination period is the Plan Year containing the
Determination Date and the four preceding Plan Years. The
determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the
Regulations thereunder.
(b) Top-Heavy: The Plan is Top-Heavy for any Plan Year beginning after December 31, 1983, if any of the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans.
(2) If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds 60%.
(3) If this plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of Plans and the Top-Heavy Ratio for the Permissive Aggregation group exceeds 60%.
(c) Top-Heavy Ratio means the following:
(1) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer has not maintained any qualified defined benefit plan which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder.
(2) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer maintains or has maintained one or more qualified defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the Present Value of accrued benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated qualified defined contributions plan or plans for all Participants, determined in accordance with (1) above, and the Present Value of accrued benefits under the qualified defined benefit plan or plans for all Participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12-month period ending on the Determination Date; except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and accrued benefits of a Participant (A) who is not a Key Employee but who was a Key Employee in a prior Plan Year, or (B) who has not been credited with at least one Hour of Service for the Employer during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible Employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.
The accrued benefit of a Participant other
than a Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by
the Employer, or (b) if there is no such method, as if
such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of
Section 411(b)(1)(C) of the Code.
(d) Permissive Aggregation Group means the Required Aggregation Group of plans plus any other qualified plan or plans (or simplified employee pension plan) of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code.
(e) Required Aggregation Group means (i) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated) and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of Section 401(a)(4) or 410 of the Code.
(f) Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the Determination Date is the last day of that Plan Year.
(g) Valuation Date means the last day of the Plan Year.
(h) Present Value means present value based only on
the interest and mortality rates specified by the Employer
in the Plan Agreement.
15.3. Minimum Allocation.
(a) Except as otherwise provided in paragraphs (c) and
(d) below, the Employer contributions and Forfeitures
allocated on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of 3% of such
Participant's Earnings, or in the case where the Employer
has no defined benefit plan which designates this Plan to
satisfy Section 401 of the Code, the largest percentage of
Employer contributions and Forfeitures, as a percentage of
the Key Employee's Earnings, allocated on behalf of any Key
Employee for that year. The minimum allocation is
determined without regard to any Social Security
contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would
have received a lesser allocation of the Employer's
contributions and Forfeitures for the Plan Year because of
(1) the Participant's failure to be credited with at least
1,000 Hours of Service, or (2) the Participant's failure to
make mandatory Employee contributions to the Plan, or (3)
the Participant's receiving Earnings less than a stated
amount. Neither Elective Deferrals, Employer Matching
Contributions nor Qualified Matching Contributions for non-
Key Employees shall be taken into account for purposes of
satisfying the requirement of this Section 15.3(a).
(b) For purposes of computing the minimum allocation,
Earnings will mean Section 415 Compensation as defined in
Section 6.5(b) of the Plan.
(c) The provision in paragraph (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year.
(d) The provision in paragraph (a) above shall not apply to any Participant to the extent he is covered under any other plan or plans of the Employer, and the Employer has provided in the Plan Agreement that the minimum allocation requirement applicable to Top-Heavy Plans will be met in the other plan or plans. Notwithstanding the foregoing, if the Employer has adopted Putnam paired plans (as described in Section 4.6) and the Participant is eligible to participate in both paired plans, the minimum allocation described in paragraph (a) shall be provided by the Putnam Money Purchase Pension Plan.
(e) The minimum allocation required (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Sections 411(a)(3)(B) or (D) of the Code.
15.4. Adjustment of Fractions. For any Plan Year in
which the Plan is Top-Heavy, the Defined Benefit Fraction and the
Defined Contribution Fraction in Article 6 shall each be computed
using 100% of the dollar limitations specified in Sections
415(b)(1)(A) and 415(c)(1)(A) instead of 125%. The foregoing
requirement shall not apply if the Top-Heavy Ratio does not
exceed 90% and the Employer has elected in the Plan Agreement to
provide increased minimum allocations or benefits satisfying
Section 416(h)(2) of the Code.
15.5. Minimum Vesting Schedules. For any Plan Year in
which this Plan is Top-Heavy and for any subsequent Plan Year, a
minimum vesting schedule will automatically apply to the Plan, as
follows:
(a) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule 100% immediate vesting, the Three-Year Cliff, Five-Year Graded or Six-Year Graded schedule, then the schedule selected in the Plan Agreement shall continue to apply for any Plan Year to which this Section 15.5 applies.
(b) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Five-Year Cliff schedule, then the Three-Year Cliff schedule shall apply in any Plan Year to which this Section 15.5 applies.
(c) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Seven-Year Graded schedule, then the Six-Year Graded schedule shall apply in any Plan Year to which this Section 15.5 applies.
(d) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule a schedule other than those described in paragraphs (a), (b) and (c), then the Top- Heavy schedule specified by the Employer in the Plan Agreement for this purpose shall apply in any Plan Year to which this Section 15.5 applies.
The minimum vesting schedule applies to all benefits within the meaning of Section 411(a)(7) of the Code except those attributable to Participant Contributions, including benefits accrued before the effective date of Section 416 of the Code and benefits accrued before the Plan became Top-Heavy. Further, no reduction in a Participant's nonforfeitable percentage may occur in the event the Plan's status as Top-Heavy changes for any Plan Year. However, the vested portion of the Profit Sharing Contribution Account of any Employee who does not have an Hour of Service after the Plan has initially become Top-Heavy will be determined without regard to this Section 15.5.
ARTICLE 16. ADMINISTRATION OF THE PLAN
16.1. Plan Administrator. The Plan shall be
administered by the Employer, as Plan Administrator and Named
Fiduciary within the meaning of ERISA, under rules of uniform
application; provided, however, that the Plan Administrator's
duties and responsibilities may be delegated to a person
appointed by the Employer or a committee established by the
Employer for that purpose, in which case the committee shall be
the Plan Administrator and Named Fiduciary. The members of such
a committee shall act by majority vote, and may by majority vote
authorize any one or ones of their number to act for the
committee. The person or committee (if any) initially appointed
by the Employer may be named in the Plan Agreement, but the
Employer may remove any such person or committee member by
written notice to him, and any such person or committee may
resign by written notice to the Employer, without the necessity
of amending the Plan Agreement. To the extent permitted under
applicable law, the Plan Administrator shall have the sole
authority to enforce the terms hereof on behalf of any and all
persons having or claiming any interest under the Plan, and shall
be responsible for the operation of the Plan in accordance with
its terms. The Plan Administrator shall have discretionary
authority to determine all questions arising out of the
administration, interpretation and application of the Plan, all
of which determinations shall be conclusive and binding on all
persons. The Plan Administrator, in carrying out its
responsibilities under the Plan, may rely upon the written
opinions of its counsel and on certificates of physicians.
Subject to the provisions of the Plan and applicable law, the
Plan Administrator shall have no liability to any person as a
result of any action taken or omitted hereunder by the Plan
Administrator.
16.2. Claims Procedure. Claims for participation in or
distribution of benefits under the Plan shall be made in writing
to the Plan Administrator, or an agent designated by the Plan
Administrator whose name shall have been communicated to all
Participants and other persons as required by law. If any claim
so made is denied in whole or in part, the claimant shall be
furnished promptly by the Plan Administrator with a written
notice:
(a) setting forth the reason for the denial,
(b) making reference to pertinent Plan provisions,
(c) describing any additional material or information from the claimant which is necessary and why, and
(d) explaining the claim review procedure set forth herein.
Within 60 days after denial of any claim for participation or distribution under the Plan, the claimant may request in writing a review of the denial by the Plan Administrator. Any claimant seeking review hereunder shall be entitled to examine all pertinent documents and to submit issues and comments in writing. The Plan Administrator shall render a decision on review hereunder; provided, that if the Plan Administrator determines that a hearing would be appropriate, its decision on review shall be rendered within 120 days after receipt of the request for review. The decision on review shall be in writing and shall state the reason for the decision, referring to the Plan provisions upon which it is based.
16.3. Employer's Responsibilities. The Employer shall be responsible for:
(a) Keeping records of employment and other matters containing all relevant data pertaining to any person affected hereby and his eligibility to participate, allocations to his Accounts, and his other rights under the Plan;
(b) Periodic, timely filing of all statements, reports and returns required to be filed by ERISA;
(c) Timely preparation and distribution of disclosure
materials required by ERISA;
(d) Providing notice to interested parties as required
by Section 7476 of the Code;
(e) Retention of records for periods required by law; and
(f) Seeing that all persons required to be bonded on account of handling assets of the Plan are bonded.
16.4. Recordkeeper. The Recordkeeper is hereby designated as agent of the Employer under the Plan to perform directly or through agents certain ministerial duties in connection with the Plan, in particular:
(a) To keep and regularly furnish to the Employer a detailed statement of each Participant's Accounts, showing contributions thereto by the Employer and the Participant, Investment Products purchased therewith, earnings thereon and Investment Products purchased therewith, and each redemption or distribution made for any reason, including fees or benefits; and
(b) To the extent agreed between the Employer and the
Recordkeeper, to prepare for the Employer or to assist the
Employer to prepare such returns, reports or forms as the
Employer shall be required to furnish to Participants and
Beneficiaries or other interested persons and to the
Internal Revenue Service or the Department of Labor; all as
may be more fully set forth in a service agreement executed
by the Employer and the Recordkeeper. If the Employer does
not appoint another person or entity as Recordkeeper, the
Employer itself shall be the Recordkeeper.
16.5. Prototype Plan. Putnam is the sponsor of the
Putnam Basic Plan Document, a prototype plan approved as to form
by the Internal Revenue Service. Provided that an Employer's
adoption of the Plan is made known to and accepted by Putnam in
accordance with the Plan Agreement, Putnam will inform the
Employer of amendments to the prototype plan and provide such
other services in connection with the Plan as may be agreed
between Putnam and the Employer. Putnam may impose for its
services as sponsor of the prototype plan such fees as it may
establish from time to time in a fee schedule addressed to the
Employer. Such fees shall, unless paid by the Employer, be paid
from the Trust Fund, and shall in that case be charged pro rata
against the Accounts of all Participants. The Trustee is
expressly authorized to cause Investment Products to be sold or
redeemed for the purpose of paying such fees.
ARTICLE 17. TRUSTEE AND INSURANCE TRUSTEE
17.1. Powers and Duties of the Trustee. The Trustee
shall have the authority, in addition to any authority given by
law, to exercise the following powers in the administration of
the Trust:
(a) To invest all or a part of the Trust Fund in
Investment Products in accordance with the investment
instructions delivered by the Employer pursuant to Section
13.3, without restriction to investments authorized for
fiduciaries, including without limitation any common,
collective or commingled trust fund maintained by the
Trustee (or any other such fund, acceptable to Putnam and
the Trustee, that qualifies for exemption from federal
income tax pursuant to Revenue Ruling 81-100). Any
investment in, and any terms and conditions of, any such
common, collective or commingled trust fund available only
to employee trusts which meet the requirements of the Code,
or corresponding provisions of subsequent income tax laws of
the United States, shall constitute an integral part of this
Agreement;
(b) If Putnam and the Trustee have consented thereto in writing, to invest without limit in stock of the Employer or any affiliated company;
(c) To dispose of all or part of the investments, securities or other property which may from time to time or at any time constitute the Trust Fund in accordance with the written directions furnished by the Employer for the investment of Participants' separate Accounts or the payment of benefits or expenses of the Plan, and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance therefore, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money;
(d) To hold cash uninvested to the extent necessary to pay benefits or expenses of the Plan;
(e) To follow the directions of an investment manager appointed pursuant to Section 13.7;
(f) To cause any investment of the Trust Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund;
(g) Upon written direction of or through the Employer,
to vote in person or by proxy (in accordance with Section
13.6 and, in the case of stock of the Employer, at the
direction of the Employer or Participants in accordance with
Section 13.8) with respect to all securities that are part
of the Trust Fund;
(h) To consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Trust Fund according to the terms of the Plan;
(i) Upon the written direction of the Employer, to make loans from the Trust Fund to Participants in amounts and on terms approved by the Plan Administrator in accordance with the provisions of the Plan; provided that the Employer shall have the sole responsibility for computing and collecting all loan repayments required to be made under the Plan; and
(j) To pay from the Trust Fund all taxes imposed or levied with respect to the Trust Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax assessment, claim or demand respecting the Trust Fund or any part thereof.
17.2. Limitation of Responsibilities. Except as may otherwise be required under applicable law, neither the Trustee nor the Insurance Trustee nor any of their respective agents shall have any responsibility for:
(a) Determining the correctness of the amount of any contribution for the sole collection or payment of contributions, which shall be the sole responsibility of the Employer;
(b) Loss or breach caused by any Participant's exercise of control over his Accounts, which shall be the sole responsibility of the Participant;
(c) Loss or breach caused by the Employer's exercise of control over Accounts pursuant to Section 13.3, which shall be the sole responsibility of the Employer;
(d) Sums paid to an insurer or the validity of any Policy or the accuracy of information provided by an insurer, which shall be the sole responsibility of the insurer;
(e) Performance of any other responsibilities not specifically allocated to them under the Plan.
17.3. Fees and Expenses. The Trustee's fees for
performing its duties hereunder shall be such reasonable amounts
as shall be established by the Trustee from time to time in a fee
schedule addressed to the Employer. Such fees, any taxes of any
kind which may be levied or assessed upon or in respect of the
Trust Fund and any and all expenses reasonably incurred by the
Trustee shall, unless paid by the Employer, be paid from the
Trust Fund and shall, unless allocable to the Accounts of
specific Participants, be charged pro rata against the Accounts
of all Participants. The Trustee is expressly authorized to
cause Investment Products to be sold or redeemed for the purpose
of paying such amounts. Charges and expenses incurred in
connection with a specific Investment Product, unless allocable
to the Accounts of specific Participants, shall be charged pro
rata against the Accounts of all Participants for whose benefit
amounts have been invested in the specific Investment Product.
17.4. Reliance on Employer. The Trustee and its agents
(and the Insurance Trustee, if any) shall rely upon any decision
of the Employer, or of any person authorized by the Employer,
purporting to be made pursuant to the terms of the Plan, and upon
any information or statements submitted by the Employer or such
person (including those relating to the entitlement of any
Participant to benefits under the Plan), and shall not inquire as
to the basis of any such decision or information or statements,
and shall incur no obligation or liability for any action taken
or omitted in reliance thereon. The Trustee and its agents shall
be entitled to rely on the latest written instructions received
from the Employer as to the person or persons authorized to act
for the Employer hereunder, and to sign on behalf of the Employer
any directions or instructions, until receipt from the Employer
of written notice that such authority has been revoked.
17.5. Action Without Instructions. If the Trustee
receives no instructions from the Employer in response to
communications sent by registered or certified mail to the
Employer at its last known address as shown on the books of the
Trustee, then the Trustee may make such determinations with
respect to administrative matters arising under the Plan as it
considers reasonable, notwithstanding any prior instructions or
directions given by or on behalf of the Employer, but subject to
any instruction or direction given by or on behalf of the
Participants. To the extent permitted by applicable law, any
determination so made will be binding on all persons having or
claiming any interest under the Plan or Trust, and the Trustee
will incur no obligation or responsibility for any such
determination made in good faith or for any action taken pursuant
thereto. In making any such determination the Trustee may
require that it be furnished with such relevant documents as it
reasonable considers necessary.
17.6. Advice of Counsel. The Trustee and the Insurance
Trustee may each consult with legal counsel (who may, but need
not be, counsel for the Employer) concerning any questions which
may arise with respect to their respective rights and duties
under the Plan, and the opinion of such counsel shall be full and
complete protection to the extent permitted by applicable law in
the respect of any action taken or omitted by the Trustee or the
Insurance Trustee, as the case may be, hereunder in accordance
with the opinion of such counsel.
17.7. Accounts. The Trustee shall keep full accounts of
all receipts and disbursements which pertain to investments in
Investment Products, and the Trustee and the Insurance Trustee
shall each keep accounts of such other transactions as it is
required to perform hereunder. Within a reasonable time
following the close of each Plan Year, or upon its removal or
resignation or upon termination of the Trust and at such other
times as may be appropriate, each shall render to the Employer
and any other persons as may be required by law an account of its
administration of the Plan and Trust during the period since the
last previous such accounting, including such information as may
be required by law. The written approval of any account by the
Employer and all other persons to whom an account is rendered
shall be final and binding as to all matters and transactions
stated or shown therein, upon the Employer and Participants and
all persons who then are or thereafter become interested in the
Trust. The failure of the Employer or any other person to whom
an account is rendered to notify the party rendering the account
within 60 days after the receipt of any account of his or its
objection to the account shall be the equivalent of written
approval. If the Employer or any other person to whom an account
is rendered files any objections within such 60-day period with
respect to any matters or transactions stated or shown in the
account and the Employer or such other person and the party
rendering the account cannot amicably settle the questions raised
by such objections, the party rendering the account and the
Employer or such person shall have the right to have such
questions settled by judicial proceedings, although the Employer
or such other person to whom an account is rendered shall have,
to the extent permitted by applicable law, only 60 days from
filing of written objection to the account to commence legal
proceedings. Nothing herein contained shall be construed so as
to deprive the Trustee or the Insurance Trustee of the right to
have a judicial settlement of its accounts. In any proceeding
for a judicial settlements of any account or for instructions,
the only necessary parties shall be the Trustee, the Insurance
Trustee, the Employer and persons to whom an account is required
by law to be rendered.
17.8. Access to Records. The Trustee and the Insurance
Trustee shall give access to their respective records with
respect to the Plan at reasonable times and on reasonable notice
to any person required by law to have access to such records.
17.9. Successors. Any corporation into which the
Trustee may merge or with which it may consolidate or any
corporation resulting from any such merger or consolidation shall
be the successor of the Trustee without the execution or filing
of any additional instrument or the performance of any further
act.
17.10. Persons Dealing with Trustee or Insurance Trustee.
No person dealing with the Trustee or the Insurance Trustee shall
be bound to see to the application of any money or property paid
or delivered to such party or to inquire into the validity or
propriety of any transactions.
17.11. Resignation and Removal; Procedure. The Trustee or
the Insurance Trustee may resign at any time by giving 60 days'
written notice to the Employer and to Putnam. The Employer may
remove the Trustee or the Insurance Trustee at any time by giving
60 days' written notice to the party removed and to Putnam. In
any case of resignation or removal hereunder, the period of
notice may be reduced to such shorter period as is satisfactory
to the Trustee, the Insurance Trustee and the Employer.
Notwithstanding anything to the contrary herein, any resignation
hereunder shall take effect at the time notice thereof is given
if the Employer may no longer participate in the prototype Plan
and is deemed to have an individually designed plan at the time
notice is given.
17.12. Action of Trustee Following Resignation or Removal.
When the resignation or removal of the Trustee becomes effective,
the Trustee shall perform all acts necessary to transfer the
Trust Fund to its successor. However, the Trustee may reserve
such portion of the Trust Fund as it may reasonably determine to
be necessary for payment of its fees and any taxes and expenses,
and any balance of such reserve remaining after payment of such
fees, taxes and expenses shall be paid over to its successor.
The Trustee shall have no responsibility for acts or omissions
occurring after its resignation becomes effective.
17.13. Action of Insurance Trustee Following Resignation or
Removal. When the Insurance Trustee's resignation or removal
becomes effective, the Insurance Trustee shall perform all acts
necessary to transfer ownership of the Policies to its successor.
If no successor has accepted appointment, the Policies shall be
held and owned by the Employer acting as Insurance Trustee until
a successor is appointed.
17.14. Effect of Resignation or Removal. Resignation or
removal of the Trustee or the Insurance Trustee shall not
terminate the Trust. In the event of any vacancy in the position
of Trustee (or, in a Plan having amounts invested in Policies,
the position of Insurance Trustee), whether the vacancy occurs
because of the resignation or removal of the Trustee (or the
Insurance Trustee) the Employer shall appoint a successor to fill
the vacant position. If the Employer does not appoint such a
successor who accepts appointment by the later of 60 days after
notice of resignation or removal is given or by such later date
as the Trustee or the Insurance Trustee, as the case may be, and
Employer may agree in writing to postpone the effective date of
the Trustee's or the Insurance Trustee's resignation or removal,
the Trustee or Insurance Trustee may apply to a court of
competent jurisdiction for such appointment or cause the Trust to
be terminated, effective as of the date specified by the Trustee
or Insurance Trustee, as the case may be, in writing delivered to
the Employer. Each successor Trustee so appointed and accepting
a trusteeship hereunder shall have all of the rights and powers
and all of the duties and obligations of the original Trustee or
Insurance Trustee, as the case may be, under the provisions
hereof, but shall have no responsibility for acts or omissions
before he becomes a Trustee or Insurance Trustee.
17.15. Fiscal Year of Trust. The fiscal year of the Trust
will coincide with the Plan Year.
17.16. Limitation of Liability. Except as may otherwise be
required by law and other provisions of the Plan, no fiduciary of
the Plan, within the meaning of Section 3(21) of ERISA, shall be
liable for any losses incurred with respect to the management of
the Plan, nor shall he or it be liable for any acts or omissions
except those caused by his or its own negligence or bad faith in
failing to carry out his or its duties under the terms contained
in the Plan.
17.17. Indemnification. Subject to the limitations of applicable law, the Employer agrees to indemnify and hold harmless (i) all fiduciaries, within the meaning of ERISA Sections 3(21) and 404, and (ii) Putnam, for all liability occasioned by any act of such party or omission to act, in good faith and without gross negligence, and for all expenses incurred by any such party in determining its duty or liability under ERISA with respect to any question under the Plan.
ARTICLE 18. AMENDMENT
18.1. General. The Employer reserves the power at any
time or times to amend the provisions of the Plan and the Plan
Agreement to any extent and in any manner that it may deem
advisable. If, however, the Employer makes any amendment
(including an amendment occasioned by a waiver of the minimum
funding requirement under Section 412(d) of the Code) other than
(a) a change in an election made in the Plan Agreement,
(b) amendments stated in the Plan Agreement which allow the Plan to satisfy Section 415 and to avoid duplication of minimums under Section 416 of the Code because of the required aggregation of multiple plans, or
(c) model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed,
the Employer shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. In that event, Putnam shall have no further responsibility to provide to the Employer any amendments or other material incident to the prototype plan, and Putnam may resign immediately as Trustee and as Recordkeeper. Any amendment shall be made by delivery to the Trustee (and the Recordkeeper, if any) of a written instrument executed by the Employer providing for such amendment. Upon the delivery of such instrument to the Trustee, such instrument shall become effective in accordance with its terms as to all Participants and all persons having or claiming any interest hereunder, provided, that the Employer shall not have the power:
(1) To amend the Plan in such a manner as would cause or permit any part of the assets of the Trust to be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries, or as would cause or permit any portion of such assets to revert to or become the property of the Employer.
(2) To amend the Plan retroactively in such a manner as would have the effect of decreasing a Participant's accrued benefit, except that 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 (2), an amendment shall be treated as reducing a Participant's accrued benefit if it has the effect of reducing his Account balance, or of eliminating an optional form of benefit with respect to amounts attributable to contributions made performed before the adoption of the amendment; or
(3) To amend the Plan so as to decrease the portion of a Participant's Account balance that has become vested, as compared to the portion that was vested, under the terms of the Plan without regard to the amendment, as of the later of the date the amendment is adopted or the date it becomes effective.
(4) To amend the Plan in such a manner as would increase the duties or liabilities of the Trustee or the Recordkeeper unless the Trustee or the Recordkeeper consents thereto in writing.
18.2. Delegation of Amendment Power. The Employer and allsponsoring organizations of the Putnam Basic Plan Document delegate to Putnam Mutual Funds Corp., the power to amend the Plan (including the power to amend this Section 18.2 to name a successor to which such power of amendment shall be delegated), for the purpose of adopting amendments which are certified to Putnam Mutual Funds Corp., by counsel satisfactory to it, as necessary or appropriate under applicable law, including any regulation or ruling issued by the United States Treasury Department or any other federal or state department or agency; provided that Putnam Mutual Funds Corp., or such successor may amend the Plan only if it has mailed a copy of the proposed amendment to the Employer at its last known address as shown on its books by the date on which it delivers a written instrument providing for such amendment, and only if the same amendment is made on said date to all plans in this form as to which Putnam Mutual Funds Corp., or such successor has a similar power of amendment. If a sponsoring organization does not adopt any amendment made by Putnam Mutual Funds Corp., such sponsoring organization shall cease to participate in this prototype Plan and will be considered to have an individually designed plan.
ARTICLE 19. TERMINATION OF THE PLAN AND TRUST
19.1. General. The Employer has established the Plan
and the Trust with the bona fide intention and expectation that
contributions will be continued indefinitely, but the Employer
shall have no obligation or liability whatsoever to maintain the
Plan for any given length of time and may discontinue
contributions under the Plan or terminate the Plan at any time by
written notice delivered to the Trustee and the Insurance
Trustee, without any liability whatsoever for any such
discontinuance or termination.
19.2. Events of Termination. The Plan will terminate
upon the happening of any of the following events:
(a) Death of the Employer, if a sole proprietor, or dissolution or termination of the Employer, unless within 60 days thereafter provision is made by the successor to the business with respect to which the Plan was established for the continuation of the Plan, and such continuation is approved by the Trustee;
(b) Merger, consolidation or reorganization of the Employer into one or more corporations or organizations, unless the surviving corporations or organizations adopt the Plan by an instrument in writing delivered to the Trustee within 60 days after such a merger, consolidation and reorganization;
(c) Sale of all or substantially all of the assets of the Employer, unless the purchaser adopts the Plan by an instrument in writing delivered to the Trustee within 60 days after the sale;
(d) The institution of bankruptcy proceedings by or against the Employer, or a general assignment by the Employer to or for the benefit of its creditors; or
(e) Delivery of notice as provided in Section 19.1.
19.3. Effect of Termination. Notwithstanding any other
provisions of this Plan, other than Section 19.4, upon
termination of the Plan or complete discontinuance of
contributions thereunder, each Participant's Accounts will become
fully vested and nonforfeitable, and upon partial termination of
the Plan, the Accounts of each Participant affected by the
partial termination will become fully vested and nonforfeitable.
The Employer shall notify the Trustee and the Insurance Trustee
in writing of such termination, partial termination or complete
discontinuance of contributions. In the event of the complete
termination of the Plan or discontinuance of contributions, the
Trustee will, after payment of all expenses of the Trust Fund,
make distribution of the Trust asses to the Participants or other
persons entitled thereto, in such form as the Employer may direct
pursuant to Article 10 or, in the absence of such direction, in a
single payment in cash or in kind. Upon completion of such
distributions under this Article, the Trust will terminate, the
Trustee and the Insurance Trustee will be relieved from their
obligations under the Trust, and no Participant or other person
will have any further claim thereunder.
19.4. Approval of Plan. Notwithstanding any other provision of the Plan, if the Employer fails to obtain or to retain the approval by the Internal Revenue Service of the Plan as a qualified plan under Section 401(a) of the Code, then (i) the Employer shall promptly notify the Trustee, and (ii) the Employer may no longer participate in the Putnam prototype plan, but will be deemed to have an individually designed plan. If it is determined by the Internal Revenue Service that the Plan upon its initial adoption does not qualify under Section 401(a) of the Code, all assets then held under the Plan will be returned within one year of the denial of initial qualification to the Participants and the Employer to the extent attributable to their respective contributions and any income earned thereon, but only if the application for qualification is made by the time prescribed by law for filing the Employer's federal income tax return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. Upon such distribution, the Plan will be considered to be rescinded and to be of no force or effect.
ARTICLE 20. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS
20.1. General. Notwithstanding any other provision
hereof, subject to the approval of the Trustee there may be
transferred to the Trustee all or any of the assets held (whether
by a trustee, custodian or otherwise) in respect of any other
plan which satisfies the applicable requirements of Section
401(a) of the Code and which is maintained for the benefit of any
Employee (provided, however, that the Employee is not a member of
a class of Employees excluded from eligibility to participate in
the Plan) except that insurance policies held in respect of such
other plan shall be transferred to the Insurance Trustee as
trustee if the Employer so determines. Any such assets so
transferred shall be accompanied by written instructions from the
Employer naming the persons for whose benefit such assets have
been transferred and showing separately the respective
contributions made by the Employer and by the Participants and
the current value of the assets attributable thereto.
Notwithstanding the foregoing, if a Participant's employment
classification changes under Section 3.5 such that he begins
participation in another plan of the Employer, his Account, if
any, shall, upon the Administrator's direction, be transferred to
the plan in which he has become eligible to participate, if such
plan permits receipt of such Account.
20.2. Amounts Transferred. The Employer shall credit
any assets transferred pursuant to Section 20.1 or Section 3.5 to
the appropriate Accounts of the persons for whose benefit such
assets have been transferred. Any amounts credited as
contributions previously made by an employer or by such persons
under such other plan shall be treated as contributions
previously made under the Plan by the Employer or by such
persons, as the case may be.
20.3. Merger or Consolidation. The Plan shall not be
merged or consolidated with any other plan, nor shall any assets
or liabilities of the Trust Fund be transferred to any other
plan, unless each Participant would receive a benefit immediately
after the transaction, if the Plan then terminated, which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transaction if the Plan had
then terminated.
ARTICLE 21. MISCELLANEOUS
21.1. Notice of Plan. The Plan shall be communicated to
all Participants by the Employer on or before the last day on
which such communication may be made under applicable law.
21.2. No Employment Rights. Neither the establishment
of the Plan and the Trust, nor any amendment thereof, nor the
creation of any fund or account, nor the purchase of Policies,
nor the payment of any benefits shall be construed as giving to
any Participant or any other person any legal or equitable right
against the Employer, the Trustee, or the Insurance Trustee,
except as provided herein or by ERISA; and in no event shall the
terms of employment or service of any Participant be modified or
in any way be affected hereby.
21.3. Distributions Exclusively From Plan. Participants
and Beneficiaries shall look solely to the assets held in the
Trust and any Policies purchased pursuant to the Plan for the
payment of any benefits under the Plan.
21.4. No Alienation. The benefits provided hereunder
shall not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to
cause such benefits to be so subjected shall not be recognized,
except as provided in Section 12.4 or in accordance with a
Qualified Domestic Relations Order. The Plan Administrator shall
determine whether a domestic relations order is qualified in
accordance with written procedures adopted by the Plan
Administrator. Notwithstanding the foregoing, an order shall not
fail to be a Qualified Domestic Relations Order merely because it
requires a distribution to an alternate payee (or the segregation
of accounts pending distribution to an alternate payee) before
the Participant is otherwise entitled to a distribution under the
Plan.
21.5. Provision of Information. The Employer, Trustee
and Insurance Trustee shall furnish to each other such
information relating to the Plan and Trust as may be required
under the Code or ERISA and any regulations issued or forms
adopted by the Treasury Department or the Labor Department or
otherwise thereunder.
21.6. No Prohibited Transactions. The Employer,
Trustee, and Insurance Trustee shall, to the extent of their
respective powers and authority under the Plan, prevent the Plan
from engaging in any transaction known by that person to
constitute a transaction prohibited by Section 4975 of the Code
and any rules or regulations with respect thereto.
21.7. Governing Law. The Plan shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States, and to the extent permitted by
such laws, by the laws of the Commonwealth of Massachusetts
21.8. Gender. Whenever used herein, a pronoun in the masculine gender includes the feminine gender unless the context clearly indicates otherwise.
PUTNAM PROFIT SHARING AND 401(K) PLAN
PLAN AGREEMENT #001
This is the Plan Agreement for a Putnam prototype profit sharing plan with optional Section 401(k) provisions. Please consult a tax or legal advisor and review the entire form before you sign |
it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. You can get further information to help you complete the Plan Agreement from your investment dealer, or from Putnam at:
Putnam Defined Contribution Plans One Putnam Place E2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-9894
* * * * *
By executing this Plan Agreement, the Employer establishes a profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #05, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Profit Sharing and 401(k) Plan.
* * * * *
All Employers complete items 1-11 below. Employers who wish to adopt Section 401(k) provisions also complete item 12.
Business Information. The Employer adopting this Plan is:
Business Address: _______________________________
_______________________________ SIC
Code: _______
_______________________________
|
Phone: __________________________
Form of Organization (check one):
_____ Sole proprietorship _____ Corporation _____ Other
_____ Partnership _____ S Corporation
Plan Name: __________________________________
Plan Number: 00__(complete)
Taxable Year of Business:
______ Calendar Year
Plan Information.
Plan Year. Check one:
_____ The Plan Year will be the same as the Taxable Year of the Business shown in 1.F. above. If the Taxable |
Year of the Business changes, the Plan Year will change accordingly.
_____ The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month).
The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan.
Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____ Yes
_____ No
If you answered Yes in 2.B. above, the Effective
Date of your adoption of this Plan will be the first
|
day of the current Plan Year unless you elect a later date below. Please complete the following:
If you answered No in 2.B. above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began):
Identifying Highly Compensated Employees. Check One:
_____ The Plan will use the regular method under Plan Section 2.60(a) for identifying Highly Compensated Employees.
If your Plan Year is the calendar year, do you wish to make the regular method's "calendar year election" for identifying your Highly Compensated Employees?
_____ Yes
_____ No
_____ The Plan will use the simplified
|
method under Plan Section 2.60(b) for identifying Highly Compensated Employees.
Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B and C below.
Classes of Eligible Employees. The Plan requires coverage of all classes of employees of the Employer and any Affiliated Employer, except for union employees and nonresident aliens without U.S.-source income. The general rules of the Plan exclude employees in those two groups, but if you want employees in one or both categories to be eligible for your Plan, check the appropriate space below.
The following employees will be eligible to participate in the Plan:
_____ Nonresident aliens with no U.S.-source income
Age Requirement (check and complete one):
_____ No minimum age required for participation
_____ Employees must reach age __ (not over 21) to
participate
|
Service Requirements.
A 6-month Eligibility Period is a 6-month period beginning either on an employee's first day of work with the Employer or on the date 6 months following the employee's first day of work, and anniversaries of those dates. A 12-month Eligibility Period is the 12- month period beginning on an employee's first day of work with the Employer, and anniversaries of that date. You may also select another Eligibility Period consisting of a number of months of your choice and each successive period of that number of months.
To become eligible, an employee must complete (choose one):
_____ a. No minimum service required.
Skip to (5) below.
_____ b. One 6-month Eligibility Period
_____ c. One __-month
Eligibility Period (must be less than
12)
_____ d. One 12-month
Eligibility Period
_____ e. Two 12-month
|
Eligibility Periods (may not be chosen if you adopt either the Section 401(k) provisions under item 12 or a vesting schedule other than the first choice under item 8.A(1), which provides for 100% full and immediate vesting).
If the Employer acquires a business, will the Eligibility Period for employees of the acquired business be the period selected in (1) above, beginning on the first day of work for the acquired business?
_____ Yes
_____ No
a. To receive credit for a 6-
|
month Eligibility Period, an employee must complete during it at least:
_____ 500 Hours of Service
_____ _____________ Hours of Service
(under 500)
|
b. Complete only if (1)(c) above is selected. To receive credit for the Eligibility Period selected in (1)(c) above, an employee must complete during it at least:
_____ _____________ Hours of Service
(under 1000)
Note: If you adopt an Eligibility Period of less
than 12 months, in any event, an employee will
|
automatically receive credit for the Eligibility Period if the employee completes at least 1,000 Hours of Service during a 12 consecutive month period following the first day of work.
c. To receive
credit for a 12-month
Eligibility Period, an
employee must complete
during it at least:
_____ 1,000 Hours of Service
_____ _____________ Hours of Service
(under 1,000)
Hours of Service will be credited to an employee
by the following method (check one):
_____ a. Actual hours for which an
employee is paid
_____ b. Any employee who has
one actual paid hour in the following
period will be credited with the number
of Hours of Service indicated (check
one):
_____ Day (10 Hours of Service)
_____ Week (45 Hours of Service)
_____ Semi-monthly payroll period
(95 Hours of Service)
_____ Month (190
Hours of Service)
|
Note: If you are adopting this Plan to replace an
existing plan, employees will be credited under this
Plan with all service credited to them under the plan
you are replacing.
Entry Dates. Each Employee in an eligible class
who completes the age and service requirements
specified above will begin to participate in the
Plan on (check one):
_____ The first day of the month in which he fulfills the requirements.
_____ The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one):
_____ The first day of the month following the date he fulfills the requirements (monthly).
_____ The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly).
_____ The first day of the first month and the seventh month in a Plan Year (semiannually).
(For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above?
_____ Yes
_____ No; all Employees on the Effective Date will
be eligible as of the Effective Date, even if they
have not met the age and service requirements.
|
Compensation (Plan Section 2.8).
A. Amount Compensation for purposes of the Plan will be the amount of the following that is actually paid by your Business to an employee during the Plan Year (check one):
_____ Form W-2 earnings as defined in Section 2.8 of the
Plan.
_____ Form W-2 earnings as defined in Section 2.8 of the
|
Plan, plus any amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP, tax sheltered
403(b) arrangement, or Code Section 457 deferred
compensation plan, and contributions described in Code
Section 414(h)(2) that are picked up by a governmental
employer.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b) of the
Plan.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b) of the
|
Plan, plus any amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP, tax sheltered
403(b) arrangement, or Code Section 457 deferred
compensation plan, and contributions described in Code
Section 414(h)(2) that are picked up by a governmental
employer.
B. Measuring Period. Compensation will be based on
the Plan Year. However, for an employee's initial year
of participation in the Plan, Compensation shall be
recognized as of:
_____ The first day of the Plan Year.
_____ The date the Participant entered
the Plan.
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Contributions (Plan Sections 4.1 and 4.2).
Employer Contributions - Profit Limitation. Will Employer contributions to the Plan be limited to the current and accumulated profits of your Business? Check one:
_____ Yes _____ No If you will make contributions only under the Section 401(k) provisions in item 12 of this Plan Agreement, |
skip the rest of this part 5.
Employer Contributions - Amount.
(1) The Employer will contribute to the Plan for each Plan Year (check one):
_____ An amount chosen by the Employer from
year to year
_____ ____% of the Earnings of all Qualified
Participants for the Plan Year
_____ $____ for each Qualified Participant per
___
__
__
__
__
(e
nt
er
ti
me
pe
ri
od
,
ex
.
pa
yr
ol
l
pe
ri
od
,
pl
an
ye
ar
)
(2) Will Forfeitures for a Plan Year be applied to
|
reduce the amount of the contribution otherwise required?
_____ Yes _____ No (3) Will Forfeitures that are not applied to reduce |
the amount of contribution otherwise required for the Plan Year be applied to reduce the required Employer Matching Contribution for the Plan Year described in 12.B.(1)?
_____ Yes
_____ No
If you check No to both (2) and (3) above, Forfeitures
will be allocated as though they were additional Profit
Sharing Contributions.
Employer Contributions - Allocations to Participants
(1) Allocation to Qualified Participants. Any Employee who has met the eligibility requirements in item 3 of this Plan Agreement is a Qualified Participant unless, for reasons other than his death or Retirement, he is not an active Employee on the last day of the Plan Year, and he is not credited with more than 500 Hours of Service in the Plan Year.
How will contributions be allocated:
_______ Pro rata (percentage based on compensation)
_______ Uniform Dollar amount
_______ Integrated With Social Security (complete
(2) and (3) below)
(2) Integration with Social Security. (Complete only if you have elected in 5.C.1 to integrate your Plan with Social Security.) Contributions under paragraph B will be allocated to Qualified Participants as you check below:
_____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document in every Plan Year, whether or not the Plan is top-heavy.
_____ Contributions will be allocated
according to the Top-Heavy Integration
Formula in Section 4.2(c)(1) of the Basic
Plan Document only in Plan Years in which the
Plan is top-heavy. In all other Plan Years,
contributions will be allocated according to
the Non-Top-Heavy Integration Formula in
Section 4.2(c)(2) of the Basic Plan Document.
(3) Integration Level. (Complete only if you have elected in 5.C.1 to integrate your Plan with Social Security.) The Integration Level will be (check one):
_____ The Social Security Wage Base in effect at the beginning of the Plan Year.
____ __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year.
____ $__________ (not more than the Social Security Wage Base).
Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living.
D. Participant Contributions (Plan Section 4.2(e)). Will your Plan allow Participants to make after-tax contributions?
Yes
No
Investments (Plan Sections 13.2 and 13.3). The Employer selects in part A below the Investment Products that will be available under the Plan (in addition to Policies selected under Plan Article 14, if any). All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. From the group of available Investment Products selected by the Employer, each Participant chooses the investments for his own Accounts unless the Employer elects differently in B below.
Available Investment Products (Plan Section 13.2). The following investments will be available under the Plan (check one):
Mutual Funds
_____ The group of funds made available by Putnam,
selected by the Employer and communicated to
Participants in writing. A current list of the
funds selected by the Employer from time to time
shall be kept with the records of the Plan. The
initial list of funds is as follows:
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
|
Other Investment Options
______ Putnam Stable Value Fund
______ Other Investment Products (as defined in
Section 2.28 of the Plan)
If there is any amount in the Trust Fund for which no
|
instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam (or if the Employer makes no such selection, by execution of the Plan Agreement, the Employer shall affirmatively elect to have such amounts invested in the Putnam Money Market Fund) until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement with Putnam (or if none, The Putnam Money Market Fund) as an available Investment Product for that purpose.
Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.)
_____ The Employer will make all investment decisions with respect to all employee contributions, including Elective Deferrals, Participant Contributions, Deductible Employee Contributions and Rollover Contributions. _____ The Employer will make all investment decisions with respect to all Employer contributions, including Profit Sharing Contributions, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions.
_____ The Employer will make investment decisions with respect to Employer Matching Contributions and Qualified Matching Contributions made pursuant to Section 12.B and C of this Plan Agreement.
_____ The Employer will make investment decisions with respect to Qualified Nonelective Contributions made pursuant to Section 12.D of this Plan Agreement.
of
this
Plan
Agree
ment.
Changes. Investment instructions may be changed (check one):
_____ on any Valuation Date (daily)
_____ on the first day of any month
(monthly)
_____ on the first day of the first,
fourth, seventh and tenth months in a Plan Year
(quarterly)
Employer Stock. (Skip this paragraph if you did not
designate Employer Stock as an investment under the
Service Agreement.)
|
Voting. Section 13.8 of the Plan
provides that Employer Stock held as an investment
under the Plan will be voted in accordance with
the Employer's instructions unless the Employer
elects that Participants will direct the voting of
Employer Stock to the extent described in Section
13.8. Check below only if Participants will
direct the voting of Employer Stock.
_____ Participants are hereby appointed named fiduciaries for the purpose of the voting of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the voting of Employer Stock credited to his Account, the Trustee shall not vote such Employer Stock. Unallocated shares of Employer Stock will be voted by the Trustee as directed by the Plan Administrator.)
Tendering. Section 13.8 of the Plan
provides that Employer Stock held as an investment
under the Plan will be tendered in accordance with
the Employer's instructions unless the Employer
elects that Participants will direct the tendering
of Employer Stock to the extent described in
Section 13.8. Check below only if Participants
will direct the tendering of Employer Stock.
(Note: Unallocated shares of Employer Stock will
be tendered in proportion to the percentage of
allocated shares which are tendered.)
_____ Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in
accordance with Section 13.8. (Note: To the extent a Participant fails to direct the tendering of Employer Stock credited to his Account, the Trustee shall not tender such Employer Stock.) |
Voting of Non-Putnam Shares. Section 13.10 of the Plan
provides that shares of registered investment companies
held under the Plan other than Putnam mutual funds
shall be voted in accordance with the Employer's
instructions unless the Employer elects that
Participants will direct the voting of such non-Putnam
investment company shares to the extent described in
Section 13.10. Check below only if Participants will
direct the voting of such non-Putnam investment company
shares:
_____ Participants are hereby
appointed named fiduciaries for the purpose
of voting shares of registered investment
|
companies other than Putnam mutual funds in accordance with Section 13.10.
Note: Shares of non-Putnam investment companies for which the Trustee receives no voting instructions shall be voted in the same proportion as it votes such shares for which it has received instructions.
Distributions and Withdrawals.
Retirement Distributions.
Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65).
Early Retirement (Plan Section 7.1). Check and complete the item below only if you want Participants to become fully vested upon fulfilling specified age and service requirements before reaching normal retirement age:
_____ Early retirement will be permitted at age ____ with at least ________ Years of Service.
Annuities (Plan Section 9.3). Will your Plan permit a Participant to select a life annuity form of distribution? You must check Yes if this Plan replaces an existing Plan that permits distributions in a life annuity form.
_____ Yes
_____ No
Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions from Employer Contribution Accounts? You must check Yes if this Plan replaces an existing Plan that permits hardship distributions of Profit Sharing Contributions.
_____ Yes
_____ No
Withdrawals after Age 59 1/2 (Plan Section 12.3). Will your Plan permit employees over age 59 1/2 to withdraw amounts upon request? You must check Yes if this Plan replaces an existing Plan that permits withdrawals after age 59 1/2.
_____ Yes
_____ No
Loans. (Plan Section 12.4). Will your Plan
permit loans to employees from their Accounts?
_____ Yes
_____ No
Automatic Distribution of Small Accounts (Plan
|
Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment?
_____ Yes
_____ No
Note: The time for distribution cannot be left to the discretion of the Employer or the Plan Administrator. If you check No above, small accounts will be distributable at the time selected by the Participant.
Vesting (Plan Article 8).
Time of Vesting.
(1) The provision checked below will determine a Participant's vested percentage in the Profit Sharing Contribution portion of his Employer Contribution Account:
_____ 100% vesting immediately upon participation
in the Plan.
_____ Five-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 1 2 3 4 5
_____ Six-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Seven-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 3 4 5 6 7
_____ Three-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-2 3
_____ Five-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-4 5
|
_____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule):
Vested
Percentage
__% __%
__% __%
__%
Years of
Service
___ ___
___ ___
___
|
If you selected above an "Other Schedule," specify in the space below the schedule that will apply after the Plan is top-heavy. The schedule you specify must be (i) the Six-Year Graded Schedule, or (ii) the Three-year Cliff Schedule, or (iii) any other schedule that is at least as favorable to employees, at all years of service, as either the Six-Year Schedule or the Three-Year Cliff Schedule.
The top-heavy vesting schedule will be:
_____ the same "Other Schedule"
selected above
_____
Veste
d
Perce
ntage
__%
__%
__%
__%
__%
Years
of
Servi
ce
___
___
___
___
___
|
(2) If you adopt the Section 401(k) provisions in item 12 and will make Employer Matching Contributions, check the provision below that will determine a Participant's vested percentage in his Employer Matching Contribution Account (check one):
_____ 100% vesting immediately upon participation in the Plan.
_____ Five-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 1 2 3 4 5
_____ Six-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Seven-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 3 4 5 6 7
_____ Three-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-2 3
_____ Five-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-4 5
|
_____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule):
Vested
Percentage
__% __%
__% __%
__%
Years of
Service
___ ___
___ ___
___
|
If you selected "Other Schedule" above, the vesting
schedule that will apply to the Employer Matching
Contribution Account after the Plan becomes top-heavy
will be the top-heavy vesting schedule applicable to
the Employer Contribution Account, as specified in
Section 8.A.(1).
Service for Vesting. Skip this part B if your Plan will include all of an employee's service in determining his Years of Service for vesting.
Years of Service for vesting will exclude (check one or more):
_____ Service before the Effective Date of the Plan, if this is a new plan, or service before the effective date of your existing plan, if this Plan replaces an existing plan
_____ Service before the Plan Year in which an employee reached age 18
_____ Service for a business acquired by the Employer, before the date of acquisition
Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one):
_____ 1,000 Hours of Service
_____ ___________________ Hours of Service
(under 1,000)
Year of Service Measuring Period for Vesting (Plan
|
Section 2.54). The periods of 12 months used for measuring Years of Service will be (check one):
_____ Plan Years
_____ 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing.
Top-Heavy Minimum Contributions (Plan Section 15.3). For any Plan Year in which the Plan is top-heavy, you must provide for each Participant who is a non-key employee and who is employed on the last day of the Plan Year an |
allocation equal to 3% of his Earnings (or if less, the highest percentage allocated to any key employee). Neither Elective Deferrals, nor Employer Matching Contributions nor Qualified Matching Contributions for a non-key employee may be taken into account for purposes of this requirement. If you have adopted Putnam paired plans, for any Plan Year in which the Plan is top-heavy, the top-heavy minimum contribution will be provided under the Putnam Money Purchase Pension Plan.
Skip paragraphs A and B below if you have Putnam paired plans or if you do not maintain any other qualified plan in addition to this Plan.
If you maintain another qualified plan in addition to this Plan, specify below whether a non-key employee who participates in both plans will receive a top-heavy minimum contribution (or benefit) in this Plan or the other plan.
The top-heavy minimum contribution (or benefit) for non-key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one):
_____ This Plan
_____ The plan named here:
__________________________________
|
(Skip this paragraph if you do not maintain a defined benefit plan.) If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 15.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 15.4. Specify your election by completing the statement below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as permitted under Plan
Section 15.4.
Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below:
If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one):
_____ The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan.
_____ The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below.
Note: Your description under A or B above cannot be left to discretion and changed from year to year. If you want to amend it from year to year, you must execute a new plan agreement.
If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %__________________________
Mortality Table:
__________________________
Administration.
Plan Administrator (Plan Section 16.1). You may
appoint a person or a committee to serve as Plan
|
Administrator. You may remove and replace anyone you have appointed, and anyone you have appointed may resign, without the need to amend this Plan Agreement, provided that you notify Participants in writing of any such change. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator.
The initial Plan Administrator will be (check one):
_____ This person: _______________________________
_____ A committee composed of these people:
_________________________________________________________________
_
_________________________________________________________________
_
|
Recordkeeper (Plan Section 16.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and you.
The initial Recordkeeper will be:
Complete item 12 below if your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code.
Section 401(k) Plan Provisions (Plan Article 5).
Elective Deferrals (Plan Section 5.2).
A Participant may make Elective Deferrals for each year in an amount not to exceed (check one):
_____ (a) ___% of his Earnings
_____ (b) ___% of his Earnings not to
exceed $_______ (specify a dollar
amount)
_____ (c) $_______
(specify a dollar amount)
Note: Elective Deferrals may not exceed the annual dollar limit under Section 402(g) of the Internal Revenue Code.
A Participant may begin to make Elective Deferrals, or change the amount of his Elective Deferrals, as of the following dates (check one):
_____ First business day of each month
(monthly).
_____ First business day of the first, fourth,
seventh and tenth months of the Plan Year
(quarterly).
_____ First business day of the first and
seventh months of the Plan Year
(semiannually).
_____ First business day of the Plan Year only
(annually).
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May Participants make Elective Deferrals of bonuses?
_____ Yes
_____ No
Note: You may choose to make Employer Matching
|
Contributions or Qualified Matching Contributions, or neither, or both. Qualified Matching Contributions are always fully vested and cannot be distributed from the Plan before a Participant reaches age 59 1/2 or leaves employment. They will be used, to the extent needed, to help the Plan pass the ADP test explained on page __ of the Qs & As. Employer Matching Contributions are subject to the vesting schedule elected in item 8 of this Plan Agreement, and can be withdrawn during employment in the event of financial hardship (as defined in Section 12.2 of the Plan) if you so elect in part F below.
Employer Matching Contributions (Plan Section 5.8). Skip this part B if you will not make Employer
Matching Contributions.
The Employer will contribute and will allocate to
each Participant's Employer Matching Account an
|
amount equal to:
(Check the provision(s) desired, and fill in the % and/or $ limitation blank(s) in each provision you check. If you wish to determine the amount of Employer Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.)
_____ ___% of Elective Deferrals
_____ ___% of Elective Deferrals that do not
exceed ___% of Earnings
_____ ___% of Participant Contributions
|
_____ In applying the above election, Elective Deferrals shall not exceed $__________.
Will forfeited Employer Matching Contributions be applied to reduce the total contribution specified in B (1) above?
_____ Yes
_____ No
(3) Will forfeited Employer Matching Contributions
|
that are not applied to reduce required Employer Matching Contributions specified in B(1) above be applied to reduce required Employer Contributions for the Plan Year described in 5.B?
_____ Yes
_____ No
If you check No to both (2) and (3) above, forfeited Employer Matching Contributions will be allocated as though they were additional Employer Matching Contributions.
Qualified Matching Contributions (Plan Section 2.62). Skip this part C if you will not make Qualified Matching Contributions.
Qualified Matching Contributions will be made with respect to (check one):
_____ Elective Deferrals by all Participants
_____ Elective Deferrals only by Non-Highly
Compensated Participants
The amount of Qualified Matching Contributions
made with respect to a Participant will be:
(Check the provision desired and fill in the %
and/or $ limitation blank(s) in the provision you
check. If you wish to determine the amount of
|
Qualified Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.)
_____ ___% of his Elective Deferrals
_____ ___% of his Elective Deferrals that do
not exceed ___% of his Earnings
_____ ___% of Participant Contributions
_____ In applying the above election, Elective
Deferrals shall not exceed $________.
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Qualified Nonelective Contributions (Plan Section 2.64): Skip this part D if you will not make Qualified Nonelective Contributions.
Qualified Nonelective Contributions will be made
on behalf of (check one):
_____ All Participants
|
_____ Only Participants who are not Highly Compensated Employees
The amount of Qualified Nonelective Contributions for a Plan Year will be (check one):
_____ ___% (not over 15%) of the Earnings of Participants on whose behalf Qualified Nonelective Contributions are made
_____ An amount determined by the Employer from year to year, to be shared in proportion to their Earnings by Participants on whose behalf Qualified Nonelective Contributions are made
Note: Qualified Nonelective Contributions will be used, to the extent needed, to help the Plan pass the ADP test, explained on page __ of the Qs & As.
ACP Test. Every plan that has after-tax Participant Contributions, Employer Matching Contributions or Qualified Matching Contributions must pass an annual test called the ACP test, which is explained on page __ of the Qs & As. Elective Deferrals and Qualified Nonelective Contributions will be used to help the Plan pass the ACP test, to the extent needed.
Hardship Distributions from 401(k) Accounts (Plan Sections 12.2 and 5.14).
Will your Plan permit hardship distributions from Elective Deferral Accounts?
_____ Yes
_____ No
If your Plan has Employer Matching Contributions, will it permit hardship distributions from Employer Matching Accounts? You must check Yes if this Plan replaces an existing plan that permits hardship distributions of Employer Matching Contributions.
_____ Yes
_____ No
Reliance on Opinion Letter. If you ever maintained or you
later adopt any plan (including a welfare benefit fund, as
defined in Section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate
accounts for key employees, as defined in Section 419A(d)(3)
of the Code; or an individual medical account, as defined in
Section 415(l)(2) of the Code) in addition to this plan, you
may not rely on an opinion letter issued to Putnam by the
National Office of the Internal Revenue Service as evidence
that the Plan is qualified under Section 401 of the Internal
Revenue Code. If you maintain or adopt multiple plans, in
order to obtain reliance with respect to plan qualification
of the Plan, you must receive a determination letter from
the appropriate Key District Office of Internal Revenue.
Putnam will prepare an application for such a letter upon
your request at a fee agreed upon by the parties.
The Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Section 401 of
the Code unless the terms of the plan, as herein adopted or
amended, that pertain to the requirements of Section
401(a)(4), 401(a)(5), 401(a)(17), 401(l), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or
later laws, (a) are made effective retroactively to the
first day of the first Year beginning after December 31,
1988 (or such later date on which these requirements first
become effective with respect to this plan); or (b) are made
effective no later than the first day on which the Employer
is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements,
and the prior provisions of the plan constitute such an
interpretation.
Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #001 may be used only in conjunction with Putnam's basic plan document #05.
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
PROFIT SHARING AND 401(k) PLAN
The Employer named below hereby adopts a PUTNAM PROFIT SHARING AND 401(k) PLAN, and appoints __________________ to serve as Trustee of the Plan. (Note: you may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission.) The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Profit Sharing and 401(k) Plan only upon Putnam's acceptance of this Plan Agreement.
Employer signature(s) to adopt Plan:
Date of signature:
Please print name(s) of authorized person(s) signing above:
A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective.
INVESTMENT DEALER INFORMATION
Registered Representative:
_________________________________________
Name
_________________________________________
Telephone
* * * * *
|
ACCEPTANCE OF TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By: _________________________________________________________________ ______________ Complete Part B only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. Note: Putnam may impose an annual maintenance fee as a condition of its acceptance of this |
plan as a Putnam Prototype Profit Sharing and 401(k) Plan.
B. _________________________________, Trustee
By: ______________________________
___ Trustee's Tax I.D. Number
_______________
(Trustee)
_________________________________________________________________
____________________
Address of Trustee
|
Complete Part C only if insurance Policies will be purchased under Article 14 of the Plan (in addition to Putnam Investment Products).
C. Appointment and Acceptance of Insurance Trustee
1. Appointment to:
You are hereby designated as Insurance Trustee for Policies to be held in accordance with the terms and conditions of this Plan and Trust.
Employer signature to appoint Insurance Trustee:
2. Acceptance as Insurance Trustee is agreed to in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer as set forth above.
By:_____________________________________ Trustee's Tax I.D.
Number _________________
_________________________________________________________________
____________________
Address of Insurance Trustee
|
* * * * *
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #05.
Putnam Mutual Funds Corp.
By: ______________________________
PUTNAM MONEY PURCHASE PENSION PLAN
PLAN AGREEMENT #002
This is the Plan Agreement for a Putnam prototype money purchase plan. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. |
You can get further information to help you complete the Plan Agreement from your investment dealer, or from Putnam at:
Putnam Defined Contribution Plans One Putnam Place E2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-9894
* * * * *
By executing this Plan Agreement, the Employer establishes a money purchase pension plan and trust upon the terms and conditions of Putnam Basic Plan Document #05, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Money Purchase Pension Plan.
* * * * *
Business Information. The Employer adopting this Plan is:
Business Address: _______________________________
_______________________________ SIC
Code: _______
_______________________________
|
Phone: __________________________
Form of Organization (check one):
_____ Sole proprietorship _____ Corporation ______ Other
_____ Partnership _____ S Corporation
Plan Name: __________________________________
Plan Number: 00__(complete)
Taxable Year of Business:
______ Calendar Year
Plan Information.
Plan Year. Check one:
_____ The Plan Year will be the same as the Taxable Year of the Business shown in 1.F. above. If the Taxable |
Year of the Business changes, the Plan Year will change accordingly.
_____ The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month).
The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan.
Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____ Yes
_____ No
If you answered Yes in 2.B. above, the Effective
Date of your adoption of this Plan will be the first
|
day of the current Plan Year unless you elect a later date below. Please complete the following:
______________________________________________________________
Name of the plan you are replacing
______________________________________________________________
Original Effective Date of the plan you are
replacing
|
If you answered No in 2.B. above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began):
Identifying Highly Compensated Employees. Check One:
_____ The Plan will use the regular method under Plan Section 2.60(a) for identifying Highly Compensated Employees.
If your Plan Year is the calendar year, do you wish to make the "calendar year election" for identifying your Highly Compensated Employees?
_____ Yes
_____ No
_____ The Plan will use the simplified
|
method under Plan Section 2.60(b) for identifying Highly Compensated Employees.
Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B and C below.
Classes of Eligible Employees. The Plan requires coverage of all classes of employees of the Employer and any Affiliated Employer, except for union employees and nonresident aliens without U.S.-source income. The general rules of the Plan exclude employees in those two groups, but if you want employees in one or both categories to be eligible for your Plan, check the appropriate space below.
The following employees will be eligible to participate in the Plan:
_____ Members of the following collective bargaining unit(s) (give names of unions):
_____ Nonresident aliens with no U.S.-source income
Age Requirement (check and complete one):
_____ No minimum age required for participation
_____ Employees must reach age __ (not over 21) to
participate
|
Service Requirements.
A 6-month Eligibility Period is a 6-month period beginning either on an employee's first day of work with the Employer or on the date 6 months following the employee's first day of work, and anniversaries of those dates. A 12-month Eligibility Period is the 12- month period beginning on an employee's first day of work with the Employer, and anniversaries of that date. You may also select another Eligibility Period consisting of a number of months of your choice and each successive period of that number of months.
To become eligible, an employee must complete (choose one):
_____ a. No minimum service required.
Skip to (5) below.
_____ b. One 6-month Eligibility Period
_____ c. One ____- month
Eligibility Period (must be less than
12)
_____ d. One 12-month
Eligibility Period
_____ e. Two 12-month
Eligibility Periods (may not be chosen
if you adopt a vesting schedule other
than the first choice under item 8.A,
which provides for 100% full and
immediate vesting).
|
If the Employer acquires a business, will the Eligibility Period for employees of the acquired business be the period selected in (1) above, beginning on the first day of work for the acquired business?
_____ Yes
_____ No
a. To receive credit for a 6-month
|
Eligibility Period, an employee must complete during it at least:
_____ 500 Hours of Service
_____ _____________ Hours of Service
(under 500)
|
b. Complete only if (1)(c) above is selected. To receive credit for the Eligibility Period selected in (1)(c) above, an employee must complete during it at least:
_____ _____________ Hours of Service
(under 1000)
Note: If you adopt an Eligibility Period of less
than 12 months, in any event, an employee will
|
automatically receive credit for the Eligibility Period if the employee completes at least 1,000 Hours of Service during a 12 consecutive month period following the first day of work.
c. To receive
credit for a 12-month
Eligibility Period, an
employee must complete
during it at least:
_____ 1,000 Hours of Service
_____ _____________ Hours of Service
(under 1,000)
Hours of Service will be credited to an employee
by the following method (check one):
_____ a. Actual hours for which an
employee is paid
_____ b. Any employee who has
one actual paid hour in the following
period will be credited with the number
of Hours of Service indicated (check
one):
_____ Day (10 Hours of Service)
_____ Week (45 Hours of Service)
_____ Semi-monthly payroll period
(95 Hours of Service)
_____ Month (190
Hours of Service)
|
Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing.
Entry Dates. Each Employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one):
_____ The first day of the month in which he fulfills the requirements.
_____ The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one):
_____ The first day of the month following the date he fulfills the requirements (monthly).
_____ The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly).
_____ The first day of the first month and the seventh month in a Plan Year (semiannually).
(For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above?
_____ Yes
_____ No; all Employees on the Effective Date will
be eligible as of the Effective Date, even if they
have not met the age and service requirements.
Compensation (Plan Section 2.8).
Amount. Compensation for purposes of the Plan will be
the amount of the following that is actually paid by
your Business to an employee during the Plan Year
(check one):
_____ Form W-2 earnings as defined in Section 2.8 of the
Plan.
_____ Form W-2 earnings as defined in Section 2.8 of the
|
Plan, plus any amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP, tax sheltered
403(b) arrangement, or Code Section 457 deferred
compensation plan, and contributions described in Code
Section 414(h)(2) that are picked up by a governmental
employer.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b) of the
Plan.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b) of the
|
Plan, plus any amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP, tax sheltered
403(b) arrangement, and Code Section 457 deferred
compensation plan, or contributions described in Code
Section 414(h)(2) that are picked up by a governmental
employer.
Measuring Period. Compensation will be based on the Plan Year. However, for an employee's initial year of participation in the Plan, Compensation shall be recognized as of:
______ the first day of the Plan Year.
______ the date the employee entered the Plan.
Contributions (Plan Section 4.3).
Employer Contributions - Amount. The Employer will contribute to the Plan for each Plan Year this Basic Contribution Percentage ____% (not more than 25%) of the Earnings of all Qualified Participants for the Plan Year.
Employer Contributions - Allocations to Participants
1. Allocation to Qualified Participants. Any Employee who has met the eligibility requirements in item 3 of this Plan Agreement is a Qualified Participant unless, for reasons other than his death or Retirement, he is not an active Employee on the last day of the Plan Year, and he is not credited with more than 500 Hours of Service in the Plan Year.
2. Integration with Social Security. Contributions under paragraph B will be allocated to Qualified Participants in proportion to their Earnings, unless you check the following space to indicate that your Plan will be integrated with Social Security, as explained on page of the Qs & As.
____ The
Plan will
be
integrated
with
Social
Security,
and the
Base
Contributi
on
Percentage
will be
___% (not
less than
3% unless
you will
perform
annual top-
heavy
testing
for your
Plan).
3. Integration Level. (Complete only if you have elected in 5.B.2. to integrate your Plan with Social Security). The Integration Level will be (check one):
____ The Social Security Wage Base in effect at the beginning of the Plan Year.
____ __% (not more than 100%) of the Social
Security Wage Base in effect at the beginning
of the Plan Year.
____ $__________ (not more than the
Social Security Wage Base).
Participant Contributions (Plan Section 4.3(e)). Will your Plan allow Participants to make after-tax contributions?
Yes
No
Investments (Plan Sections 13.2 and 13.3). The Employer selects in part A below the Investment Products that will be available under the Plan (in addition to Policies selected under Plan Article 14, if any). All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. From the group of available Investment Products selected by the Employer, each Participant chooses the investments for his own Accounts unless the Employer elects differently in B below.
Available Investment Products (Plan Section 13.2). The following investments will be available under the Plan (check one):
Mutual Funds
_____ The group of funds made available by Putnam,
selected by the Employer and communicated to
Participants in writing. A current list of the
funds selected by the Employer from time to time
shall be kept with the records of the Plan. The
initial list of funds is as follows:
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
|
Other Investment Options
______ Putnam Fiduciary Trust Company GIC Fund
______ Other Investment Products (as defined in
Section 2.28 of the Plan)
If there is any amount in the Trust Fund for which no
|
instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam (or if the Employer makes no such selection, by execution of the Plan Agreement, the Employer shall affirmatively elect to have such amounts invested in the Putnam Money Market Fund) until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement with Putnam (or if none, the Putnam Money Market Fund) as an available Investment Product for that purpose.
Instructions (Plan Section 13.3). Investment
instructions for amounts held under the Plan generally
will be given by each Participant for his own Accounts
and delivered to Putnam as indicated in the Service
Agreement between Putnam and the Employer. Check below
only if the Employer will make investment decisions
under the Plan.
_____ The Employer will make all investment
decisions with respect to all Employer
contributions.
_____ The Employer will make all investment decisions with respect to all employee contributions, including Participant Contributions and Rollover Contributions.
Changes. Investment instructions may be changed (check one):
_____ on any Valuation Date (daily)
_____ on the first day of any month
(monthly)
_____ on the first day of the first,
fourth, seventh and tenth months in a Plan Year
(quarterly)
Employer Stock. (Skip this paragraph if you did not
designate Employer Stock as an investment under the
Service Agreement.)
|
Voting. Section 13.8 of the Plan
provides that Employer Stock held as an investment
under the Plan will be voted in accordance with
the Employer's instructions unless the Employer
elects that Participants will direct the voting of
Employer Stock to the extent described in Section
13.8. Check below only if Participants will
direct the voting of Employer Stock.
_____ Participants are hereby appointed named fiduciaries for the purpose of voting of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the voting of Employer Stock credited to his Account, the Trust shall not vote such Employer Stock.
Unallocated shares of Employee Stock will be voted by the Trustee as directed by the Plan Administrator.) |
Tendering. Section 13.8 of the Plan
provides that Employer Stock held as an investment
under the Plan will be tendered in accordance with
the Employer's instructions unless the Employer
elects that Participants will direct the tendering
of Employer Stock to the extent described in
Section 13.8. Check below only if Participants
will direct the tendering of Employer Stock.
(Note: Unallocated shares of Employer Stock will
be tendered in proportion to the percentage of
allocated shares which are tendered.)
_____ Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the tendering of Employer Stock, the Trustee shall not tender such Employer Stock.)
Voting of Non-Putnam Shares. Section 13.10 of the Plan
provides that shares of registered investment companies
held under the Plan other than Putnam mutual funds
shall be voted in accordance with the Employer's
instructions unless the Employer elects that
Participants will direct the voting of such non-Putnam
investment company shares to the extent described in
Section 13.10. Check below only if Participants will
direct the voting of such non-Putnam investment company
shares:
_____ Participants are hereby
appointed named fiduciaries for the purpose
of voting shares of registered investment
|
companies other than Putnam mutual funds in accordance with Section 13.10.
Note: Shares of non-Putnam investment companies for which the Trustee receives no voting instructions shall be voted in the same proportion as it votes such shares for which it has received instructions.
Retirement Age.
Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65).
Early Retirement (Plan Section 7.1). Check and complete the item below only if you want Participants to become fully vested upon fulfilling specified age and service requirements before reaching normal retirement age:
_____ Early retirement will be permitted at age ____ with at least ________ Years of Service.
Vesting (Plan Article 8).
Time of Vesting. The provision checked below will determine a Participant's vested percentage in his Employer Contribution Account.
_____ 100% vesting immediately upon participation in the Plan. If you check this option, skip the rest of this part 8.
_____ Five-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 1 2 3 4 5
_____ Six- Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Seven-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
Years of Service 3 4 5 6 7
_____ Three-Year Cliff
Schedule:
Vested Percentage
0% 100%
Years of Service
0-2 3
_____ Five-Year Cliff
Schedule:
Vested Percentage 0% 100%
Years of Service 0-4 5
|
_____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule):
Vested
Percentage
__% __%
__% __%
__%
Years of
Service
___ ___
___ ___
___
|
If you selected above "Other Schedule", specify in the space below the schedule that will apply after the Plan is top-heavy. The schedule you specify must be (i) the Six-Year Graded Schedule, or (ii) the Three-Year Cliff Schedule, or (iii) any other schedule that is at least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule
The top-heavy vesting schedule will be:
____ the same "Other Schedule" selected above
____ Vested Percentage
% % % %
%
Years of Service ___
___ ___ ___ ___
Service for Vesting. Skip this part B if your Plan
will include all of an employee's service in
|
determining his Years of Service for vesting.
Years of Service for vesting will exclude (check one or more):
_____ Service before the Effective Date of the Plan, if this is a new plan, or service before the effective date of your existing plan, if this Plan replaces an existing plan _____ Service before the Plan Year in which an employee reached age 18
_____ Service for a business acquired by the Employer, before the date of acquisition
Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one):
_____ 1,000 Hours of Service
_____ ___________________ Hours of Service
(under 1,000)
Year of Service Measuring Period for Vesting (Plan
|
Section 2.54). The periods of 12 months used for measuring Years of Service will be (check one):
_____ Plan Years
_____ 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing.
Loans (Plan Section 12.4). Will your Plan permit loans to employees from their Accounts?
_____ Yes
_____ No
Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment?
_____ Yes _____ No Note: The time for distribution cannot be left to the |
discretion of the Employer or the Plan Administrator. If you check No above, small accounts will be distributable at the time selected by the Participant.
Top-Heavy Minimum Contributions (Plan Section 15.3). For any Plan Year in which the Plan is top-heavy, you must provide for each Participant who is a non-key employee and who is employed on the last day of the Plan Year an |
allocation equal to 3% of his Earnings (or if less, the highest percentage allocated to any key employee). If you have adopted Putnam paired plans, for any Plan Year in which the Plan is top-heavy, the top-heavy minimum contribution will be provided under this Plan.
Skip paragraphs A and B below if you have Putnam paired plans or if you do not maintain any other qualified plan in addition to this Plan.
If you maintain another qualified plan in addition to this Plan, specify below whether a non-key employee who participates in both plans will receive a top-heavy minimum contribution (or benefit) in this Plan or the other plan (check one):
The top-heavy minimum contribution (or benefit) for non-key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in:
_____ This Plan (Check this if the other plan is another Putnam prototype plan.)
(Skip this paragraph if you do not maintain a defined benefit plan.) If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 15.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 15.4. Specify your election by completing the statement below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as permitted under Plan
Section 15.4.
Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below:
If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one):
_____ The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan.
_____ The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below.
B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below:
Note: Your description under A or B above cannot be left to discretion and changed from year to year. If you want to amend it from year to year, you must execute a new plan agreement.
If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %______________________________________ Mortality table: ________________________________________ |
Administration.
Plan Administrator (Plan Section 16.1). You may appoint a person or a committee to serve as Plan Administrator. You may remove and replace anyone you have appointed, and anyone you have appointed may resign, without the need to amend this Plan Agreement, provided that you notify Participants in writing of any such change. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator.
The initial Plan Administrator will be (check one):
_____ This person: _______________________________
_____ A committee composed of these people:
_________________________________________________________________
_
_________________________________________________________________
_
|
Recordkeeper (Plan Section 16.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and you.
The initial Recordkeeper will be:
Reliance on Opinion Letter. If you ever maintained or you
later adopt any plan (including a welfare benefit fund, as
defined in Section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate
accounts for key employees, as defined in Section 419A(d)(3)
of the Code; or an individual medical account, as defined in
Section 415(l)(2) of the Code) in addition to this plan,
you may not rely on an opinion letter issued to Putnam by
the National Office of the Internal Revenue Service as
evidence that the Plan is qualified under Section 401 of
the Internal Revenue Code. If you maintain or adopt
multiple plans, in order to obtain reliance with respect to
plan qualification of the Plan, you must receive a
determination letter from the appropriate Key District
Office of Internal Revenue. Putnam will prepare an
application for such a letter upon your request at a fee
agreed upon by the parties.
The Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Section 401 of
the Code unless the terms of the plan, as herein adopted or
amended, that pertain to the requirements of Section
401(a)(4), 401(a)(5), 401(a)(17), 401(1), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or
later laws, (a) are made effective retroactively to the
first day of the first Year beginning after December 31,
1988 (or such later date on which these requirements first
become effective with respect to this plan); or (b) are made
effective no later than the first day on which the Employer
is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements,
and the prior provisions of the plan constitute such an
interpretation.
Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #002 may be used only in conjunction with Putnam's basic plan document #05.
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
MONEY PURCHASE PENSION PLAN
The Employer named below hereby adopts a PUTNAM MONEY PURCHASE PENSION PLAN, and appoints __________________ to serve as Trustee of the Plan. (Note: you may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission.) The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Money Purchase Pension Plan only upon Putnam's acceptance of this Plan Agreement.
Employer signature(s) to adopt Plan:
Date of signature:
Please print name(s) of authorized person(s) signing above:
A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective.
INVESTMENT DEALER INFORMATION
Registered Representative:
_________________________________________
Name
_________________________________________
Telephone
* * * * *
|
ACCEPTANCE OF TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By: _________________________________________________________________ ______________ Complete Part B only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. Note: Putnam may impose an annual maintenance fee as a condition of its acceptance of this |
plan as a Putnam Prototype Money Purchase Pension Plan.
B. _________________________________, Trustee
By: ______________________________
___ Trustee's Tax I.D. Number
_______________
(Trustee)
_________________________________________________________________
____________________
Address of Trustee
|
Complete Part C only if insurance Policies will be purchased under Article 14 of the Plan (in addition to Putnam Investment Products).
C. Appointment and Acceptance of Insurance Trustee
1. Appointment to:
You are hereby designated as Insurance Trustee for Policies to be held in accordance with the terms and conditions of this Plan and Trust.
Employer signature to appoint Insurance Trustee:
2. Acceptance as Insurance Trustee is agreed to in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer as set forth above.
By:_____________________________________ Trustee's Tax I.D.
Number _________________
_________________________________________________________________
____________________
Address of Insurance Trustee
|
* * * * *
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #05.
Putnam Mutual Funds Corp.
By: ______________________________
PUTNAM BASIC PROFIT SHARING AND 401(K) PLAN
PLAN AGREEMENT #003
This is the Plan Agreement for a Putnam prototype profit sharing plan with optional Section 401(k) provisions. Please consult a tax or legal advisor and review the entire form before you sign |
it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. You can get further information to help you complete the Plan Agreement from your investment dealer, or from Putnam at:
Putnam Defined Contribution Plans
Attn: L-3 Plan Administration
Putnam DCPA, Location 34
P.O. Box 9740
Providence, RI 02940-9740
Phone: 1-800-752-5766
* * * * *
By executing this Plan Agreement, the Employer establishes a profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #05, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Basic Profit Sharing and 401(k) Plan.
* * * * *
All Employers complete items 1-11 below. Employers who wish to adopt Section 401(k) provisions also complete item 12.
Business Information. The Employer adopting this Plan is:
Business Address: _______________________________
Phone: __________________________
Form of Organization (check one):
_____ Sole proprietorship _____
Corporation _____ Other
_____ Partnership _____ S Corporation
Plan Name:_______________________________
Plan Number: 00 (complete)
Taxable Year of Business:
_____ Calendar Year
_____ Fiscal year ending on
_______________________________________________
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Plan Information.
Plan Year. Check one:
_____ The Plan Year will be the same as the Taxable Year of the Business shown in 1.F. above. If the Taxable |
Year of the Business changes, the Plan Year will change accordingly.
_____ The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month).
The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan.
Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____ Yes
_____ No
If you answered Yes in 2.B. above, please complete the following:
______________________________________________________________
Name of the plan you are replacing
______________________________________________________________
Original Effective Date of the plan you are
replacing
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Identifying Highly Compensated Employees. Check One:
_____ The Plan will use the regular method under Plan Section 2.60(a) for identifying Highly Compensated Employees.
If your Plan Year is the calendar year, do you wish to make the regular method's "calendar year election" for identifying your Highly Compensated Employees?
_____ Yes
_____ No
_____ The Plan will use the simplified
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method under Plan Section 2.60(b) for identifying Highly Compensated Employees.
Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B and C below.
Classes of Eligible Employees. The Plan requires coverage of all classes of employees of the Employer and any Affiliated Employer, except for union employees and nonresident aliens without U.S.-source income. The general rules of the Plan exclude employees in those two groups, but if you want employees in one or both categories to be eligible for your Plan, check the appropriate space below.
The following employees will be eligible to participate in the Plan:
_____ Members of the following collective bargaining unit(s) (give names of unions):
_____ Nonresident aliens with no U.S.-source income
Age Requirement (check and complete one):
_____ No minimum age required for participation
_____ Employees must reach age ___ (not over 21) to
participate
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Service Requirements.
A 6-month Eligibility Period is a 6-month period beginning either on an employee's first day of work with the Employer or on the date 6 months following the employee's first day of work, and anniversaries of those dates. A 12-month Eligibility Period is the 12- month period beginning on an employee's first day of work with the Employer, and anniversaries of that date. You may also select another Eligibility Period consisting of a number of months of your choice and each successive period of that number of months.
To become eligible, an employee must complete (choose one):
_____ a. No minimum service required.
Skip to (5) below.
_____ b. One 6-month Eligibility Period
_____ c. One __-month
Eligibility Period (must be less than
12)
_____ d. One 12-month
Eligibility Period
_____ e. Two 12-month
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Eligibility Periods (may not be chosen if you adopt either the Section 401(k) provisions under item 12 or a vesting schedule other than the first choice under item 8.A(1), which provides for 100% full and immediate vesting).
If the Employer acquires a business, will the Eligibility Period for employees of the acquired business be the period selected in (1) above, beginning on the first day of work for the acquired business?
_____ Yes
_____ No
a. To receive credit for a 6-month
Eligibility Period, an employee must complete
during it at least:
_____ 500 Hours of Service
_____ _____________ Hours of Service (must be
1 hour or more)
(under 500)
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b. Complete only if (1)(c) above is selected. To receive credit for the Eligibility Period selected in (1)(c), an employee must complete during it at least:
_____ _____________ Hours of Service
(under 1000)
Note: If you adopt an Eligibility Period of less
than 12 months, in any event, an employee will
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automatically receive credit for the Eligibility Period if the employee completes at least 1,000 Hours of Service during a 12 consecutive month period following the first day of work.
c. To receive
credit for a 12-month
Eligibility Period, an
employee must complete it
during at least:
_____ 1,000 Hours of Service
_____ _____________ Hours of Service (must be
1 hour or more)
(under 1,000)
Hours of Service will be credited to an employee
by the following method (check one):
_____ a. Actual hours for which an
employee is paid
_____ b. Any employee who has
one actual paid hour in the following
period will be credited with the number
of Hours of Service indicated (check
one):
_____ Day (10 Hours of Service)
_____ Week (45 Hours of Service)
_____ Semi-monthly payroll period
(95 Hours of Service)
_____ Month (190
Hours of Service)
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Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing.
Entry Dates. Each Employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one):
_____ The first day of the month in which he fulfills the requirements.
_____ The first of the following dates occurring after he fulfills the requirements (check one):
_____ The first day of the month following the date he fulfills the requirements (monthly).
_____ The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly).
_____ The first day of the first month and the seventh month in a Plan Year (semiannually).
(For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above?
_____ Yes
_____ No; all Employees on the Effective Date will
be eligible as of the Effective Date, even if they
have not met the age and service requirements.
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Compensation (Plan Section 2.8).
Amount. Compensation for purposes of the Plan will be the amount of the following that is actually paid by your Business to an employee during the Plan Year (check one):
_____ Form W-2 earnings as defined in Section 2.8 of the
Plan.
_____ Form W-2 earnings as defined in Section 2.8 of the
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Plan, plus any amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP, tax sheltered
403(b) arrangement, or Code Section 457 deferred
compensation plan, or contributions described in Code
Section 414(h)(2) that are picked up by a governmental
employer.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b) of the
Plan.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b) of the
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Plan, plus any amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP, tax sheltered
403(b) arrangement, or Code Section 457 deferred
compensation plan, or contributions described in Code
Section 414(h)(2) that are picked up by a governmental
employer.
Measuring Period. Compensation will be based on the Plan Year. However, for an employee's initial year of Participation in the Plan, Compensation shall be recognized as of:
_____ The first day of the Plan Year.
_____ The date the Participant entered the Plan.
Contributions (Plan Sections 4.1 and 4.2).
Employer Contributions - Profit Limitation. Will
Employer contributions to the Plan be limited to the
current and accumulated profits of your business?
(check one):
_____ Yes _____ No If you will make contributions only under the Section 401(k) provisions in item 12 of this Plan Agreement, |
skip the rest of this part 5.
Employer Contributions - Amount.
(1) The Employer will contribute to the Plan for each Plan Year (check one):
_____ An amount chosen by the Employer from year to year
______ ____% of the Earnings of all Qualified Participants for the Plan Year
______ $____ for each Qualified Participant
(2) Will Forfeitures for a Plan Year be applied to reduce the amount of the contribution otherwise required?
_____ Yes
_____ No
(3) Will Forfeitures that are not applied to reduce the amount of contribution otherwise required for the Plan Year be applied to reduce the required Employer Matching Contribution for the Plan Year described in 12.B.(1)?
_____ Yes
_____ No
If you check No to both (2) and (3) above, Forfeitures will be allocated as though they were additional Profit Sharing Contributions.
Employer Contributions - Allocations to Participants
1. Allocation to Qualified Participants. Any Employee who has met the eligibility requirements in item 3 of this Plan Agreement is a Qualified Participant unless, for reasons other than his death or retirement, he is not an active Employee on the last day of the Plan Year, and he is not credited with more than 500 Hours of Service in the Plan Year.
How will contributions be allocated?
_______ Pro rata (percentage based on compensation)
_______ Uniform Dollar amount
_______ Integrated With Social Security (complete
(2) and (3) below)
2. Integration with Social Security. (Complete only if you have elected in 5.C.1. to integrate your Plan with Social Security.) Contributions under paragraph B will be allocated to Qualified Participants as you check below:
_____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document in every Plan Year, whether or not the Plan is top-heavy.
_____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document only in Plan Years in which the Plan is top-heavy. In all other Plan Years, contributions will be allocated according to the Non-Top-Heavy Integration Formula in Section 4.2(c)(2) of the Basic Plan Document.
3. Integration Level. (Complete only if you have elected in 5.C.1 to integrate your Plan with Social Security.) The Integration Level will be (check one):
____ The Social Security Wage Base in effect at the beginning of the Plan Year.
____ __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year.
____ $__________ (not more than the Social Security Wage Base).
Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living.
D. Participant Contributions (Plan Section 4.2(e)). Will your Plan allow Participants to make after-tax contributions?
_____ Yes
_____ No
Investments (Plan Sections 13.2 and 13.3). The Employer
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selects in part A below the Investment Products that will be available under the Plan. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. From the group of available Investment Products selected by the Employer, each Participant chooses the investments for his own Accounts unless the Employer elects differently in B below.
Available Investment Products (Plan Section 13.2). The following investments will be available under the Plan (check one):
Mutual Funds
_____ The group of funds made available by Putnam,
selected by the Employer and communicated to
Participants in writing. A current list of the
funds selected by the Employer from time to time
shall be kept with the records of the Plan. The
initial list of funds is as follows (up to six (6)
funds may be selected):
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
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Other Investment Options
______ Putnam Stable Value Fund
Note: You may include an existing GIC option above, provided that the entire balance of the contract(s) mature within three years of the date your assets are transferred to Putnam.
In the event that there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam (or if the Employer makes no such selection, by execution of the Plan Agreement, the Employer shall affirmatively elect to have such amounts invested in the Putnam Money Market Fund) until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement with Putnam (or if none, the Putnam Money Market Fund) as an available Investment Product for that purpose.
Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.)
_____ The Employer will make all investment decisions with respect to all employee contributions including Elective Deferrals, Participant Contributions, Deductible Employee Contributions and Rollover Contributions.
_____ The Employer will make investment decisions with respect to all Employer Contributions, including Profit Sharing Contributions, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions.
_____ The Employer will make investment decisions with respect to Employer Matching Contributions and Qualified Matching Contributions made pursuant to Sections 12.B and 13.A of this Plan Agreement.
_____ The Employer will make investment decisions with respect to Qualified Nonelective Contributions made pursuant to Section 13.B of this Plan Agreement.
of
this
Plan
Agree
ment.
Changes. Investment instructions may be changed (check one):
_____ on any Valuation Date (daily) _____ on the first day of any month. _____ on the first day of the first, |
fourth, seventh and tenth months in a Plan Year
(quarterly)
Voting of Non-Putnam Shares. Section 13.10 of the Plan
provides that shares of registered investment companies
held under the Plan other than Putnam mutual funds
shall be voted in accordance with the Employer's
instructions unless the Employer elects that
Participants will direct the voting of such non-Putnam
investment company shares to the extent described in
Section 13.10. Check below only if Participants will
direct the voting of such non-Putnam investment company
shares:
_____ Participants are hereby
appointed named fiduciaries for the purpose
of voting shares of registered investment
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companies other than Putnam mutual funds in accordance with Section 13.10.
Note: Shares of non-Putnam investment companies for which the Trustee receives no voting instructions shall be voted in the same proportion as it votes such shares for which it has received instructions.
Distributions and Withdrawals.
Retirement Distributions.
Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65).
Early Retirement (Plan Section 7.1). Check and complete the item below only if you want Participants to become fully vested upon fulfilling specified age and service requirements before reaching normal retirement age:
_____ Early retirement will be permitted at age ____ with at least ________ Years of Service.
Annuities (Plan Section 9.3). Will your Plan permit a Participant to select a life annuity form of distribution? You must check Yes if this Plan replaces an existing plan that permits distributions in a life annuity form:
_____ Yes
_____ No
Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions from Employer Contribution Accounts? You must check Yes if this Plan replaces an existing plan that permits hardship distributions of Profit Sharing Contributions:
_____ Yes
_____ No
Withdrawals after Age 59 1/2 (Plan Section 12.3). Will your Plan permit employees over age 59 1/2 to withdraw amounts upon request? You must check Yes if this Plan replaces an existing plan that permits withdrawals after age 59 1/2:
_____ Yes
_____ No
Loans (Plan Section 12.4). Will your Plan
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permit loans under the Putnam Loan Program to employees from their Accounts? (Note: no other loan program may be used.)
_____ Yes
_____ No
Automatic Distribution of Small Accounts (Plan
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Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment?
_____ Yes _____ No Note: If you check No above, the time for |
distribution cannot be left to the discretion of the Employer or the Plan Administrator. Small accounts will be distributable at the time selected by the Participant.
Vesting (Plan Article 8).
Time of Vesting.
(1) The provision checked below will determine a Participant's vested percentage in the Profit Sharing Contribution portion of his Employer Contribution Account:
_____ 100% vesting immediately upon participation in the Plan.
_____ Five-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 1 2 3 4 5
_____ Six-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Seven-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 3 4 5 6 7
_____ Three-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-2 3
_____ Five-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-4 5
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_____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule):
Vested
Percentage
__% __%
__% __%
__%
Years of
Service
___ ___
___ ___
___
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If you selected above an "Other Schedule", specify
in the space below the schedule that will apply
after the Plan is top-heavy. The schedule you
specify must be (i) the Six-Year Graded Schedule,
or (ii) the Three-year Cliff Schedule, or (iii)
any other schedule that is at least as favorable
to employees, at all years of service, as either
the Six-Year Schedule or the Three-Year Cliff
Schedule.
The top-heavy vesting schedule will be:
_____ the same "Other Schedule"
selected above
_____
Veste
d
Perce
ntage
__%
__%
__%
__%
__%
Years
of
Servi
ce
___
___
___
___
___
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(2) If you adopt the Section 401(k) provisions in item 12 and will make Employer Matching Contributions, check the provision below that will determine a Participant's vested percentage in his Employer Matching Contribution Account (check one):
_____ 100% vesting immediately upon participation in the Plan.
_____ Five-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 1 2 3 4 5
_____ Six-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Seven-Year Graded Schedule:
Vested Percentage 20%
40% 60% 80% 100%
Years of Service 3 4 5 6 7
_____ Three-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-2 3
_____ Five-Year Cliff Schedule:
Vested Percentage 0%
100%
Years of Service 0-4 5
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_____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule):
Vested
Percentage
__% __%
__% __%
__%
Years of
Service
___ ___
___ ___
___
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If you selected "Other Schedule" above, the vesting
schedule that will apply to the Employer Matching
Contribution Account after the Plan becomes top-heavy
will be the top-heavy vesting schedule applicable to
the Employer Contribution Account, as specified in
Section 8.A.(1).
Service for Vesting. Skip this part B if your Plan will include all of an employee's service in determining his Years of Service for vesting.
Years of Service for vesting will exclude (check one or more):
_____ Service before the Effective Date of the Plan, if this is a new plan, or service before the effective date of your existing plan, if this Plan replaces an existing plan
_____ Service before the Plan Year in which an employee reached age 18
_____ Service for a business acquired by the Employer, before the date of acquisition
Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one):
_____ 1,000 Hours of Service
_____ ___________________ Hours of Service
(under 1,000)
Year of Service Measuring Period for Vesting (Plan
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Section 2.54). The periods of 12 months used for measuring Years of Service will be (check one):
_____ Plan Years
_____ 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing.
Top-Heavy Minimum Contributions (Plan Section 15.3). For any Plan Year in which the Plan is top-heavy, you must provide for each Participant who is a non-key employee and who is employed on the last day of the Plan Year an |
allocation equal to 3% of his Earnings (or if less, the highest percentage allocated to any key employee). Neither Elective Deferrals, Employer Matching Contributions nor Qualified Matching Contributions for a non-key employee may be taken into account for purposes of this requirement. If you have adopted Putnam paired plans, for any Plan Year in which the Plan is top-heavy, the top-heavy minimum contribution will be provided under the Putnam Money Purchase Pension Plan.
Skip paragraphs A and B below if you have Putnam paired plans or if you do not maintain any other qualified plan in addition to this Plan.
If you maintain another qualified plan in addition to this Plan, specify below whether a non-key employee who participates in both plans will receive a top-heavy minimum contribution (or benefit) in this Plan or the other plan (check one):
The top-heavy minimum contribution (or benefit) for non-key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in:
_____ This Plan
_____ The plan named here:
__________________________________
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(Skip this paragraph if you do not maintain a defined benefit plan.) If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 15.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 15.4. Specify your election by completing the statement below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as required under Plan
Section 15.4.
Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below:
If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one):
_____ The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan.
_____ The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below.
B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below:
Note: Your description under A or B cannot be left to discretion and changed from year to year. If you want to amend it from year to year, you must execute a new plan agreement.
If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %__________________________
Mortality Table: __________________________
Administration.
Plan Administrator (Plan Section 16.1). You may appoint a person or a committee to serve as Plan Administrator. You may remove and replace anyone you have appointed, and anyone you have appointed may resign, without the need to amend this Plan Agreement, provided that you notify Participants in writing of any such change. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator.
The initial Plan Administrator will be (check one):
_____ This person: _______________________________
_____ A committee composed of these people:
_________________________________________________________________
_
_________________________________________________________________
_
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Recordkeeper (Plan Section 16.4). You must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and you.
Complete item 12 below if your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code.
Section 401(k) Plan Provisions (Plan Article 5).
Elective Deferrals (Plan Section 5.2).
A Participant may make Elective Deferrals for each year in an amount not to exceed (check one):
_____ (a) _______% of his Earnings
_____ (b) $______ (specify dollar
amount)
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_____ (c) _______% of his Earnings not to
exceed $_______
(specify dollar amount)
Note: Elective Deferrals may not exceed the annual dollar limit under Section 402(g) of the Internal Revenue Code.
A Participant may begin to make Elective Deferrals, or change the amount of his Elective Deferrals, as of the following dates (check one):
_____ First business day of each month
(monthly).
_____ First business day of the first, fourth,
seventh and tenth months of the Plan Year
(quarterly).
_____ First business day of the first and
seventh months of the Plan Year
(semiannually).
_____ First business day of the Plan Year only
(annually).
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May Participants make Elective Deferrals of bonuses?
_____ Yes
_____ No
Employer Matching Contributions of Employee Elective
|
Deferrals (Plan Section 5.8). Skip this part B if you will not make Employer Matching Contributions. Employer Matching Contributions are subject to the vesting schedule elected in item 8 of this Plan Agreement, and can be withdrawn during employment in the event of financial hardship (as defined in Section 12.2 of the Plan) if you so elect in part F below.
The Employer will contribute and will allocate to each Participant's Employer Matching Account an amount equal to:
(Check the provision(s) desired, and fill in the % blank(s) in each provision you check. If you wish to determine the amount of Employer Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.)
_____ ___% of Elective Deferrals
_____ ___% of Elective Deferrals that do not
exceed ___% of Earnings
_____ ___% of Participant
Contributions
_____ In applying the above election, Elective
Deferrals shall not exceed $______.
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(2) Will forfeited Employer Matching Contributions be applied to reduce the total contribution specified in B(1) above?
_____ Yes
_____ No
(3) Will forfeited Employer Matching Contributions that are not applied to reduce required Employer Matching Contributions specified in B(1) above be applied to reduce required Employer Contributions for the Plan Year described in 5.B?
_____ Yes
_____ No
If you check No to both (2) and (3) above, forfeited Employer Matching Contributions will be allocated as though they were additional Employer Matching Contributions.
Hardship Distributions from 401(k) Accounts (Plan Sections 12.2 and 5.14).
(1) Will your Plan permit hardship distributions from Elective Deferral Accounts?
_____ Yes
_____ No
(2) If your Plan has Employer Matching Contributions, will it permit hardship distributions from Employer Matching Accounts? You must check Yes if this Plan replaces an existing plan that permits hardship distributions of Employer Matching Contributions.
_____ Yes
_____ No
QNEC and QMACs.
Note: Qualified Matching Contributions are always fully vested and cannot be distributed from the Plan before a Participant reaches age 59 1/2 or leaves employment. They will be used to the extent needed, to help the Plan pass the ADP test explained on page __ of the Qs & As.
Qualified Matching Contributions (Plan Section 2.62). Skip this part A if you will not make Qualified Matching Contributions.
Qualified Matching Contributions will be made with respect to (check one):
_____ Elective Deferrals by all Participants
_____ Elective Deferrals only by Non-Highly
Compensated Participants
The amount of Qualified Matching Contributions
|
made with respect to a Participant will be:
(Check the provision desired and fill in the % blank(s) in the provision you check. If you wish to determine the amount of Qualified Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.)
_____ ___% of his Elective Deferrals
_____ ___% of his Elective Deferrals that do not exceed ___% of his Earnings
_____ ___% of Participant Contributions _____ In applying the above election, Elective Deferrals shall not exceed $________.
Qualified Nonelective Contributions (Plan Section 2.64).
Qualified Nonelective Contributions will be made
on behalf of (check one):
_____ All Participants
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_____ Only Participants who are not Highly Compensated Employees
The amount of Qualified Nonelective Contributions for a Plan Year will be (check one):
(If you wish to determine the amount of Qualified Nonelective Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check.)
_____ ___% (not over 15%) of the Earnings of Participants on whose behalf Qualified Nonelective Contributions are made
_____ An amount determined by the Employer from year to year, to be shared in proportion to their Earnings by Participants on whose behalf Qualified Nonelective Contributions are made
Note: Qualified Nonelective Contributions will be used, to the extent needed, to help the Plan pass the ADP test, explained on page __ of the Qs & As.
ACP Test. Every plan that has after-tax Participant Contributions, Employer Matching Contributions or Qualified Matching Contributions must pass an annual test called the ACP test, which is explained on page __ of the Qs & As. Elective Deferrals and Qualified Nonelective Contributions will be used to help the Plan pass the ACP test, to the extent needed.
Reliance on Opinion Letter. If you ever maintained or you
later adopt any plan (including a welfare benefit fund, as
defined in Section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate
accounts for key employees, as defined in Section 419A(d)(3)
of the Code; or an individual medical account, as defined in
Section 415(l)(2) of the Code) in addition to this plan,
you may not rely on an opinion letter issued to Putnam by
the National Office of the Internal Revenue Service as
evidence that the Plan is qualified under Section 401 of
the Internal Revenue Code. If you maintain or adopt
multiple plans, in order to obtain reliance with respect to
plan qualification of the Plan, you must receive a
determination letter from the appropriate Key District
Office of Internal Revenue. Putnam will prepare an
application for such a letter upon your request at a fee
agreed upon by the parties.
The Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Section 401 of
the Code unless the terms of the plan, as herein adopted or
amended, that pertain to the requirements of Sections
401(a)(4), 401(a)(5), 401(a)(17), 401(l), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or
later laws, (a) are made effective retroactively to the
first day of the first Year beginning after December 31,
1988 (or such later date on which these requirements first
become effective with respect to this plan); or (b) are made
effective no later than the first day on which the Employer
is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements,
and the prior provisions of the plan constitute such an
interpretation.
Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #003 may be used only in conjunction with Putnam's basic plan document #05.
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
BASIC PROFIT SHARING AND 401(k) PLAN
The Employer named below hereby adopts a PUTNAM BASIC PROFIT SHARING AND 401(k) PLAN, and appoints Putnam Fiduciary Trust Company to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Basic Profit Sharing and 401(k) Plan only upon Putnam's acceptance of this Plan Agreement.
Employer signature(s) to adopt Plan:
Date of signature:
Please print name(s) of authorized person(s) signing above:
A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective.
INVESTMENT DEALER INFORMATION
Registered Representative:
_________________________________________
Name
_________________________________________
Telephone
* * * * *
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ACCEPTANCE OF TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #05.
Putnam Mutual Funds Corp.
By: ______________________________
PUTNAM BASIC PLAN DOCUMENT #06
PUTNAM BASIC PLAN DOCUMENT #06
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTRODUCTION
1
ARTICLE 2. DEFINITIONS 2
2.1. Account
2
2.2. Affiliated Employer
2
2.3. Authorized Leave of Absence
2
2.4. Beneficiary
3
2.5. CODA
3
2.6. Code
3
2.7. Compensation
3
2.8. Date of Employment
3
2.9. Deductible Employee Contribution Account
3
2.10. Deferral Agreement
3
2.11. Disabled
3
2.12. Earned Income
4
2.13. Earnings
4
2.14. Effective Date
4
2.15. Elective Deferral
4
2.16. Elective Deferral Account
4
2.17. Eligibility Period
5
2.18. Employee
5
2.19. Employer
5
2.20. Employer Matching Account
5
2.21. Employer Matching Contribution
5
2.22. Employer Profit Sharing Account
5
2.23. Employer Profit Sharing Contribution
6
2.24. Employer Stock
6
2.25. ERISA
6
2.26. Forfeiture
6
2.27. Highly Compensated Employee
6
2.28. Hour of Service
7
2.29. Investment Company
9
2.30. Investment Company Shares
9
2.31. Investment Products
9
2.32. Leased Employee
9
2.33. Non-Highly Compensated Employee
9
2.34. One-Year Eligibility Break
10
2.35. One-Year Vesting Break
10
2.36. Owner-Employee
10
2.37. Participant
10
2.38. Participant Contribution Account
10
2.39. Plan
10
2.40. Plan Administrator
10
2.41. Plan Agreement
10
2.42. Plan Year
10
2.43. Putnam
11
2.44. Qualified Domestic Relations Order
11
2.45. Qualified Matching Account
11
2.46. Qualified Matching Contribution
11
2.47. Qualified Nonelective Contribution
11
2.48. Qualified Nonelective Contribution Account
11
2.49. Qualified Participant
11
2.50. Recordkeeper
11
2.51. Retirement
11
2.52. Rollover Account
12
2.53. Self-Employed Individual
12
2.54. Service Agreement
12
2.55. Shareholder-Employee
12
2.56. Trust and Trust Fund
12
2.57. Trustee
12
2.58. Valuation Date
12
2.59. Year of Service
12
ARTICLE 3. PARTICIPATION
14
3.1. Initial Participation
14
3.2. Resumed Participation
14
3.3. Benefits for Owner-Employees
15
3.4. Changes in Classification
15
ARTICLE 4. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA) 17
4.1. General Provisions Applicable to Contributions
Under Both Articles
4 and 5
17
4.2. CODA Participation
18
4.3. Annual Limit on Elective Deferrals
18
4.4. Distribution of Certain Elective Deferrals
19
4.5. Satisfaction of ADP and ACP Tests
19
4.6. Actual Deferral Percentage Test Limit
20
4.7. Distribution of Excess Contributions
21
4.8. Employer Matching Contributions
22
4.9. Average Contribution Percentage Test Limit and
Aggregate Limit 23
4.10. Distribution of Excess Aggregate Contributions
25
4.11. Qualified Nonelective Contributions; Qualified
Matching
Contributions
26
4.12. Restriction on Distributions
26
4.13. Forfeitures of Employer Matching Contributions
27
4.14. Special Effective Dates
27
ARTICLE 5. OTHER CONTRIBUTIONS
28
5.1. Employer Profit Sharing Contributions
28
5.2. Forfeitures of Employer Profit Sharing
Contributions 28
5.3. Rollover Contributions
28
5.4. No After-Tax Participant Contributions or
Deductible Employee
Contributions
28
ARTICLE 6. LIMITATIONS ON ALLOCATIONS 29
6.1. No Additional Plan
29
6.2. Additional Master or Prototype Plan
30
6.3. Additional Non-Master or Non-Prototype Plan
31
6.4. Additional Defined Benefit Plan
31
6.5. Definitions
31
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS
35
7.1. Retirement
35
7.2. Death
35
7.3. Other Termination of Employment
35
ARTICLE 8. VESTING 37
8.1. Vested Balance
37
8.2. Vesting of Accounts of Returned Former Employees
37
8.3. Forfeiture of Non-Vested Amounts
38
8.4. Special Rule in the Event of a Withdrawal
39
8.5. Vesting Election
39
ARTICLE 9. PAYMENT OF BENEFITS
40
9.1. Distribution of Accounts
40
9.2. Restriction on Immediate Distributions
40
9.3. Optional Forms of Distribution
41
9.4. Distribution Procedure
42
9.5. Lost Distributee
42
9.6. Direct Rollovers
43
9.7. Distributions Required by a Qualified Domestic
Relations Order 43
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS
45
10.1. Applicability
45
10.2. Qualified Joint and Survivor Annuity
46
10.3. Qualified Preretirement Survivor Annuity
46
10.4. Definitions
46
10.5. Notice Requirements
48
10.6. Transitional Rules
48
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS
51
11.1. General Rules
51
11.2. Required Beginning Date
51
11.3. Limits on Distribution Periods
52
11.4. Determination of Amount to Be Distributed Each
Year 53
11.5. Death Distribution Provisions
54
11.6. Transitional Rule
55
ARTICLE 12. WITHDRAWALS AND LOANS 57
12.1. Withdrawals from Participant Contribution
Accounts 57
12.2. Withdrawals on Account of Hardship
57
12.3. Withdrawals After Reaching Age 59 1/2 58
12.4. Loans
59
12.5. Procedure; Amount Available
61
12.6. Protected Benefits
61
12.7. Restrictions Concerning Transferred Assets
61
ARTICLE 13. TRUST FUND AND INVESTMENTS 62
13.1. Establishment of Trust Fund
62
13.2. Management of Trust Fund
62
13.3. Investment Instructions
63
13.4. Valuation of the Trust Fund
64
13.5. Distributions on Investment Company Shares
65
13.6. Registration and Voting of Investment Company
Shares 65
13.7. Investment Manager
65
13.8. Employer Stock
65
13.9. Insurance Contracts
68
13.10. Registration and Voting of Non-Putnam
Investment Company
Shares
69
ARTICLE 14. TOP-HEAVY PLANS 70
14.1. Superseding Effect
70
14.2. Definitions
70
14.3. Minimum Allocation
72
14.4. Adjustment of Fractions
73
14.5. Minimum Vesting Schedules
73
ARTICLE 15. ADMINISTRATION OF THE PLAN 75
15.1. Plan Administrator
75
15.2. Claims Procedure
75
15.3. Employer's Responsibilities
76
15.4. Recordkeeper
76
15.5. Prototype Plan
77
ARTICLE 16. TRUSTEE
78
16.1. Powers and Duties of the Trustee
78
16.2. Limitation of Responsibilities
79
16.3. Fees and Expenses
79
16.4. Reliance on Employer
80
16.5. Action Without Instructions
80
16.6. Advice of Counsel
80
16.7. Accounts
80
16.8. Access to Records
81
16.9. Successors
81
16.10. Persons Dealing with Trustee
81
16.11. Resignation and Removal; Procedure
81
16.12. Action of Trustee Following Resignation or
Removal 82
16.13. Effect of Resignation or Removal
82
16.14. Fiscal Year of Trust
82
16.15. Limitation of Liability
82
16.16. Indemnification
82
ARTICLE 17. AMENDMENT 83
17.1. General
83
17.2. Delegation of Amendment Power
84
ARTICLE 18. TERMINATION OF THE PLAN AND TRUST
85
18.1. General
85
18.2. Events of Termination
85
18.3. Effect of Termination
85
18.4. Approval of Plan
86
ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS;
MERGERS
87
19.1. General
87
19.2. Amounts Transferred
87
19.3. Merger or Consolidation
87
ARTICLE 20. MISCELLANEOUS
88
20.1. Notice of Plan
88
20.2. No Employment Rights
88
20.3. Distributions Exclusively From Plan
88
20.4. No Alienation
88
20.5. Provision of Information
88
20.6. No Prohibited Transactions
88
20.7. Governing Law
88
20.8. Gender
88
PUTNAM BASIC PLAN DOCUMENT #06
ARTICLE INTRODUCTION
By executing the Plan Agreement, the Employer has
|
established a retirement plan (the "Plan") according to the terms
and conditions of the Plan Agreement and this Putnam Basic Plan
Document #06, for the purpose of providing a retirement fund for
the benefit of Participants and Beneficiaries. A Plan
established hereunder pursuant to a Plan Agreement is intended to
qualify under section 401(a) and section 401(k) of the Code.
ARTICLE DEFINITIONS
The terms defined in Sections 2.1 through 2.59 appear generally throughout the document. Article 4 contain additional definitions of terms related to the cash or deferred arrangement (CODA) contained in this Plan and Section 10.4 contains additional definitions related to distributions from the Plan. Articles 6 and 11 contain additional definitions of terms used only in those Articles.
2.1. Account means any of, and Accounts means all of, a Participant's Elective Deferral Account, Employer Matching Account, Qualified Nonelective Contribution Account, Qualified Matching Account, Employer Profit Sharing Account, Participant Contribution Account, Rollover Account, and Deductible Employee Contribution Account.
2.2. Affiliated Employer, for purposes of the Plan other than Article 6, means the Employer and a trade or business, whether or not incorporated, which is any of the following:
(a) A member of a group of controlled corporations (within the meaning of Section 414(b) of the Code) which includes the Employer; or
(b) A trade or business under common control (within the meaning of Section 414(c) of the Code) with the Employer; or
(c) A member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Employer; or
(d) An entity otherwise required to be aggregated with the Employer pursuant to Section 414(o) of the Code.
In determining an Employee's service for vesting and for eligibility to participate in the Plan, all employment with Affiliated Employers will be treated as employment by the Employer.
For purposes of Article 6 only, the definitions in paragraphs (a) and (b) of this Section 2.2 shall be modified by adding at the conclusion of the parenthetical phrase in each such paragraph the words "as modified by Section 415(h) of the Code."
2. Authorized Leave of Absence means a leave of absence from employment granted in writing by an Affiliated Employer. Authorized Leave of Absence shall be granted on account of military service for any period during which an Employee's right to re-employment is guaranteed by law, and for such other reasons and periods as an Affiliated Employer shall consider proper, provided that Employees in similar situations shall be similarly treated.
2. Beneficiary means a person entitled to receive benefits under the Plan upon the death of a Participant, in accordance with Section 7.2 and Articles 10 and 11.
2. CODA means the cash or deferred arrangement that meets the requirements of Section 401(k) of the Code, as described in Article 4.
2. Code means the Internal Revenue Code of 1986, as amended.
2. Compensation means all of an Employee's compensation determined in accordance with the definition elected by the Employer in the Plan Agreement. For purposes of that election, "Form W-2 earnings" means "wages" as defined in Section 3401(a) of the Code in connection with income tax withholding at the source, and all other compensation paid to the Employee by the Employer in the course of its trade or business, for which the Employer is required to furnish the Employee with a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code, determined without regard to exclusions based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code). Compensation shall include only amounts actually paid to the Employee during the Plan Year. In addition, if the Employer so elects in the Plan Agreement, Compensation shall include any amount which is contributed to an employee benefit plan for the Employee by the Employer pursuant to a salary reduction agreement, and which is not includible in the gross income of the Employee under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. (For a self-employed person, the relevant term is Earned Income, as defined in Section 2.12.)
2. Date of Employment means the first date on which an Employee performs an Hour of Service; or, in the case of an Employee who has incurred one or more One-Year Eligibility Breaks and who is treated as a new Employee under the rules of Section 3.2, the first date on which he performs an Hour of Service after his return to employment.
2. Deductible Employee Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded amounts contributed by him to the Plan on a tax-deductible basis under prior law, and the income, expenses, gains and losses thereon.
2. Deferral Agreement means an Employee's agreement to make one or more Elective Deferrals in accordance with Section 4.2.
2. Disabled means unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of such impairment shall be supported by medical evidence.
2. Earned Income means a Self-Employed Individual's net
earnings from self-employment in the trade or business with
respect to which the Plan is established, excluding items not
included in gross income and the deductions allocable to such
items, and reduced by (i) contributions by the Employer to
qualified plans, to the extent deductible under Section 404 of
the Code, and (ii) the deduction allowed to the taxpayer under
Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2. Earnings, for determining all benefits provided under the Plan for all Plan Years beginning after December 31, 1988, means the first $200,000 (as adjusted by the Secretary of the Treasury at the same time and in the same manner as under Section 415(d) of the Code, except that the dollar increase effective on any January 1 is effective for all Plan Years beginning in the calendar year in which that January 1 occurs, and the first such dollar increase is effective on January 1, 1990) of the sum of the Compensation and the Earned Income received by an Employee during a Plan Year. Notwithstanding the foregoing, for Plan Years beginning after December 31, 1993, Earnings means the first $150,000 (as adjusted periodically by the Secretary of the Treasury for inflation) of the sum of the Compensation and Earned Income received by an Employee during a Plan Year. To calculate an allocation to a Participant's Account for any Plan Year shorter than 12 months, the dollar limit on Earnings must be multiplied by a fraction of which the denominator is 12 and the numerator is the number of months in the Plan Year. In determining the Earnings of a Participant, the rules of Section 414(q)(6) of the Code shall apply, except that in applying those rules the term "family" shall include only the Participant's spouse and the Participant's lineal descendants who have not reached age 19 by the last day of the Plan Year. If, as a result of the application of such rules, the applicable Earnings limitation described above is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Earnings as determined under this Section prior to the application of this limitation.
2. Effective Date means the first day of the Plan Year in which the Plan is adopted, provided that, if the Employer is adopting the Plan as an amendment to an existing plan, the Effective Date will be the date elected by the Employer in the Plan Agreement, which date shall be no earlier than the first day of the Plan Year in which the Plan is adopted. If the Plan Agreement indicates that the Employer is adopting the Plan as an amendment of an existing plan, the provisions of the existing plan apply to all events preceding the Effective Date, except as to specific provisions of the Plan which set forth a retroactive effective date in accordance with Section 1140 of the Tax Reform Act of 1986.
2. Elective Deferral means any contribution made to the Plan by the Employer at the election of a Participant, in lieu of cash compensation, including contributions made pursuant to a Deferral Agreement or other deferral mechanism.
2. Elective Deferral Account means an account maintained on the books of the Plan, in which are recorded a Participant's Elective Deferrals and the income, expenses, gains and losses incurred thereon.
2. Eligibility Period means a period of service with the Employer which an Employee is required to complete in order to commence participation in the Plan. A 12-month Eligibility Period is a period of 12 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, in which he is credited with at least 1,000 Hours of Service. A 6-month Eligibility Period is a period of 6 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, or on the 6-month anniversary of such Date of Employment or any anniversary thereof, in which he is credited with at least 500 Hours of Service. If the Employer has selected another period of service as the Eligibility Period under the Plan, Eligibility Period means the period so designated in the Plan Agreement in which the Employee is credited with a number of Hours of Service equal to the product of 1,000 multiplied by a fraction having a numerator equal to the number of months in the Eligibility Period designated in the Plan Agreement and a denominator of 12. Notwithstanding the foregoing, if an Employee is credited with 1,000 Hours of Service during a 12-consecutive-month period following his Date of Employment or any anniversary thereof, he shall be credited with an Eligibility Period. In the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service in the case of a 12-month Eligibility Period, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000.
2. Employee means a common law Employee of an Affiliated Employer; in the case of an Affiliated Employer which is a sole proprietorship, the sole proprietor thereof; in the case of an Affiliated Employer which is a partnership, a partner thereof; and a Leased Employee of an Affiliated Employer. The term "Employee" includes an individual on Authorized Leave of Absence, a Self-Employed Individual and an Owner-Employee.
2. Employer means the Employer named in the Plan Agreement and any successor to all or the major portion of its assets or business which assumes the obligations of the Employer under the Plan Agreement.
2. Employer Matching Account means an account maintained on the books of the Plan, in which are recorded the Employer Matching Contributions made on behalf of a Participant and the income, expenses, gains and losses incurred thereon.
2. Employer Matching Contribution means a contribution made by the Employer (i) to the Plan pursuant to Section 4.8, or (ii) to another defined contribution plan on account of a Participant's "elective deferrals" or "employee contributions," as those terms are used in Section 401(m)(4) of the Code.
2. Employer Profit Sharing Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded the amounts allocated for his benefit from contributions by the Employer under Section 5.1 and the income, expenses, gains and losses incurred thereon.
2. Employer Profit Sharing Contribution means a contribution made for the benefit of a Participant by the Employer pursuant to Section 5.1.
2. Employer Stock means securities constituting "qualifying employer securities" of an Employer within the meaning of Section 407(d)(5) of ERISA.
2. ERISA means the Employee Retirement Income Security Act of 1974, as amended.
2. Forfeiture means a nonvested amount forfeited by a former Participant, pursuant to Section 8.3, or an amount forfeited by a former Participant or Beneficiary who cannot be located, pursuant to Section 9.5.
2. Highly Compensated Employee means an Employee if: (i)
the Employee is a 5% owner during the Plan Year; (ii) the
Employee's compensation for the Plan Year exceeds $75,000 (as
adjusted pursuant to Section 415(d) of the Code); (iii) the
Employee's compensation for the Plan Year exceeds $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and the Employee
is in the top-paid group of Employees; or (iv) the Employee is an
officer of the Employer and received compensation during the Plan
Year that is greater than 50% of the dollar limitation under Code
Section 415(b)(1)(A).
The lookback provisions of Code Section 414(q) do not apply to determining Highly Compensated Employees. An Employer may choose to apply this test on the basis of the Employer's workforce as of a single day during the Plan Year ("snapshot day"). In applying this test on a snapshot basis, the Employer shall determine who is a Highly Compensated Employee on the basis of the data as of the snapshot day. If the determination of who is a Highly Compensated Employee is made earlier than the last day of the Plan Year, the Employee's compensation that is used to determine an Employee's status must be projected for the Plan Year under a reasonable method established by the Employer.
Notwithstanding the foregoing, in addition to those Employees who are determined to be highly compensated on the Plan's snapshot day, as described above, where there are Employees who are not employed on the snapshot day but who are taken into account for purposes of testing under Section 4.6 or 4.9, the Employer must treat as a Highly Compensated Employee any Eligible Employee for the Plan Year who:
(a) terminated prior to the snapshot day and was a Highly Compensated Employee in the prior year;
(b) terminated prior to the snapshot day and (i) was a 5% owner, (ii) had compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) was an officer and had compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer; or
(c) becomes employed subsequent to the snapshot day and (i) is a 5% owner, (ii) has compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) is an officer and has compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer.
If during a Plan Year an Employee is a family member of
either a 5% owner who is an Employee, or a Highly Compensated
Employee who is one of the ten most highly paid Highly
Compensated Employees ranked on the basis of compensation paid by
the Employees during the year, then the family member and the 5%
owner or top-ten-Highly-Compensated-Employee shall be treated as
a single Employee receiving compensation and Plan contributions
or benefits equal to the sum of the compensation and
contributions or benefits of the family member and the 5% owner
or top-ten-Highly-Compensated-Employee. For purposes of this
Section 2.27, family members include the spouse, lineal
ascendants and descendants of the Employee and the spouses of
such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. The Plan Administrator is responsible for identifying the Highly Compensated Employees and reporting such data to the Recordkeeper.
2. Hour of Service means each hour described in paragraphs
(a), (b), (c), (d) or (e) below, subject to paragraphs (f) and
(g) below.
(a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed.
(b) Each hour for which an Employee is paid, or
entitled to payment, by an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or
leave of absence. No more than 501 Hours of Service shall
be credited under this paragraph for any single continuous
period of absence (whether or not such period occurs in a
single computation period) unless the Employee's absence is
not an Authorized Leave of Absence. Hours under this
paragraph shall be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations,
which are incorporated herein by this reference.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliated Employer. The same Hours of Service shall not be
credited under both paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c); and no more than
501 Hours of Service shall be credited under this paragraph
(c) with respect to payments of back pay, to the extent that
such pay is agreed to or awarded for a period of time
described in paragraph (b) during which the Employee did not
perform or would not have performed any duties. These hours
shall be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or
payment is made.
(d) Each hour during an Authorized Leave of Absence. Such hours shall be credited at the rate of a customary full work week for an Employee.
(e) Solely for purposes of determining whether a One-
Year Vesting Break or a One-Year Eligibility Break has
occurred, each hour which otherwise would have been credited
to an Employee but for an absence from work by reason of:
the pregnancy of the Employee, the birth of a child of the
Employee, the placement of a child with the Employee in
connection with the adoption of the child by the Employee,
or caring for a child for a period beginning immediately
after its birth or placement. If the Plan Administrator
cannot determine the hours which would normally have been
credited during such an absence, the Employee shall be
credited with eight Hours of Service for each day of
absence. No more than 501 Hours of Service shall be
credited under this paragraph by reason of any pregnancy or
placement. Hours credited under this paragraph shall be
treated as Hours of Service only in the Plan Year or
Eligibility Period or both, as the case may be, in which the
absence from work begins, if necessary to prevent the
Participant's incurring a One-Year Vesting Break or One-Year
Eligibility Break in that period, or, if not, in the period
immediately following that in which the absence begins. The
Employee must timely furnish to the Employer information
reasonably required to establish (i) that an absence from
work is for a reason specified above, and (ii) the number of
days for which the absence continued.
(f) Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment.
(g) If the Employer maintains the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer. If the Employer does not maintain the plan of a predecessor Employer, service for the predecessor Employer shall not be treated as service for the Employer.
(h) Hours of Service shall be credited to a Leased Employee as though he were an Employee.
2. Investment Company means an open-end registered investment company for which Putnam Mutual Funds Corp., or its affiliate acts as principal underwriter, or for which Putnam Investment Management, Inc. or its affiliate serves as an investment adviser; provided that its prospectus offers its shares under the Plan.
2. Investment Company Shares means shares issued by an Investment Company.
2. Investment Products means any of the investment products specified by the Employer in accordance with Section 13.2, from the group of those products sponsored, underwritten or managed by Putnam as shall be made available by Putnam under the Plan, and such other products as shall be expressly agreed to in writing by Putnam for availability under the Plan.
2. Leased Employee means any person (other than an Employee
of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Section 414(n)(6)
of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient
Employer. The compensation of a Leased Employee for purposes of
the Plan means the Compensation (as defined in Section 2.7) of
the Leased Employee attributable to services performed for the
recipient Employer. Contributions or benefits provided to a
leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer
shall be treated as provided by the recipient Employer. Provided
that leased Employees do not constitute more than 20% of the
recipient's nonhighly compensated workforce, a leased Employee
shall not be considered an Employee of the recipient if he is
covered by a money purchase pension plan providing: (1) a
nonintegrated Employer contribution rate of at least 10% of
compensation (as defined in Section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or
Section 403(b) of the Code), (2) immediate participation, and (3)
full and immediate vesting.
2. Non-Highly Compensated Employee means an Employee who is not a Highly Compensated Employee.
2. One-Year Eligibility Break means a 12-month Eligibility Period during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service.
2. One-Year Vesting Break means a Plan Year during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service.
2. Owner-Employee means the sole proprietor of an Affiliated Employer that is a sole proprietorship, or a partner owning more than 10% of either the capital or profits interest of an Affiliated Employer that is a partnership. The Plan Administrator shall be responsible for identifying Owner-Employees to the Recordkeeper.
2. Participant means each Employee who has met the requirement for participation in Article 3. An Employee is not a Participant for any period before the entry date applicable to him.
2. Participant Contribution Account means an account maintained on the books of the Plan, in which are recorded after- tax contributions made by a Participant under a predecessor plan to which this Plan serves as an amendment or successor and any income, expenses, gains or losses incurred on such Contributions. No additional after-tax contributions may be made under the Plan or credited to this Account. All Participant Contribution Accounts will be fully vested at all times.
2. Plan means the form of defined contribution retirement plan and trust agreement adopted by the Employer, consisting of the Plan Agreement and the Putnam Basic Plan Document #06 as set forth herein, together with any and all amendments and supplements thereto.
2. Plan Administrator means the Employer or its appointee pursuant to Section 15.1.
2. Plan Agreement means the separate agreement entered into between the Employer and the Trustee and accepted by Putnam, under which the Employer adopts the Plan and selects among its optional provisions.
2. Plan Year means the period of 12 consecutive months specified by the Employer in the Plan Agreement, as well as any initial short plan year period specified by the Employer in the Plan Agreement.
2. Putnam means (i) Putnam Mutual Funds Corp., or a company affiliated with it which Putnam Mutual Funds Corp. has designated as its agent, performing specified actions or procedures in its capacity as sponsor of this prototype Plan, and (ii) Putnam Fiduciary Trust Company when performing in the capacity as Recordkeeper or Trustee.
2. Qualified Domestic Relations Order means any judgment, decree or order (including approval of a property settlement agreement) which constitutes a "qualified domestic relations order" within the meaning of Code Section 414(p). A judgment, decree or order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan.
2. Qualified Matching Account means an account maintained on the books of the Plan, in which are recorded the Qualified Matching Contributions made on behalf of a Participant and the income, expense, gain and loss attributable thereto.
2. Qualified Matching Contribution means a contribution made by the Employer that: (i) is allocated with respect to Elective Deferrals of a Participant who is a Non-Highly Compensated Employee, (ii) is fully vested at all times and (iii) is distributable only in accordance with Section 4.12.
2. Qualified Nonelective Contribution means a contribution
(other than an Employer Matching Contribution or Qualified
Matching Contribution) made by the Employer on behalf of a
Participant who is a Non-Highly Compensated Employee, that: (i) a
Participant may not elect to receive in cash until it is
distributed from the Plan; (ii) is fully vested at all times; and
(iii) is distributable only in accordance with Section 4.12.
2. Qualified Nonelective Contribution Account means an account maintained on the books of the Plan, in which are recorded the Qualified Nonelective Contributions made on behalf of a Participant and the income, expense, gain and loss attributable thereto.
2. Qualified Participant means any Participant who is an active Employee on the last day of the Plan Year in question or who is credited with more than 500 Hours of Service during the Plan Year in question or whose Retirement, death or disability occurred during the Plan Year in question.
2. Recordkeeper means Putnam and any successor thereto
designated by the Employer to perform the duties described in
Section 15.4. The terms and conditions of Putnam's service in
the capacity as Recordkeeper will be as specified in the Service
Agreement.
2. Retirement means ceasing to be an Employee in accordance with Section 7.1.
2. Rollover Account means an account established for an Employee who makes a rollover contribution to the Plan pursuant to Section 5.3.
2. Self-Employed Individual means an individual whose personal services are a material income-producing factor in the trade or business for which the Plan is established, and who has Earned Income for the taxable year from that trade or business, or would have Earned Income but for the fact that the trade or business had no net profits for the taxable year.
2. Service Agreement means the service agreement entered into between the Employer and Putnam or its successor as Recordkeeper.
2. Shareholder-Employee means any officer or Employee of an
electing small business corporation, within the meaning of
Section 1362 of the Code, who on any day during a taxable year of
the Employer owns (or is considered as owning under Section
318(a)(1) of the Code) more than 5% of the outstanding stock of
the Employer. The Plan Administrator shall be responsible for
identifying Shareholder-Employees to the Recordkeeper.
2. Trust and Trust Fund mean the trust fund established under Section 13.1.
2. Trustee means the person, or the entity with trustee powers, named in the Plan Agreement as trustee, and any successor thereto.
2. Valuation Date means each day when the New York Stock Exchange is open, or such other date or dates as the Employer may designate by written agreement with the Recordkeeper.
2. Year of Service means a Plan Year in which an Employee is credited with at least 1,000 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. An Employee's Years of Service shall include service credited prior to the Effective Date under any predecessor plan. If the initial Plan Year is shorter than 12 months, each Employee who is credited with at least 1,000 Hours of Service in the 12-month period ending on the last day of the initial Plan Year shall be credited with a Year of Service with respect to the initial Plan Year.
If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall not include service completed during a period in which the Employer did not maintain the Plan or any predecessor plan (as defined under regulations prescribed by the Secretary of the Treasury).
Years of Service for vesting shall include service in any Plan Year (or comparable period prior to the Effective Date) completed before the Employee reached age 18.
Years of Service for eligibility and vesting shall not
include service for an employer that is not an Affiliated
Employer, provided, however, Years of Service for eligibility and
vesting shall include employment by a business acquired by the
Employer, before the date of the acquisition, if the Plan is the
amendment of a predecessor plan maintained by such acquired
business.
ARTICLE 3. PARTICIPATION
3.1. Initial Participation. Upon completion of the eligibility for Plan participation requirements specified in the Plan Agreement, an Employee shall begin participation in the Plan as of the later of (i) the first day of the first, fourth, seventh or tenth month of the Plan Year, whichever next follows or coincides with the date of completion of such eligibility requirements, or (ii) the Effective Date; provided, however, that:
(a) if the Plan is adopted as an amendment of a predecessor plan of the Employer, every Employee who was participating under the predecessor plan when it was so amended shall become a Participant in the Plan as of the Effective Date, whether or not he has satisfied the age and service requirements specified in the Plan Agreement; and
(b) if the Employer so specifies in the Plan
Agreement, any individual who is (i) a nonresident alien
receiving no earned income from an Affiliated Employer which
constitutes income from sources within the United States, or
(ii) included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
representatives (excluding from the term "Employee
representatives" any organization of which more than half of
the members are Employees who are owners, officers, or
executives of an Affiliated Employer), if retirement
benefits were the subject of good faith bargaining and no
more than 2% of the Employees covered by the collective
bargaining agreement are professionals as defined in Section
1.410(b)-9 of the Income Tax Regulations, shall not
participate in the Plan until the later of the date on which
he ceases to be described in clause (i) or (ii), whichever
is applicable, or the entry date specified by the Employer
in the Plan Agreement; and
(c) if the Plan is not adopted as an amendment of a predecessor plan of the Employer, all Employees on the Effective Date who have satisfied the age requirement (versus the service requirement) designated in the Plan Agreement shall begin participation on the Effective Date, if the Employer so elects in the Plan Agreement; and
(d) a Participant shall cease to participate in the Plan when he becomes a member of a class of Employees ineligible to participate in the Plan, and shall resume participation immediately upon his return to a class of Employees eligible to participate in the Plan.
3.2. Resumed Participation. A former Employee who incurs a One-Year Eligibility Break after having become a Participant shall participate in the Plan as of the date on which he again becomes an Employee, if (i) his Accounts had become partially or fully vested before he incurred a One-Year Vesting Break, or (ii) he incurred fewer than five consecutive One-Year Eligibility Breaks. In any other case, when he again becomes an Employee he shall be treated as a new Employee under Section 3.1.
3.3. Benefits for Owner-Employees. If the Plan provides contributions or benefits for one or more Owner-Employees who control both the trade or business with respect to which the Plan is established and one or more other trades or businesses, the Plan and plans established with respect to such other trades or businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to the Employees of this and all such other trades or businesses. If the Plan provides contributions or benefits for one or more Owner- Employees who control one or more other trades or businesses, the Employees of each such other trade or business must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than those provided for such Owner-Employees under the Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which he does not control and such individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trade or business which he does control must be as favorable as those provided for him under the most favorable plan of the trade or business which he does not control. For purposes of this Section 3.3, an Owner-Employee, or two or more Owner-Employees, shall be considered to control a trade or business if such Owner-Employee, or such two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital interest or the profits interest in such partnership.
For purposes of the preceding sentence, an Owner-Employee or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee or such two or more Owner-Employees are considered to control within the meaning of the preceding sentence.
3.4. Changes in Classification. If a Participant ceases to be a member of a classification of Employees eligible to participate in the Plan, but does not incur a One-Year Eligibility Break, he will continue to be credited with Years of Service for vesting while he remains an Employee, and he will resume participation as of the date on which he again becomes a member of a classification of Employees eligible to participate in the Plan. If such a Participant incurs a One-Year Eligibility Break, Section 3.2 will apply. If a Participant who ceases to be a member of a classification of Employees eligible to participate in the Plan becomes a member of a classification of Employees eligible to participate in another plan of the Employer, his Account, if any, under the Plan shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account.
If an Employee who is not a member of a classification of
Employees eligible to participate in the Plan satisfies the age
and service requirements specified in the Plan Agreement, he will
begin to participate immediately upon becoming a member of an
eligible classification. If such an Employee has account
balances under another plan of the Employer, such account
balances shall be transferred to the Plan upon the Employee's
commencement of participation in the Plan, if such other plan
permits such transfer.
ARTICLE 4. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA)
4.1 General Provisions Applicable to Contributions Under Both Articles 4 and 5.
(a) Payment and Crediting of Contributions. The Employer may specify that contributions will be made to the Plan only under the CODA, or that Employer Profit Sharing Contributions described in Section 5.1 may also be made. The Employer shall pay to the order of the Trustee the aggregate contributions to the Trust Fund for each Plan Year. Each contribution shall be accompanied by instructions from the Employer, in the manner prescribed by Putnam. Neither the Trustee nor Putnam shall be under any duty to inquire into the correctness of the amount or the timing of any contribution, or to collect any amount if the Employer fails to make a contribution as provided in the Plan.
(b) Time for Payment. Elective Deferrals will be transferred to the Trustee as soon as such contributions can reasonably be segregated from the general assets of the Employer, but in any event within 90 days after the date on which the Compensation to which such contributions relate is paid. The aggregate of all other contributions with respect to a Plan Year shall be transferred to the Trustee no later than the due date (including extensions) for filing the Employer's federal income tax return for that Plan Year.
(c) Allocations under CODA. Allocations to Participants' Accounts of contributions made pursuant to this Article 4 shall be made as soon as administratively feasible after their receipt by the Trustee, but in any case shall not be allocated as of a day later than the last day of the Plan Year for which the contributions were made.
(d) Limitations on Allocations. All allocations shall be subject to the limitations in Article 6.
(e) Establishment of Accounts. The Employer will establish and maintain (or cause to be established and maintained) for each Participant individual accounts adequate to disclose his interest in the Trust Fund, including such of the following separate accounts as shall apply to the Participant: Elective Deferral Account, Employer Matching Account, Qualified Nonelective Account, Qualified Matching Account, Employer Profit Sharing Account, Participant Contribution Account, Deductible Employee Contribution Account, and Rollover Account. The maintenance of such accounts shall be only for recordkeeping purposes, and the assets of separate accounts shall not be required to be segregated for purposes of investment. For purposes of the Plan, a Participant is treated as benefiting under the Plan for any Plan Year during which the Participant received or is deemed to receive an allocation to an Account in accordance with Treasury Regulation 1.410(b)-3(a).
(f) Restoration of Accounts. Notwithstanding any other provision of the Plan, for any Plan Year in which it is necessary to restore any portion of a Participant's Account pursuant to Section 8.3(b) or 9.5, to the extent that the amount of Forfeitures available is insufficient to accomplish such restoration, the Employer shall contribute the amount necessary to eliminate the insufficiency, regardless of whether the contribution is currently deductible by the Employer under Section 404 of the Code.
4.2. CODA Participation. Each Employee who has met the eligibility requirements of Article 3 may make Elective Deferrals to the Plan by completing and returning to the Plan Administrator a Deferral Agreement which provides that the Participant's cash compensation from the Employer will be reduced by the amount indicated in the Deferral Agreement, and that the Employer will contribute an equivalent amount to the Trust on behalf of the Participant. The following rules will govern Elective Deferrals:
(a) Subject to the limits specified in the Plan Agreement and set forth in Section 4.3, a Deferral Agreement may apply to any amount or percentage of the Earnings payable to a Participant in each year, including any bonuses payable to a Participant from time to time.
(b) In accordance with such reasonable rules as the Plan Administrator shall specify, a Deferral Agreement will become effective as soon as is administratively feasible after the Deferral Agreement is returned to the Plan Administrator, and will remain effective until it is modified or terminated. No Deferral Agreement may become effective retroactively.
(c) A Participant may modify his Deferral Agreement by completing and returning to the Plan Administrator a new Deferral Agreement as of the first business day of any of the first, fourth, seventh and tenth months of the Plan Year, and any such modification will become effective as described in paragraph (b).
(d) A Participant may terminate his Deferral Agreement at any time upon advance written notice to the Plan Administrator, and any such termination will become effective as described in paragraph (b).
4.3. Annual Limit on Elective Deferrals. During any taxable
year of a Participant, his Elective Deferrals under the Plan and
any other qualified plan of an Affiliated Employer shall not
exceed the dollar limit contained in Section 402(g) of the Code
in effect at the beginning of the taxable year. With respect to
any taxable year, a Participant's Elective Deferrals for purposes
of this Section 4.3 include all Employer contributions made on
his behalf pursuant to an election to defer under any qualified
CODA as described in Section 401(k) of the Code, any simplified
employee pension cash or deferred arrangement (SARSEP) as
described in Section 402(h)(1)(B) of the Code, any eligible
deferred compensation plan under Section 457 of the Code, any
plan described under Section 501(c)(18) of the Code, and any
Employer contributions made on behalf of the Participant for the
purchase of an annuity contract under Section 403(b) of the Code
pursuant to a salary reduction agreement. The limit under
Section 402(g) of the Code on the amount of Elective Deferrals of
a Participant who receives a hardship withdrawal pursuant to
Section 12.2 shall be reduced, for the taxable year next
following the withdrawal, by the amount of Elective Deferrals
made in the taxable year of the hardship withdrawal.
4.4 Distribution of Certain Elective Deferrals. "Excess
Elective Deferrals" means those Elective Deferrals described in
Section 4.3 that are includible in a Participant's gross income
under Section 402(g) of the Code, to the extent that the
Participant's aggregate elective deferrals for a taxable year
exceed the dollar limitation under that Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, whether or not they are distributed under this Section 4.4.
A Participant may designate to the Plan any Excess Elective
Deferrals made during his taxable year by notifying the Employer
on or before the following March 15 of the amount of the Excess
Elective Deferrals to be so designated. A Participant who has
Excess Elective Deferrals for a taxable year, taking into account
only his Elective Deferrals under the Plan and any other plans of
the Affiliated Employers, shall be deemed to have designated the
entire amount of such Excess Elective Deferrals.
Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were so designated or deemed designated for the preceding year. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is the Participant's Excess Elective Deferrals for the year and the denominator of which is the Participant's Account balance attributable to Elective Deferrals without regard to any income or loss occurring during the year.
To the extent that the return to a Participant of his
Elective Deferrals would reduce an Excess Amount (as defined in
Section 6.5(f)), such Excess Deferrals shall be distributed to
the Participant in accordance with Article 6.
4.5. Satisfaction of ADP and ACP Tests. In each Plan Year, the Plan must satisfy the ADP test described in Section 4.6 and the ACP test described in Section 4.9. The Employer may cause the Plan to satisfy the ADP or ACP test or both tests for a Plan Year by any of the following methods or by any combination of them:
(a) By the distribution of Excess Contributions in accordance with Section 4.7, or the distribution of Excess Aggregate Contributions in accordance with Section 4.10, or both; or
(b) By making Qualified Nonelective Contributions or
Qualified Matching Contributions or both, in accordance with
Section 4.11.
4.6. Actual Deferral Percentage Test Limit. The Actual Deferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:
(a) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points.
The following special rules shall apply to the computation of the ADP:
(c) "Actual Deferral Percentage" means, for a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in the group) of (1) the amount of Employer contributions actually paid over to the Trust on behalf of the Participant for the Plan Year to (2) the Participant's Earnings for the Plan Year. Employer contributions on behalf of any Participant shall include: (i) his Elective Deferrals, including Excess Elective Deferrals of Highly Compensated Employees, but excluding (A) Excess Elective Deferrals of Non-Highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or another plan maintained by an Affiliated Employer, and (B) Elective Deferrals that are taken into account in the Average Contribution Percentage test described in Section 4.9 (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals), and excluding Elective Deferrals returned to a Participant to reduce an Excess Amount as defined in Section 6.5(f); (ii) such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test and not used to satisfy the ACP test; and (iii) such amount of Qualified Matching Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test and not used to satisfy the ACP test. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for his failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made.
(d) In the event that the Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 4.6 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year.
(e) The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals allocated to his Accounts under two or more CODAs described in Section 401(k) of the Code that are maintained by the Affiliated Employers shall be determined as if such Elective Deferrals were made under a single CODA. If a Highly Compensated Employee participates in two or more CODAs that have different Plan Years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs.
(f) For purposes of determining the ADP of a Participant who is a 5% owner or one of the ten most highly- paid Highly Compensated Employees, the Elective Deferrals and the Earnings of such a Participant shall include the Elective Deferrals and Earnings for the Plan Year of his Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the ADP both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees.
(g) For purposes of the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12-month period immediately following the Plan Year to which those contributions relate.
(h) The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in satisfying the test.
(i) The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
4.7. Distribution of Excess Contributions. "Excess Contributions" means, with respect to any Plan Year, the excess of:
(a) The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for the Plan Year, over
(b) The maximum amount of Employer contributions permitted by the ADP test, determined by reducing contributions made on behalf of Highly Compensated Employees in order of their ADPs, beginning with the highest of such percentages.
Notwithstanding any other provision of the Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts Excess Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Contributions is the income or loss allocable to the Participant's Elective Deferral Account for the Plan Year multiplied by a fraction, the numerator of which is the Participant's Excess Contributions for the year and the denominator is the Participant's account balance attributable to Elective Deferrals without regard to any income or loss occurring during the Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of them. Excess Contributions shall be allocated to a Participant who is a family member subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Elective Deferrals bear to the combined Elective Deferrals (and other amounts treated as Elective Deferrals) of all of the Participants aggregated to determine his family members' combined ADP. Excess Contributions shall be treated as Annual Additions under the Plan.
4.8. Employer Matching Contributions. If so specified in the Plan Agreement, the Employer will make Employer Matching Contributions to the Plan in accordance with the Plan Agreement, but no Employer Matching Contribution shall be made with respect to an Elective Deferral that is returned to a Participant because it represents an Excess Elective Deferral, an Excess Contribution, an Excess Aggregate Contribution or an Excess Amount (as defined in Section 6.5(f)); and if an Employer Matching Contribution has nevertheless been made with respect to such an Elective Deferral, the Employer Matching Contribution shall be forfeited, notwithstanding any other provision of the Plan. Employer Matching Contributions will be allocated among the Employer Matching Accounts of Participants in proportion to their Elective Deferrals as specified by the Employer in the Plan Agreement. Employer Matching Accounts shall become vested according to the vesting schedule specified in the Plan Agreement, but regardless of that schedule shall be fully vested upon the Participant's Retirement, or, if earlier, attainment of the normal retirement age specified in the Plan Agreement, his death during employment with an Affiliated Employer, and in accordance with Section 18.3.
4.9. Average Contribution Percentage Test Limit and Aggregate Limit. The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:
(a) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points.
The following rules shall apply to the computation of the
ACP:
(c) "Average Contribution Percentage" means the average of the Contribution Percentages of the Eligible Participants in a group.
(d) "Contribution Percentage" means the ratio (expressed as a percentage) of a Participant's Contribution Percentage Amounts to the Participant's Earnings for the Plan Year.
(e) "Contribution Percentage Amounts" means the sum of the Participant Contributions, Employer Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Employer Matching Contributions allocated to the Participant's Account, taken into account in the year in which the allocation is made. Qualified Nonelective Contributions, if any, necessary to enable the Plan to satisfy the ACP test and not used to satisfy the ADP test shall be included in the Contribution Percentage Amounts. Elective Deferrals shall also be included in the Contribution Percentage Amounts to the extent, if any, needed to enable the Plan to satisfy the ACP test, so long as the ADP test is met before the Elective Deferrals are used in the ACP test, and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test.
(f) "Eligible Participant" means any Employee who is eligible to make an Elective Deferral, if Elective Deferrals are taken into account in the calculation of the Contribution Percentage, or to receive an Employer Matching Contribution (or a Forfeiture thereof) or a Qualified Matching Contribution.
(g) "Aggregate Limit" means the sum of (i) 125% of the greater of the ADP of the Non-Highly Compensated Employees for the Plan Year, or the ACP of Non-Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA, and (ii) the lesser of 200% of, or two plus, the lesser of the ADP or ACP. "Lesser" is substituted for "greater" in clause (i) of the preceding sentence, and "greater" is substituted for "lesser" after the phrase "two plus the" in clause (ii) of the preceding sentence, if that formulation will result in a larger Aggregate Limit.
(h) If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by an Affiliated Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the Aggregate Limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amount is reduced shall be treated as an Excess Aggregate Contribution. In determining the Aggregate Limit, the ADP and ACP of Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. The Aggregate Limit will be considered satisfied if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-Highly Compensated Employees.
(i) For purposes of this section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or CODAs described in Section 401(k) of the Code, that are maintained by an Affiliated Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more CODAs that have different plan years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs.
(j) In the event that the Plan satisfies the
requirements of Sections 401(m), 401(a)(4) or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with the Plan, then
this Section 4.9 shall be applied by determining the
Contribution Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy
Section 401(m) of the Code only if they have the same Plan
Year.
(k) For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the ten most highly-paid Highly Compensated Employers, the Contribution Percentage Amounts and Earnings of the Participant shall include the Contribution Percentage Amounts and Earnings for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the Contribution Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees.
(l) For purposes of the ACP test, Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year.
(m) The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in the ACP test.
(n) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
4.10. Distribution of Excess Aggregate Contributions. Notwithstanding any other provision of the Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose Accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Aggregate Contributions is the income or loss allocable to the Participant's Employer Matching Account, Qualified Matching Account (if any, and if all amounts therein are not used in the ADP test), and, if applicable, Qualified Nonelective Contribution Account, Participant Contribution Account and Elective Deferral Account for the Plan Year, multiplied by a fraction, the numerator of which is the Participant's Excess Aggregate Contributions for the year and the denominator of which is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during the Plan Year. Excess Aggregate Contributions shall be allocated to a Participant who is subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Employer Matching Contributions (and other amounts treated as his Employer Matching Contributions) bear to the combined Employer Matching Contributions (and other amounts treated as Employer Matching Contributions) of all of the Participants aggregated to determine its family members' combined ACP. If excess amounts attributable to Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan.
Excess Aggregate Contributions shall be forfeited if forfeitable, or distributed on a pro-rata basis from the Participant's Participant Contribution Account, Employer Matching Account, and Qualified Matching Account (and, if applicable, the Participant's Qualified Nonelective Account or Elective Deferral Account, or both).
Excess Aggregate Contributions means, with respect to any Plan Year, the excess of:
(a) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage and actually made on behalf of Highly Compensated Employees for the Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the ACP test and the Aggregate Limit (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages).
Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 4.4, and then determining Excess Contributions pursuant to Section 4.7.
4.11. Qualified Nonelective Contributions; Qualified Matching Contributions. The Employer may make Qualified Nonelective Contributions for a Plan Year which, if made, shall be allocated to the Qualified Nonelective Contribution Accounts of Qualified Participants who are Non-Highly Compensated Employees, in proportion to the Earnings of such Qualified Participants for the Plan Year. The Employer may make Qualified Matching Contributions for a Plan Year which, if made shall be allocated to the Qualified Matching Accounts of Participants who are Non-Highly Compensated Employees, in proportion to the Elective Deferrals of such Participants for the Plan Year.
4.12. Restriction on Distributions. Except as provided in Sections 4.4, 4.7 and 4.10, no distribution may be made from a Participant's Elective Deferral Account, Qualified Nonelective Account or Qualified Matching Account until the occurrence of one of the following events:
(a) The Participant's Disability, death or termination of employment with the Affiliated Employers;
(b) Termination of the Plan without the establishment
of another defined contribution plan other than an employee
stock ownership plan as defined in Section 4975(e) or
Section 409 of the Code, or a simplified employee pension
plan as defined in Section 408(k) of the Code;
(c) The Participant's attainment of age 59 1/2; or
(d) In the case of an Employer that is a corporation,
the disposition by the Employer to an unrelated entity of
(i) substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used in a trade or business
of the Employer, if the Employer continues to maintain the
Plan after the disposition, but only with respect to
Employees who continue employment with the entity acquiring
such assets; or (ii) the Employer's interest in a subsidiary
(within the meaning of Section 409(d)(3) of the Code), if
the Employer continues to maintain the Plan after the
disposition, but only with respect to Employees who continue
employment with such subsidiary.
In addition, if the Employer has elected in the Plan Agreement to permit such distributions, a distribution may be made from a Participant's Elective Deferral Account in the event of his financial hardship as described in Section 12.2. All distributions upon any of the events listed above are subject to the conditions of Article 10, Joint and Survivor Annuity Requirements. In addition, distributions made after March 31, 1988, on account of an event described in subsection (b) or (d) above must be made in a lump sum.
4.13. Forfeitures of Employer Matching Contributions.
Forfeitures of Employer Matching Contributions, other than Excess
Aggregate Contributions, shall be made in accordance with Section
8.3. Forfeitures of Employer Matching Contributions in a Plan
Year shall be applied to reduce other contributions required of
the Employer.
4.14. Special Effective Dates. If the Plan is adopted
as an amendment of an existing plan, the provisions of Sections
4.3 and Section 4.7 through 4.11 are effective as of the first
day of the first Plan Year beginning after December 31, 1986.
ARTICLE 5. OTHER CONTRIBUTIONS
5.1. Employer Profit Sharing Contributions.
(a) Amount of Annual Contribution. If the Employer so elects in the Plan Agreement, the Employer may in each Plan Year contribute an amount to the Trust Fund determined in the Employer's own discretion, which contribution plus any amount reapplied for the Plan Year under Section 6.1(d) shall not exceed the amount deductible under Section 404 of the Code. Employer Profit Sharing Contributions may be made in any Plan Year whether or not the Employer has current or accumulated profits for that Plan Year.
(b) Allocation of Employer Profit Sharing Contributions. The Employer Profit Sharing Contribution (and any amounts reapplied under Section 6.1(d)) for the Plan Year shall be allocated as of the last day of each Plan Year to the Employer Profit Sharing Accounts of each Qualified Participant in proportion to the Earnings of each such Qualified Participant for the Plan Year.
5.2. Forfeitures of Employer Profit Sharing Contributions. Forfeitures of Employer Profit Sharing Contributions shall be made in accordance with Section 8.3. Forfeitures of Employer Profit Sharing Contributions shall be applied to reduce other contributions required of the Employer.
5.3. Rollover Contributions. An Employee in an eligible class may contribute at any time cash or other property (which is not a collectible within the meaning of Section 408(m) of the Code) acceptable to the Trustee representing qualified rollover amounts under Sections 402, 403, or 408 of the Code. Amounts so contributed shall be credited to a Rollover Account for the Participant.
5.4. No After-Tax Participant Contributions or Deductible
Employee Contributions. The Plan Administrator shall not accept
either after-tax Participant Contributions or deductible employee
contributions, other than those held in a Participant
Contribution Account or a Deductible Employee Contribution
Account transferred from a predecessor plan of the Employer.
ARTICLE 6. LIMITATIONS ON ALLOCATIONS
6.1. No Additional Plan. 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), or an individual medical account (as defined in
Section 415(l)(2) of the Code) which provides an Annual Addition
as defined in Section 6.5(a), maintained by an Affiliated
Employer:
(a) The amount of Annual Additions (as defined in
Section 6.5(a)) which may be credited to the Participant's
Accounts for any Limitation Year will not exceed the lesser
of the Maximum Annual Additions or any other limitation
contained in this Plan. If the Employer contribution that
would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for
the Limitation Year to exceed the Maximum Annual Additions,
the amount contributed or allocated will be reduced so that
the Annual Additions for the Limitation Year will equal the
Maximum Annual Additions.
(b) Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant
on the basis of a reasonable estimation of the Participant's
Section 415 Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Additions for the Limitation Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Limitation Year.
(d) If pursuant to paragraph (c), or as a result of a reasonable error in determining the amount of Elective Deferrals that may be made by a Participant, the Annual Additions exceed the Maximum Annual Additions, the Excess Amount will be disposed of as follows:
(1) Elective Deferrals, to the extent they would reduce the Excess Amount, will be returned to the Participant.
(2) If after the application of (1) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant's Accounts 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 (1) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any Forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.
(4) If a suspense account is in existence at any time during a Limitation Year pursuant to this Section 6.1(d), it will participate in the allocation of the Trust's investment gains and losses. If a 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 may not be distributed to Participants or former Participants.
6.2. Additional Master or Prototype Plan. If in addition to this Plan a Participant is covered under another qualified Master or Prototype defined contribution plan or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(1)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer during any Limitation Year:
(a) The Annual Additions which may be credited to a Participant's Accounts under this Plan for any such Limitation Year will not exceed the Maximum Annual Additions reduced by the Annual Additions credited to a Participant's accounts 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 an Affiliated Employer are less than the Maximum Annual Additions, and the Employer contribution that would otherwise be contributed or allocated to the Participant's Accounts under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated to this Plan will be reduced so that the Annual Additions under all such plans and funds for the Plan Year will equal the Maximum Annual Additions. 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 Annual Additions, no amount will be contributed or allocated to the Participant's Accounts under this Plan for the Limitation Year.
(b) Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant in the manner described in Section 6.1(b).
(c) As soon as is administratively feasible after the end of the Plan Year, the Maximum Annual Additions for the Plan Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Plan Year.
(d) If, pursuant to Section 6.2(c) or as a result of the allocation of Forfeitures, or of a reasonable error in determining the amount of Elective Deferrals that may be made by him, a Participant's Annual Additions 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 under any qualified Master or Prototype defined contribution plan, except that Annual Additions to any welfare benefit fund or individual medical account will be deemed to have 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 X and Y, where (X) is the total Excess Amount allocated as of such date, and (Y) is the ratio of: (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified Master or Prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be disposed of in the manner described in Section 6.1(d).
6.3. Additional Non-Master or Non-Prototype Plan. If the Participant is covered under another qualified defined contribution plan maintained by an Affiliated Employer which is not a Master or Prototype plan, Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with Section 6.2 as though the other plan were a Master or Prototype plan.
6.4. Additional Defined Benefit Plan. If an Affiliated Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with the Plan Agreement.
6.5. Definitions.
(a) Annual Additions means the sum of the following amounts credited to a Participant's Accounts for the Limitation Year:
(1) Employer contributions;
(2) For any Limitation Year beginning after December 31, 1986, Participant Contributions;
(3) Forfeitures;
(4) Amounts allocated after March 31, 1984, to any individual medical account, as defined in Section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by an Affiliated Employer;
(5) Amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post retirement medical benefits allocated to the separate account of a key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by an Affiliated Employer; and
(6) Excess Elective Deferrals, Excess Contributions (including recharacterized Elective Deferrals) and Excess Aggregate Contributions.
For this purpose, any Excess Amount applied under Sections 6.1(d) or 6.2(e) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. Any rollover contribution will not be considered an Annual Addition.
(b) Section 415 Compensation means, for a
Self-Employed Individual, his Earned Income; and for any
other Participant, his "Form W-2 earnings" as defined in
Section 2.7.
For purposes of applying the limitations of this Article 6,
Section 415 Compensation for a Limitation Year is the
Section 415 Compensation actually paid or made available
during such Limitation Year.
(c) Defined Benefit Fraction means a fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Affiliated Employers, and the denominator of which is the lesser of 125% of the dollar limitation in effect for the Limitation Year under Sections 415(b) and (d) of the Code, or 140% of the Participant's Highest Average Compensation including any adjustments under Section 415(b) of the Code. Notwithstanding the foregoing, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any change in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation means $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year.
(e) Defined Contribution Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant's accounts under all the defined contribution plans (whether or not terminated) maintained by Affiliated Employers for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Affiliated Employers, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, and individual medical accounts, as defined in Section 415(l)(2) of the Code), and the denominator of which is the sum of the Maximum Annual Additions for the current and all prior Limitation Years of service with the Affiliated Employers (regardless of whether a defined contribution plan was maintained by any Affiliated Employer). The Maximum Annual Additions in any Plan Year is the lesser of 125% of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code, or 35% of the Participant's Section 415 Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined contribution plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to product of the excess of the sum of the fractions over 1.0, multiplied by the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat 100% of nondeductible Employee contributions as Annual Additions.
(f) Excess Amount means, with respect to any Participant, the amount by which Annual Additions exceed the Maximum Annual Additions.
(g) Highest Average Compensation means the average compensation for the three consecutive Years of Service with the Employer that produces the highest average. A Year of Service with the Employer is determined based on the Plan Year.
(h) Limitation Year means the Plan Year. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different period of 12 consecutive months, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made.
(i) Master or Prototype plan means a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service.
(j) Maximum Annual Additions, which is the maximum
annual addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation
Year, means an amount not exceeding the lesser of (a) the
Defined Contribution Dollar Limitation or (b) 25% of the
Participant's Section 415 Compensation for the Limitation
Year. The compensation limitation referred to in (b) shall
not apply to any contribution for medical benefits (within
the meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an Annual Addition under
Section 415(l)(1) or Section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Annual Additions will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction:
number of months in the short Limitation Year
(k) Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight 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 employment until normal retirement age under the Plan (or current age, if later), and
(2) The Participant's Section 415 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.
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS
7.1. Retirement. After his Retirement, the amount credited to a Participant's Accounts will be distributed to him in accordance with Article 9. The termination of a Participant's employment with the Affiliated Employers after he has (i) attained the normal retirement age specified in the Plan Agreement, (ii) fulfilled the requirements for early retirement (if any) specified in the Plan Agreement, or (iii) become Disabled will constitute his Retirement. Upon a Participant's Retirement (or, if earlier, his attainment of the normal retirement age specified in the Plan Agreement or fulfillment of the requirements for early retirement, if any, specified in the Plan Agreement), the Participant's Accounts shall become fully vested, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant who separates from service with any vested balance in his Accounts, after satisfying the service requirements for early retirement (if any is specified in the Plan Agreement) but before satisfying the age requirement for early retirement (if any is specified in the Plan Agreement), shall be entitled to a fully vested early retirement benefit upon his satisfaction of such age requirement.
7.2. Death. If a Participant dies before the distribution
of his Accounts has been completed, his Beneficiary will be
entitled to distribution of benefits in accordance with Article
9. A Participant's Accounts will become fully vested upon his
death before termination of his employment with the Affiliated
Employers, regardless of the vesting schedule specified by the
Employer in the Plan Agreement.
A Participant may designate a Beneficiary by completing and returning to the Plan Administrator a form provided for this purpose. The form most recently completed and returned to the Plan Administrator before the Participant's death shall supersede any earlier form. If a Participant has not designated any Beneficiary before his death, or if no Beneficiary so designated survives the Participant, his Beneficiary shall be his surviving spouse, or if there is no surviving spouse, his estate. A married Participant may designate a Beneficiary other than his spouse only if his spouse consents in writing to the designation, and the spouse's consent acknowledges the effect of the consent and is witnessed by a notary public or a representative of the Plan. The beneficiary or beneficiaries named in the designation to which the spouse has so consented may not be changed without further written spousal consent unless the terms of the spouse's original written consent expressly permit such a change, and acknowledge that the spouse voluntarily relinquishes the right to limit the consent to a specific beneficiary. The marriage of a Participant shall nullify any designation of a beneficiary previously executed by the Participant. If it is established to the satisfaction of the Plan Administrator that the Participant has no spouse or that the spouse cannot be located, the requirement of spousal consent shall not apply. Any spousal consent, or establishment that spousal consent cannot be obtained, shall apply only to the particular spouse involved.
7.3. Other Termination of Employment. A Participant whose
employment terminates for any reason other than his Retirement or
death will be entitled to distribution, in accordance with
Article 9, or benefits equal to the amount of the vested balance
of his Accounts as determined under Article 8.
ARTICLE 8. VESTING
8.1. Vested Balance. The vested balance of a Participant's Accounts will be determined as follows:
(a) General Rule. A Participant's Elective Deferral Account, Qualified Nonelective Contribution Account, Qualified Matching Account, Participant Contribution Account and Rollover Account shall be fully vested at all times. The vested portion of his Employer Matching Account and Employer Profit Sharing Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates.
(b) Retirement. All of a Participant's Accounts shall become fully vested upon his Retirement or his earlier attainment of the normal retirement age elected by the Employer in the Plan Agreement.
For so long as a former Employee does not receive a distribution (or a deemed distribution) of the vested portion of his Accounts, the undistributed portion shall be held in a separate account which shall be invested pursuant to Section 13.3 and shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants.
8.2. Vesting of Accounts of Returned Former Employees. The following rules apply in determining the vested portion of the Accounts of a Participant who incurs one or more consecutive One- Year Vesting Breaks and then returns to employment with an Affiliated Employer:
(a) If the Participant incurred fewer than five consecutive One-Year Vesting Breaks, then all of his Years of Service will be taken into account in determining the vested portion of his Accounts, as soon as he has completed one Year of Service following his return to employment.
(b) If the Participant incurred five or more consecutive One-Year Vesting Breaks, then:
(1) no Year of Service completed after his return to employment will be taken into account in determining the vested portion of his Accounts as of any time before he incurred the first One-Year Vesting Break;
(2) years of Service completed before he incurred
the first One-Year Vesting Break will not be taken into
account in determining the vested portion of his
Accounts as of any time after his return to employment
(i) unless some portion of his Employer Contribution
Account or Employer Matching Account had become vested
before he incurred the first One-Year Vesting Break,
and (ii) until he has completed one Year of Service
following his return to employment; and
(3) separate sub-accounts will be maintained for the Participant's pre-break and post-break Employer Contribution Account and Employer Matching Account, until both sub-accounts become fully vested. Both sub-accounts will share in the earnings and losses of the Trust Fund.
8.3. Forfeiture of Non-Vested Amounts. The portion of a
former Employee's Accounts that has not become vested under
Section 8.1 shall become a Forfeiture in accordance with the
following rules, and shall be applied in accordance with Section
4.13 or Section 5.2.
(a) If Distribution Is Made. If any or all of the vested portion of a Participant's Accounts is distributed in accordance with Section 9.1 or 9.2 before the Participant incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture in the Plan Year in which the distribution occurs. For purposes of this Section 8.3, if the value of the vested portion of a Participant's Accounts is zero, the Participant shall be deemed to have received a distribution of the entire vested balance of his Accounts on the day his employment terminates. If the Participant elects to have distributed less than the entire vested portion of his Employer Contribution Account or Employer Matching Accounts, the part of the nonvested portion that will become a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of the entire vested portion of such Accounts.
(b) Right of Repayment. If a Participant who receives a distribution pursuant to paragraph (a) returns to employment with an Affiliated Employer, the balance of his Employer Contribution Account and Employer Matching Account will be restored to the amount of such balance on the date of distribution, if he repays to the Plan the full amount of the distribution, before the earlier of (i) the fifth anniversary of his return to employment or (ii) the date he incurs five consecutive One-Year Vesting Breaks following the date of distribution. If an Employee is deemed to receive a distribution pursuant to this Section 8.3, and he resumes employment covered under this Plan before the date he incurs five consecutive One-Year Vesting Breaks, upon his reemployment the Employer-derived account balance of the Employee will be restored to the amount on the date of such deemed distribution. Such restoration will be made, first, from the amount of any Forfeitures available for reallocation as of the last day of the Plan Year in which repayment is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(f).
(c) If No Distribution Is Made. If no distribution (nor deemed distribution) is made to a Participant before he incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture at the end of the Plan Year that constitutes his fifth consecutive One-Year Vesting Break.
(d) Adjustment of Accounts. Before a Forfeiture is incurred, a Participant's Accounts shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants.
(e) Accumulated Deductible Contributions. For Plan Years beginning before January 1, 1989, a Participant's vested Account balance shall not include accumulated deductible contributions within the meaning of Section 72(o)(5)(B) of the Code.
8.4. Special Rule in the Event of a Withdrawal. If a withdrawal pursuant to Section 12.2 or 12.3 is made from a Participant's Employer Profit Sharing Account or Employer Matching Account before the Account is fully vested, and the Participant may subsequently increase the vested percentage in the Account, then a separate account will be established at the time of the withdrawal, and at any relevant time after the withdrawal the vested portion of the separate account will be equal to the amount "X" determined by the following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the withdrawal.
8.5. Vesting Election. If the Plan is amended to change any
vesting schedule, or is amended in any way that directly or
indirectly affects the computation of a Participant's vested
percentage, each Participant who has completed not less than
three Years of Service may elect, within a reasonable period
after the adoption of the amendment or change, in a writing filed
with the Employer to have his vested percentage computed under
the Plan without regard to such amendment. For a Participant who
is not credited with at least one Hour of Service in a Plan Year
beginning after December 31, 1988, the preceding sentence shall
be applied by substituting "five Years of Service" for "three
Years of Service." 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) 60 days
after the amendment is adopted; (b) 60 days after the amendment
becomes effective; or (c) 60 days after the Participant is issued
written notice of the amendment by the Employer.
ARTICLE 9. PAYMENT OF BENEFITS
9.1. Distribution of Accounts. A Participant or Beneficiary who has become eligible for a distribution of benefits pursuant to Article 7 may elect to receive such benefits at any time, subject to the terms and conditions of this Article 9, Article 10 and Article 11. Unless a Participant or Beneficiary elects otherwise, distribution of benefits will begin no later than the 60th day after the end of the Plan Year in which the latest of the following events occurs:
(a) The Participant attains age 65 (or if earlier, the normal retirement age specified by the Employer in the Plan Agreement); or
(b) The tenth anniversary of the year in which the Participant commenced participation in the Plan; or
(c) The Participant's employment with the Affiliated Employers terminates.
A Beneficiary who is the surviving spouse of a Participant may elect to have distribution of benefits begin within the 90-day period following the Participant's death.
For purposes of this Section 9.1, the failure of a
Participant (and his spouse, if spousal consent is required
pursuant to Article 10) to consent to a distribution while a
benefit is "immediately distributable" within the meaning of
Section 9.2 shall be considered an election to defer commencement
of payment. The vested portion of a Participant's Accounts will
be distributed in a lump sum in cash no later than 60 days after
the end of the Plan Year in which his employment terminates, if
at the time the Participant first became entitled to a
distribution the value of such vested portion derived from
Employer and Employee contributions does not exceed $3,500.
Commencement of distributions in any case shall be subject to
Section 9.4.
9.2. Restriction on Immediate Distributions. A Participant's account balance is considered "immediately distributable" if any part of the account balance could be distributed to the Participant (or his surviving spouse) before the Participant attains, or would have attained if not deceased, the later of the normal retirement age specified in the Plan Agreement or age 62.
(a) If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and his spouse (or where either the Participant or the spouse has died, the survivor) must consent to any such distribution, unless an exception described in paragraph (b) applies. The consent of the Participant and his spouse shall be obtained in writing within the 90-day period ending on the annuity starting date, which is the first day of the first period for which an amount is paid as an annuity (or any other form). The Plan Administrator shall notify the Participant and the spouse, no less than 30 days and no more than 90 days before the annuity starting date, 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 of the optional forms of benefit available under the Plan and an explanation of their relative values, in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the required notification is given, provided that:
(1) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and
(2) the Participant, after receiving the notice, affirmatively elects a distribution.
(b) Notwithstanding paragraph (a), only the
Participant need consent to the commencement of a
distribution in the form of a 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 10.1(b) 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 spouse shall be required to the extent that a
distribution is required to satisfy Section 401(a)(9) or
Section 415 of the Code. In addition, upon termination of
the Plan, if the Plan does not offer an annuity option
purchased from a commercial provider, and no Affiliated
Employer maintains another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code), a Participant's account balance
shall be distributed to the Participant without his consent.
If any Affiliated Employer maintains another defined
contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), a
Participant's account balance shall be transferred to that
defined contribution plan without his consent, unless he
consents to an immediate distribution. 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(o)(5)(B) of
the Code.
9.3. Optional Forms of Distribution. If at the time a Participant first becomes entitled to a distribution the value of his vested Account balance derived from Employer and Employee contributions does not exceed $3,500, distribution shall be made in a lump sum in cash. Subject to the preceding sentence and to the rules of Article 10 concerning joint and survivor annuities, a Participant or Beneficiary may elect to receive benefits in any of the following optional forms:
(a) A lump sum payment in cash or in kind or in a combination of both;
(b) A series of installments over a period certain that meets the requirements of Article 11; or
(c) In the event that the Plan is adopted as an amendment to an existing plan, any optional form of distribution available under the existing plan. Such optional forms of distribution may be made available where necessary through the purchase by the Plan Administrator of an appropriate annuity contract from a commercial provider, with terms complying with the requirements of Article 11. If the Plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code, the provisions of Article 10 shall apply.
9.4. Distribution Procedure. The Trustee shall make or commence distributions to or for the benefit of Participants only on receipt of an instruction from the Employer in writing or by such other means as shall be acceptable to the Trustee, certifying that a distribution of a Participant's benefits is payable pursuant to the Plan, and specifying the time and manner of payment. The amount to be distributed shall be determined as of the Valuation Date coincident with or next following the Employer's order. The Trustee shall be fully protected in acting upon the directions of the Employer in making benefit distributions, and shall have no duty to determine the rights or benefits of any person under the Plan or to inquire into the right or power of the Employer to direct any such distribution. The Trustee shall be entitled to assume conclusively that any determination by the Employer with respect to a distribution meets the requirements of the Plan. The Trustee shall not be required to make any payment hereunder in excess of the net realizable value of the assets of the Account in question at the time of such payment, nor to make any payment in cash unless the Employer has furnished instructions as to the assets to be converted to cash for the purposes of making payment.
9.5. Lost Distributee. In the event that the Plan
Administrator is unable with reasonable effort to locate a person
entitled to distribution under the Plan, the Accounts
distributable to such a person shall become a Forfeiture at the
end of the third Plan Year after the Plan Administrator's efforts
to locate such person began; provided, however, that the amount
of the Forfeiture shall be restored in the event that such person
thereafter submits a claim for benefits under the Plan. Such
restoration will be made, first, from the amount of Forfeitures
available for reallocation as of the last day of the Plan Year in
which the claim is made, to the extent thereof; and to the extent
that Forfeitures are not available or are insufficient to restore
the balance, from contributions made by the Employer pursuant to
Section 4.1(f). A Forfeiture occurring under this Section 9.5
shall be used to reduce the amount of contributions required of
the Employer as described in Section 4.13 and Section 5.2.
9.6. Direct Rollovers. This Section 9.6 applies to distributions made on or after January 1, 1993. 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 Section 9.6, the following definitions shall apply:
(a) 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 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 distributees and the distributee's Designated Beneficiary (as defined in Section 11.3), 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, and 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).
(b) 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 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. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.
(c) 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 Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are distributees with regard to the interest of the spouse or former spouse.
(d) Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
9.7. Distributions Required by a Qualified Domestic
Relations Order. To the extent required by a Qualified Domestic
Relations Order, the Plan Administrator shall make distributions
from a Participant's Accounts to any alternate payee named in
such order in a manner consistent with the distribution options
otherwise available under the Plan, regardless of whether the
Participant is otherwise entitled to a distribution at such time
under the Plan.
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS
10.1. Applicability.
(a) Generally. The provisions of Sections 10.2
through 10.5 shall generally apply to a Participant who is
credited with at least one Hour of Service on or after
August 23, 1984, and such other Participants as provided in
Section 10.6.
(b) Exception for Certain Plans. The provisions of Sections 10.2 through 10.5 shall not apply to a Participant if: (i) the Participant does not or cannot elect payment of benefits in the form of a life annuity, and (ii) on the death of the Participant, his Vested Account Balance will be paid to his surviving spouse (unless there is no surviving spouse, or the surviving spouse has consented to the designation of another Beneficiary in a manner conforming to a Qualified Election) and the surviving spouse may elect to have distribution of the Vested Account Balance (adjusted in accordance with Section 13.4 for gains or losses occurring after the Participant's death) commence within the 90-day period following the date of the Participant's death. The Participant may waive the spousal death benefit described in this paragraph (b) at any time, provided that no such waiver shall be effective unless it satisfies the conditions applicable under Section 10.4(c) to a Participant's waiver of a Qualified Preretirement Survivor Annuity. The exception in this paragraph (b) shall not be operative with respect to a Participant if the Plan:
(1) is a direct or indirect transferee of a defined benefit plan, money purchase pension plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code; or
(2) is adopted as an amendment of a plan that did not qualify for the exception in this paragraph (b) before the amendment was adopted.
For purposes of this paragraph (b), Vested Account Balance shall have the meaning provided in Section 10.4(f). The provisions of Sections 10.2 through 10.6 set forth the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code.
(c) Exception for Certain Amounts. The provisions of
Sections 10.2 through 10.5 shall not apply to any
distribution made on or after the first day of the first
Plan Year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated
deductible employee contributions as defined in Section
72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan or a target
benefit plan, provided that the exceptions applicable to
certain profit sharing plans under paragraph (b) are
applicable with respect to the separate account (for this
purpose, Vested Account Balance means the Participant's
separate account balance attributable solely to accumulated
deductible employee contributions within the meaning of
Section 72(o)(5)(B) of the Code).
10.2. Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a Qualified Election within the 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 life annuity. In either case, the Participant may elect to have such an annuity distributed upon his attainment of the Earliest Retirement Age under the Plan.
10.3. Qualified Preretirement Survivor Annuity. Unless
an optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, the Vested Account
Balance of a Participant who dies before the Annuity Starting
Date shall be applied toward the purchase of an annuity for the
life of his surviving spouse (a "Qualified Preretirement Survivor
Annuity"). The surviving spouse may elect to have such an
annuity distributed within a reasonable period after the
Participant's death. For purposes of this Article 10, the term
"spouse" means the current spouse or surviving spouse of a
Participant, except 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.
10.4. Definitions. The following definitions apply:
(a) "Election Period" means the period beginning on
the first day of the Plan Year in which a Participant
attains age 35 and ending on the date of the Participant's
death. If a Participant separates from service before the
first day of the Plan Year in which he reaches age 35, the
Election Period with respect to his account balance as of
the date of separation shall begin on the date of
separation. A Participant who will not attain age 35 as of
the end of a 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 35. Such an election shall not be valid
unless the Participant receives a written explanation of the
Qualified Preretirement Survivor Annuity in such terms as
are comparable to the explanation required under Section
10.5. Qualified Preretirement Survivor Annuity coverage
will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new
waiver on or after that date shall be subject to the full
requirements of this article.
(b) "Earliest Retirement Age" means the earliest date on which the Participant could elect to receive Retirement benefits under the Plan.
(c) "Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any such waiver shall not be effective unless: (1) the Participant's spouse consents in writing to the waiver; (2) the waiver designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent); (3) the spouse's consent acknowledges the effect of the waiver; and (4) 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 waiver designates a form of benefit payment which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent). If it 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 these provisions (and any establishment that the consent of a spouse may not be obtained) shall be effective only with respect to the particular spouse involved. A consent that permits designations by the Participant without any requirement of further consent by the spouse must acknowledge that the spouse has the right to limit the 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 those rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at 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 Section 10.5.
(d) "Qualified Joint and Survivor Annuity" means an immediate annuity for the life of a Participant, with a survivor annuity for the life of the spouse which is not less than 50% and not more than 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 that can be purchased with the Participant's Vested Account Balance. The percentage of the survivor annuity under the Plan shall be 50%.
(e) "Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity (or any other form).
(f) "Vested Account Balance" means the aggregate value of the Participant's vested account balance 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 10 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.
(g) "Straight life annuity" means an annuity payable in equal installments for the life of the Participant that terminates upon the Participant's death.
10.5. Notice Requirements. In the case of a Qualified Joint and Survivor Annuity, no less than 30 days and no more than 90 days before a Participant's Annuity Starting Date the Plan Administrator shall provide to him a written explanation of (i) the terms and conditions of a Qualified Joint and Survivor Annuity, (ii) the Participant's right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity form of benefit, (iii) the rights of the Participant's spouse, and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity.
In the case of a Qualified Preretirement Survivor Annuity, within the applicable period for a Participant the Plan Administrator shall provide to him a written explanation of the Qualified Preretirement Survivor Annuity, in terms and manner comparable to the requirements applicable to the explanation of a Qualified Joint and Survivor Annuity as described in the preceding paragraph. 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 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after an individual becomes a Participant; (iii) a reasonable period ending after this Article 10 first applies to the Participant. Notwithstanding the foregoing, in the case of a Participant who separates from service before attaining age 35, notice must be provided within a reasonable period ending after his separation from service.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described in
(ii) and (iii) is the end of the two-year period beginning one
year before the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates
from service before the Plan Year in which he reaches age 35,
notice shall be provided within the two-year period beginning one
year before the separation and ending one year after the
separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for the
Participant shall be redetermined.
10.6. Transitional Rules.
(a) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the preceding Sections of this Article 10, must be given the opportunity to elect to have those Sections apply if the Participant is credited with at least one Hour of Service under the Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and the Participant had at least ten years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under the Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with paragraph (d) of this Section 10.6.
(c) The respective opportunities to elect (as described in paragraphs (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to be paid to those Participants.
(d) Any Participant who has so elected pursuant to paragraph (b) of this Section 10.6, and any Participant who does not elect under paragraph (a), or who meets the requirements of paragraph (a) except that he does not have at least ten years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements, if his benefits would otherwise have been payable in the form of a life annuity:
(1) Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a married Participant who:
(A) begins to receive payments under the Plan on or after normal retirement age; or
(B) dies on or after normal retirement age while still working for the Employer; or
(C) begins to receive payments on or after the qualified early retirement age; or
(D) separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits;
then such benefits will be received under the Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period, which must begin at least six months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time.
(2) Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect during the election period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment.
(3) For purposes of this Section 10.6, qualified
early retirement age is the latest of the earliest date
under the Plan on which the Participant may elect to
receive Retirement benefits, the first day of the 120th
month beginning before the Participant reaches normal
retirement age, or the date the Participant begins
participation.
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS
11.1. General Rules. Subject to Article 10, Joint and
Survivor Annuity Requirements, the requirements of this Article
11 shall apply to any distribution of a Participant's interest
and will take precedence over any inconsistent provisions of the
Plan. All distributions required under this Article 11 shall be
determined and made in accordance with the Income Tax Regulations
issued under Section 401(a)(9) of the Code (including proposed
regulations, until the adoption of final regulations), including
the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
11.2. Required Beginning Date. The entire interest of a Participant must be distributed, or begin to be distributed, no later than the Participant's required beginning date, determined as follows.
(a) General Rule. 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 70 1/2.
(b) Transitional Rules. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (1) or (2) below:
(1) Non-5% owners. The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of his Retirement or his attainment of age 70 1/2 occurs.
(2) 5% owners. The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of:
(A) the calendar year in which the Participant attains age 70 1/2, or
(B) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant who is not
a 5% owner, who attains age 70 1/2 during 1988 and who has
not
retired as of January 1, 1989, is April 1, 1990.
(c) Rules for 5% Owners. A Participant is treated as a 5% owner for purposes of this Section 11.2 if he is a 5% owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top heavy) at any time during the Plan Year ending with or within the calendar year in which he attains age 66 1/2, or any subsequent Plan Year. Once distributions have begun to a 5% owner under this Section 11.2, they must continue, even if the Participant ceases to be a 5% owner in a subsequent year.
11.3. Limits on Distribution Periods. As of the first Distribution Calendar Year, distributions not made in a single sum may be made only over one or a combination of the following periods:
(a) the life of the Participant,
(b) the life of the Participant and his 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 his Designated Beneficiary.
"Designated Beneficiary" means the individual who is
designated as the Beneficiary under the Plan in accordance with
Section 401(a)(9) of the Code and the regulations issued
thereunder (including proposed regulations, until the adoption of
final regulations) and Section 7.2.
"Distribution Calendar Year" means a calendar year for which a minimum distribution is required under Section 401(a)(9) of the Code and this Section 11.3. For distributions 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 11.5.
"Life Expectancy" and "Joint and Last Survivor Expectancy" are 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 his spouse, in the case of distributions described in Section 11.5(b)) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Any such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy of a nonspouse beneficiary may not be recalculated.
11.4. Determination of Amount to Be Distributed Each
Year. If the Participant's 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. Paragraphs
(a) through (d) apply to distributions in forms other than the
purchase of an annuity contract.
(a) If a Participant's Benefit (as defined below) is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and his Designated Beneficiary, or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar 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 (as defined below).
(b) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant.
(c) 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 (1) the Applicable Life Expectancy or (2) 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 Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the Applicable Life Expectancy in paragraph (a) above as the relevant divisor, without regard to Proposed Regulations Section 1.401(a)(9)-2.
(d) 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.
(e) If the Participant's Benefit is distributed in the form of an annuity contract 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 regulations issued thereunder (including proposed regulations, until the adoption of final regulations).
"Applicable Life Expectancy" means 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 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. If annuity payments commence in accordance with Section 11.4(e) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest in the Plan, the applicable calendar year is the year of purchase.
"Participant's Benefit" means the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year), increased by the amount of any contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. For purposes of the preceding sentence, 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 Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year.
11.5. Death Distribution Provisions.
(a) Distribution Beginning before Death. If the Participant dies after distribution of his interest has begun, the remaining portion of his interest will continue to be distributed at least as rapidly as under the method of distribution being used before the Participant's death.
(b) Distribution Beginning after Death. If the Participant dies before distribution of his interest begins, distribution of his entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death, except to the extent that an election is made to receive distributions in accordance 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 Designated Beneficiary's 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; or
(2) If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this Section 11.5 by the time of his 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 11.5, or (ii) December 31 of the calendar year which contains the fifth 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 anniversary of the Participant's death.
(c) For purposes of paragraph (b), if the surviving spouse dies after the Participant, but before payments to the spouse begin, the provisions of paragraph (b), with the exception of subparagraph (2) therein, shall be applied as if the surviving spouse were the Participant.
(d) For purposes of this Section 11.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse of the Participant if the amount becomes payable to the surviving spouse when the child reaches the age of majority.
(e) For the purposes of this Section 11.5, distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if paragraph (c) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to paragraph (b) above). If distribution in the form of an annuity contract described in Section 11.4(e) irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences.
11.6. Transitional Rule. Notwithstanding the other requirements of this Article 11, and subject to the requirements of Article 10, Joint and Survivor Annuity Requirements, distribution on behalf of any Participant, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the Trust under Section 401(a)(9) of the Internal Revenue Code of 1954 as in effect before its amendment by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of the Employee.
(c) The designation specified in paragraph (b) was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984.
(d) The Employee had accrued a benefit under the Plan as of December 31, 1983.
(e) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority.
A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary to whom such distribution is being made will be presumed to have designated the method of distribution under which the distribution is being made, if the method of distribution was specified in writing and the distribution satisfies the requirements in paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of the Code
and the regulations thereunder. If a designation is revoked
after the date distributions are required to begin, the Trust
must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been
distributed to satisfy Section 401(a)(9) of the Code and the
regulations thereunder, but for the designation described in
paragraphs (b) through (e). For calendar years beginning after
December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any
changes in the designation generally will be considered to be a
revocation of the designation, but the mere substitution or
addition of another beneficiary (one not named in the
designation) under the designation will not be considered to be a
revocation of the designation, so long as the substitution or
addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life). In the case
of an amount transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l
of the Proposed Income Tax Regulations shall apply.
ARTICLE 12. WITHDRAWALS AND LOANS
12.1. Withdrawals from Participant Contribution Accounts. Subject to the requirements of Article 10, a Participant may upon written notice (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) to the Employer withdraw any amount from his Participant Contribution Account (if any). A withdrawn amount may not be repaid to the Plan. No Forfeiture will occur solely as a result of an Employee's withdrawal from a Participant Contribution Account.
12.2. Withdrawals on Account of Hardship.
(a) If the Employer has so elected in the Plan Agreement, upon a Participant's written request (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), the Plan Administrator may permit a withdrawal of funds from the vested portion of the Participant's Accounts on account of the Participant's financial hardship, which must be demonstrated to the satisfaction of the Plan Administrator, provided, that no hardship withdrawal shall be made from a Qualified Nonelective Contribution Account or Qualified Matching Account. In considering such requests, the Plan Administrator shall apply uniform standards that do not discriminate in favor of Highly Compensated Employees. If hardship withdrawals are permitted from more than one of the Elective Deferral Account, Rollover Account, Employer Matching Account, and Employer Profit Sharing Account, they shall be made first from a Participant's Elective Deferral Account, then from his Rollover Account, then from his Employer Matching Account, and finally from his Employer Profit Sharing Account. A withdrawn amount may not be repaid to the Plan.
(b) The maximum amount that may be withdrawn on
account of hardship from an Elective Deferral Account after
December 31, 1988, shall not exceed the sum of (1) the
amount credited to the Account as of December 31, 1988, and
(2) the aggregate amount of the Elective Deferrals made by
the Participant after December 31, 1988, and before the
hardship withdrawal.
(c) Hardship withdrawals shall be permitted only on account of the following financial needs:
(1) Expenses for medical care described in
Section 213(d) of the Code for the Participant, his
spouse, children and dependents, or necessary for these
persons to obtain such care;
(2) Purchase of the principal residence of the Participant (excluding regular mortgage payments);
(3) Payment of tuition and related educational fees and room and board expenses for the upcoming 12 months of post-secondary education for the Participant, his spouse, children or dependents; or
(4) Payments necessary to prevent the Participant's eviction from, or the foreclosure of a mortgage on, his principal residence.
(d) Hardship withdrawals shall be subject to the
spousal consent requirements contained in Sections
411(a)(11) and 417 of the Code, to the same extent that
those requirements apply to a Participant pursuant to
Section 10.1.
(e) A hardship distribution will be permitted to a Participant only upon satisfaction of the following conditions:
(1) The Participant has obtained all nontaxable loans and all distributions other than hardship withdrawals available to him from all plans maintained by the Affiliated Employers;
(2) The hardship withdrawal does not exceed the amount of the Participant's financial need as described in paragraph (b) plus any amounts necessary to pay federal, state and local income taxes and penalties reasonably anticipated to result from the withdrawal;
(3) With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the Participant's Elective Deferrals and voluntary after-tax contributions will be suspended for a period of 12 months following his receipt of a hardship withdrawal; and
(4) With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the amount of Elective Deferrals that the Participant may make in his taxable year immediately following the year of a hardship withdrawal will not exceed the applicable limit under Section 402(g) of the Code for the taxable year, reduced by the amount of Elective Deferrals made by the Participant in the taxable year of the hardship withdrawal.
12.3. Withdrawals After Reaching Age 59 1/2. A Participant who has reached age 59 1/2 may upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) withdraw during his employment any amount not exceeding the vested balance of his Accounts. A withdrawn amount may not be repaid to the Plan.
12.4. Loans. If the Employer has so elected in the Plan Agreement, the Employer may direct the Trustee to make a loan to a Participant or Beneficiary from the vested portion of his Accounts, subject to the following terms and conditions and to such reasonable additional rules and regulations as the Plan Administrator may establish for the orderly operation of the program:
(a) The Plan Administrator shall administer the loan program subject to the terms and conditions of this Section 12.4.
(b) A Participant's or Beneficiary's request for a loan shall be submitted to the Plan Administrator by means of a written application on a form supplied by the Plan Administrator (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). Applications shall be approved or denied by the Plan Administrator on the basis of its assessment of the borrower's ability to collateralize and repay the loan, as revealed in the loan application.
(c) Loans shall be made to all Participants and Beneficiaries on a reasonably equivalent basis. Loans shall not be made available to Highly Compensated Employees (as defined in Section 414(q) of the Code) in amounts greater than the amounts made available to other Employees (relative to the borrower's Account balance).
(d) Loans must be evidenced by the Participant's promissory note for the amount of the loan payable to the order of the Trustee, and adequately secured by assignment of not more than fifty percent (50%) of the Participant's entire right, title and interest in and to the Trust Fund, exclusive of any asset as to which Putnam is not the Trustee.
(e) Loans must bear a reasonable interest rate comparable to the rate charged by commercial lenders in the geographical area for similar loans. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates is justified by conditions that would customarily be taken into account by a commercial lender in the Employer's geographical area.
(f) The period for repayment for any loan shall not exceed five years, except in the case of a loan used to acquire a dwelling unit which within a reasonable time is to be used as the principal residence of the Participant, in which case the repayment period may exceed five years. The terms of a loan shall require that it be repaid in level payments of principal and interest not less frequently then quarterly throughout the repayment period, except that alternative arrangements for repayment may apply in the event that the borrower is on unpaid leave of absence for a period not to exceed one year.
(g) To the extent that a Participant would be required
under Article 10 to obtain the consent of his spouse to a
distribution of an immediately distributable benefit other
than a Qualified Joint and Survivor Annuity, the consent of
the Participant's spouse shall be required for the use of
his Account as security for a loan. The spouse's consent
must be obtained no earlier than the beginning of the 90-day
period that ends on the date on which the loan is to be so
secured, and obtained in accordance with the requirements of
Section 10.4(c) for a Qualified Election. Any such consent
shall thereafter be binding on the consenting spouse and any
subsequent spouse of the Participant. A new consent shall
be required for use of the Account as security for any
extension, renewal, renegotiation or revision of the
original loan.
(h) If valid spousal consent has been obtained in accordance with Section 12.4(g), then notwithstanding any other provision of the 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. If less than 100% of the Participant's vested 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 vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse.
(i) In the event of default on a loan by a Participant who is an active Employee, foreclosure on the Participant's Account as security will not occur until the Employer has reported to the Trustee the occurrence of an event permitting distribution from the Plan in accordance with Article 9 or Section 4.12.
(j) No loan shall be made to an Owner-Employee or a Shareholder-Employee unless a prohibited transaction exemption is obtained by the Employer.
(k) No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated.
(1) Loans shall be considered investments directed by a Participant pursuant to Section 13.3. The amount loaned shall be charged solely against the Accounts of the Participant, and repaid amounts and interest shall be credited solely thereto.
12.5. Procedure; Amount Available. Withdrawals and loans shall be made subject to the terms and conditions applicable to distributions pursuant to Section 9.4, except that the amount of any withdrawal or loan shall be determined by reference to the vested balance of the Participant's Account as of the most recent Valuation Date preceding the withdrawal or loan, and shall not exceed the amount of the vested account balance.
12.6. Protected Benefits. Notwithstanding any provision
to the contrary, if an Employer amends an existing retirement
plan ("prior plan") by adopting this Plan, to the extent any
withdrawal option or form of payment available under the prior
plan is an optional form of benefit within the meaning of Code
Section 411(d)(6), such option or form of payment shall continue
to be available to the extent required by such Code Section.
12.7. Restrictions Concerning Transferred Assets.
Notwithstanding any provision to the contrary, if an Employer
amends an existing defined benefit or money purchase pension plan
("prior pension plan") by adopting this Plan, accrued benefits
attributable to the assets and liabilities transferred from the
prior pension plan (which accrued benefits include the account
balance of such Participant in the Plan attributable to such
accrued benefits as of the date of the transfer and any earnings
on such account balance subsequent to the transfer) shall be
distributable only on or after the events upon which
distributions are or were permissible under the prior pension
plan.
ARTICLE 13. TRUST FUND AND INVESTMENTS
13.1. Establishment of Trust Fund. The Employer and the Trustee hereby agree to the establishment of a Trust Fund consisting of all amounts as shall be contributed or transferred from time to time to the Trustee pursuant to the Plan, and all earnings thereon. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan, and no such assets shall ever revert to the Employer, except that:
(a) contributions made by the Employer by mistake of fact, as determined by the Employer, may be returned to the Employer within one (1) year of the date of payment,
(b) contributions that are conditioned on their deductibility under Section 404 of the Code may be returned to the Employer, to the extent disallowed, within one (1) year of the disallowance of the deduction,
(c) contributions that are conditioned on the initial qualification of the Plan under the Code, and all investment gains attributable to them, may be returned to the Employer within one (1) year after such qualification is denied by determination of the Internal Revenue Service, but only if an application for determination of such qualification is made within the time prescribed by law for filing the Employer's federal income tax return for its taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe, and
(d) amounts held in a suspense account may be returned to the Employer on termination of the Plan, to the extent that they may not then be allocated to any Participant's Account in accordance with Article 6.
All Employer contributions under the Plan other than those made pursuant to Section 4.1(f) are hereby expressly conditioned on the initial qualification of the Plan and their deductibility under the Code. Investment gains attributable to contributions returned pursuant to Subsections (a) and (b) shall not be returned to the contributing Employer, and investment losses attributable to such contributions shall reduce the amount returned.
13.2. Management of Trust Fund. The assets of the Trust Fund shall be held in trust by the Trustee and accounted for in accordance with this Article 13, and shall be invested in accordance with Section 13.3 in the Investment Products specified by the Employer in the Plan Agreement and from time to time thereafter in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). The Employer shall have the exclusive authority and discretion to select the Investment Products available under the Plan. In making that selection, the Employer shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Employer shall cause the available Investment Products to be diversified sufficiently to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. It is especially intended that the Trustee shall have no discretionary authority to determine the investment of Trust assets. Notwithstanding the foregoing, assets of the Trust Fund shall also be invested in Employer Stock if so elected by the Employer and agreed to by Putnam under the Service Agreement.
13.3. Investment Instructions. All amounts held in the Trust Fund under the Plan shall be invested in Investment Products solely in accordance with the instructions of the Participant to whose Accounts they are allocable, as delivered to Putnam in accordance with the Service Agreement. Instructions shall apply to future contributions, past accumulations, or both, according to their terms, and shall be communicated by the Employer to Putnam in accordance with procedures prescribed in the Service Agreement. Instructions shall be effective prospectively, coincident with or within a reasonable time after their receipt in good order by Putnam. An instruction once received shall remain in effect until it is changed by the provision of a new instruction. New instructions shall be accepted by Putnam on any valuation date.
In the event that the Employer adopts this Putnam prototype Plan as an amendment to or restatement of an existing plan, the Employer shall specify one or more Investment Products to serve as the sole investments for all Participants' Accounts during the period in which existing records of the Plan are transferred to the Recordkeeper. During that period, new investment instructions as to existing assets of the Plan cannot be carried out, nor can distributions be made from the Plan except to the extent permitted under the terms of the Service Agreement. The Employer and the Recordkeeper shall use their best efforts to minimize the duration of the period to which the preceding sentence applies.
To the extent specifically authorized and provided in the Service Agreement, the Employer may direct the Trustee to establish as an Investment Product a fund all of the assets of which shall be invested in shares of stock of the Employer that constitute "qualifying employer securities" within the meaning of section 407(d)(5) of ERISA ("Employer Stock"). The Plan Administrator as named fiduciary shall continually monitor the suitability of acquiring and holding Employer Stock under the fiduciary duty rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2) of ERISA) and the requirements of section 404(c) of ERISA, and shall be responsible for ensuring that the procedures relating to the purchase, holding and sale of Employer Stock, and the exercise of any and all rights with respect to such Employer Stock shall be in accordance with section 404(c) of ERISA unless the Employer retains voting, tender or similar rights with respect to the Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the direction of the Plan Administrator with respect to the acquisition and holding of Employer Stock. The Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Plan Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting and tender or retention of Employer Stock.
Putnam shall be under no duty to question or review the directions given by the Employer or to make suggestions to the Employer in connection therewith. Putnam shall not be liable for any loss, or by reason of any breach, that arises from the Employer's exercise or non-exercise of rights under this Article 13, or from any direction of the Employer unless it is clear on the face of the direction that the actions to be taken under the direction are prohibited by the fiduciary duty rules of Section 404(a) of ERISA. All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of, securities or other property held in an investment fund shall be credited to and reinvested in such investment fund, and all expenses of the Trust that are properly allocated to a particular investment fund shall be so allocated and charged. The Employer may at any time direct Putnam to eliminate any investment fund or funds, and Putnam shall thereupon dispose of the assets of such investment fund and reinvest the proceeds thereof in accordance with the directions of the Employer.
Neither the Employer nor the Trustee nor Putnam shall be responsible for questioning any instructions of a Participant or for reviewing the investments selected therein, or for any loss resulting from instructions of a Participant or from the failure of a Participant to provide or to change instructions. Neither Putnam nor the Trustee shall have any duty to question any instructions received from the Employer or a Participant or to review the investments selected thereby, nor shall Putnam or the Trustee be responsible for any loss resulting from instructions received from the Employer or a Participant or from the failure of the Employer or a Participant to provide or to change instructions. In the event that Putnam or the Trustee receives a contribution under the Plan as to which no instructions are delivered, or such instructions as are delivered are unclear to Putnam or the Trustee, such contribution shall be invested until clear instructions are received in the default investment option set forth in the Service Agreement or other written agreement between the Employer and Putnam, or if no such option is so set forth, the Employer, by execution of the Plan Agreement, shall affirmatively elect to have such contributions invested in the Putnam Money Market Fund. Neither Putnam nor the Trustee shall have any discretionary authority or responsibility in the investment of the assets of the Trust Fund.
13.4. Valuation of the Trust Fund. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund, and the net earnings or losses and expenses of the Trust Fund for the period elapsed since the most recent previous Valuation Date shall be allocated among the Accounts of Participants. Earnings, losses and expenses which pertain to investments which are specifically held for a given Participant's Account shall be allocated solely to that Account. In the event that an investment is not specifically held for a given Participant's Account, the earnings, losses and expenses pertaining to that investment shall be allocated among all Participants' Accounts in the ratio that each such Account bears to the total of all Accounts of all Participants. Each Participant's Accounts shall be adjusted pursuant to this Section 13.4 until such time as they are either fully distributed or forfeited, regardless of whether the Participant continues to be an Employee.
13.5. Distributions on Investment Company Shares. Subject to Section 9.3, all dividends and capital gains or other distributions received on any Investment Company Shares credited to Participant's Account will (unless received in additional Investment Company Shares) be reinvested in full and fractional shares of the same Investment Company at the price determined as provided in the then current prospectus of the Investment Company. The shares so received or purchased upon such reinvestment will be credited to such accounts. If any dividends or capital gain or other distributions may be received on such Investment Company Shares at the election of the shareholder in additional shares or in cash or other property, the Trustee will elect to receive such dividends or distributions in additional Investment Company Shares.
13.6. Registration and Voting of Investment Company Shares. All Investment Company Shares shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law, the Trustee will transmit to the Employer copies of any notices of shareholders' meetings, proxies and proxy-soliciting materials, prospectuses and the annual or other reports to shareholders, with respect to Investment Company Shares held in the Trust Fund. The Trustee shall act in accordance with directions received from the Employer with respect to matters to be voted upon by the shareholders of the Investment Company. Such directions must be in writing on a form approved by the Trustee, signed by the Employer and delivered to the Trustee within the time prescribed by it. The Trustee will not vote Investment Company Shares as to which it receives no written directions.
13.7. Investment Manager. The Employer, with the consent of Putnam, may appoint an investment manager, as defined in Section 3(38) of the ERISA, with respect to all or a portion of the assets of the Trust Fund. The Trustee shall have no liability in connection with any action or nonaction pursuant to directions of such an investment manager.
13.8. Employer Stock.
(a) Voting Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(a) shall govern the voting of Employer Stock held by Putnam as Trustee under the Plan. The Trustee shall vote Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of Employer Stock and shall direct the Trustee as to the voting of Employer Stock in accordance with the provisions of this Section 13.8(a). In either case, the Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting of Employer Stock. The remainder of this Section 13.8(a) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the voting of Employer Stock. For purposes of this Section 13.8(a), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock.
When the issuer of Employer Stock files preliminary proxy solicitation materials with the Securities and Exchange Commission, the Employer shall cause a copy of all the materials to be simultaneously sent to the Trustee, and the Trustee shall prepare a voting instruction form based upon these materials. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the number of full and fractional shares of Employer Stock credited to the Participant's accounts, whether or not vested. For purposes of this Section 13.8(a), the number of shares of Employer Stock deemed credited to a Participant's Accounts shall be determined as of the date of record determined by the Employer for which an allocation has been completed and Employer Stock has actually been credited to Participant's Accounts. Procedures for the execution of purchases and sales of Employer Stock shall be as set forth in the Service Agreement. The Employer shall provide the Trustee with a copy of any materials provided to Participants and shall certify to the Trustee that the materials have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee as to the manner in which to vote that number of shares of Employer Stock held under the Plan (whether or not vested) equal to a fraction, of which the numerator is the number of shares of Employer Stock credited to his Account and the denominator is the number of shares of Employer Stock credited to all Participants' Accounts. Such directions shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) and shall be held in confidence by the Trustee and not divulged to the Employer, or any officer or employee thereof, or any other persons. Upon its receipt of directions, the Trustee shall vote the shares of Employer Stock as directed by the Participant. The Trustee shall not vote those shares of Employer Stock credited to the Accounts of Participants for which no voting directions are received. With respect to shares of Employer Stock held in the Trust which are not credited to a Participant's Account, the Plan Administrator shall retain the status of named fiduciary and shall direct the voting of such Employer Stock.
(b) Tendering Rights. Notwithstanding any other
provision of the Plan, the provisions of this Section
13.8(b) shall govern the tendering of Employer Stock by
Putnam as Trustee under the Plan. In the event of a tender
offer, the Trustee shall tender Employer Stock in accordance
with the directions of the Employer unless the Employer has
elected in the Plan Agreement that Participants shall be
appointed named fiduciaries as to the tendering of Employer
Stock in accordance with the provisions of this Section
13.8(b). The remainder of this Section 13.8(b) applies only
if the Employer elects in the Plan Agreement that
Participants shall direct the Trustee as to the tendering of
Employer Stock. For purposes of this Section 13.8(b), the
term "Participant" includes any Beneficiary with an Account
in the Plan which is invested in Employer Stock.
Upon commencement of a tender offer for any Employer Stock, the Employer shall notify each Plan Participant, and use its best efforts to distribute timely or cause to be distributed to Participants the same information that is distributed to shareholders of the issuer of Employer Stock in connection with the tender offer, and after consulting with the Trustee shall provide at the Employer's expense a means by which Participants may direct the Trustee whether or not to tender the Employer Stock credited to their Accounts (whether or not vested). The Employer shall provide to the Trustee a copy of any material provided to Participants and shall certify to the Trustees that the materials have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock credited to his Accounts. Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) as is agreed upon by the Trustees and the Employer. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock credited to his Accounts may, at any time before the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer before the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that he may give to the Trustee. The Trustee shall not tender shares of Employer Stock credited to a Participant's Accounts for which it has received no directions from the Plan Participant. The Trustee shall tender that number of shares of Employer Stock not credited to Participants' Accounts determined by multiplying the total number of such shares by a fraction, the numerator of which is the number of shares of Employer Stock credited to Participants' Accounts for which the Trustee has received directions from Participants to tender (which directions have not been withdrawn as of the date of this determination), and the denominator of which is the total number of shares of Employer Stock credited to Participants' Accounts.
A direction by a Participant to the Trustee to tender shares of Employer Stock credited to his Accounts shall not be considered a written election under the Plan by the Participant to withdraw or to have distributed to him any or all of such shares. The Trustee shall credit to each account of the Plan Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that account. Pending receipt of directions through the Administrator from the Participant as to the investment of the proceeds of the tendered shares, the Trustee shall invest the proceeds as the Administrator shall direct. To the extent that any Participant gives no direction as to the tendering of Employer stock that he has the right to direct under this Section 13.8(a), the Trustee shall not tender such Employer Stock.
(c) Other Rights. With respect to all rights in connection with Employer Stock other than the right to vote and the right to tender, Participants are hereby appointed named fiduciaries to the same extent (if any) as provided in the foregoing paragraphs of this Section 13.8 with regard to the right to vote, and the Trustee shall follow the directions of Participants and the Plan Administrator with regard to the exercise of such rights to the same extent as with regard to the right to vote.
13.9. Insurance Contracts. If so provided in the Plan Agreement or other agreement between the Employer and the Trustee, the Plan Administrator may direct the Trustee to receive and hold or apply assets of the Trust to the purchase of individual or group insurance or annuity contracts ("policies" or "contracts") issued by any insurance company and in a form approved by the Plan Administrator (including contracts under which the contract holder is granted options to purchase insurance or annuity benefits), or financial agreements which are backed by group insurance or annuity contracts ("financial agreements"). If such investments are to be made, the Plan Administrator shall direct the Trustee to execute and deliver such applications and other documents as are necessary to establish record ownership, to value such policies, contracts or financial agreements under the method of valuation selected by the Plan Administrator, and to record or report such values to the Plan Administrator or any investment manager selected by the Plan Administrator, in the form and manner agreed to by the Plan Administrator.
The Plan Administrator may direct the Trustee to exercise or may exercise directly the powers of contract holder under any policy, contract or financial agreement, and the Trustee shall exercise such powers only upon direction of the Plan Administrator. The Trustee shall have no authority to act in its own discretion, with respect to the terms, acquisition, valuation, continued holding and/or disposition of any such policy, contract or financial agreement or any asset held thereunder. The Trustee shall be under no duty to question any direction of the Plan Administrator or to review the form of any such policy, contract or financial agreement or the selection of the issuer thereof, or to make recommendations to the Plan Administrator or to any issuer with respect to the form of any such policy, contract or financial agreement.
The Trustee shall be fully protected in acting in accordance with written directions of the Plan Administrator, and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. In the event that the Plan Administrator directs that any monies or property be paid or delivered to the contract holder other than for the benefit of specific individual beneficiaries, the Trustee agrees to accept such monies or property as assets of the Trust subject to all the terms hereof.
13.10. Registration and Voting of Non-Putnam Investment
Company Shares. All shares of registered investment companies
other than Investment Companies shall be registered in the name
of the Trustee or its nominee. Subject to any requirements of
applicable law and to the extent provided in an agreement between
Putnam and a third party investment provider, the Trustee shall
transmit to the Employer copies of any notices of shareholders'
meetings, proxies or proxy-soliciting materials, prospectuses or
the annual or other reports to shareholders, with respect to
shares of registered investment companies other than Investment
Companies held in the Trust Fund. The Trustee shall vote shares
of registered investment companies other than Investment
Companies in accordance with the directions of the Employer.
Directions as to voting such shares must be in writing on a form
approved by the Trustee or such other manner acceptable to the
Trustee, signed by the addressee and delivered to the Trustee
within the time prescribed by it. The Trustee shall vote those
shares of registered investment companies other than Investment
Companies for which no voting directions are received in the same
proportion as it votes those shares for which it has received
voting directions.
ARTICLE 14. TOP-HEAVY PLANS
14.1. Superseding Effect. For any Plan Year beginning after December 31, 1983, in which Plan is determined to be a Top- Heavy Plan under Section 14.2(b), the provisions of this Article 15 will supersede any conflicting provisions in the Plan or the Plan Agreement.
14.2. Definitions. For purposes of this Article 14, the terms below shall be defined as follows:
(a) Key Employee means any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the determination period was: (i) an officer of the
Employer having annual compensation greater than 50% of the
amount in effect under Section 415(b)(1)(A) of the Code;
(ii) an owner (or considered an owner under Section 318 of
the Code) of one of the ten largest interests in the
Employer having annual compensation exceeding the dollar
limitation under Section 415(c)(1)(A) of the Code; (iii) a
5% owner of the Employer; or (iv) a 1% owner of the Employer
having annual compensation of more than $150,000. Annual
compensation means compensation satisfying the definition
elected by the Employer in the Plan Agreement, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h) or Section 403(b) of the Code. The determination
period is the Plan Year containing the Determination Date
and the four preceding Plan Years. The determination of who
is a Key Employee will be made in accordance with Section
416(i)(1) of the Code and the Regulations thereunder.
(b) Top-Heavy: The Plan is Top-Heavy for any Plan Year beginning after December 31, 1983, if any of the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans.
(2) If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds 60%.
(3) If this plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of Plans and the Top-Heavy Ratio for the Permissive Aggregation group exceeds 60%.
(c) Top-Heavy Ratio means the following:
(1) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer has not maintained any qualified defined benefit plan which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder.
(2) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer maintains or has maintained one or more qualified defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the Present Value of accrued benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated qualified defined contributions plan or plans for all Participants, determined in accordance with (1) above, and the Present Value of accrued benefits under the qualified defined benefit plan or plans for all Participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12- month period ending on the Determination Date; except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and accrued benefits of a Participant (A) who is not a Key Employee but who was a Key Employee in a prior Plan Year, or (B) who has not been credited with at least one Hour of Service for the Employer during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible Employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a
Key Employee shall be determined under (a) the method,
if any, that uniformly applies for accrual purposes
under all defined benefit plans maintained by the
Employer, or (b) if there is no such method, as if such
benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of
Section 411(b)(1)(C) of the Code.
(d) Permissive Aggregation Group means the Required Aggregation Group of plans plus any other qualified plan or plans (or simplified employee pension plan) of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code.
(e) Required Aggregation Group means (i) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated) and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of Section 401(a)(4) or 410 of the Code.
(f) Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the Determination Date is the last day of that Plan Year.
(g) Valuation Date means the last day of the Plan Year.
(h) Present Value means present value based only on the interest and mortality rates specified by the Employer in the Plan Agreement.
14.3. Minimum Allocation.
(a) Except as otherwise provided in paragraphs (c) and
(d) below, the Employer contributions and Forfeitures (if
any) allocated on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of 3% of such
Participant's Earnings, or in the case where the Employer
has no defined benefit plan which designates this Plan to
satisfy Section 401 of the Code, the largest percentage of
Employer contributions and Forfeitures, as a percentage of
the Key Employee's Earnings, allocated on behalf of any Key
Employee for that year. The minimum allocation is
determined without regard to any Social Security
contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would
have received a lesser allocation of the Employer's
contributions and Forfeitures for the Plan Year because of
(1) the Participant's failure to be credited with at least
1,000 Hours of Service, or (2) the Participant's failure to
make mandatory Employee contributions to the Plan, or (3)
the Participant's receiving Earnings less than a stated
amount. Neither Elective Deferrals, Employer Matching
Contributions nor Qualified Matching Contributions for non-
Key Employees shall be taken into account for purposes of
satisfying the requirement of this Section 14.3(a).
(b) For purposes of computing the minimum allocation,
Earnings will mean Section 415 Compensation as defined in
Section 6.5(b) of the Plan.
(c) The provision in paragraph (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year.
(d) The provision in paragraph (a) above shall not apply to any Participant to the extent he is covered under any other plan or plans of the Employer, and the Employer has provided in the Plan Agreement that the minimum allocation requirement applicable to Top-Heavy Plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Sections 411(a)(3)(B) or (D) of the Code.
14.4. Adjustment of Fractions. For any Plan Year in
which the Plan is Top-Heavy, the Defined Benefit Fraction and the
Defined Contribution Fraction described in Article 6 shall each
be computed using 100% of the dollar limitations specified in
Sections 415(b)(1)(A) and 415(c)(1)(A) instead of 125%. The
foregoing requirement shall not apply if the Top-Heavy Ratio does
not exceed 90% and the Employer has elected in the Plan Agreement
to provide increased minimum allocations or benefits satisfying
Section 416(h)(2) of the Code.
14.5. Minimum Vesting Schedules. For any Plan Year in which this Plan is Top-Heavy and for any subsequent Plan Year, a minimum vesting schedule will automatically apply to the Plan, as follows:
(a) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule 100% immediate vesting, the Three-Year Cliff, Five-Year Graded or Six-Year Graded schedule, then the schedule selected in the Plan Agreement shall continue to apply for any Plan Year to which this Section 14.5 applies.
(b) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Five-Year Cliff schedule, then the Three-Year Cliff schedule shall apply in any Plan Year to which this Section 14.5 applies.
(c) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Seven-Year Graded schedule, then the Six-Year Graded schedule shall apply in any Plan Year to which this Section 14.5 applies.
(d) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule a schedule other than those described in paragraphs (a), (b) and (c), then the Top- Heavy schedule specified by the Employer in the Plan Agreement for this purpose shall apply in any Plan Year to which this Section 14.5 applies.
The minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code except those
attributable to Elective Deferrals, rollover contributions
described in Section 5.3, Qualified Matching Contributions,
Qualified Nonelective Contributions, or Participant
Contributions, but including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued
before the Plan became Top-Heavy. Further, no reduction in a
Participant's nonforfeitable percentage may occur in the event
the Plan's status as Top-Heavy changes for any Plan Year.
However, the vested portion of the Employer Profit Sharing
Account or Employer Matching Account of any Employee who does not
have an Hour of Service after the Plan has initially become Top-
Heavy will be determined without regard to this Section 14.5.
ARTICLE 15. ADMINISTRATION OF THE PLAN
15.1. Plan Administrator. The Plan shall be administered by the Employer, as Plan Administrator and Named Fiduciary within the meaning of ERISA, under rules of uniform application; provided, however, that the Plan Administrator's duties and responsibilities may be delegated to a person appointed by the Employer or a committee established by the Employer for that purpose, in which case the committee shall be the Plan Administrator and Named Fiduciary. The members of such a committee shall act by majority vote, and may by majority vote authorize any one or ones of their number to act for the committee. The person or committee (if any) initially appointed by the Employer may be named in the Plan Agreement, but the Employer may remove any such person or committee member by written notice to him, and any such person or committee may resign by written notice to the Employer, without the necessity of amending the Plan Agreement. To the extent permitted under applicable law, the Plan Administrator shall have the sole authority to enforce the terms hereof on behalf of any and all persons having or claiming any interest under the Plan, and shall be responsible for the operation of the Plan in accordance with its terms. The Plan Administrator shall have discretionary authority to determine all questions arising out of the administration, interpretation and application of the Plan, all of which determinations shall be conclusive and binding on all persons. The Plan Administrator, in carrying out its responsibilities under the Plan, may rely upon the written opinions of its counsel and on certificates of physicians. Subject to the provisions of the Plan and applicable law, the Plan Administrator shall have no liability to any person as a result of any action taken or omitted hereunder by the Plan Administrator.
15.2. Claims Procedure. Claims for participation in or distribution of benefits under the Plan shall be made in writing to the Plan Administrator, or an agent designated by the Plan Administrator whose name shall have been communicated to all Participants and other persons as required by law. If any claim so made is denied in whole or in part, the claimant shall be furnished promptly by the Plan Administrator with a written notice:
(a) setting forth the reason for the denial,
(b) making reference to pertinent Plan provisions,
(c) describing any additional material or information from the claimant which is necessary and why, and
(d) explaining the claim review procedure set forth herein.
Within 60 days after denial of any claim for participation or distribution under the Plan, the claimant may request in writing a review of the denial by the Plan Administrator. Any claimant seeking review hereunder shall be entitled to examine all pertinent documents and to submit issues and comments in writing. The Plan Administrator shall render a decision on review hereunder; provided, that if the Plan Administrator determines that a hearing would be appropriate, its decision on review shall be rendered within 120 days after receipt of the request for review. The decision on review shall be in writing and shall state the reason for the decision, referring to the Plan provisions upon which it is based.
15.3. Employer's Responsibilities. The Employer shall be responsible for:
(a) Keeping records of employment and other matters containing all relevant data pertaining to any person affected hereby and his eligibility to participate, allocations to his Accounts, and his other rights under the Plan;
(b) Periodic, timely filing of all statements, reports and returns required to be filed by ERISA;
(c) Timely preparation and distribution of disclosure materials required by ERISA;
(d) Providing notice to interested parties as required by Section 7476 of the Code;
(e) Retention of records for periods required by law; and
(f) Seeing that all persons required to be bonded on account of handling assets of the Plan are bonded.
15.4. Recordkeeper. The Recordkeeper is hereby designated as agent of the Employer under the Plan to perform directly or through agents certain ministerial duties in connection with the Plan, in particular:
(a) To keep and regularly furnish to the Employer a detailed statement of each Participant's Accounts, showing contributions thereto by the Employer and the Participant, Investment Products purchased therewith, earnings thereon and Investment Products purchased therewith, and each redemption or distribution made for any reason, including fees or benefits; and
(b) To the extent agreed between the Employer and the Recordkeeper, to prepare for the Employer or to assist the Employer to prepare such returns, reports or forms as the Employer shall be required to furnish to Participants and Beneficiaries or other interested persons and to the Internal Revenue Service or the Department of Labor; all as may be more fully set forth in the Service Agreement. If the Employer does not appoint another person or entity as Recordkeeper, the Employer itself shall be the Recordkeeper.
15.5. Prototype Plan. Putnam is the sponsor of the
Putnam Basic Plan Document, a prototype plan approved as to form
by the Internal Revenue Service. Provided that an Employer's
adoption of the Plan is made known to and accepted by Putnam in
accordance with the Plan Agreement, Putnam will inform the
Employer of amendments to the prototype plan and provide such
other services in connection with the Plan as may be agreed
between Putnam and the Employer. Putnam may impose for its
services as sponsor of the prototype plan such fees as it may
establish from time to time in a fee schedule addressed to the
Employer. Such fees shall, unless paid by the Employer, be paid
from the Trust Fund, and shall in that case be charged pro rata
against the Accounts of all Participants. The Trustee is
expressly authorized to cause Investment Products to be sold or
redeemed for the purpose of paying such fees.
ARTICLE 16. TRUSTEE
16.1. Powers and Duties of the Trustee. The Trustee shall have the authority, in addition to any authority given by law, to exercise the following powers in the administration of the Trust:
(a) To invest all or a part of the Trust Fund in Investment Products in accordance with the investment instructions delivered by the Employer pursuant to Section 13.3, without restriction to investments authorized for fiduciaries, including without limitation any common, collective or commingled trust fund maintained by the Trustee (or any other such fund, acceptable to Putnam and the Trustee, that qualifies for exemption from federal income tax pursuant to Revenue Ruling 81-100). Any investment in, and any terms and conditions of, any such common, collective or commingled trust fund available only to employee trusts which meet the requirements of the Code, or corresponding provisions of subsequent income tax laws of the United States, shall constitute an integral part of this Agreement;
(b) If Putnam and the Trustee have consented thereto in writing, to invest without limit in stock of the Employer or any affiliated company;
(c) To dispose of all or part of the investments, securities or other property which may from time to time or at any time constitute the Trust Fund in accordance with the written directions furnished by the Employer for the investment of Participants' separate Accounts or the payment of benefits or expenses of the Plan, and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance therefore, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money;
(d) To hold cash uninvested to the extent necessary to pay benefits or expenses of the Plan;
(e) To follow the directions of an investment manager appointed pursuant to Section 13.7;
(f) To cause any investment of the Trust Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund;
(g) Upon written direction of or through the Employer, to vote in person or by proxy (in accordance with Sections 13.6 and 13.10 and, in the case of stock of the Employer, at the direction of the Employer or Participants in accordance with Section 13.8) with respect to all securities that are part of the Trust Fund;
(h) To consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Trust Fund according to the terms of the Plan;
(i) Upon the written direction of the Employer, to make loans from the Trust Fund to Participants in amounts and on terms approved by the Plan Administrator in accordance with the provisions of the Plan; provided that the Employer shall have the sole responsibility for computing and collecting all loan repayments required to be made under the Plan; and
(j) To pay from the Trust Fund all taxes imposed or levied with respect to the Trust Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax assessment, claim or demand respecting the Trust Fund or any part thereof.
16.2. Limitation of Responsibilities. Except as may otherwise be required under applicable law, neither the Trustee nor any of its agents shall have any responsibility for:
(a) Determining the correctness of the amount of any contribution for the sole collection or payment of contributions, which shall be the sole responsibility of the Employer;
(b) Loss or breach caused by any Participant's exercise of control over his Accounts, which shall be the sole responsibility of the Participant;
(c) Loss or breach caused by the Employer's exercise of control over Accounts pursuant to Section 13.3, which shall be the sole responsibility of the Employer;
(d) Performance of any other responsibilities not specifically allocated to them under the Plan.
16.3. Fees and Expenses. The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by the Trustee from time to time in a fee schedule addressed to the Employer. Such fees, any taxes of any kind which may be levied or assessed upon or in respect of the Trust Fund and any and all expenses reasonably incurred by the Trustee shall, unless paid by the Employer, be paid from the Trust Fund and shall, unless allocable to the Accounts of specific Participants, be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such amounts. Charges and expenses incurred in connection with a specific Investment Product, unless allocable to the Accounts of specific Participants, shall be charged pro rata against the Accounts of all Participants for whose benefit amounts have been invested in the specific Investment Product.
16.4. Reliance on Employer. The Trustee and its agents shall rely upon any decision of the Employer, or of any person authorized by the Employer, purporting to be made pursuant to the terms of the Plan, and upon any information or statements submitted by the Employer or such person (including those relating to the entitlement of any Participant to benefits under the Plan), and shall not inquire as to the basis of any such decision or information or statements, and shall incur no obligation or liability for any action taken or omitted in reliance thereon. The Trustee and its agents shall be entitled to rely on the latest written instructions received from the Employer as to the person or persons authorized to act for the Employer hereunder, and to sign on behalf of the Employer any directions or instructions, until receipt from the Employer of written notice that such authority has been revoked.
16.5. Action Without Instructions. If the Trustee receives no instructions from the Employer in response to communications sent by registered or certified mail to the Employer at its last known address as shown on the books of the Trustee, then the Trustee may make such determinations with respect to administrative matters arising under the Plan as it considers reasonable, notwithstanding any prior instructions or directions given by or on behalf of the Employer, but subject to any instruction or direction given by or on behalf of the Participants. To the extent permitted by applicable law, any determination so made will be binding on all persons having or claiming any interest under the Plan or Trust, and the Trustee will incur no obligation or responsibility for any such determination made in good faith or for any action taken pursuant thereto. In making any such determination the Trustee may require that it be furnished with such relevant documents as it reasonable considers necessary.
16.6. Advice of Counsel. The Trustee may consult with legal counsel (who may, but need not be, counsel for the Employer) concerning any questions which may arise with respect to its rights and duties under the Plan, and the opinion of such counsel shall be full and complete protection to the extent permitted by applicable law in the respect of any action taken or omitted by the Trustee hereunder in accordance with the opinion of such counsel.
16.7. Accounts. The Trustee shall keep full accounts of all receipts and disbursements which pertain to investments in Investment Products, and of such other transactions as it is required to perform hereunder. Within a reasonable time following the close of each Plan Year, or upon its removal or resignation or upon termination of the Trust and at such other times as may be appropriate, the Trustee shall render to the Employer and any other persons as may be required by law an account of its administration of the Plan and Trust during the period since the last previous such accounting, including such information as may be required by law. The written approval of any account by the Employer and all other persons to whom an account is rendered shall be final and binding as to all matters and transactions stated or shown therein, upon the Employer and Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or any other person to whom an account is rendered to notify the party rendering the account within 60 days after the receipt of any account of his or its objection to the account shall be the equivalent of written approval. If the Employer or any other person to whom an account is rendered files any objections within such 60-day period with respect to any matters or transactions stated or shown in the account and the Employer or such other person and the party rendering the account cannot amicably settle the questions raised by such objections, the party rendering the account and the Employer or such person shall have the right to have such questions settled by judicial proceedings, although the Employer or such other person to whom an account is rendered shall have, to the extent permitted by applicable law, only 60 days from filing of written objection to the account to commence legal proceedings. Nothing herein contained shall be construed so as to deprive the Trustee of the right to have a judicial settlement of its accounts. In any proceeding for a judicial settlements of any account or for instructions, the only necessary parties shall be the Trustee, the Employer and persons to whom an account is required by law to be rendered.
16.8. Access to Records. The Trustee shall give access to its records with respect to the Plan at reasonable times and on reasonable notice to any person required by law to have access to such records.
16.9. Successors. Any corporation into which the Trustee may merge or with which it may consolidate or any corporation resulting from any such merger or consolidation shall be the successor of the Trustee without the execution or filing of any additional instrument or the performance of any further act.
16.10. Persons Dealing with Trustee. 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.
16.11. Resignation and Removal; Procedure. The Trustee may resign at any time by giving 60 days' written notice to the Employer and to Putnam. The Employer may remove the Trustee at any time by giving 60 days' written notice to the party removed and to Putnam. In any case of resignation or removal hereunder, the period of notice may be reduced to such shorter period as is satisfactory to the Trustee and the Employer. Notwithstanding anything to the contrary herein, any resignation hereunder shall take effect at the time notice thereof is given if the Employer may no longer participate in the prototype Plan and is deemed to have an individually designed plan at the time notice is given.
16.12. Action of Trustee Following Resignation or Removal. When the resignation or removal of the Trustee becomes effective, the Trustee shall perform all acts necessary to transfer the Trust Fund to its successor. However, the Trustee may reserve such portion of the Trust Fund as it may reasonably determine to be necessary for payment of its fees and any taxes and expenses, and any balance of such reserve remaining after payment of such fees, taxes and expenses shall be paid over to its successor. The Trustee shall have no responsibility for acts or omissions occurring after its resignation becomes effective.
16.13. Effect of Resignation or Removal. Resignation or removal of the Trustee shall not terminate the Trust. In the event of any vacancy in the position of Trustee, whether the vacancy occurs because of the resignation or removal of the Trustee, the Employer shall appoint a successor to fill the vacant position. If the Employer does not appoint such a successor who accepts appointment by the later of 60 days after notice of resignation or removal is given or by such later date as the Trustee and Employer may agree in writing to postpone the effective date of the Trustee's resignation or removal, the Trustee may apply to a court of competent jurisdiction for such appointment or cause the Trust to be terminated, effective as of the date specified by the Trustee in writing delivered to the Employer. Each successor Trustee so appointed and accepting a trusteeship hereunder shall have all of the rights and powers and all of the duties and obligations of the original Trustee, under the provisions hereof, but shall have no responsibility for acts or omissions before he becomes a Trustee.
16.14. Fiscal Year of Trust. The fiscal year of the Trust will coincide with the Plan Year.
16.15. Limitation of Liability. Except as may otherwise be required by law and other provisions of the Plan, no fiduciary of the Plan, within the meaning of Section 3(21) of ERISA, shall be liable for any losses incurred with respect to the management of the Plan, nor shall he or it be liable for any acts or omissions except those caused by his or its own negligence or bad faith in failing to carry out his or its duties under the terms contained in the Plan.
16.16. Indemnification. Subject to the limitations of
applicable law, the Employer agrees to indemnify and hold
harmless (i) all fiduciaries, within the meaning of ERISA
Sections 3(21) and 404, and (ii) Putnam, for all liability
occasioned by any act of such party or omission to act, in good
faith and without gross negligence, and for all expenses incurred
by any such party in determining its duty or liability under
ERISA with respect to any question under the Plan.
ARTICLE 17. AMENDMENT
17.1. General. The Employer reserves the power at any time or times to amend the provisions of the Plan and the Plan Agreement to any extent and in any manner that it may deem advisable. If, however, the Employer makes any amendment (including an amendment occasioned by a waiver of the minimum funding requirement under Section 412(d) of the Code) other than
(a) a change in an election made in the Plan Agreement,
(b) amendments stated in the Plan Agreement which allow the Plan to satisfy Section 415 and to avoid duplication of minimums under Section 416 of the Code because of the required aggregation of multiple plans, or
(c) model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed,
the Employer shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. In that event, Putnam shall have no further responsibility to provide to the Employer any amendments or other material incident to the prototype plan, and Putnam may resign immediately as Trustee and as Recordkeeper. Any amendment shall be made by delivery to the Trustee (and the Recordkeeper, if any) of a written instrument executed by the Employer providing for such amendment. Upon the delivery of such instrument to the Trustee, such instrument shall become effective in accordance with its terms as to all Participants and all persons having or claiming any interest hereunder, provided, that the Employer shall not have the power:
(1) to amend the Plan in such a manner as would cause or permit any part of the assets of the Trust to be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries, or as would cause or permit any portion of such assets to revert to or become the property of the Employer.
(2) to amend the Plan retroactively in such a manner as would have the effect of decreasing a Participant's accrued benefit, except that 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 (2), an amendment shall be treated as reducing a Participant's accrued benefit if it has the effect of reducing his Account balance, or of eliminating an optional form of benefit with respect to amounts attributable to contributions made performed before the adoption of the amendment; or
(3) to amend the Plan so as to decrease the portion of a Participant's Account balance that has become vested, as compared to the portion that was vested, under the terms of the Plan without regard to the amendment, as of the later of the date the amendment is adopted or the date it becomes effective.
(4) to amend the Plan in such a manner as would increase the duties or liabilities of the Trustee or the Recordkeeper unless the Trustee or the Recordkeeper consents thereto in writing.
17.2. Delegation of Amendment Power. The Employer and
all
sponsoring organizations of the Putnam Basic Plan Document
delegate to Putnam Mutual Funds Corp., the power to amend the
Plan (including the power to amend this Section 17.2 to name a
successor to which such power of amendment shall be delegated),
for the purpose of adopting amendments which are certified to
Putnam Mutual Funds Corp., by counsel satisfactory to it, as
necessary or appropriate under applicable law, including any
regulation or ruling issued by the United States Treasury
Department or any other federal or state department or agency;
provided that Putnam Mutual Funds Corp., or such successor may
amend the Plan only if it has mailed a copy of the proposed
amendment to the Employer at its last known address as shown on
its books by the date on which it delivers a written instrument
providing for such amendment, and only if the same amendment is
made on said date to all plans in this form as to which Putnam
Mutual Funds Corp., or such successor has a similar power of
amendment. If a sponsoring organization does not adopt any
amendment made by Putnam Mutual Funds Corp., such sponsoring
organization shall cease to participate in this prototype Plan
and will be considered to have an individually designed plan.
If, upon the submission of this Putnam Basic Plan Document #07 to
the Internal Revenue Service for a determination letter, the
Internal Revenue Service determines that changes are required to
the Basic Plan Document but not to the form of Plan Agreement,
Putnam shall furnish a copy of the revised Basic Plan Document to
the Employer and the Employer will not be required to execute a
revised Plan Agreement.
ARTICLE 18. TERMINATION OF THE PLAN AND TRUST
18.1. General. The Employer has established the Plan and the Trust with the bona fide intention and expectation that contributions will be continued indefinitely, but the Employer shall have no obligation or liability whatsoever to maintain the Plan for any given length of time and may discontinue contributions under the Plan or terminate the Plan at any time by written notice delivered to the Trustee, without any liability whatsoever for any such discontinuance or termination.
18.2. Events of Termination. The Plan will terminate upon the happening of any of the following events:
(a) Death of the Employer, if a sole proprietor, or dissolution or termination of the Employer, unless within 60 days thereafter provision is made by the successor to the business with respect to which the Plan was established for the continuation of the Plan, and such continuation is approved by the Trustee;
(b) Merger, consolidation or reorganization of the Employer into one or more corporations or organizations, unless the surviving corporations or organizations adopt the Plan by an instrument in writing delivered to the Trustee within 60 days after such a merger, consolidation and reorganization;
(c) Sale of all or substantially all of the assets of the Employer, unless the purchaser adopts the Plan by an instrument in writing delivered to the Trustee within 60 days after the sale;
(d) The institution of bankruptcy proceedings by or against the Employer, or a general assignment by the Employer to or for the benefit of its creditors; or
(e) Delivery of notice of termination as provided in
Section 18.1.
18.3. Effect of Termination. Notwithstanding any other provisions of this Plan, other than Section 18.4, upon termination of the Plan or complete discontinuance of contributions thereunder, each Participant's Accounts will become fully vested and nonforfeitable, and upon partial termination of the Plan, the Accounts of each Participant affected by the partial termination will become fully vested and nonforfeitable. The Employer shall notify the Trustee in writing of such termination, partial termination or complete discontinuance of contributions. In the event of the complete termination of the Plan or discontinuance of contributions, the Trustee will, after payment of all expenses of the Trust Fund, make distribution of the Trust assets to the Participants or other persons entitled thereto, in such form as the Employer may direct pursuant to Article 10 or, in the absence of such direction, in a single payment in cash or in kind. Upon completion of such distributions under this Article, the Trust will terminate, the Trustee will be relieved from its obligations under the Trust, and no Participant or other person will have any further claim thereunder.
18.4. Approval of Plan. Notwithstanding any other
provision of the Plan, if the Employer fails to obtain or to
retain the approval by the Internal Revenue Service of the Plan
as a qualified plan under Section 401(a) of the Code, then (i)
the Employer shall promptly notify the Trustee, and (ii) the
Employer may no longer participate in the Putnam prototype plan,
but will be deemed to have an individually designed plan. If it
is determined by the Internal Revenue Service that the Plan upon
its initial adoption does not qualify under Section 401(a) of the
Code, all assets then held under the Plan will be returned within
one year of the denial of initial qualification to the
Participants and the Employer to the extent attributable to their
respective contributions and any income earned thereon, but only
if the application for qualification is made by the time
prescribed by law for filing the Employer's federal income tax
return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe. Upon
such distribution, the Plan will be considered to be rescinded
and to be of no force or effect.
ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS;
MERGERS
19.1. General. Notwithstanding any other provision hereof, subject to the approval of the Trustee there may be transferred to the Trustee all or any of the assets held (whether by a trustee, custodian or otherwise) in respect of any other plan which satisfies the applicable requirements of Section 401(a) of the Code and which is maintained for the benefit of any Employee (provided, however, that the Employee is not a member of a class of Employees excluded from eligibility to participate in the Plan). Any such assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred and showing separately the respective contributions made by the Employer and by the Participants and the current value of the assets attributable thereto. Notwithstanding the foregoing, if a Participant's employment classification changes under Section 3.4 such that he begins participation in another plan of the Employer, his Account, if any, shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account.
19.2. Amounts Transferred. The Employer shall credit any assets transferred pursuant to Section 19.1 or Section 3.4 to the appropriate Accounts of the persons for whose benefit such assets have been transferred. Any amounts credited as contributions previously made by an employer or by such persons under such other plan shall be treated as contributions previously made under the Plan by the Employer or by such persons, as the case may be.
19.3. Merger or Consolidation. The Plan shall not be
merged or consolidated with any other plan, nor shall any assets
or liabilities of the Trust Fund be transferred to any other
plan, unless each Participant would receive a benefit immediately
after the transaction, if the Plan then terminated, which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transaction if the Plan had
then terminated.
ARTICLE 20. MISCELLANEOUS
20.1. Notice of Plan. The Plan shall be communicated to all Participants by the Employer on or before the last day on which such communication may be made under applicable law.
20.2. No Employment Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or any other person any legal or equitable right against the Employer, or the Trustee, except as provided herein or by ERISA; and in no event shall the terms of employment or service of any Participant be modified or in any way be affected hereby.
20.3. Distributions Exclusively From Plan. Participants and Beneficiaries shall look solely to the assets held in the Trust purchased pursuant to the Plan for the payment of any benefits under the Plan.
20.4. No Alienation. The benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected shall not be recognized, except as provided in Section 12.4 or in accordance with a Qualified Domestic Relations Order. The Plan Administrator shall determine whether a domestic relations order is qualified in accordance with written procedures adopted by the Plan Administrator. Notwithstanding the foregoing, an order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan.
20.5. Provision of Information. The Employer and the Trustee shall furnish to each other such information relating to the Plan and Trust as may be required under the Code or ERISA and any regulations issued or forms adopted by the Treasury Department or the Labor Department or otherwise thereunder.
20.6. No Prohibited Transactions. The Employer and the Trustee shall, to the extent of their respective powers and authority under the Plan, prevent the Plan from engaging in any transaction known by that person to constitute a transaction prohibited by Section 4975 of the Code and any rules or regulations with respect thereto.
20.7. Governing Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States, and to the extent permitted by such laws, by the laws of the Commonwealth of Massachusetts
20.8. Gender. Whenever used herein, a pronoun in the masculine gender includes the feminine gender unless the context clearly indicates otherwise.
PUTNAM STREAMLINED STANDARD 401(k) AND PROFIT SHARING PLAN
PLAN AGREEMENT #001
By executing this Plan Agreement, the Employer establishes a 401(k) and profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #06, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. Please consult a tax or legal advisor and review this entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Streamlined Standard 401(k) and Profit Sharing Plan.
* * * * *
Employer Information. The Employer adopting this Plan is:
A. Employer Name: _____________________________________
C. Employer Address: _______________________________
D. SIC Code: _______
E. Employer Contact: Name:
___________________________________________
Title: __________________ Phone #:
_______________
F. Fiscal Year: __________ through __________
(month/day) (month/day)
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G. Type of Entity (check one):
_____ Corporation _____ Partnership _____ Subchapter S Corporation
H. Plan Name: __________________________________
I. Plan Number: 00__(complete) Plan Information.
A. Plan Year. Check one:
_____(1) The Calendar Year
_____(2) The Plan Year will be the same as the Fiscal
Year of the Employer shown in 1.F. above. If
the Fiscal Year of the Employer changes, the
Plan Year will change accordingly.
_____(3) The Plan Year will be the period of 12 months
beginning on the first day of __________
(month) and ending on the last day of
__________ (month).
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B. Effective Date of Adoption of Plan.
(1) Are you adopting this Plan to replace an existing plan?
_____ a. Yes _____ b. No
(2) If you answered Yes in 2.B.(1) above, please complete the following:
a. Effective Date of Existing Plan:
____________________.
b. Effective Date of Replacement Plan:
_____ (i) The first day of the Plan
Year in which this Replacement Plan is
adopted.
_____ (ii) The day as of which this
Replacement Plan is adopted.
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If you answered No in 2.B.(1) above, the Effective Date of your adoption of this Plan will be the first day of the current Plan Year.
Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below.
A. Classes of Eligible Employees. The Plan shall cover all employees who have met the age and service requirements with the following exclusions:
_____ (1) No exclusions. All job classifications will be eligible.
_____ (2) The Plan shall exclude
employees in a unit of Employees covered by
a collective bargaining agreement with
respect to which retirement benefits were
the subject of good faith bargaining, with
the exception of the following collective
bargaining units, which shall be included:
____________________.
_____ (3) The Plan shall exclude employees who are non- resident aliens without U.S. source income.
B. Age Requirement (check and complete (1) or (2) below):
_____ (1) No
minimum age required for participation
_____ (2)
Employees must reach age __ (not over 21) to
participate
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C. Service Requirements.
To become eligible, an employee must complete (choose one):
_____ (1) No minimum service required. Skip to 4.A below.
_____ (2) One
6-
month Eligibility Period
____ (3) One
12-month Eligibility Period
_____ (4) One
__-month Eligibility Period (must be less
than 12)
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D. (For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above?
_____ (1) Yes
_____ (2) No; all Employees who meet the age requirement on the Effective Date will be eligible as of the Effective Date, even if they have not met the service requirements.
Contributions
A. Elective Deferrals (Plan Section 4.2). Your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code. Indicate below the maximum percentage of Earnings that a Participant may elect as Elective Deferrals for each year:
___% of Earnings
B. Employer Matching Contributions (Plan Section 4.8).
Will you make matching contributions to the Plan?
_____ (1) No
_____ (2) Yes
(if Yes, check a or b)
_____ a. discretionary matching
contributions
_____ b. fixed matching contributions
(check and complete i, ii or iii)
_____ (i) ___% of Elective
Deferrals
_____ (ii) ___% of Elective
Deferrals that do not exceed ___%
of Earnings
_____ (iii) ___% of Elective
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Deferrals that do not exceed $________
C. Employer Profit Sharing Contributions (Plan Section 5.1). Will you make Employer Profit Sharing Contributions to the Plan?
_____ (1) Yes _____ (2) No
Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan that is not being replaced by this Plan.
A. For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key Employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check (1) or (2)):
_____ (1) This Plan _____
(2) The other
qualified plan
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B. If you maintain a defined benefit plan in addition to
this Plan, and the Top-Heavy Ratio (as defined in Plan
Section 14.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased minimum
allocation or benefit pursuant to Plan Section 14.4.
Specify your election by completing the statement
below:
The employer will provide and increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as permitted under Plan
Section 14.4.
Other Plans. You must complete this section if you maintain or ever maintained a defined benefit plan in which any Participant in this Plan is (or was) a participant or could become a participant. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by you, the plans will meet the limits of Article 6 in the manner you describe below:
If you have ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %__________________________
Mortality Table: __________________________
Compensation (Plan Section 2.7).
Compensation for purposes of the Plan will be the amount of
the following that is actually paid by your Business to an
employee during the Plan Year (check (1) or (2)):
_____ (1) Form W-2 earnings as defined in Section 2.7 of
the Plan.
_____ (2) Form W-2 earnings as defined in Section 2.7 of
the Plan, plus any amounts withheld from the employee
under a 401(k) plan, cafeteria plan, SARSEP, tax
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sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer.
Distributions and Withdrawals.
A. Retirement Distributions.
1. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65).
2. Early Retirement (Plan Section 7.1). Select one:
_____ a. No Early Retirement will be permitted.
_____ b. Early Retirement will be permitted at age ____.
_____ c. Early Retirement will be permitted at age ____ with at least ________ Years of Service.
3. Annuities (Plan Section 9.3). This Plan will permit distributions in the form of a life annuity only if this Plan replaces or serves as a transferee plan for an existing Plan that permits distributions in a life annuity form.
Did your prior plan offer a life annuity form of
distribution?
_____ a. Yes _____ b.
No
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B. Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions?
_____ (1) No
_____ (2) Yes.
Indicate below from which Accounts hardship
withdrawals will be
permitted:
_____ a. Elective Deferral Account
_____ b. Rollover Account
_____ c. Employer Matching Account
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_____ d. Employer Profit Sharing Account
C. Loans. (Plan Section 12.4). Will your Plan permit loans to employees from the vested portion of all their
Accounts?
_____ (1) Yes _____ (2)
No
Vesting (Plan Article 8).
A. Time of Vesting (select (1) or (2) below and complete
vesting schedule).
_____ (1)
Single Vesting Schedule:
The vesting schedule selected below will
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apply to both Employer Matching Contributions and Employer Profit Sharing Contributions.
_____ (2) Dual
Vesting Schedules:
The vesting schedule marked with an "MC"
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below will apply to Employer Matching Contributions and the vesting schedule marked with a "PS" below will apply to Employer Profit Sharing Contributions.
(3) Vesting Schedules:
_____ a. 100% vesting immediately upon participation in the Plan.
_____ b. Five-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80%
100%
Years of Service 1 2 3 4
5
_____ c. Seven-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80%
100%
Years of Service 3 4 5 6
7
_____ d. Six-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80%
100%
Years of Service 2 3 4 5
6
_____ e. Three-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of Service 0-2 3
_____ f. Five-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of Service 0-4 5
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_____ g. Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule):
(i) Vested Percentage__% __% __% __% __%
If you selected above an "Other Schedule," specify in the space below the schedule that
will apply after the Plan is top-heavy. The
schedule you specify must be at least as
favorable to employees, at all years of
service, as either the Six-Year Graded
Schedule or the Three-Year Cliff Schedule.
The top-heavy vesting schedule will be:
_____ (i) the
same "Other Schedule" selected above
_____ (ii) the
following schedule.
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(i) Vested Percentage __% __% __% __% __%
_____ (iii) Six- Year Graded Schedule
______ (iv)
Three-
Year Cliff Schedule
B. Service for Vesting (select (1) or (2)).
_____ (1) All
of an employee's service will be used to
determine his Years of Service for purposes
of vesting
_____ (2) An
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employee's Years of Service for vesting will include all years except:
___ a. (New plan) service before the effective date of the plan
___ b. (Existing plan) service before the effective date of the existing plan
Investments (Plan Sections 13.2 and 13.3).
A. Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instruction as the case may be, as an available Investment Product for that purpose.
B. Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.)
1. Voting. Employer Stock will be voted as follows:
_____ a. In accordance with the Employer's instructions.
_____ b. In accordance with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
voting of Employer Stock in accordance
with Section 13.8.
2. Tendering. Employer stock will be tendered as follows:
_____ a. In accordance with the Employer's instructions.
_____ b. In accordance with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
tendering of Employer Stock in
accordance with Section 13.8.
Administration.
Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one):
_____ (2) A committee composed of these people:
Reliance on Opinion Letter. If you ever maintained or you later adopt any plan in addition to this Plan (including a welfare benefit fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for key employees, as defined in Section 419A(d)(3) of the Code; or an individual medical account, as defined in Section 415(l)(2) of the Code), you may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. If you maintain or adopt multiple plans, in order to obtain reliance with respect to plan qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. It is the responsibility of the Employer to ascertain whether a determination letter is required with respect to qualification of the Plan and to request Putnam to prepare the application for such determination letter if such service is desired.
Putnam will inform you of all amendments it makes to the prototype plan. Putnam will also inform you if it discontinues or abandons the prototype plan. This Plan Agreement #001 may be used only in conjunction with Putnam's Basic Plan Document #07.
* * * * *
If you have any questions regarding this Plan Agreement, contact Putnam at:
Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-5766
* * * * *
EMPLOYER'S ADOPTION OF
PUTNAM STREAMLINED STANDARD 401(k) AND
PROFIT SHARING PLAN
The Employer named below hereby adopts a PUTNAM STREAMLINED
STANDARD 401(k) AND PROFIT SHARING PLAN, and appoints
______________________________ to serve as Trustee of the Plan.
The Employer acknowledges that it has received copies of the
current prospectus for each Investment Product available under
the Plan, and represents that it will deliver copies of the then
current prospectus for each such Investment Product to each
Participant before each occasion on which the Participant makes
an investment instruction as to his Account. The Employer
further acknowledges that the Plan will be recognized by Putnam
as a Putnam Streamlined Standard 401(k) and Profit Sharing Plan
only upon Putnam's acceptance of this Plan Agreement.
Investment Options
The Employer hereby elects the following as the investment options available under the Plan:
_______________________ _______________________ _______________________ _______________________ _______________________ _______________________ _______________________ _______________________ ________________________ |
The following investment option shall be the default option:
_________________________________ (select the default option from
among the investment options listed above).
Employer Signature
Employer signature(s) to adopt Plan:
Date of signature:
Please print name(s) of authorized person(s) signing above:
A new Plan Agreement must be signed by the last day of the Plan Year in which the Plan is to be effective.
* * * * *
ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY
AS TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
Putnam Fiduciary Trust Company, Trustee
* * * * *
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #06.
Putnam Mutual Funds Corp.
By: ______________________________
* * * * *
ACCEPTANCE OF OTHER TRUSTEE
Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission.) Note: Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Streamlined Standard 401(k) and Profit Sharing Plan.
_________________________________, Trustee
By: _________________________________ Trustee's Tax I.D.
Number_______________
(Trustee)
Person for Putnam to Contact: ________________________________
Telephone:______________
PUTNAM BASIC PLAN DOCUMENT #07
PUTNAM BASIC PLAN DOCUMENT #07
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTRODUCTION 1
ARTICLE 2. DEFINITIONS 2
2.1. Account 2
2.2. Affiliated Employer 2
2.3. Authorized Leave of Absence 2
2.4. Base Contribution Percentage 2
2.5. Beneficiary 3
2.6. CODA 3
2.7. Code 3
2.8. Compensation 3
2.9. Date of Employment 3
2.10. Deductible Employee Contribution Account 3
2.11. Disabled 4
2.12. Earned Income 4
2.13. Earnings 4
2.14. Effective Date 4
2.15. Eligibility Period 4
2.16. Employee 5
2.17. Employer 5
2.18. Employer Contribution Account 5
2.19. Employer Stock 5
2.20. ERISA 5
2.21. Excess Earnings 5
2.22. Forfeiture 5
2.23. Hour of Service 5
2.24. Integration Level 7
2.25. Investment Company 7
2.26. Investment Company Shares 7
2.27. Investment Products 7
2.28. Leased Employee 7
2.29. One-Year Eligibility Break 8
2.30. One-Year Vesting Break 8
2.31. Owner-Employee 8
2.32. Participant 8
2.33. Participant Contribution 8
2.34. Participant Contribution Account 8
2.35. Plan 8
2.36. Plan Administrator 9
2.37. Plan Agreement 9
2.38. Plan Year 9
2.39. Profit Sharing Contribution 9
2.40. Putnam 9
2.41. Qualified Domestic Relations Order 9
2.42. Qualified Participant 9
2.43. Recordkeeper 9
2.44. Retirement 9
2.45. Rollover Account 10
2.46. Self-Employed Individual 10
2.47. Shareholder-Employee 10
2.48. Social Security Wage Base 10
2.49. Trust and Trust Fund 10
2.50. Trustee 10
2.51. Valuation Date 10
2.52. Year of Service 10
2.53. Deferral Agreement 11
2.54. Elective Deferral 11
2.55. Elective Deferral Account 11
2.56. Employer Matching Account 11
2.57. Employer Matching Contribution 11
2.58. Highly Compensated Employee 11
2.59. Non-Highly Compensated Employee 14
2.60. Qualified Matching Account 14
2.61. Qualified Matching Contribution 14
2.62. Qualified Nonelective Contribution 14
2.63. Qualified Nonelective Contribution Account 14
ARTICLE 3. PARTICIPATION 15
3.1. Initial Participation 15
3.2. Special Participation Rule 16
3.3. Resumed Participation 16
3.4. Benefits for Owner-Employees 16
3.5. Changes in Classification 17
ARTICLE 4. CONTRIBUTIONS 18
4.1. Provisions Applicable to All Plans 18
4.2. Provisions Applicable Only to Profit Sharing
Plans 19
4.3. Provisions Applicable Only to Money Purchase
Pension Plans 22
4.4. Forfeitures. 24
4.5. Rollover Contributions 24
4.6. Participant Contributions 24
4.7. No Deductible Employee Contributions 24
ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA) 25
5.1. Applicability; Allocations 25
5.2. CODA Participation 25
5.3. Annual Limit on Elective Deferrals 25
5.4. Distribution of Certain Elective Deferrals 26
5.5. Satisfaction of ADP and ACP Tests 26
5.6. Actual Deferral Percentage Test Limit 27
5.7. Distribution of Excess Contributions 29
5.8. Matching Contributions 30
5.9. Recharacterization of Excess Contributions 30
5.10. Average Contribution Percentage Test Limit and
Aggregate Limit 31
5.11. Distribution of Excess Aggregate Contributions
33
5.12. Qualified Nonelective Contributions; Qualified
Matching
Contributions 34
5.13. Restriction on Distributions 34
5.14. Forfeitures of Employer Matching Contributions
35
5.15. Special Effective Dates 35
ARTICLE 6. LIMITATIONS ON ALLOCATIONS 36
6.1. No Additional Plan 36
6.2. Additional Master or Prototype Plan 37
6.3. Additional Non-Master or Non-Prototype Plan 38
6.4. Additional Defined Benefit Plan 38
6.5. Definitions 38
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 43
7.1. Retirement 43
7.2. Death 43
7.3. Other Termination of Employment 43
ARTICLE 8. VESTING 45
8.1. Vested Balance 45
8.2. Vesting of Accounts of Returned Former Employees
45
8.3. Forfeiture of Non-Vested Amounts 46
8.4. Special Rule in the Event of a Withdrawal 47
8.5. Vesting Election 47
ARTICLE 9. PAYMENT OF BENEFITS 49
9.1. Distribution of Accounts 49
9.2. Restriction on Immediate Distributions 49
9.3. Optional Forms of Distribution 50
9.4. Distribution Procedure 51
9.5. Lost Distributee 51
9.6. Direct Rollovers 52
9.7. Distributions Required by a Qualified Domestic
Relations Order 53
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 54
10.1. Applicability 54
10.2. Qualified Joint and Survivor Annuity 55
10.3. Qualified Preretirement Survivor Annuity 55
10.4. Definitions 55
10.5. Notice Requirements 57
10.6. Transitional Rules 57
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 60
11.1. General Rules 60
11.2. Required Beginning Date 60
11.3. Limits on Distribution Periods 61
11.4. Determination of Amount to Be Distributed Each
Year 61
11.5. Death Distribution Provisions 63
11.6. Transitional Rule 64
ARTICLE 12. WITHDRAWALS AND LOANS 66
12.1. Withdrawals from Participant Contribution
Accounts 66
12.2. Withdrawals on Account of Hardship 66
12.3. Withdrawals After Reaching Age 59 1/2 67
12.4. Other Withdrawals 67
12.5. Loans 68
12.6. Procedure; Amount Available 70
12.7. Protected Benefits 70
12.8. Restrictions Concerning Transferred Assets 70
ARTICLE 13. TRUST FUND AND INVESTMENTS 71
13.1. Establishment of Trust Fund 71
13.2. Management of Trust Fund 71
13.3. Investment Instructions 72
13.4. Valuation of the Trust Fund 74
13.5. Distributions on Investment Company Shares 74
13.6. Registration and Voting of Investment Company
Shares 74
13.7. Investment Manager 74
13.8. Employer Stock 75
13.9. Insurance Contracts 77
13.10. Registration and Voting of Non-Putnam
Investment Company
Shares 78
ARTICLE 14. TOP-HEAVY PLANS 79
14.1. Superseding Effect 79
14.2. Definitions 79
14.3. Minimum Allocation 81
14.4. Adjustment of Fractions 82
14.5. Minimum Vesting Schedules 82
ARTICLE 15. ADMINISTRATION OF THE PLAN 84
15.1. Plan Administrator 84
15.2. Claims Procedure 84
15.3. Employer's Responsibilities 85
15.4. Recordkeeper 85
15.5. Prototype Plan 85
ARTICLE 16. TRUSTEE 87
16.1. Powers and Duties of the Trustee 87
16.2. Limitation of Responsibilities 88
16.3. Fees and Expenses 88
16.4. Reliance on Employer 89
16.5. Action Without Instructions 89
16.6. Advice of Counsel 89
16.7. Accounts 89
16.8. Access to Records 90
16.9. Successors 90
16.10. Persons Dealing with Trustee 90
16.11. Resignation and Removal; Procedure 90
16.12. Action of Trustee Following Resignation or
Removal 90
16.13. Effect of Resignation or Removal 91
16.14. Fiscal Year of Trust 91
16.15. Limitation of Liability 91
16.16. Indemnification 91
ARTICLE 17. AMENDMENT 92
17.1. General 92
17.2. Delegation of Amendment Power 93
ARTICLE 18. TERMINATION OF THE PLAN AND TRUST 94
18.1. General 94
18.2. Events of Termination 94
18.3. Effect of Termination 94
18.4. Approval of Plan 95
ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS;
MERGERS 96
19.1. General 96
19.2. Amounts Transferred 96
19.3. Merger or Consolidation 96
ARTICLE 20. MISCELLANEOUS 97
20.1. Notice of Plan 97
20.2. No Employment Rights 97
20.3. Distributions Exclusively From Plan 97
20.4. No Alienation 97
20.5. Provision of Information 97
20.6. No Prohibited Transactions 97
20.7. Governing Law 97
20.8. Gender 97
PUTNAM BASIC PLAN DOCUMENT #07
ARTICLE INTRODUCTION
By executing the Plan Agreement, the Employer has
|
established a retirement plan (the "Plan") according to the terms
and conditions of the Plan Agreement and this Putnam Basic Plan
Document #07, for the purpose of providing a retirement fund for
the benefit of Participants and Beneficiaries. A Plan
established hereunder pursuant to a Plan Agreement is intended to
qualify under Section 401(a) of the Code.
ARTICLE DEFINITIONS
The terms defined in Sections 2.1 through 2.52 appear generally throughout the document. Sections 2.53 through 2.63 and Article 5 contain definitions of terms used only in a CODA and Section 10.4 contains additional definitions related to distributions from the Plan. Articles 6 and 11 contain additional definitions of terms used only in those Articles.
Account means any of, and Accounts means all of, a Participant's Employer Contribution Account, Participant Contribution Account, Rollover Account, Deductible Employee Contribution Account and if the Plan contains a CODA, the accounts maintained for the Participant pursuant to Article 5.
Affiliated Employer, for purposes of the Plan other than Article 6, means the Employer and a trade or business, whether or not incorporated, which is any of the following:
A member of a group of controlled corporations (within the meaning of Section 414(b) of the Code) which includes the Employer; or
A trade or business under common control (within the meaning of Section 414(c) of the Code) with the Employer; or
A member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Employer; or
An entity otherwise required to be aggregated with the Employer pursuant to Section 414(o) of the Code.
In determining an Employee's service for vesting and for eligibility to participate in the Plan, all employment with Affiliated Employers will be treated as employment by the Employer.
For purposes of Article 6 only, the definitions in paragraphs (a) and (b) of this Section 2.2 shall be modified by adding at the conclusion of the parenthetical phrase in each such paragraph the words "as modified by Section 415(h) of the Code."
Authorized Leave of Absence means a leave of absence from employment granted in writing by an Affiliated Employer. Authorized Leave of Absence shall be granted on account of military service for any period during which an Employee's right to re-employment is guaranteed by law, and for such other reasons and periods as an Affiliated Employer shall consider proper, provided that Employees in similar situations shall be similarly treated.
Base Contribution Percentage means the percentage so specified in the Plan Agreement.
Beneficiary means a person entitled to receive benefits under the Plan upon the death of a Participant, in accordance with Section 7.2 and Articles 10 and 11.
CODA means a cash or deferred arrangement that meets the requirements of Section 401(k) of the Code, adopted as part of a profit sharing plan.
Code means the Internal Revenue Code of 1986, as amended.
Compensation means all of an Employee's compensation
determined in accordance with the definition and for the purpose
elected by the Employer in the Plan Agreement. For purposes of
that election, "Form W-2 earnings" means "wages" as defined in
Section 3401(a) of the Code in connection with income tax
withholding at the source, and all other compensation paid to the
Employee by the Employer in the course of its trade or business,
for which the Employer is required to furnish the Employee with a
written statement under Sections 6041(d), 6051(a)(3) and 6052 of
the Code, determined without regard to exclusions based on the
nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section
3401(a)(2) of the Code). Compensation shall include only amounts
actually paid to the Employee during the Plan Year, except that
if the Employer so elects in the Plan Agreement, in an Employee's
initial year of participation in the Plan, Compensation shall
include only amounts actually paid to the Employee from the
Employee's effective date of participation pursuant to Section
3.1 to the end of the Plan Year. In addition, if the Employer so
elects in the Plan Agreement, Compensation shall include any
amount which is contributed to an employee benefit plan for the
Employee by the Employer pursuant to a salary reduction
agreement, and which is not includible in the gross income of the
Employee under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of
the Code. If the Employer so elects in the Plan Agreement,
Compensation shall not include overtime pay, bonuses, commissions
or other similar types of pay, or Compensation above a specified
amount, all as designated in the Plan Agreement, provided, that
such election may not be made if the Employer elects in the Plan
Agreement to integrate the Plan with Social Security. (For a
self-employed person, the relevant term is Earned Income, as
defined in Section 2.12.)
Date of Employment means the first date on which an Employee performs an Hour of Service; or, in the case of an Employee who has incurred one or more One-Year Eligibility Breaks and who is treated as a new Employee under the rules of Section 3.3, the first date on which he performs an Hour of Service after his return to employment.
Deductible Employee Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded amounts contributed by him to the Plan on a tax-deductible basis under prior law, and the income, expenses, gains and losses thereon.
Disabled means unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of such impairment shall be supported by medical evidence.
Earned Income means a Self-Employed Individual's net
earnings from self-employment in the trade or business with
respect to which the Plan is established, excluding items not
included in gross income and the deductions allocable to such
items, and reduced by (i) contributions by the Employer to
qualified plans, to the extent deductible under Section 404 of
the Code, and (ii) the deduction allowed to the taxpayer under
Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
Earnings, for determining all benefits provided under the Plan, means the first $150,000 (as adjusted periodically by the Secretary of the Treasury for inflation) of the sum of the Compensation and Earned Income received by an Employee during a Plan Year. To calculate an allocation to a Participant's Account for any Plan Year shorter than 12 months, the dollar limit on Earnings must be multiplied by a fraction of which the denominator is 12 and the numerator is the number of months in the Plan Year. In determining the Earnings of a Participant, the rules of Section 414(q)(6) of the Code shall apply, except that in applying those rules the term "family" shall include only the Participant's spouse and the Participant's lineal descendants who have not reached age 19 by the last day of the Plan Year. If, as a result of the application of such rules, the applicable Earnings limitation described above is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Earnings as determined under this Section prior to the application of this limitation.
Effective Date means the date so designated in the Plan
Agreement. If the Plan Agreement indicates that the Employer is
adopting the Plan as an amendment of an existing plan, the
provisions of the existing plan apply to all events preceding the
Effective Date, except as to specific provisions of the Plan
which set forth a retroactive effective date in accordance with
Section 1140 of the Tax Reform Act of 1986.
Eligibility Period means a period of service with the Employer which an Employee is required to complete in order to commence participation in the Plan. A 12-month Eligibility Period is a period of 12 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, in which he is credited with at least 1,000 Hours of Service or the number of Hours of Services set forth in the Plan Agreement. A 6-month Eligibility Period is a period of 6 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, or on the 6-month anniversary of such Date of Employment or any anniversary thereof, in which he is credited with at least 500 Hours of Service or the number of Hours of Service set forth in the Plan Agreement. If the Employer has selected another period of service as the Eligibility Period under the Plan, Eligibility Period means the period so designated in which the Employee is credited with the number of hours designated in the Plan Agreement. Notwithstanding the foregoing, if an Employee is credited with 1,000 Hours of Service during a 12-consecutive- month period following his Date of Employment or any anniversary thereof, he shall be credited with an Eligibility Period. In the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service in the case of a 12-month Eligibility Period, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. If the Employer so elects in the Plan Agreement, an Employee's most recent Date of Employment for purposes of this Section 2.15 shall be the first date on which he performed services for a business acquired by the Employer.
Employee means a common law Employee of an Affiliated Employer; in the case of an Affiliated Employer which is a sole proprietorship, the sole proprietor thereof; in the case of an Affiliated Employer which is a partnership, a partner thereof; and a Leased Employee of an Affiliated Employer. The term "Employee" includes an individual on Authorized Leave of Absence, a Self-Employed Individual and an Owner-Employee.
Employer means the Employer named in the Plan Agreement and any successor to all or the major portion of its assets or business which assumes the obligations of the Employer under the Plan Agreement.
Employer Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded the amounts allocated for his benefit from contributions by the Employer (other than contributions pursuant to Article 5 (i.e. the CODA provisions)), Forfeitures by former Participants (if the Plan provides for reallocation of Forfeitures), amounts reapplied under Section 6.1(d), and the income, expenses, gains and losses incurred thereon.
Employer Stock means securities constituting "qualifying employer securities" of an Employer within the meaning of Section 407(d)(5) of ERISA.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Excess Earnings means a Participant's Earnings in excess of the Integration Level of the Plan.
Forfeiture means a nonvested amount forfeited by a former Participant, pursuant to Section 8.3, or an amount forfeited by a former Participant or Beneficiary who cannot be located, pursuant to Section 9.5.
Hour of Service means each hour described in paragraphs
(a), (b), (c), (d) or (e) below, subject to paragraphs (f) and
(g) below.
Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed.
Each hour for which an Employee is paid, or
entitled to payment, by an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or
leave of absence. No more than 501 Hours of Service shall
be credited under this paragraph for any single continuous
period of absence (whether or not such period occurs in a
single computation period) unless the Employee's absence is
not an Authorized Leave of Absence. Hours under this
paragraph shall be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations,
which are incorporated herein by this reference.
Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliated Employer. The same Hours of Service shall not be
credited under both paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c); and no more than
501 Hours of Service shall be credited under this paragraph
(c) with respect to payments of back pay, to the extent that
such pay is agreed to or awarded for a period of time
described in paragraph (b) during which the Employee did not
perform or would not have performed any duties. These hours
shall be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or
payment is made.
Each hour during an Authorized Leave of Absence. Such hours shall be credited at the rate of a customary full work week for an Employee.
Solely for purposes of determining whether a One
Year Vesting Break or a One-Year Eligibility Break has
occurred, each hour which otherwise would have been credited
to an Employee but for an absence from work by reason of:
the pregnancy of the Employee, the birth of a child of the
Employee, the placement of a child with the Employee in
connection with the adoption of the child by the Employee,
or caring for a child for a period beginning immediately
after its birth or placement. If the Plan Administrator
cannot determine the hours which would normally have been
credited during such an absence, the Employee shall be
credited with eight Hours of Service for each day of
absence. No more than 501 Hours of Service shall be
credited under this paragraph by reason of any pregnancy or
placement. Hours credited under this paragraph shall be
treated as Hours of Service only in the Plan Year or
Eligibility Period or both, as the case may be, in which the
absence from work begins, if necessary to prevent the
Participant's incurring a One-Year Vesting Break or One-Year
Eligibility Break in that period, or, if not, in the period
immediately following that in which the absence begins. The
Employee must timely furnish to the Employer information
reasonably required to establish (i) that an absence from
work is for a reason specified above, and (ii) the number of
days for which the absence continued.
Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment, or as otherwise specified in the Plan Agreement.
If the Employer maintains the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer. If the Employer does not maintain the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer only to the extent that the Employer so elects in the Plan Agreement.
Hours of Service shall be credited to a Leased Employee as though he were an Employee.
Integration Level means the Earnings amount selected by the Employer in the Plan Agreement.
Investment Company means an open-end registered investment company for which Putnam Mutual Funds Corp., or its affiliate acts as principal underwriter, or for which Putnam Investment Management, Inc., or its affiliate serves as an investment adviser; provided that its prospectus offers its shares under the Plan.
Investment Company Shares means shares issued by an Investment Company.
Investment Products means any of the investment products specified by the Employer in accordance with Section 13.2, from the group of those products sponsored, underwritten or managed by Putnam as shall be made available by Putnam under the Plan, and such other products as shall be expressly agreed to in writing by Putnam for availability under the Plan.
Leased Employee means any person (other than an Employee
of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Section 414(n)(6)
of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient
Employer. The compensation of a Leased Employee for purposes of
the Plan means the Compensation (as defined in Section 2.8) of
the Leased Employee attributable to services performed for the
recipient Employer. Contributions or benefits provided to a
leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer
shall be treated as provided by the recipient Employer. Provided
that leased Employees do not constitute more than 20% of the
recipient's nonhighly compensated workforce, a leased Employee
shall not be considered an Employee of the recipient if he is
covered by a money purchase pension plan providing: (1) a
nonintegrated Employer contribution rate of at least 10% of
compensation (as defined in Section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or
Section 403(b) of the Code), (2) immediate participation, and (3)
full and immediate vesting.
One-Year Eligibility Break means a 12-month Eligibility Period during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service, and provided further that if the Employer has elected in the Plan Agreement to establish a number less than 500 as the requisite Hours of Service for crediting a 12-month Eligibility Period, that number shall be substituted for 500.
One-Year Vesting Break means a Year of Service measuring period, as elected by the Employer in the Plan Agreement, during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations for the Secretary of Labor dealing with breaks in service, and provided further that if the Employer has elected in the Plan Agreement to establish a number less than 500 as the requisite Hours of Service for crediting a Year of Service, that number shall be substituted for 500.
Owner-Employee means the sole proprietor of an Affiliated Employer that is a sole proprietorship, or a partner owning more than 10% of either the capital or profits interest of an Affiliated Employer that is a partnership. The Plan Administrator shall be responsible for identifying Owner-Employees to the Recordkeeper.
Participant means each Employee who has met the requirement for participation in Article 3. An Employee is not a Participant for any period before the entry date applicable to him.
Participant Contribution means an after-tax contribution made by a Participant in accordance with Section 4.6.
Participant Contribution Account means an account maintained on the books of the Plan, in which are recorded Participant Contributions by a Participant and any income, expenses, gains or losses incurred thereon.
Plan means the form of defined contribution retirement plan and trust agreement adopted by the Employer, consisting of the Plan Agreement and the Putnam Basic Plan Document #07 as set forth herein, together with any and all amendments and supplements thereto.
Plan Administrator means the Employer or its appointee pursuant to Section 15.1.
Plan Agreement means the separate agreement entered into between the Employer and the Trustee and accepted by Putnam, under which the Employer adopts the Plan and selects among its optional provisions.
Plan Year means the period of 12 consecutive months specified by the Employer in the Plan Agreement, as well as any initial short plan year period specified by the Employer in the Plan Agreement.
Profit Sharing Contribution means a contribution made for the benefit of a Participant by the Employer pursuant to Section 4.2(a).
Putnam means (i) Putnam Mutual Funds Corp., or a company affiliated with it which Putnam Mutual Funds Corp. has designated as its agent performing specified actions or procedures in its capacity as sponsor of this prototype Plan, and (ii) Putnam Fiduciary Trust Company when performing in its capacity as Recordkeeper or Trustee.
Qualified Domestic Relations Order means any judgment, decree or order (including approval of a property settlement agreement) which constitutes a "qualified domestic relations order" within the meaning of Code Section 414(p). A judgment, decree or order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan.
Qualified Participant means any Participant who satisfies the requirements for being a Qualified Participant as elected by the Employer in the Plan Agreement, for the purposes set forth in the Plan Agreement. If the Plan is not adopted to replace an existing plan, this Section 2.42 is effective on the Effective Date. If the Plan replaces an existing plan, this Section 2.42 is effective on the Effective Date, and the provision of the existing plan that this Section 2.42 replaces shall continue to apply until that time.
Recordkeeper means the person or entity designated by the
Employer in the Plan Agreement to perform the duties described in
Section 15.4, and any successor thereto. If Putnam is the
Recordkeeper, the terms and conditions of its service will be as
specified in a service agreement between the Employer and Putnam.
Retirement means ceasing to be an Employee in accordance with Section 7.1.
Rollover Account means an account established for an Employee who makes a rollover contribution to the Plan pursuant to Section 4.5.
Self-Employed Individual means an individual whose personal services are a material income-producing factor in the trade or business for which the Plan is established, and who has Earned Income for the taxable year from that trade or business, or would have Earned Income but for the fact that the trade or business had no net profits for the taxable year.
Shareholder-Employee means any officer or Employee of an
electing small business corporation, within the meaning of
Section 1362 of the Code, who on any day during a taxable year of
the Employer owns (or is considered as owning under Section
318(a)(1) of the Code) more than 5% of the outstanding stock of
the Employer. The Plan administrator shall be responsible for
identifying Shareholder-Employees to the Recordkeeper.
Social Security Wage Base means the maximum amount considered as wages under Section 3121(a)(1) of the Code as in effect on the first day of the Plan Year.
Trust and Trust Fund mean the trust fund established under
Section 13.1.
Trustee means the person, or the entity with trustee powers, named in the Plan Agreement as trustee, and any successor thereto.
Valuation Date means each day when the New York Stock Exchange is open, or such other date or dates as the Employer may designate by written agreement with the Recordkeeper.
Year of Service means a Plan Year or a 12-month Eligibility Period, as elected by the Employer in the Plan Agreement, in which an Employee is credited with at least 1,000 Hours of Service; provided, however, that if the Employer has elected in the Plan Agreement to establish a number less than 1,000 as the requisite for crediting a Year of Service, that number shall be substituted for 1,000, and provided further that in the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. An Employee's Years of Service shall include service credited prior to the Effective Date under any predecessor plan. If the initial Plan Year is shorter than 12 months, each Employee who is credited with at least 1,000 Hours of Service in the 12-month period ending on the last day of the initial Plan Year shall be credited with a Year of Service with respect to the initial Plan Year.
If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall not include:
Service in any Plan Year (or comparable period prior to the Effective Date) completed before the Employee reached age 18;
Service completed during a period in which the Employer did not maintain the Plan or any predecessor plan (as defined under regulations prescribed by the Secretary of the Treasury).
If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall include employment by a business acquired by the Employer, before the date of the acquisition.
The following definitions apply only to cash or deferred arrangements under Section 401(k) (CODA):
Deferral Agreement means an Employee's agreement to make one or more Elective Deferrals in accordance with Section 5.2.
Elective Deferral means any contribution made to the Plan by the Employer at the election of a Participant, in lieu of cash compensation, including contributions made pursuant to a Deferral Agreement or other deferral mechanism.
Elective Deferral Account means an account maintained on the books of the Plan, in which are recorded a Participant's Elective Deferrals and the income, expenses, gains and losses incurred thereon.
Employer Matching Account means an account maintained on the books of the Plan, in which are recorded the Employer Matching Contributions made on behalf of a Participant and the income, expenses, gains and losses incurred thereon.
Employer Matching Contribution means a contribution made by the Employer (i) to the Plan pursuant to Section 5.8, or (ii) to another defined contribution plan on account of a Participant's "elective deferrals" or "employee contributions," as those terms are used in Section 401(m)(4) of the Code.
Highly Compensated Employee means any highly compensated active Employee or highly compensated former Employee as defined in subsection (a) below; provided, however, that if the Employer so elects in the Plan Agreement, Highly Compensated Employee means any highly compensated Employee under the simplified method described in subsection (b) below.
Regular Method. A highly compensated active Employee includes any Employee who performs service for the Employer during the determination year and who during the look-back year: (i) received compensation from the Employer in excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation from the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group for such year; or (iii) was an officer of the Employer and received compensation during such year that is greater than 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term also includes (A) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year," and among the 100 Employees who received the most compensation from the Employer during the determination year; and (B) Employees who are 5% owners at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (iii) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee.
A highly compensated former Employee includes any Employee who separated from service (or was deemed to have separated) before the determination year, performed no service for the Employer during the determination year, and was a highly compensated active Employee for either the year of separation from service or any determination year ending on or after the Employee's 55th birthday.
If during a determination year or look-back year an Employee is a family member of either a 5% owner who is an active or former Employee, or a Highly Compensated Employee who is one of the 10 most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employer during the year, then the family member and the 5% owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten Highly Compensated Employee. For purposes of this Section 2.58(a), family members include the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants.
For purposes of this subsection (a), the "determination year" shall be the Plan Year, and the "look-back year" shall be the 12-month period immediately preceding the determination year; provided, however, that in a Plan for which the Plan Year is the calendar year, the current Plan Year shall be both the "determination year" and the "look-back year" if the Employer so elects in the Plan Agreement.
Simplified Method. An Employee is a Highly
Compensated Employee under this simplified method if (i) the
Employee is a 5% owner during the Plan Year; (ii) the
Employee's compensation for the Plan Year exceeds $75,000
(as adjusted pursuant to Section 415(d) of the Code);
(iii) the Employee's compensation for the Plan Year exceeds
$50,000 (as adjusted pursuant to Section 415(d) of the Code)
and the Employee is in the top-paid group of Employees; or
(iv) the Employee is an officer of the Employer and received
compensation during the Plan Year that is greater than 50%
of the dollar limitation under Code Section 415(b)(1)(A).
The lookback provisions of Code Section 414(q) do not apply to determining Highly Compensated Employees under this simplified method. An Employer that applies this simplified method for determining Highly Compensated Employees may choose to apply this method on the basis of the Employer's workforce as of a single day during the Plan Year ("snapshot day"). In applying this simplified method on a snapshot basis, the Employer shall determine who is a Highly Compensated Employee on the basis of the data as of the snapshot day. If the determination of who is a Highly Compensated Employee is made earlier than the last day of the Plan Year, the Employee's compensation that is used to determine an Employee's status must be projected for the Plan Year under a reasonable method established by the Employer.
Notwithstanding the foregoing, in addition to those Employees who are determined to be highly compensated on the Plan's snapshot day, as described above, where there are Employees who are not employed on the snapshot day but who are taken into account for purposes of testing under Section 5.6 or 5.10, the Employer must treat as a Highly Compensated Employee any Eligible Employee for the Plan Year who:
terminated prior to the snapshot day and was a Highly Compensated Employee in the prior year;
terminated prior to the snapshot day and (i) was a 5% owner, (ii) had compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) was an officer and had compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer; or
becomes employed subsequent to the snapshot day and (i) is a 5% owner, (ii) has compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) is an officer and has compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer.
If during a Plan Year an Employee is a family member of
either a 5% owner who is an Employee, or a Highly
Compensated Employee who is one of the ten most highly paid
Highly Compensated Employees ranked on the basis of
compensation paid by the Employees during the year, then the
family member and the 5% owner or
top-ten-Highly-Compensated-
Employee shall be treated as a single Employee receiving
compensation and Plan contributions or benefits equal to the
sum of the compensation and contributions or benefits of the
family member and the 5% owner or
top-ten-Highly-Compensated-
Employee. For purposes of this Section 2.58(b), family
members include the spouse, lineal ascendants and
descendants of the Employee and the spouses of such lineal
ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. The Plan Administrator is responsible for identifying the Highly Compensated Employees and reporting such data to the Recordkeeper.
Non-Highly Compensated Employee means an Employee who is not a Highly Compensated Employee.
Qualified Matching Account means an account maintained on the books of the Plan, in which are recorded the Qualified Matching Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto.
Qualified Matching Contribution means a contribution made by the Employer that: (i) is allocated with respect to a Participant's Elective Deferrals or Participant Contributions or both (as elected by the Employer in the Plan Agreement), (ii) is fully vested at all times and (iii) is distributable only in accordance with Section 5.13.
Qualified Nonelective Contribution means a contribution
(other than an Employer Matching Contribution or Qualified
Matching Contribution) made by the Employer, that: (i) a
Participant may not elect to receive in cash until it is
distributed from the Plan; (ii) is fully vested at all times; and
(iii) is distributable only in accordance with Section 5.13.
Qualified Nonelective Contribution Account means an
account maintained on the books of the Plan, in which are
recorded the Qualified Nonelective Contributions on behalf of a
Participant and the income, expense, gain and loss attributable
thereto.
ARTICLE PARTICIPATION
Initial Participation. Upon completion of the eligibility for Plan participation requirements specified in the Plan Agreement, an Employee shall begin participation in the Plan as of the entry date specified in the Plan Agreement, or as of the Effective Date, whichever is later; provided, however, that:
if the Plan is adopted as an amendment of a predecessor plan
of the Employer, every Employee who was participating under the predecessor plan when it was so amended shall become a Participant in the Plan as of the Effective Date, whether or not he has satisfied the age and service requirements specified in the Plan Agreement; and
if the Employer so specifies in the Plan
Agreement, any individual who is (i) a nonresident alien
receiving no earned income from an Affiliated Employer which
constitutes income from sources within the United States,
(ii) included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
representatives (excluding from the term "Employee
representatives" any organization of which more than half of
the members are Employees who are owners, officers, or
executives of an Affiliated Employer), if retirement
benefits were the subject of good faith bargaining and no
more than 2% of the Employees covered by the collective
bargaining agreement are professionals as defined in Section
1.410(b)-9 of the Income Tax Regulations, (iii) is an
Employee of an Affiliated Employer specified by the Employer
in the Plan Agreement, (iv) is a Leased Employee, or (v) is
a member of such other class of Employees specified by the
Employer in the Plan Agreement, shall not participate in the
Plan until the later of the date on which he ceases to be
described in clause (i), (ii), (iii), (iv) or (v), whichever
are applicable, or the entry date specified by the Employer
in the Plan Agreement; and
if the Plan is not adopted as an amendment of a predecessor plan of the Employer, Employees on the Effective Date shall begin participation on the Effective Date, to the extent so elected by the Employer in the Plan Agreement; and
a Participant shall cease to participate in the Plan when he becomes a member of a class of Employees ineligible to participate in the Plan, and shall resume participation immediately upon his return to a class of Employees eligible to participate in the Plan.
In the case of a Plan to which the CODA provisions of Article 5 apply and for which the Employer has elected in the Plan Agreement to apply different minimum service requirements for purposes of participation in Profit Sharing Contributions, for purposes of participation in the CODA provisions and/or for purposes of participation in Employer Matching Contributions, this Article 3 shall be applied separately with regard to participation under Article 4, with regard to participation under the CODA provisions of Article 5 and/or with regard to participation in Employer Matching Contributions under Article 5.
Special Participation Rule. With respect to a Plan in which the Employer has specified full and immediate vesting in the Plan Agreement, an Employee who incurs a One-Year Eligibility Break before completing the number of Eligibility Periods required under Section 3.1 shall not thereafter be credited with any Eligibility Period completed before the One-Year Eligibility Break.
Resumed Participation. A former Employee who incurs a One-Year Eligibility Break after having become a Participant shall participate in the Plan as of the date on which he again becomes an Employee, if (i) his Accounts had become partially or fully vested before he incurred a One-Year Vesting Break, or (ii) he incurred fewer than five consecutive One-Year Eligibility Breaks. In any other case, when he again becomes an Employee he shall be treated as a new Employee under Section 3.1.
Benefits for Owner-Employees. If the Plan provides contributions or benefits for one or more Owner-Employees who control both the trade or business with respect to which the Plan is established and one or more other trades or businesses, the Plan and plans established with respect to such other trades or businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to the Employees of this and all such other trades or businesses. If the Plan provides contributions or benefits for one or more Owner- Employees who control one or more other trades or businesses, the Employees of each such other trade or business must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than those provided for such Owner-Employees under the Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which he does not control and such individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trade or business which he does control must be as favorable as those provided for him under the most favorable plan of the trade or business which he does not control. For purposes of this Section 3.4, an Owner-Employee, or two or more Owner-Employees, shall be considered to control a trade or business if such Owner-Employee, or such two or more Owner-Employees together:
own the entire interest in an unincorporated trade or business, or
in the case of a partnership, own more than 50% of either the capital interest or the profits interest in such partnership.
For purposes of the preceding sentence, an Owner-Employee or
two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or indirectly,
by a partnership which such Owner-Employee or such two or more
Owner-Employees are considered to control within the meaning of
the preceding sentence.
Changes in Classification. If a Participant ceases to be
a member of a classification of Employees eligible to participate
in the Plan, but does not incur a One-Year Eligibility Break, he
will continue to be credited with Years of Service for vesting
while he remains an Employee, and he will resume participation as
of the date on which he again becomes a member of a
classification of Employees eligible to participate in the Plan.
If such a Participant incurs a One-Year Eligibility Break,
Section 3.3 will apply. If a Participant who ceases to be a
member of a classification of Employees eligible to participate
in the Plan becomes a member of a classification of Employees
eligible to participate in another plan of the Employer, his
Account, if any, under the Plan shall, upon the Administrator's
direction, be transferred to the plan in which he has become
eligible to participate, if such plan permits receipt of such
Account.
If an Employee who is not a member of a classification of
Employees eligible to participate in the Plan satisfies the age
and service requirements specified in the Plan Agreement, he will
begin to participate immediately upon becoming a member of an
eligible classification. If such an Employee has account
balances under another plan of the Employer, such account
balances shall be transferred to the Plan upon the Employee's
commencement of participation in the Plan, if such other plan
permits such transfer.
ARTICLE CONTRIBUTIONS
Provisions Applicable to All Plans.
Payment and Crediting of Contributions. The Employer shall pay to the order of the Trustee the aggregate contributions to the Trust Fund for each Plan Year. Each contribution shall be accompanied by instructions from the Employer, in the manner prescribed by Putnam. Neither the Trustee nor Putnam shall be under any duty to inquire into the correctness of the amount or the timing of any contribution, or to collect any amount if the Employer fails to make a contribution as provided in the Plan.
Time for Payment. Elective Deferrals will be transferred to the Trustee as soon as such contributions can reasonably be segregated from the general assets of the Employer, but in any event within 90 days after the date on which the Compensation to which such contributions relate is paid. The aggregate of all other contributions with respect to a Plan Year shall be transferred to the Trustee no later than the due date (including extensions) for filing the Employer's federal income tax return for that Plan Year.
Limitations on Allocations. All allocations shall be subject to the limitations in Article 6.
Establishment of Accounts. The Employer will establish and maintain (or cause to be established and maintained) for each Participant individual accounts adequate to disclose his interest in the Trust Fund, including such of the following separate accounts as shall apply to the Participant: Employer Contribution Account, Participant Contribution Account, Deductible Employee Contribution Account, and Rollover Account; and in a Plan with a CODA, Elective Deferral Account, Qualified Nonelective Account, Qualified Matching Account and Employer Matching Account. The maintenance of such accounts shall be only for recordkeeping purposes, and the assets of separate accounts shall not be required to be segregated for purposes of investment.
Restoration of Accounts. Notwithstanding any other provision of the Plan, for any Plan Year in which it is necessary to restore any portion of a Participant's Account pursuant to Section 8.3(b) or 9.5, to the extent that the amount of Forfeitures available is insufficient to accomplish such restoration, the Employer shall contribute the amount necessary to eliminate the insufficiency, regardless of whether the contribution is currently deductible by the Employer under Section 404 of the Code. Forfeitures shall be considered available for allocation pursuant to Sections 4.4 and 5.14 in a Plan Year only after all necessary restoration of Accounts has been accomplished.
Provisions Applicable Only to Profit Sharing Plans.
Amount of Annual Contribution. The Employer will contribute for each Plan Year as a Profit Sharing Contribution an amount determined in accordance with the formula specified by the Employer in the Plan Agreement, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404 of the Code.
Allocation of Profit Sharing Contributions;
General Rule. As of the last day of each Plan Year, the
Profit Sharing Contribution (and any amounts reapplied under
Section 6.1(d)) for the Plan Year shall be allocated as
indicated by the Employer in the Plan Agreement.
Plans Integrated with Social Security. If the Employer elects in the Plan Agreement an allocation formula integrated with Social Security, Profit Sharing Contributions (and any amounts reapplied under Section 6.1(d)) shall be allocated as of the last day of the Plan Year, as follows:
Top-Heavy Integration Formula. If the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 14, or if the Employer has specified in the Plan Agreement that this paragraph (1) will apply whether or not the Plan is Top-Heavy, then:
First, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Earnings (or, if less, the entire amount to be allocated).
Next, among the Employer Contribution Accounts of all Qualified Participants who have Excess Earnings, in the ratio that each Qualified Participant's Excess Earnings bears to all Qualified Participants' Excess Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Excess Earnings (or, if less, the entire amount remaining to be allocated). In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, all of such Qualified Participant's Earnings shall be taken into account.
Next, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that the sum of each Qualified Participant's Earnings and Excess Earnings bears to the sum of all Qualified Participants' Earnings and Excess Earnings. The total amount allocated in this manner shall not exceed the lesser of (i) the sum of all Participants' Earnings and Excess Earnings multiplied by the Top-Heavy Maximum Disparity Percentage determined under subparagraph (1)(E), or (ii) the entire amount remaining to be allocated. In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, two times such Qualifying Participant's Earnings shall be taken into account.
Finally, any amount remaining shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings.
The Top-Heavy Maximum Disparity Percentage shall be the lesser of (i) 2.7% or (ii) the applicable percentage from the following table:
If the Plan's
Integration The
Level is More But not more applicable
than: than: percentage
is:
$0 The greater 2.7%
of $10,000 or
20% of the
Social
Security Wage
Base
The greater 80% of the 1.3%
of $10,000 or Social
20% of the Security Wage
Social Base
Security Wage
Base
80% of the Less than the 2.4%
Social Social
Security Wage Security Wage
Base Base
|
If the Plan's Integration Level is equal to the Social Security Wage Base, the Top-Heavy Maximum Disparity Percentage is 2.7%.
Non-Top-Heavy Integration Formula. If the Plan is not required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 14, and the Employer has not specified in the Plan Agreement that paragraph (1) will apply whether or not the Plan is Top-Heavy, then:
An amount equal to (i) the Maximum
Disparity Percentage determined under subparagraph
(2)(C) multiplied by the sum of all Qualified
Participants' Earnings and Excess Earnings, or
(ii) if less, the entire amount to be allocated,
shall be allocated among the Employer Contribution
Account of all Participants in the ratio that the
sum of each Qualified Participant's Earnings and
Excess Earnings bears to the sum of all Qualified
Participants' Earnings and Excess Earnings. In
the case of any Qualified Participant who has
exceeded the cumulative permitted disparity limit
described in subparagraph (5) below, two times
such Qualified Participant's Earnings shall be
taken into account.
Any amount remaining after the allocation in paragraph (2)(A) shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings.
The Maximum Disparity Percentage shall be the lesser of (i) 5.7% or (ii) the applicable percentage from the following table:
If the Plan's
Integration The
Level is more But not more applicable
than: than: percentage
is:
$0 The greater 5.7%
of $10,000 or
20% of the
Social
Security Wage
Base
The greater 80% of the 4.3%
of $10,000 or Social
20% of the Security Wage
Social Base
Security Wage
Base
80% of the Less than the 5.4%
Social Social
Security Wage Security Wage
Base Base
|
If the Plan's Integration Level is equal to the Social Security Wage Base, the Maximum Disparity Percentage is 5.7%.
In this Section 4.2, "Earnings" means Earnings as defined in Section 2.13.
Annual overall permitted disparity limit.
Notwithstanding subparagraphs (1) through (3) above,
for any Plan Year this Plan benefits any Participant
who benefits under another qualified plan or simplified
employee pension (as defined in Section 408(k) of the
Code) maintained by the Employer that provides for
permitted disparity (or imputes disparity), Profit
Sharing Contributions and Forfeitures will be allocated
among the Employer Contribution Accounts of all
Qualified Participants in the ratio that such Qualified
Participant's Earnings bears to the Earnings of all
Participants. For all purposes under the Plan, a
Participant is treated as benefiting under a plan
(including this Plan) for any plan year during which
the Participant receives or is deemed to receive an
allocation under a plan in accordance with
Section 1.410(b)-3(a) of the Treasury Regulations.
Cumulative Permitted Disparity Limit. Effective for Plan years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension plan (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefitted under a defined benefit or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit.
Provisions Applicable Only to Money Purchase Pension Plans.
Amount of Annual Contributions. The Employer will contribute for each Plan Year an amount described in paragraph (b) or (c) below, whichever is applicable, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404(c) of the Code.
Allocation of Contributions; General Rule. The Employer shall contribute an amount equal to the product of the Earnings of all Qualified Participants and the Base Contribution Percentage, and the contribution shall be allocated as of the last day of the Plan Year among the Employer Contribution Accounts of all Qualified Participants in the ratio that the Earnings of each Qualified Participant bears to the Earnings of all Qualified Participants. This general rule does not apply to a Plan that is integrated with Social Security.
Plans Integrated with Social Security. If the Employer has elected in the Plan Agreement to integrate the Plan with Social Security, the Employer shall contribute an amount equal to the sum of the following amounts, and the contribution shall be allocated as of the last day of the Plan Year as follows:
To the Employer Contribution Account of each Qualified Participant, an amount equal to the product of the Base Contribution Percentage and his Earnings, and
To the Employer Contribution Account of each Qualified Participant who has Excess Earnings, the product of his Excess Earnings and the lesser of (i) the Base Contribution Percentage or (ii) the Money Purchase Maximum Disparity Percentage determined under paragraph (d).
The Base Contribution Percentage shall be no less than three percent (3%) in either of the following circumstances: (i) any Plan Year of a Plan for which the Plan Agreement does not specify that the Employer will perform annual Top-Heavy testing, or (ii) any Plan Year in which the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 14.
Notwithstanding subparagraphs (1) through (3) above, in the case of any Participant who has exceeded the cumulative permitted disparity limit described in paragraph (f) below, the amount shall be each Qualified Participant's Earnings multiplied by the percentage determined in subparagraph (2) above.
The Money Purchase Maximum Disparity Percentage is equal to the lesser of (i) 5.7% or (ii) the applicable percentage from the following table:
If the Plan's
Integration The
Level is more But not more applicable
than: than: percentage
is:
$0 The greater 5.7%
of $10,000 or
20% of the
Social
Security Wage
Base
The greater 80% of the 4.3%
of $10,000 or Social
20% of the Security Wage
Social Base
Security Wage
Base
80% of the Less than the 5.4%
Social Social
Security Wage Security Wage
Base Base
|
If the Plan's Integration Level is equal to the Social Security Wage Base, the Money Purchase Maximum Disparity Percentage is 5.7%.
Annual overall permitted disparity limit.
Notwithstanding the preceding paragraphs, for any Plan Year
this Plan benefits any Participant who benefits under
another qualified plan or simplified employee pension (as
defined in Section 408(k) of the Code) maintained by the
Employer that provides for permitted disparity (or imputes
disparity), the Employer shall contribute for each Qualified
Participant an amount equal to the Qualified Participant's
Earnings multiplied by the lesser of (i) the Base
Contribution Percentage or (ii) the Money Purchase Maximum
Disparity Percentage determined under paragraph (d). For
all purposes under the Plan, a Participant is treated as
benefiting under a plan (including this Plan) for any plan
year during which the Participant receives or is deemed to
receive an allocation under a plan in accordance with
Section 1.410(b)-3(a) of the Treasury Regulations.
Cumulative Permitted Disparity Limit. Effective for Plan Years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 total cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefited under a defined benefit plan or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit.
Forfeitures. Forfeitures from Employer Contribution
Accounts shall be used, as elected by the Employer in the Plan
Agreement, either to reduce other contributions required of the
Employer, as specified in the Plan Agreement, or shall be
reallocated as additional contributions by the Employer. If the
Employer elects to use Forfeitures from Employer Conribution
Accounts to reduce other contributions required of the Employer,
the amount of such Forfeitures in a Plan Year shall be treated as
a portion of such required contribution. If the Employer elects
to reallocate Forfeitures from Employer Contribution Accounts as
additional contributions, such forfeitures shall be allocated (i)
in the case of a profit sharing plan, in accordance with Section
4.2(b) (provided that such Forfeitures may be allocated under
paragraphs (c)(1)(B), (c)(1)(C) and (c)(2)(C) of Section 4.2 only
to the extent that the limitation described therein has not been
fully utilized), and (ii) in the case of a money purchase plan,
among the Employer Contribution Accounts of all Qualified
Participants in proportion to their Earnings for the Plan Year.
Rollover Contributions. An Employee in an eligible class may contribute at any time cash or other property (which is not a collectible within the meaning of Section 408(m) of the Code) acceptable to the Trustee representing qualified rollover amounts under Sections 402, 403, or 408 of the Code. Amounts so contributed shall be credited to a Rollover Account for the Participant.
Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions, together with any matching contributions (as defined in section 401(m)(4) of the Code) if applicable, shall be limited so as to meet the nondiscrimination test of section 401(m) of the Code, as set forth in Section 5.10 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contribution Accounts will be fully vested at all times.
No Deductible Employee Contributions. The Plan Administrator shall not accept deductible employee contributions, other than those held in a Deductible Employee Contribution Account transferred from a predecessor plan of the Employer.
ARTICLE CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA)
Applicability; Allocations. This Article 5 applies to any
plan adopted pursuant to Plan Agreement #001, which Plan
Agreement by its terms includes a CODA permitting Elective
Deferrals to be made under the Plan. The Employer may specify in
the Plan Agreement that contributions will be made to the Plan
only under the CODA, or that contributions may be made under
Section 4.2 as well as under the CODA. Allocations to
Participants' Accounts of contributions made pursuant to this
Article 5 shall be made as soon as administratively feasible
after their receipt by the Trustee, but in any case no later than
as of the last day of the Plan Year for which the contributions
were made.
CODA Participation. Each Employee who has met the eligibility requirements of Article 3 may make Elective Deferrals to the Plan by completing and returning to the Plan Administrator a Deferral Agreement form which provides that the Participant's cash compensation from the Employer will be reduced by the amount indicated in the Deferral Agreement, and that the Employer will contribute an equivalent amount to the Trust on behalf of the Participant. The following rules will govern Elective Deferrals:
Subject to the limits specified in the Plan Agreement and set forth in Section 5.3, a Deferral Agreement may apply to any amount or percentage of the Earnings payable to a Participant in each year, and, if so specified by the Employer in the Plan Agreement, separately to bonuses payable to a Participant from time to time, even if such bonuses have otherwise been excluded from Compensation under the Plan Agreement.
In accordance with such reasonable rules as the Plan Administrator shall specify, a Deferral Agreement will become effective as soon as is administratively feasible after the Deferral Agreement is returned to the Plan Administrator, and will remain effective until it is modified or terminated. No Deferral Agreement may become effective retroactively.
A Participant may modify his Deferral Agreement by completing and returning to the Plan Administrator a new Deferral Agreement form as of any of the dates specified in the Plan Agreement, and any such modification will become effective as described in paragraph (b).
A Participant may terminate his Deferral Agreement at any time upon advance written notice to the Plan Administrator, and any such termination will become effective as described in paragraph (b).
Annual Limit on Elective Deferrals. During any taxable
year of a Participant, his Elective Deferrals under the Plan and
any other qualified plan of an Affiliated Employer shall not
exceed the dollar limit contained in Section 402(g) of the Code
in effect at the beginning of the taxable year. With respect to
any taxable year, a Participant's Elective Deferrals for purposes
of this Section 5.3 include all Employer contributions made on
his behalf pursuant to an election to defer under any qualified
CODA as described in Section 401(k) of the Code, any simplified
employee pension cash or deferred arrangement (SARSEP) as
described in Section 402(h)(1)(B) of the Code, any eligible
deferred compensation plan under Section 457 of the Code, any
plan described under Section 501(c)(18) of the Code, and any
Employer contributions made on behalf of the Participant for the
purchase of an annuity contract under Section 403(b) of the Code
pursuant to a salary reduction agreement. The limit under
Section 402(g) of the Code on the amount of Elective Deferrals of
a Participant who receives a hardship withdrawal pursuant to
Section 12.2 shall be reduced, for the taxable year next
following the withdrawal, by the amount of Elective Deferrals
made in the taxable year of the hardship withdrawal.
Distribution of Certain Elective Deferrals. "Excess
Elective Deferrals" means those Elective Deferrals described in
Section 5.3 that are includible in a Participant's gross income
under Section 402(g) of the Code, to the extent that the
Participant's aggregate elective deferrals for a taxable year
exceed the dollar limitation under that Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, whether or not they are distributed under this Section 5.4.
A Participant may designate to the Plan any Excess Elective
Deferrals made during his taxable year by notifying the Employer
on or before the following March 15 of the amount of the Excess
Elective Deferrals to be so designated. A Participant who has
Excess Elective Deferrals for a taxable year, taking into account
only his Elective Deferrals under the Plan and any other plans of
the Affiliated Employers, shall be deemed to have designated the
entire amount of such Excess Elective Deferrals.
Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were so designated or deemed designated for the preceding year. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is the Participant's Excess Elective Deferrals for the year and the denominator of which is the Participant's Account balance attributable to Elective Deferrals without regard to any income or loss occurring during the year.
To the extent that the return to a Participant of his
Elective Deferrals would reduce an Excess Amount (as defined in
Section 6.5(f)), such Excess Deferrals shall be distributed to
the Participant in accordance with Article 6.
Satisfaction of ADP and ACP Tests. In each Plan Year, the Plan must satisfy the ADP test described in Section 5.6 and the ACP test described in Section 5.10. The Employer may cause the Plan to satisfy the ADP or ACP test or both tests for a Plan Year by any of the following methods or by any combination of them:
By the distribution of Excess Contributions in accordance with Section 5.7, or the distribution of Excess Aggregate Contributions in accordance with Section 5.11, or both; or
By recharacterization of Excess Contributions in accordance with Section 5.9; or
If the Employer has so elected in the Plan Agreement, by making Qualified Nonelective Contributions or Qualified Matching Contributions or both, in accordance with the Plan Agreement and Section 5.12.
Actual Deferral Percentage Test Limit. The Actual Deferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:
The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or
The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points.
The following special rules shall apply to the computation of the ADP:
"Actual Deferral Percentage" means, for a
specified group of Participants for a Plan Year, the average
of the ratios (calculated separately for each Participant in
the group) of (1) the amount of Employer contributions
actually paid over to the Trust on behalf of the Participant
for the Plan Year to (2) the Participant's Earnings for the
Plan Year (or, provided that the Employer applies this
method to all Employees for a Plan Year, the Participant's
Earnings for that portion of the Plan Year during which he
was eligible to participate in the Plan). Employer
contributions on behalf of any Participant shall include:
(i) his Elective Deferrals, including Excess Elective
Deferrals of Highly Compensated Employees, but excluding (A)
Excess Elective Deferrals of Non-Highly Compensated
Employees that arise solely from Elective Deferrals made
under the Plan or another plan maintained by an Affiliated
Employer, and (B) Elective Deferrals that are taken into
account in the Average Contribution Percentage test
described in Section 5.10 (provided the ADP test is
satisfied both with and without exclusion of these Elective
Deferrals), and excluding Elective Deferrals returned to a
Participant to reduce an Excess Amount as defined in Section
6.5(f); and (ii) if the Employer has elected to make
Qualified Nonelective Contributions, such amount of
Qualified Nonelective Contributions, if any, as shall be
necessary to enable the Plan to satisfy the ADP test and not
used to satisfy the ACP test; and (iii) if the Employer has
elected to make Qualified Matching Contributions, such
amount of Qualified Matching Contributions, if any, as shall
be necessary to enable the Plan to satisfy the ADP test and
not used to satisfy the ACP test. For purposes of computing
Actual Deferral Percentages, an Employee who would be a
Participant but for his failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
In the event that the Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 5.6 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year.
The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) allocated to his Accounts under two or more CODAs described in Section 401(k) of the Code that are maintained by the Affiliated Employers shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single CODA. If a Highly Compensated Employee participates in two or more CODAs that have different Plan Years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs.
For purposes of determining the ADP of a Participant who is a 5% owner or one of the ten most highly- paid Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) and the Earnings of such a Participant shall include the Elective Deferrals (and, if applicable, Qualified Nonelective Contributions and Qualified Matching Contributions, or both) and Earnings for the Plan Year of his Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the ADP both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees.
For purposes of the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12-month period immediately following the Plan Year to which those contributions relate.
The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in satisfying the test.
The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
Distribution of Excess Contributions. "Excess Contributions" means, with respect to any Plan Year, the excess of:
The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for the Plan Year, over
The maximum amount of Employer contributions permitted by the ADP test, determined by reducing contributions made on behalf of Highly Compensated Employees in order of their ADPs, beginning with the highest of such percentages.
Notwithstanding any other provision of the Plan, Excess
Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of each
Plan Year to Participants to whose Accounts Excess Contributions
were allocated for the preceding Plan Year. The income or loss
allocable to Excess Contributions is the income or loss allocable
to the Participant's Elective Deferral Account (and, if
applicable, his Qualified Nonelective Account or Qualified
Matching Account or both) for the Plan Year multiplied by a
fraction, the numerator of which is the Participant's Excess
Contributions for the year and the denominator is the
Participant's account balance attributable to Elective Deferrals
(and Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if any of these are included in the ADP
test) without regard to any income or loss occurring during the
Plan Year. If such excess amounts are distributed more than 2
1/2
months after the last day of the Plan Year in which the excess
amounts arose, an excise tax equal to 10% of the excess amounts
will be imposed on the Employer maintaining the Plan. Such
distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the Excess Contributions
attributable to each of them. Excess Contributions shall be
allocated to a Participant who is a family member subject to the
family member aggregation rules of Section 414(q)(6) of the Code
in the proportion that the Participant's Elective Deferrals (and
other amounts treated as his Elective Deferrals) bear to the
combined Elective Deferrals (and other amounts treated as
Elective Deferrals) of all of the Participants aggregated to
determine his family members' combined ADP. Excess Contributions
shall be treated as Annual Additions under the Plan.
Excess Contributions shall be distributed from the Participant's Elective Deferral Account and Qualified Matching Account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Nonelective Account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral Account and Qualified Matching Account.
Matching Contributions. If so specified in the Plan Agreement, the Employer will make Matching Contributions to the Plan in accordance with the Plan Agreement, but no Matching Contribution shall be made with respect to an Elective Deferral or a Participant Contribution that is returned to a Participant because it represents an Excess Elective Deferral, an Excess Contribution, and Excess Aggregate Contribution or an Excess Amount (as defined in Section 6.5(f)); and if a Matching Contribution has nevertheless been made with respect to such an Elective Deferral or Participant Contribution, the Matching Contribution shall be forfeited, notwithstanding any other provision of the Plan. Employer Matching Contributions will be allocated among the Employer Matching Accounts of Qualified Participants in proportion to their Elective Deferrals or Participant Contributions, if applicable, as specified in the Plan Agreement. Employer Matching Accounts shall become vested according to the vesting schedule specified in the Plan Agreement, but regardless of that schedule shall be fully vested upon the Participant's Retirement (or, if earlier, his fulfillment of the requirements for early retirement, if any, or attainment of the normal retirement age specified in the Plan Agreement), his death during employment with an Affiliated Employer, and in accordance with Section 18.3. Forfeitures of Employer Matching Contributions, other than Excess Aggregate Contributions, shall be made in accordance with Section 8.3.
Recharacterization of Excess Contributions. Provided that the Plan Agreement permits all Participants to make Participant Contributions, the Employer may treat a Participant's Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan as a Participant Contribution. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that a recharacterized amount in combination with other Participant Contributions made by that Employee would exceed any stated limit under the Plan on Participant Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which the Excess Contributions arose, and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing by the Employer of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for his tax year in which the Participant would have received them in cash.
Average Contribution Percentage Test Limit and Aggregate Limit. The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:
The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or
The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points.
The following rules shall apply to the computation of the
ACP:
"Average Contribution Percentage" means the average of the Contribution Percentages of the Eligible Participants in a group.
"Contribution Percentage" means the ratio (expressed as a percentage) of a Participant's Contribution Percentage Amounts to the Participant's Earnings for the Plan Year (or, provided that the Employer applies this method to all Employees for a Plan Year, the Participant's Earnings for that portion of the Plan Year during which he was eligible to participate in the Plan).
"Contribution Percentage Amounts" means the sum of the Participant Contributions, Employer Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Employer Matching Contributions allocated to the Participant's Account, taken into account in the year in which the allocation is made. If the Employer has elected in the Plan Agreement to make Qualified Nonelective Contributions, such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ACP test and not used to satisfy the ADP test shall be included in the Contribution Percentage Amounts. Elective Deferrals shall also be included in the Contribution Percentage Amounts to the extent, if any, needed to enable the Plan to satisfy the ACP test, so long as the ADP test is met before the Elective Deferrals are used in the ACP test, and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test.
"Eligible Participant" means any Employee who is eligible to make a Participant Contribution, or an Elective Deferral, if Elective Deferrals are taken into account in the calculation of the Contribution Percentage, or to receive an Employer Matching Contribution (or a Forfeiture thereof) or a Qualified Matching Contribution.
"Aggregate Limit" means the sum of (i) 125% of the greater of the ADP of the Non-Highly Compensated Employees for the Plan Year, or the ACP of Non-Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA, and (ii) the lesser of 200% of, or two plus, the lesser of the ADP or ACP. "Lesser" is substituted for "greater" in clause (i) of the preceding sentence, and "greater" is substituted for "lesser" after the phrase "two plus the" in clause (ii) of the preceding sentence, if that formulation will result in a larger Aggregate Limit.
If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by an Affiliated Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the Aggregate Limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amount is reduced shall be treated as an Excess Aggregate Contribution. In determining the Aggregate Limit, the ADP and ACP of Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. The Aggregate Limit will be considered satisfied if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-Highly Compensated Employees.
For purposes of this section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or CODAs described in Section 401(k) of the Code, that are maintained by an Affiliated Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more CODAs that have different plan years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs.
In the event that the Plan satisfies the
requirements of Sections 401(m), 401(a)(4) or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with the Plan, then
this Section 5.10 shall be applied by determining the
Contribution Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy
Section 401(m) of the Code only if they have the same Plan
Year.
For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the ten most highly-paid Highly Compensated Employers, the Contribution Percentage Amounts and Earnings of the Participant shall include the Contribution Percentage Amounts and Earnings for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the Contribution Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees.
For purposes of the ACP test, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year.
The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in the ACP test.
The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
Distribution of Excess Aggregate Contributions.
Notwithstanding any other provision of the Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited if forfeitable, or if not
forfeitable, distributed no later than the last day of each Plan
Year to Participants to whose Accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. The
income or loss allocable to Excess Aggregate Contributions is the
income or loss allocable to the Participant's Employer Matching
Contribution Account, Qualified Matching Contribution Account (if
any, and if all amounts therein are not used in the ADP test),
and, if applicable, Qualified Nonelective Account, Participant
Contribution Account and Elective Deferral Account for the Plan
Year, multiplied by a fraction, the numerator of which is the
Participant's Excess Aggregate Contributions for the year and the
denominator of which is the Participant's account balance(s)
attributable to Contribution Percentage Amounts without regard to
any income or loss occurring during the Plan Year. Excess
Aggregate Contributions shall be allocated to a Participant who
is subject to the family member aggregation rules of Section
414(q)(6) of the Code in the proportion that the Participant's
Employer Matching Contributions (and other amounts treated as his
Employer Matching Contributions) bear to the combined Employer
Matching Contributions (and other amounts treated as Employer
Matching Contributions) of all of the Participants aggregated to
determine its family members' combined ACP. If excess amounts
attributable to Excess Aggregate Contributions are distributed
more than 2 1/2 months after the last day of the Plan Year in
which
such excess amounts arose, an excise tax equal to 10% of the
excess amounts will be imposed on the Employer maintaining the
Plan. Excess Aggregate Contributions shall be treated as Annual
Additions under the Plan.
Excess Aggregate Contributions shall be forfeited if forfeitable, or distributed on a pro-rata basis from the Participant's Participant Contribution Account, Employer Matching Account, and Qualified Matching Account (and, if applicable, the Participant's Qualified Nonelective Account or Elective Deferral Account, or both).
Excess Aggregate Contributions means, with respect to any Plan Year, the excess of:
The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage and actually made on behalf of Highly Compensated Employees for the Plan Year, over
The maximum Contribution Percentage Amounts permitted by the ACP test and the Aggregate Limit (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages).
Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 5.4, and then determining Excess Contributions pursuant to Section 5.7.
Qualified Nonelective Contributions; Qualified Matching Contributions. An Employer shall make Qualified Nonelective Contributions and/or Qualified Matching Contributions as provided by the Employer in the Plan Agreement. Qualified Nonelective Contributions and Qualified Matching Contributions shall be allocated to the Qualified Nonelective Contribution Accounts and Qualified Matching Accounts, respectively, of Participants as provided by the Employer in the Plan Agreement.
Restriction on Distributions. Except as provided in Sections 5.4, 5.7 and 5.11, no distribution may be made from a Participant's Elective Deferral Account, Qualified Nonelective Contribution Account or Qualified Matching Account until the occurrence of one of the following events:
The Participant's Disability, death or termination of employment with the Affiliated Employers;
Termination of the Plan without the establishment
of another defined contribution plan other than an employee
stock ownership plan as defined in Section 4975(e) or
Section 409 of the Code, or a simplified employee pension
plan as defined in Section 408(k) of the Code;
The Participant's attainment of age 59 1/2 (if the Employer has elected in the Plan Agreement to permit such distributions); or
In the case of an Employer that is a corporation,
the disposition by the Employer to an unrelated entity of
(i) substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used in a trade or business
of the Employer, if the Employer continues to maintain the
Plan after the disposition, but only with respect to
Employees who continue employment with the entity acquiring
such assets; or (ii) the Employer's interest in a subsidiary
(within the meaning of Section 409(d)(3) of the Code), if
the Employer continues to maintain the Plan after the
disposition, but only with respect to Employees who continue
employment with such subsidiary.
In addition, if the Employer has elected in the Plan Agreement to permit such distributions, a distribution may be made from a Participant's Elective Deferral Account in the event of his financial hardship as described in Section 12.2. All distributions upon any of the events listed above are subject to the conditions of Article 10, Joint and Survivor Annuity Requirements. In addition, distributions made after March 31, 1988, on account of an event described in subsection (b) or (d) above must be made in a lump sum.
Forfeitures of Employer Matching Contributions.
Forfeitures from Employer Matching Accounts shall be used, as
elected by the Employer in the Plan Agreement, either to reduce
other contributions required of the Employer, as specified in the
Plan Agreement, or shall be reallocated as additional Employer
Matching Contributions or Profit Sharing Contributions as
specified in the Plan Agreement. If the Employer elects to use
Forfeitures from Employer Matching Accounts to reduce other
contributions required of the Employer, the amount of such
Forfeitures in a Plan Year shall be treated as a portion of such
contribution. If the Employer elects to reallocate Forfeitures
from Employer Matching Contributions as additional Employer
Matching Contributions, such Forfeitures shall be allocated in
accordance with Section 5.8. If the Employer elects to
reallocate Forfeitures from Employer Matching Accounts as
additional Profit Sharing Contributions, such Forfeitures shall
be allocated in accordance with Section 4.2(b) (provided that
such Forfeitures may be allocated under paragraphs (c)(1)(B),
(c)(1)(C) and (c)(2)(C) of Section 4.2 only to the extent that
the limitation described therein has not been fully utilized).
Forfeitures of Excess Aggregate Contributions determined under
Section 5.10 that are Employer Matching Contributions shall be
used as provided above in this Section 5.14.
Special Effective Dates. If the Plan is adopted as an
amendment of an existing plan, the provisions of Sections 5.3 and
Section 5.7 through 5.10 are effective as of the first day of the
first Plan Year beginning after December 31, 1986.
ARTICLE LIMITATIONS ON ALLOCATIONS
No Additional Plan. 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), or an individual medical account (as defined in
Section 415(l)(2) of the Code) which provides an Annual Addition
as defined in Section 6.5(a), maintained by an Affiliated
Employer:
The amount of Annual Additions (as defined in
Section 6.5(a)) which may be credited to the Participant's
Accounts for any Limitation Year will not exceed the lesser
of the Maximum Annual Additions or any other limitation
contained in this Plan. If the Employer contribution that
would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for
the Limitation Year to exceed the Maximum Annual Additions,
the amount contributed or allocated will be reduced so that
the Annual Additions for the Limitation Year will equal the
Maximum Annual Additions.
Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant
on the basis of a reasonable estimation of the Participant's
Section 415 Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Additions for the Limitation Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Limitation Year.
If pursuant to paragraph (c), or as a result of the reallocation of Forfeitures, or as a result of a reasonable error in determining the amount of Elective Deferrals that may be made by a Participant, the Annual Additions exceed the Maximum Annual Additions, the Excess Amount will be disposed of as follows:
Any Participant Contributions and Elective Deferrals, to the extent they would reduce the Excess Amount, will be returned to the Participant.
If after the application of (1) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant's Accounts 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.
If after the application of (1) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any Forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.
If a suspense account is in existence at any time during a Limitation Year pursuant to this Section 6.1(d), it will participate in the allocation of the Trust's investment gains and losses. If a 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 may not be distributed to Participants or former Participants.
Additional Master or Prototype Plan. If in addition to this Plan a Participant is covered under another qualified Master or Prototype defined contribution plan or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(1)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer during any Limitation Year:
The Annual Additions which may be credited to a Participant's Accounts under this Plan for any such Limitation Year will not exceed the Maximum Annual Additions reduced by the Annual Additions credited to a Participant's accounts 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 an Affiliated Employer are less than the Maximum Annual Additions, and the Employer contribution that would otherwise be contributed or allocated to the Participant's Accounts under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated to this Plan will be reduced so that the Annual Additions under all such plans and funds for the Plan Year will equal the Maximum Annual Additions. 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 Annual Additions, no amount will be contributed or allocated to the Participant's Accounts under this Plan for the Limitation Year.
Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant in the manner described in Section 6.1(b).
As soon as is administratively feasible after the end of the Plan Year, the Maximum Annual Additions for the Plan Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Plan Year.
If, pursuant to Section 6.2(c) or as a result of the allocation of Forfeitures, or of a reasonable error in determining the amount of Elective Deferrals that may be made by him, a Participant's Annual Additions 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 under any qualified Master or Prototype defined contribution plan, except that Annual Additions to any welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date.
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 X and Y, where (X) is the total Excess Amount allocated as of such date, and (Y) is the ratio of: (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified Master or Prototype defined contribution plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner described in Section 6.1(d).
Additional Non-Master or Non-Prototype Plan. If the Participant is covered under another qualified defined contribution plan maintained by an Affiliated Employer which is not a Master or Prototype plan, Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with Section 6.2 as though the other plan were a Master or Prototype plan, unless the Employer provides other limitations in the Plan Agreement.
Additional Defined Benefit Plan. If an Affiliated Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with the Plan Agreement.
Definitions.
Annual Additions means the sum of the following amounts credited to a Participant's Accounts for the Limitation Year:
Employer contributions;
For any Limitation Year beginning after December 31, 1986, Participant Contributions;
Forfeitures;
Amounts allocated after March 31, 1984, to any individual medical account, as defined in Section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by an Affiliated Employer;
Amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post retirement medical benefits allocated to the separate account of a key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by an Affiliated Employer; and
In a Plan that includes a CODA, Excess Elective Deferrals, Excess Contributions (including recharacterized Elective Deferrals) and Excess Aggregate Contributions.
For this purpose, any Excess Amount applied under Sections 6.1(d) or 6.2(e) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. Any rollover contribution will not be considered an Annual Addition.
Section 415 Compensation means, for a
Self-Employed Individual, his Earned Income; and for any
other Participant, his "Form W-2 earnings" as defined in
Section 2.8, if the Employer has elected in item 4 of the
Plan Agreement a definition of Compensation based on "Form
W-2 earnings"; or if the Employer has not so elected, his
wages, salaries, and fees for professional services and
other amounts received for personal services actually
rendered in the course of employment with the Employer
maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements
or other expense allowances under a nonaccountable plan as
described in Income Tax Regulations Section 1.62-2(c)), and
excluding the following:
Employer contributions to a plan of deferred compensation which are not includible in the Participant'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 compensations;
Amounts realized from the exercise of a non qualified stock option, or when restricted stock (or property) held by the Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and
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
contributions are actually excludable from the gross
income of the Participant).
For purposes of applying the limitations of this Article 6,
Section 415 Compensation for a Limitation Year is the
Section 415 Compensation actually paid or made available
during such Limitation Year.
Defined Benefit Fraction means a fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Affiliated Employers, and the denominator of which is the lesser of 125% of the dollar limitation in effect for the Limitation Year under Sections 415(b) and (d) of the Code, or 140% of the Participant's Highest Average Compensation including any adjustments under Section 415(b) of the Code. Notwithstanding the foregoing, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any change in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987.
Defined Contribution Dollar Limitation means $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year.
Defined Contribution Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant's accounts under all the defined contribution plans (whether or not terminated) maintained by Affiliated Employers for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Affiliated Employers, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, and individual medical accounts, as defined in Section 415(l)(2) of the Code), and the denominator of which is the sum of the Maximum Annual Additions for the current and all prior Limitation Years of service with the Affiliated Employers (regardless of whether a defined contribution plan was maintained by any Affiliated Employer). The Maximum Annual Additions in any Plan Year is the lesser of 125% of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code, or 35% of the Participant's Section 415 Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined contribution plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to product of the excess of the sum of the fractions over 1.0, multiplied by the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat 100% of nondeductible Employee contributions as Annual Additions.
Excess Amount means, with respect to any Participant, the amount by which Annual Additions exceed the Maximum Annual Additions.
Highest Average Compensation means the average compensation for the three consecutive Years of Service with the Employer that produces the highest average. For this purpose, a Year of Service with the Employer is determined based on the Plan Year.
Limitation Year means the Plan Year. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different period of 12 consecutive months, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made.
Master or Prototype plan means a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service.
Maximum Annual Additions, which is the maximum
annual addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation
Year, means an amount not exceeding the lesser of (a) the
Defined Contribution Dollar Limitation or (b) 25% of the
Participant's Section 415 Compensation for the Limitation
Year. The compensation limitation referred to in (b) shall
not apply to any contribution for medical benefits (within
the meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an Annual Addition under
Section 415(l)(1) or Section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Annual Additions will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction:
number of months in the short Limitation Year
Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight 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:
The Participant will continue employment until normal retirement age under the Plan (or current age, if later), and
The Participant's Section 415 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.
ARTICLE ELIGIBILITY FOR DISTRIBUTION OF BENEFITS
Retirement. After his Retirement, the amount credited to a Participant's Accounts will be distributed to him in accordance with Article 9. The termination of a Participant's employment with the Affiliated Employers after he has (i) attained the normal retirement age specified in the Plan Agreement, (ii) fulfilled the requirements for early retirement (if any) specified in the Plan Agreement, or (iii) become Disabled will constitute his Retirement. Upon a Participant's Retirement (or, if earlier, his attainment of the normal retirement age specified in the Plan Agreement or fulfillment of the requirements for early retirement, if any, specified in the Plan Agreement) the Participant's Accounts shall become fully vested, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant who separates from service with any vested balance in his Accounts, after satisfying the service requirements for early retirement (if any is specified in the Plan Agreement) but before satisfying the age requirement for early retirement (if any is specified in the Plan Agreement), shall be entitled to a fully vested early retirement benefit upon his satisfaction of such age requirement.
Death. If a Participant dies before the distribution of his Accounts has been completed, his Beneficiary will be entitled to distribution of benefits in accordance with Article 9. A Participant's Accounts will become fully vested upon his death before termination of his employment with the Affiliated Employers, regardless of the vesting schedule specified by the Employer in the Plan Agreement.
A Participant may designate a Beneficiary by completing and returning to the Plan Administrator a form provided for this purpose. The form most recently completed and returned to the Plan Administrator before the Participant's death shall supersede any earlier form. If a Participant has not designated any Beneficiary before his death, or if no Beneficiary so designated survives the Participant, his Beneficiary shall be his surviving spouse, or if there is no surviving spouse, his estate. A married Participant may designate a Beneficiary other than his spouse only if his spouse consents in writing to the designation, and the spouse's consent acknowledges the effect of the consent and is witnessed by a notary public or a representative of the Plan. The beneficiary or beneficiaries named in the designation to which the spouse has so consented may not be changed without further written spousal consent unless the terms of the spouse's original written consent expressly permit such a change, and acknowledge that the spouse voluntarily relinquishes the right to limit the consent to a specific beneficiary. The marriage of a Participant shall nullify any designation of a beneficiary previously executed by the Participant. If it is established to the satisfaction of the Plan Administrator that the Participant has no spouse or that the spouse cannot be located, the requirement of spousal consent shall not apply. Any spousal consent, or establishment that spousal consent cannot be obtained, shall apply only to the particular spouse involved.
Other Termination of Employment. A Participant whose
employment terminates for any reason other than his Retirement or
death will be entitled to distribution, in accordance with
Article 9, of benefits equal to the amount of the vested balance
of his Accounts as determined under Article 8.
ARTICLE VESTING
Vested Balance. The vested balance of a Participant's Accounts will be determined as follows:
General Rule. A Participant's Participant Contribution Account and Rollover Account shall be fully vested at all times. The vested portion of his Employer Contribution Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates.
Special Rules for CODA. In a Plan that includes a CODA, a Participant's Elective Deferral Account, Qualified Nonelective Account, and Qualified Matching Account shall be fully vested at all times. The vested portion of his Employer Matching Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates.
Retirement. All of a Participant's Accounts shall become fully vested upon his Retirement or his earlier attainment of early retirement age (if any) or the normal retirement age elected by the Employer in the Plan Agreement.
For so long as a former Employee does not receive a distribution (or a deemed distribution) of the vested portion of his Accounts, the undistributed portion shall be held in a separate account which shall be invested pursuant to Section 13.3 and shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants.
Vesting of Accounts of Returned Former Employees. The following rules apply in determining the vested portion of the Accounts of a Participant who incurs one or more consecutive One- Year Vesting Breaks and then returns to employment with an Affiliated Employer:
If the Participant incurred fewer than five consecutive One-Year Vesting Breaks, then all of his Years of Service will be taken into account in determining the vested portion of his Accounts, as soon as he has completed one Year of Service following his return to employment.
If the Participant incurred five or more consecutive One-Year Vesting Breaks, then:
no Year of Service completed after his return to employment will be taken into account in determining the vested portion of his Accounts as of any time before he incurred the first One-Year Vesting Break;
years of Service completed before he incurred
the first One-Year Vesting Break will not be taken into
account in determining the vested portion of his
Accounts as of any time after his return to employment
(i) unless some portion of his Employer Contribution
Account or Employer Matching Account had become vested
before he incurred the first One-Year Vesting Break,
and (ii) until he has completed one Year of Service
following his return to employment; and
separate sub-accounts will be maintained for the Participant's pre-break and post-break Employer Contribution Account and Employer Matching Account, until both sub-accounts become fully vested. Both sub-accounts will share in the earnings and losses of the Trust Fund.
Forfeiture of Non-Vested Amounts. The portion of a former
Employee's Accounts that has not become vested under Section 8.1
shall become a Forfeiture in accordance with the following rules,
and shall be reallocated in accordance with Section 4.4 or
Section 5.14 (whichever applies) no later than the end of the
Plan Year in which it becomes a Forfeiture.
If Distribution Is Made. If any or all of the vested portion of a Participant's Accounts is distributed in accordance with Section 9.1 or 9.2 before the Participant incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture in the Plan Year in which the distribution occurs. For purposes of this Section 8.3, if the value of the vested portion of a Participant's Accounts is zero, the Participant shall be deemed to have received a distribution of the entire vested balance of his Accounts on the day his employment terminates. If the Participant elects to have distributed less than the entire vested portion of his Employer Contribution Account or Employer Matching Accounts, the part of the nonvested portion that will become a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of the entire vested portion of such Accounts.
Right of Repayment. If a Participant who receives a distribution pursuant to paragraph (a) returns to employment with an Affiliated Employer, the balance of his Employer Contribution Account and Employer Matching Account will be restored to the amount of such balance on the date of distribution, if he repays to the Plan the full amount of the distribution, before the earlier of (i) the fifth anniversary of his return to employment or (ii) the date he incurs five consecutive One-Year Vesting Breaks following the date of distribution. If an Employee is deemed to receive a distribution pursuant to this Section 8.3, and he resumes employment covered under this Plan before the date he incurs five consecutive One-Year Vesting Breaks, upon his reemployment the Employer-derived account balance of the Employee will be restored to the amount on the date of such deemed distribution. Such restoration will be made, first, from the amount of any Forfeitures available for reallocation as of the last day of the Plan Year in which repayment is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(e).
If No Distribution Is Made. If no distribution (nor deemed distribution) is made to a Participant before he incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture at the end of the Plan Year that constitutes his fifth consecutive One-Year Vesting Break.
Adjustment of Accounts. Before a Forfeiture is incurred, a Participant's Accounts shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants.
Accumulated Deductible Contributions. For Plan Years beginning before January 1, 1989, a Participant's vested Account balance shall not include accumulated deductible contributions within the meaning of Section 72(o)(5)(B) of the Code.
Special Rule in the Event of a Withdrawal. If a withdrawal pursuant to Section 12.2, 12.3 or 12.4 is made from a Participant's Employer Contribution Account or Employer Matching Account before the Account is fully vested, and the Participant may increase the vested percentage in the Account, then a separate account will be established at the time of the withdrawal, and at any relevant time after the withdrawal the vested portion of the separate account will be equal to the amount "X" determined by the following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the withdrawal.
Vesting Election. If the Plan is amended to change any
vesting schedule, or is amended in any way that directly or
indirectly affects the computation of a Participant's vested
percentage, each Participant who has completed not less than
three Years of Service may elect, within a reasonable period
after the adoption of the amendment or change, in a writing filed
with the Employer to have his vested percentage computed under
the Plan without regard to such amendment. For a Participant who
is not credited with at least one Hour of Service in a Plan Year
beginning after December 31, 1988, the preceding sentence shall
be applied by substituting "five Years of Service" for "three
Years of Service." 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) 60 days
after the amendment is adopted; (b) 60 days after the amendment
becomes effective; or (c) 60 days after the Participant is issued
written notice of the amendment by the Employer.
ARTICLE PAYMENT OF BENEFITS
Distribution of Accounts. A Participant or Beneficiary who has become eligible for a distribution of benefits pursuant to Article 7 may elect to receive such benefits at any time, subject to the terms and conditions of this Article 9, Article 10 and Article 11. Unless a Participant or Beneficiary elects otherwise, distribution of benefits will begin no later than the 60th day after the end of the Plan Year in which the latest of the following events occurs:
The Participant attains age 65 (or if earlier, the normal retirement age specified by the Employer in the Plan Agreement); or
The tenth anniversary of the year in which the Participant commenced participation in the Plan; or
The Participant's employment with the Affiliated Employers terminates.
A Beneficiary who is the surviving spouse of a Participant may elect to have distribution of benefits begin within the 90-day period following the Participant's death.
For purposes of this Section 9.1, the failure of a
Participant (and his spouse, if spousal consent is required
pursuant to Article 10) to consent to a distribution while a
benefit is "immediately distributable" within the meaning of
Section 9.2 shall be considered an election to defer commencement
of payment. If the Employer has so specified in the Plan
Agreement, the vested portion of a Participant's Accounts will be
distributed in a lump sum in cash no later than 60 days after the
end of the Plan Year in which his employment terminates, if at
the time the Participant first became entitled to a distribution
the value of such vested portion derived from Employer and
Employee contributions does not exceed $3,500. Commencement of
distributions in any case shall be subject to Section 9.4.
Restriction on Immediate Distributions. A Participant's account balance is considered "immediately distributable" if any part of the account balance could be distributed to the Participant (or his surviving spouse) before the Participant attains, or would have attained if not deceased, the later of the normal retirement age specified in the Plan Agreement or age 62.
If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and his spouse (or where either the Participant or the spouse has died), the survivor must consent to any such distribution, unless an exception described in paragraph (b) applies. The consent of the Participant and his spouse shall be obtained in writing within the 90-day period ending on the annuity starting date, which is the first day of the first period for which an amount is paid as an annuity (or any other form). The Plan Administrator shall notify the Participant and the spouse, no less than 30 days and no more than 90 days before the annuity starting date, 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 of the optional forms of benefit available under the Plan and an explanation of their relative values, in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the required notification is given, provided that:
the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and
the Participant, after receiving the notice, affirmatively elects a distribution.
Notwithstanding paragraph (a), only the
Participant need consent to the commencement of a
distribution in the form of a 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 10.1(b) 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 spouse shall be required to the extent that a
distribution is required to satisfy Section 401(a)(9) or
Section 415 of the Code. In addition, upon termination of
the Plan, if the Plan does not offer an annuity option
purchased from a commercial provider), and no Affiliated
Employer maintains another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code), a Participant's account balance
shall be distributed to the Participant without his consent.
If any Affiliated Employer maintains another defined
contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), a
Participant's account balance shall be transferred to that
defined contribution plan without his consent, unless he
consents to an immediate distribution. 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(o)(5)(B) of
the Code.
Optional Forms of Distribution. Provided that the Employer has so elected in the Plan Agreement, if at the time a Participant first becomes entitled to a distribution the value of his vested Account balance derived from Employer and Employee contributions does not exceed $3,500, distribution shall be made in a lump sum in cash. Subject to the preceding sentence and to the rules of Article 10 concerning joint and survivor annuities, a Participant or Beneficiary may elect to receive benefits in any of the following optional forms:
A lump sum payment. If a Participant's Accounts are invested in Employer Stock, a lump sum payment may be made in cash or in Employer Stock or in a combination of both;
A series of installments over a period certain that meets the requirements of Article 11;
A nontransferable annuity contract, purchased by the Plan Administrator from a commercial provider, with terms complying with the requirements of Article 11; provided, however, that an annuity for the life of any person shall be available as an optional form of distribution only if the Employer has so elected in the Plan Agreement; or
In the event that the Plan is adopted as an
amendment to an existing plan, any optional form of
distribution available under the existing plan. Such
optional forms of distribution may be made available where
necessary through the purchase by the Plan Administrator of
an appropriate annuity contract in accordance with paragraph
(c). If the Plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, target benefit
plan, stock bonus plan, or profit sharing plan which is
subject to the survivor annuity requirements of
Sections 401(a)(11) and 417 of the Code, the provisions of
Article 10 shall apply.
Distribution Procedure. The Trustee shall make or commence distributions to or for the benefit of Participants only on receipt of an instruction from the Employer in writing or by such other means as shall be acceptable to the Trustee, certifying that a distribution of a Participant's benefits is payable pursuant to the Plan, and specifying the time and manner of payment. The amount to be distributed shall be determined as of the Valuation Date coincident with or next following the Employer's order. The Trustee shall be fully protected in acting upon the directions of the Employer in making benefit distributions, and shall have no duty to determine the rights or benefits of any person under the Plan or to inquire into the right or power of the Employer to direct any such distribution. The Trustee shall be entitled to assume conclusively that any determination by the Employer with respect to a distribution meets the requirements of the Plan. The Trustee shall not be required to make any payment hereunder in excess of the net realizable value of the assets of the Account in question at the time of such payment, nor to make any payment in cash unless the Employer has furnished instructions as to the assets to be converted to cash for the purposes of making payment.
Lost Distributee. In the event that the Plan
Administrator is unable with reasonable effort to locate a person
entitled to distribution under the Plan, the Accounts
distributable to such a person shall become a Forfeiture at the
end of the third Plan Year after the Plan Administrator's efforts
to locate such person began; provided, however, that the amount
of the Forfeiture shall be restored in the event that such person
thereafter submits a claim for benefits under the Plan. Such
restoration will be made, first, from the amount of Forfeitures
available for reallocation as of the last day of the Plan Year in
which the claim is made, to the extent thereof; and to the extent
that Forfeitures are not available or are insufficient to restore
the balance, from contributions made by the Employer pursuant to
Section 4.1(e). A Forfeiture occurring under this Section 9.5
shall be reallocated as though it were an Employer contribution.
Direct 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 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 Section 9.6, the following definitions shall apply:
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 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 distributees and the distributee's Designated Beneficiary (as defined in Section 11.3), 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, and 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).
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 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. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.
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 Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are distributees with regard to the interest of the spouse or former spouse.
Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
Distributions Required by a Qualified Domestic Relations
Order. To the extent required by a Qualified Domestic Relations
Order, the Plan Administrator shall make distributions from a
Participant's Accounts to any alternate payee named in such order
in a manner consistent with the distribution options otherwise
available under the Plan, regardless of whether the Participant
is otherwise entitled to a distribution at such time under the
Plan.
ARTICLE JOINT AND SURVIVOR ANNUITY REQUIREMENTS
Applicability.
Generally. The provisions of Sections 10.2
through 10.5 shall generally apply to a Participant who is
credited with at least one Hour of Service on or after
August 23, 1984, and such other Participants as provided in
Section 10.6.
Exception for Certain Plans. The provisions of Sections 10.2 through 10.5 shall not apply to a Participant if: (i) the Participant does not or cannot elect payment of benefits in the form of a life annuity, and (ii) on the death of the Participant, his Vested Account Balance will be paid to his surviving spouse (unless there is no surviving spouse, or the surviving spouse has consented to the designation of another Beneficiary in a manner conforming to a Qualified Election) and the surviving spouse may elect to have distribution of the Vested Account Balance (adjusted in accordance with Section 13.4 for gains or losses occurring after the Participant's death) commence within the 90-day period following the date of the Participant's death. The Participant may waive the spousal death benefit described in this paragraph (b) at any time, provided that no such waiver shall be effective unless it satisfies the conditions applicable under Section 10.4(c) to a Participant's waiver of a Qualified Preretirement Survivor Annuity. The exception in this paragraph (b) shall not be operative with respect to a Participant in a profit sharing plan if the Plan:
is a direct or indirect transferee of a defined benefit plan, money purchase pension plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code; or
is adopted as an amendment of a plan that did not qualify for the exception in this paragraph (b) before the amendment was adopted.
For purposes of this paragraph (b), Vested Account Balance shall have the meaning provided in Section 10.4(f). The provisions of Sections 10.2 through 10.6 set forth the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code.
Exception for Certain Amounts. The provisions of
Sections 10.2 through 10.5 shall not apply to any
distribution made on or after the first day of the first
Plan Year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated
deductible employee contributions as defined in Section
72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan or a target
benefit plan, provided that the exceptions applicable to
certain profit sharing plans under paragraph (b) are
applicable with respect to the separate account (for this
purpose, Vested Account Balance means the Participant's
separate account balance attributable solely to accumulated
deductible employee contributions within the meaning of
Section 72(o)(5)(B) of the Code).
Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a Qualified Election within the 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 life annuity. In either case, the Participant may elect to have such an annuity distributed upon his attainment of the Earliest Retirement Age under the Plan.
Qualified Preretirement Survivor Annuity. Unless an
optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, the Vested Account
Balance of a Participant who dies before the Annuity Starting
Date shall be applied toward the purchase of an annuity for the
life of his surviving spouse (a "Qualified Preretirement Survivor
Annuity"). The surviving spouse may elect to have such an
annuity distributed within a reasonable period after the
Participant's death. For purposes of this Article 10, the term
"spouse" means the current spouse or surviving spouse of a
Participant, except 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.
Definitions. The following definitions apply:
"Election Period" means the period beginning on
the first day of the Plan Year in which a Participant
attains age 35 and ending on the date of the Participant's
death. If a Participant separates from service before the
first day of the Plan Year in which he reaches age 35, the
Election Period with respect to his account balance as of
the date of separation shall begin on the date of
separation. A Participant who will not attain age 35 as of
the end of a 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 35. Such an election shall not be valid
unless the Participant receives a written explanation of the
Qualified Preretirement Survivor Annuity in such terms as
are comparable to the explanation required under Section
10.5. Qualified Preretirement Survivor Annuity coverage
will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new
waiver on or after that date shall be subject to the full
requirements of this article.
"Earliest Retirement Age" means the earliest date on which the Participant could elect to receive Retirement benefits under the Plan.
"Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any such waiver shall not be effective unless: (1) the Participant's spouse consents in writing to the waiver; (2) the waiver designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent); (3) the spouse's consent acknowledges the effect of the waiver; and (4) 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 waiver designates a form of benefit payment which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent). If it 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 these provisions (and any establishment that the consent of a spouse may not be obtained) shall be effective only with respect to the particular spouse involved. A consent that permits designations by the Participant without any requirement of further consent by the spouse must acknowledge that the spouse has the right to limit the 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 those rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at 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 Section 10.5.
"Qualified Joint and Survivor Annuity" means an immediate annuity for the life of a Participant, with a survivor annuity for the life of the spouse which is not less than 50% and not more than 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 that can be purchased with the Participant's Vested Account Balance. The percentage of the survivor annuity under the Plan shall be 50%.
"Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity (or any other form).
"Vested Account Balance" means the aggregate value of the Participant's vested account balance 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 10 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.
"Straight life annuity" means an annuity payable in equal installments for the life of the Participant that terminates upon the Participant's death.
Notice Requirements. In the case of a Qualified Joint and Survivor Annuity, no less than 30 days (or such other period permitted by law) and no more than 90 days before a Participant's Annuity Starting Date the Plan Administrator shall provide to him a written explanation of (i) the terms and conditions of a Qualified Joint and Survivor Annuity, (ii) the Participant's right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity form of benefit, (iii) the rights of the Participant's spouse, and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity.
In the case of a Qualified Preretirement Survivor Annuity, within the applicable period for a Participant the Plan Administrator shall provide to him a written explanation of the Qualified Preretirement Survivor Annuity, in terms and manner comparable to the requirements applicable to the explanation of a Qualified Joint and Survivor Annuity as described in the preceding paragraph. 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 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after an individual becomes a Participant; (iii) a reasonable period ending after this Article 10 first applies to the Participant. Notwithstanding the foregoing, in the case of a Participant who separates from service before attaining age 35, notice must be provided within a reasonable period ending after his separation from service.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described in
(ii) and (iii) is the end of the two-year period beginning one
year before the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates
from service before the Plan Year in which he reaches age 35,
notice shall be provided within the two-year period beginning one
year before the separation and ending one year after the
separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for the
Participant shall be redetermined.
Transitional Rules.
Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the preceding Sections of this Article 10, must be given the opportunity to elect to have those Sections apply if the Participant is credited with at least one Hour of Service under the Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and the Participant had at least ten years of vesting service when he or she separated from service.
Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under the Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with paragraph (d) of this Section 10.6.
The respective opportunities to elect (as described in paragraphs (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to be paid to those Participants.
Any Participant who has so elected pursuant to paragraph (b) of this Section 10.6, and any Participant who does not elect under paragraph (a), or who meets the requirements of paragraph (a) except that he does not have at least ten years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements, if his benefits would otherwise have been payable in the form of a life annuity:
Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a married Participant who:
begins to receive payments under the Plan on or after normal retirement age; or
dies on or after normal retirement age while still working for the Employer; or
begins to receive payments on or after the qualified early retirement age; or
separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits;
then such benefits will be received under the Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period, which must begin at least six months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time.
Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect during the election period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment.
For purposes of this Section 10.6, qualified
early retirement age is the latest of the earliest date
under the Plan on which the Participant may elect to
receive Retirement benefits, the first day of the 120th
month beginning before the Participant reaches normal
retirement age, or the date the Participant begins
participation.
ARTICLE MINIMUM DISTRIBUTION REQUIREMENTS
General Rules. Subject to Article 10, Joint and Survivor
Annuity Requirements, the requirements of this Article 11 shall
apply to any distribution of a Participant's interest and will
take precedence over any inconsistent provisions of the Plan.
All distributions required under this Article 11 shall be
determined and made in accordance with the Income Tax Regulations
issued under Section 401(a)(9) of the Code (including proposed
regulations, until the adoption of final regulations), including
the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
Required Beginning Date. The entire interest of a Participant must be distributed, or begin to be distributed, no later than the Participant's required beginning date, determined as follows.
General Rule. 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 70 1/2.
Transitional Rules. The required beginning date
of a Participant who attains age 70 1/2 before January 1,
1988,
shall be determined in accordance with (1) or (2) below:
Non-5% owners. The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of his Retirement or his attainment of age 70 1/2 occurs.
5% owners. The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of:
the calendar year in which the Participant attains age 70 1/2, or
the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant who is not
a 5% owner, who attains age 70 1/2 during 1988 and who has
not
retired as of January 1, 1989, is April 1, 1990.
Rules for 5% Owners. A Participant is treated as a 5% owner for purposes of this Section 11.2 if he is a 5% owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top heavy) at any time during the Plan Year ending with or within the calendar year in which he attains age 66 1/2, or any subsequent Plan Year. Once distributions have begun to a 5% owner under this Section 11.2, they must continue, even if the Participant ceases to be a 5% owner in a subsequent year.
Limits on Distribution Periods. As of the first Distribution Calendar Year, distributions not made in a single sum may be made only over one or a combination of the following periods:
the life of the Participant,
the life of the Participant and his Designated Beneficiary,
a period certain not extending beyond the Life Expectancy of the Participant, or
a period certain not extending beyond the Joint and Last Survivor Expectancy of the Participant and his Designated Beneficiary.
"Designated Beneficiary" means the individual who is
designated as the Beneficiary under the Plan in accordance with
Section 401(a)(9) of the Code and the regulations issued
thereunder (including proposed regulations, until the adoption of
final regulations) and Section 7.2.
"Distribution Calendar Year" means a calendar year for which a minimum distribution is required under Section 401(a)(9) of the Code and this Section 11.3. For distributions 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 11.5.
"Life Expectancy" and "Joint and Last Survivor Expectancy" are 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 his spouse, in the case of distributions described in Section 11.5(b)) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Any such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy of a nonspouse beneficiary may not be recalculated.
Determination of Amount to Be Distributed Each Year. If
the Participant's 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. Paragraphs (a) through
(d) apply to distributions in forms other than the purchase of an
annuity contract.
If a Participant's Benefit (as defined below) is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and his Designated Beneficiary, or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar 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 (as defined below).
For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant.
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 (1) the Applicable Life Expectancy or (2) 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 Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the Applicable Life Expectancy in paragraph (a) above as the relevant divisor, without regard to Proposed Regulations Section 1.401(a)(9)-2.
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.
If the Participant's Benefit is distributed in the form of an annuity contract 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 regulations issued thereunder (including proposed regulations, until the adoption of final regulations).
"Applicable Life Expectancy" means 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 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. If annuity payments commence in accordance with Section 11.4(e) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest in the Plan, the applicable calendar year is the year of purchase.
"Participant's Benefit" means the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year), increased by the amount of any contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. For purposes of the preceding sentence, 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 Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year.
Death Distribution Provisions.
Distribution Beginning before Death. If the Participant dies after distribution of his interest has begun, the remaining portion of his interest will continue to be distributed at least as rapidly as under the method of distribution being used before the Participant's death.
Distribution Beginning after Death. If the Participant dies before distribution of his interest begins, distribution of his entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below:
If any portion of the Participant's interest is payable to a Designated Beneficiary, distributions may be made over the Designated Beneficiary's 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; or
If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this Section 11.5 by the time of his 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 11.5, or (ii) December 31 of the calendar year which contains the fifth 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 anniversary of the Participant's death.
For purposes of paragraph (b), if the surviving spouse dies after the Participant, but before payments to the spouse begin, the provisions of paragraph (b), with the exception of subparagraph (2) therein, shall be applied as if the surviving spouse were the Participant.
For purposes of this Section 11.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse of the Participant if the amount becomes payable to the surviving spouse when the child reaches the age of majority.
For the purposes of this Section 11.5, distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if paragraph (c) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to paragraph (b) above). If distribution in the form of an annuity contract described in Section 11.4(e) irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences.
Transitional Rule. Notwithstanding the other requirements of this Article 11, and subject to the requirements of Article 10, Joint and Survivor Annuity Requirements, distribution on behalf of any Participant, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences):
The distribution is one which would not have disqualified the Trust under Section 401(a)(9) of the Internal Revenue Code of 1954 as in effect before its amendment by the Deficit Reduction Act of 1984.
The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of the Employee.
The designation specified in paragraph (b) was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984.
The Employee had accrued a benefit under the Plan as of December 31, 1983.
The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority.
A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary to whom such distribution is being made will be presumed to have designated the method of distribution under which the distribution is being made, if the method of distribution was specified in writing and the distribution satisfies the requirements in paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of the Code
and the regulations thereunder. If a designation is revoked
after the date distributions are required to begin, the Trust
must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been
distributed to satisfy Section 401(a)(9) of the Code and the
regulations thereunder, but for the designation described in
paragraphs (b) through (e). For calendar years beginning after
December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any
changes in the designation generally will be considered to be a
revocation of the designation, but the mere substitution or
addition of another beneficiary (one not named in the
designation) under the designation will not be considered to be a
revocation of the designation, so long as the substitution or
addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life). In the case
of an amount transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l
of the Proposed Income Tax Regulations shall apply.
ARTICLE WITHDRAWALS AND LOANS
Withdrawals from Participant Contribution Accounts. Subject to the requirements of Article 10, a Participant may upon written notice (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) to the Employer withdraw any amount from his Participant Contribution Account. A withdrawn amount may not be repaid to the Plan. No Forfeiture will occur solely as a result of an Employee's withdrawal from a Participant Contribution Account.
Withdrawals on Account of Hardship.
If the Employer has so elected in the Plan Agreement, upon a Participant's written request (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), the Plan Administrator may permit a withdrawal of funds from the vested portion of the Participant's Accounts on account of the Participant's financial hardship, which must be demonstrated to the satisfaction of the Plan Administrator, provided, that no hardship withdrawal shall be made from a Qualified Nonelective Contribution Account or Qualified Matching Account. In considering such requests, the Plan Administrator shall apply uniform standards that do not discriminate in favor of Highly Compensated Employees. If hardship withdrawals are permitted from more than one of the Elective Deferral Account, Rollover Account, Employer Matching Account, and Employer Contribution Account, they shall be made first from a Participant's Elective Deferral Account, then from his Rollover Account, then from his Employer Matching Account, and finally from his Employer Contribution Account, as applicable. A withdrawn amount may not be repaid to the Plan.
The maximum amount that may be withdrawn on
account of hardship from an Elective Deferral Account after
December 31, 1988, shall not exceed the sum of (1) the
amount credited to the Account as of December 31, 1988, and
(2) the aggregate amount of the Elective Deferrals made by
the Participant after December 31, 1988, and before the
hardship withdrawal.
Hardship withdrawals shall be permitted only on account of the following financial needs:
Expenses for medical care described in
Section 213(d) of the Code for the Participant, his
spouse, children and dependents, or necessary for these
persons to obtain such care;
Purchase of the principal residence of the Participant (excluding regular mortgage payments);
Payment of tuition and related educational fees and room and board expenses for the upcoming 12 months of post-secondary education for the Participant, his spouse, children or dependents; or
Payments necessary to prevent the Participant's eviction from, or the foreclosure of a mortgage on, his principal residence.
Hardship withdrawals shall be subject to the
spousal consent requirements contained in Sections
411(a)(11) and 417 of the Code, to the same extent that
those requirements apply to a Participant pursuant to
Section 10.1.
A hardship withdrawal will be made to a Participant only upon satisfaction of the following conditions:
The Participant has obtained all nontaxable loans and all distributions other than hardship withdrawals available to him from all plans maintained by the Affiliated Employers;
The hardship withdrawals does not exceed the amount of the Participant's financial need as described in paragraph (c) plus any amounts necessary to pay federal, state and local income taxes and penalties reasonably anticipated to result from the withdrawals;
With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the Participant's Elective Deferrals and voluntary after-tax contributions will be suspended for a period of 12 months following his receipt of a hardship withdrawal; and
With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the amount of Elective Deferrals that the Participant may make in his taxable year immediately following the year of a hardship withdrawal will not exceed the applicable limit under Section 402(g) of the Code for the taxable year, reduced by the amount of Elective Deferrals made by the Participant in the taxable year of the hardship withdrawal.
Withdrawals After Reaching Age 59 1/2. If so specified by the Employer in the Plan Agreement, a Participant who has reached age 59 1/2 may upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) withdraw during his employment any amount not exceeding the vested balance of his Accounts. A withdrawn amount may not be repaid to the Plan.
Other Withdrawals. If so elected by the Employer in the Plan Agreement, a Participant may make a withdrawal from his Employer Contribution Account or Employer Matching Account for any reason upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), provided that (a) the Participant has been a Participant for at least five years, or (b) the withdrawal from such Account is limited to the excess of the balance of such Account on the date of the withdrawal over the aggregate of the amounts credited to such Account during the two year period immediately preceding the date of such withdrawal. No such withdrawal shall exceed the vested portion of the Participant's Account from which the withdrawal is made. A withdrawn amount may not be repaid to the Plan.
Loans. If the Employer has so elected in the Plan Agreement, the Employer may direct the Trustee to make a loan to a Participant or Beneficiary from the vested portion of his Accounts, subject to the following terms and conditions and to such reasonable additional rules and regulations as the Plan Administrator may establish for the orderly operation of the program:
The Plan Administrator shall administer the loan program subject to the terms and conditions of this Section 12.5.
A Participant's or Beneficiary's request for a loan shall be submitted to the Plan Administrator by means of a written application on a form supplied by the Plan Administrator (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). Applications shall be approved or denied by the Plan Administrator on the basis of its assessment of the borrower's ability to collateralize and repay the loan, as revealed in the loan application.
Loans shall be made to all Participants and Beneficiaries on a reasonably equivalent basis. Loans shall not be made available to Highly Compensated Employees (as defined in Section 414(q) of the Code) in amounts greater than the amounts made available to other Employees (relative to the borrower's Account balance).
Loans must be evidenced by the Participant's promissory note for the amount of the loan payable to the order of the Trustee, and adequately secured by assignment of not more than fifty percent (50%) of the Participant's entire right, title and interest in and to the Trust Fund, exclusive of any asset as to which Putnam is not the Trustee.
Loans must bear a reasonable interest rate comparable to the rate charged by commercial lenders in the geographical area for similar loans. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates is justified by conditions that would customarily be taken into account by a commercial lender in the Employer's geographical area.
The period for repayment for any loan shall not exceed five years, except in the case of a loan used to acquire a dwelling unit which within a reasonable time is to be used as the principal residence of the Participant, in which case the repayment period may exceed five years. The terms of a loan shall require that it be repaid in level payments of principal and interest not less frequently then quarterly throughout the repayment period, except that alternative arrangements for repayment may apply in the event that the borrower is on unpaid leave of absence for a period not to exceed one year.
To the extent that a Participant would be required
under Article 10 to obtain the consent of his spouse to a
distribution of an immediately distributable benefit other
than a Qualified Joint and Survivor Annuity, the consent of
the Participant's spouse shall be required for the use of
his Account as security for a loan. The spouse's consent
must be obtained no earlier than the beginning of the 90-day
period that ends on the date on which the loan is to be so
secured, and obtained in accordance with the requirements of
Section 10.4(c) for a Qualified Election. Any such consent
shall thereafter be binding on the consenting spouse and any
subsequent spouse of the Participant. A new consent shall
be required for use of the Account as security for any
extension, renewal, renegotiation or revision of the
original loan.
If valid spousal consent has been obtained in accordance with Section 12.5(g), then notwithstanding any other provision of the 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. If less than 100% of the Participant's vested 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 vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse.
In the event of default on a loan by a Participant who is an active Employee, foreclosure on the Participant's Account as security will not occur until the Employer has reported to the Trustee the occurrence of an event permitting distribution from the Plan in accordance with Article 9 or Section 5.13.
No loan shall be made to an Owner-Employee or a Shareholder-Employee unless a prohibited transaction exemption is obtained by the Employer.
No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated.
Loans shall be considered investments directed by a Participant pursuant to Section 13.3. The amount loaned shall be charged solely against the Accounts of the Participant, and repaid amounts and interest shall be credited solely thereto.
Procedure; Amount Available. Withdrawals and loans shall be made subject to the terms and conditions applicable to distributions pursuant to Section 9.4, except that the amount of any withdrawal or loan shall be determined by reference to the vested balance of the Participant's Account as of the most recent Valuation Date preceding the withdrawal or loan, and shall not exceed the amount of the vested account balance.
Protected Benefits. Notwithstanding any provision to the
contrary, if an Employer amends an existing retirement plan
("prior plan") by adopting this Plan, to the extent any
withdrawal option or form of payment available under the prior
plan is an optional form of benefit within the meaning of Code
Section 411(d)(6), such option or form of payment shall continue
to be available to the extent required by such Code Section.
Restrictions Concerning Transferred Assets.
Notwithstanding any provision to the contrary, if an Employer
amends an existing defined benefit or money purchase pension plan
("prior pension plan") by adopting this Plan, accrued benefits
attributable to the assets and liabilities transferred from the
prior pension plan (which accrued benefits include the account
balance of such Participant in the Plan attributable to such
accrued benefits as of the date of the transfer and any earnings
on such account balance subsequent to the transfer) shall be
distributable only on or after the events upon which
distributions are or were permissible under the prior pension
plan.
ARTICLE TRUST FUND AND INVESTMENTS
Establishment of Trust Fund. The Employer and the Trustee hereby agree to the establishment of a Trust Fund consisting of all amounts as shall be contributed or transferred from time to time to the Trustee pursuant to the Plan, and all earnings thereon. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan, and no such assets shall ever revert to the Employer, except that:
contributions made by the Employer by mistake of fact, as determined by the Employer, may be returned to the Employer within one (1) year of the date of payment,
contributions that are conditioned on their deductibility under Section 404 of the Code may be returned to the Employer, to the extent disallowed, within one (1) year of the disallowance of the deduction,
contributions that are conditioned on the initial qualification of the Plan under the Code, and all investment gains attributable to them, may be returned to the Employer within one (1) year after such qualification is denied by determination of the Internal Revenue Service, but only if an application for determination of such qualification is made within the time prescribed by law for filing the Employer's federal income tax return for its taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe, and
amounts held in a suspense account may be returned to the Employer on termination of the Plan, to the extent that they may not then be allocated to any Participant's Account in accordance with Article 6.
All Employer contributions under the Plan other than those made pursuant to Section 4.1(e) are hereby expressly conditioned on the initial qualification of the Plan and their deductibility under the Code. Investment gains attributable to contributions returned pursuant to Subsections (a) and (b) shall not be returned to the contributing Employer, and investment losses attributable to such contributions shall reduce the amount returned.
Management of Trust Fund. The assets of the Trust Fund shall be held in trust by the Trustee and accounted for in accordance with this Article 13, and shall be invested in accordance with Section 13.3 in the Investment Products specified by the Employer in the Plan Agreement and from time to time thereafter in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). The Employer shall have the exclusive authority and discretion to select the Investment Products available under the Plan. In making that selection, the Employer shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Employer shall cause the available Investment Products to be diversified sufficiently to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. It is especially intended that the Trustee shall have no discretionary authority to determine the investment of Trust assets. Notwithstanding the foregoing, assets of the Trust Fund shall also be invested in Employer Stock if so elected by the Employer and agreed to by Putnam under the service agreement executed by the Employer and Putnam pursuant to the establishment of the Plan.
Investment Instructions. All amounts held in the Trust Fund under the Plan shall be invested in Investment Products. If the Employer has elected in the Plan Agreement to make investment decisions with respect to Elective Deferrals, Participant Contributions, Rollover Contributions, Profit Sharing and other Employer Contributions, Employer Matching Contributions, Deductible Employee Contributions, Qualified Matching Contributions and/or Qualified Nonelective Contributions, investment instructions as to the Accounts for such contributions shall be the fiduciary responsibility of the Employer, and each of such affected Accounts shall have a pro rata interest in all assets of the Trust to which the Employer's instructions apply. To the extent the Employer has not elected to make investment decisions for all of the Accounts of the Plan, then assets of the Trust over which the Employer has not elected to make investment decisions shall be invested solely in accordance with the instructions of the Participant to whose Accounts they are allocable, as delivered to Putnam in accordance with its service agreement with the Employer. Instructions shall apply to future contributions, past accumulations, or both, according to their terms, and shall be communicated by the Employer to Putnam in accordance with procedures prescribed in the service agreement between the Employer and Putnam. Instructions shall be effective prospectively, coincident with or within a reasonable time after their receipt in good order by Putnam. An instruction once received shall remain in effect until it is changed by the provision of a new instruction. New instructions shall be accepted by Putnam at the time and in the manner provided in the Plan Agreement. To the extent any assets of the Trust are to be invested solely in accordance with the instructions of the Participants, the Plan is intended to constitute a plan described in section 404(c) of ERISA and Title 29 of the Code of Federal Regulations section 2550.404c-1. In such case, the Employer shall be the Plan fiduciary responsible for providing the Participants with all information required to be given pursuant to ERISA section 404(c) and Title 29 of the Code of Federal Regulations section 2550.404c-1.
In the event that the Employer adopts a Putnam prototype
plan as an amendment to or restatement of an existing plan, the
Employer shall specify one or more Investment Products to serve
as the sole investments for all Participants' Accounts during the
period in which existing records of the Plan are transferred to
the Recordkeeper. During that period, new investment
instructions as to existing assets of the Plan cannot be carried
out, nor can distributions be made from the Plan except to the
extent permitted under the terms of the service agreement between
the Employer and Putnam. The Employer and the Recordkeeper shall
use their best efforts to minimize the duration of the period to
which the preceding sentence applies.
To the extent specifically authorized and provided in the
service agreement between the Employer and Putnam, the Employer
may direct the Trustee to establish as an Investment Product a
fund all of the assets of which shall be invested in shares of
stock of the Employer that constitute "qualifying employer
securities" within the meaning of section 407(d)(5) of ERISA
("Employer Stock"). The Plan Administrator as named fiduciary
shall continually monitor the suitability of acquiring and
holding Employer Stock under the fiduciary duty rules of section
404(a)(1) of ERISA (as modified by section 404(a)(2) of ERISA)
and the requirements of section 404(c) of ERISA, and shall be
responsible for ensuring that the procedures relating to the
purchase, holding and sale of Employer Stock, and the exercise of
any and all rights with respect to such Employer Stock shall be
in accordance with section 404(c) of ERISA unless the Employer
retains voting, tender or similar rights with respect to the
Employer Stock. The Trustee shall not be liable for any loss, or
by reason of any breach, which arises from the direction of the
Plan Administrator with respect to the acquisition and holding of
Employer Stock. The Employer shall be responsible for
determining whether, under the circumstances prevailing at a
given time, its fiduciary duty to Plan Participants and
Beneficiaries under the Plan and ERISA requires that the Employer
follow the advice of independent counsel as to the voting and
tender or retention of Employer Stock.
Putnam shall be under no duty to question or review the directions given by the Employer or to make suggestions to the Employer in connection therewith. Putnam shall not be liable for any loss, or by reason of any breach, that arises from the Employer's exercise or non-exercise of rights under this Article 13, or from any direction of the Employer unless it is clear on the face of the direction that the actions to be taken under the direction are prohibited by the fiduciary duty rules of Section 404(a) of ERISA. All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of, securities or other property held in an investment fund shall be credited to and reinvested in such investment fund, and all expenses of the Trust that are properly allocated to a particular investment fund shall be so allocated and charged. The Employer may at any time direct Putnam to eliminate any investment fund or funds, and Putnam shall thereupon dispose of the assets of such investment fund and reinvest the proceeds thereof in accordance with the directions of the Employer.
Neither the Employer nor the Trustee nor Putnam shall be responsible for questioning any instructions of a Participant or for reviewing the investments selected therein, or for any loss resulting from instructions of a Participant or from the failure of a Participant to provide or to change instructions. Neither Putnam nor the Trustee shall have any duty to question any instructions received from the Employer or a Participant or to review the investments selected thereby, nor shall Putnam or the Trustee be responsible for any loss resulting from instructions received from the Employer or a Participant or from the failure of the Employer or a Participant to provide or to change instructions. In the event that Putnam or the Trustee receives a contribution under the Plan as to which no instructions are delivered, or such instructions as are delivered are unclear to Putnam or the Trustee, such contribution shall be invested until clear instructions are received in the default investment option set forth in the service agreement between the Employer and Putnam, or if no such option is so set forth, the Employer, by execution of the Plan Agreement, shall affirmatively elect to have such contributions invested in the Putnam Money Market Fund. Neither Putnam nor the Trustee shall have any discretionary authority or responsibility in the investment of the assets of the Trust Fund.
Valuation of the Trust Fund. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund, and the net earnings or losses and expenses of the Trust Fund for the period elapsed since the most recent previous Valuation Date shall be allocated among the Accounts of Participants. Earnings, losses and expenses which pertain to investments which are specifically held for a given Participant's Account shall be allocated solely to that Account. In the event that an investment is not specifically held for a given Participant's Account, the earnings, losses and expenses pertaining to that investment shall be allocated among all Participants' Accounts in the ratio that each such Account bears to the total of all Accounts of all Participants. Each Participant's Accounts shall be adjusted pursuant to this Section 13.4 until such time as they are either fully distributed or forfeited, regardless of whether the Participant continues to be an Employee.
Distributions on Investment Company Shares. Subject to
Section 9.3, all dividends and capital gains or other
distributions received on any Investment Company Shares credited
to Participant's Account will (unless received in additional
Investment Company Shares) be reinvested in full and fractional
shares of the same Investment Company at the price determined as
provided in the then current prospectus of the Investment
Company. The shares so received or purchased upon such
reinvestment will be credited to such accounts. If any dividends
or capital gain or other distributions may be received on such
Investment Company Shares at the election of the shareholder in
additional shares or in cash or other property, the Trustee will
elect to receive such dividends or distributions in additional
Investment Company Shares.
Registration and Voting of Investment Company Shares. All Investment Company Shares shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law, the Trustee will transmit to the Employer copies of any notices of shareholders' meetings, proxies and proxy- soliciting materials, prospectuses and the annual or other reports to shareholders, with respect to Investment Company Shares held in the Trust Fund. The Trustee shall act in accordance with directions received from the Employer with respect to matters to be voted upon by the shareholders of the Investment Company. Such directions must be in writing on a form approved by the Trustee, signed by the Employer and delivered to the Trustee within the time prescribed by it. The Trustee will not vote Investment Company Shares as to which it receives no written directions.
Investment Manager. The Employer, with the consent of Putnam, may appoint an investment manager, as defined in Section 3(38) of ERISA with respect to all or a portion of the assets of the Trust Fund. The Trustee shall have no liability in connection with any action or nonaction pursuant to directions of such an investment manager.
Employer Stock.
Voting Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(a) shall govern the voting of Employer Stock held by Putnam as Trustee under the Plan. The Trustee shall vote Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of Employer Stock and shall direct the Trustee as to the voting of Employer Stock in accordance with the provisions of this Section 13.8(a). In either case, the Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting of Employer Stock. The remainder of this Section 13.8(a) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the voting of Employer Stock. For purposes of this Section 13.8(a), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock.
When the issuer of Employer Stock files preliminary proxy solicitation materials with the Securities and Exchange Commission, the Employer shall cause a copy of all the materials to be simultaneously sent to the Trustee, and the Trustee shall prepare a voting instruction form based upon these materials. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the number of full and fractional shares of Employer Stock credited to the Participant's Accounts, whether or not vested. For purposes of this Section 13.8(a), the number of shares of Employer Stock deemed credited to a Participant's Accounts shall be determined as of the date of record determined by the Employer for which an allocation has been completed and Employer Stock has actually been credited to Participant's Accounts. Procedures for the execution of purchases and sales of Employer Stock shall be as set forth in the service agreement between the Employer and Putnam. The Employer shall provide the Trustee with a copy of any materials provided to Participants and shall certify to the Trustee that the materials have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee as to the manner in which to vote that number of shares of Employer Stock held under the Plan (whether or not vested) equal to a fraction, of which the numerator is the number of shares of Employer Stock credited to his Account and the denominator is the number of shares of Employer Stock credited to all Participants' Accounts. Such directions shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) and shall be held in confidence by the Trustee and not divulged to the Employer, or any officer or employee thereof, or any other persons. Upon its receipt of directions, the Trustee shall vote the shares of Employer Stock as directed by the Participant. The Trustee shall not vote those shares of Employer Stock credited to the Accounts of Participants for which no voting directions are received. With respect to shares of Employer Stock held in the Trust which are not credited to a Participant's Account, the Plan Administrator shall retain the status of named fiduciary and shall direct the voting of such Employer Stock.
Tendering Rights. Notwithstanding any other
provision of the Plan, the provisions of this Section
13.8(b) shall govern the tendering of Employer Stock by
Putnam as Trustee under the Plan. In the event of a tender
offer, the Trustee shall tender Employer Stock in accordance
with the directions of the Employer unless the Employer has
elected in the Plan Agreement that Participants shall be
appointed named fiduciaries as to the tendering of Employer
Stock in accordance with the provisions of this Section
13.8(b). The remainder of this Section 13.8(b) applies only
if the Employer elects in the Plan Agreement that
Participants shall direct the Trustee as to the tendering of
Employer Stock. For purposes of this Section 13.8(b), the
term "Participant" includes any Beneficiary with an Account
in the Plan which is invested in Employer Stock.
Upon commencement of a tender offer for any Employer Stock, the Employer shall notify each Plan Participant, and use its best efforts to distribute timely or cause to be distributed to Participants the same information that is distributed to shareholders of the issuer of Employer Stock in connection with the tender offer, and after consulting with the Trustee shall provide at the Employer's expense a means by which Participants may direct the Trustee whether or not to tender the Employer Stock credited to their Accounts (whether or not vested). The Employer shall provide to the Trustee a copy of any material provided to Participants and shall certify to the Trustees that the materials have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock credited to his Accounts. Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) as is agreed upon by the Trustees and the Employer. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock credited to his Accounts may, at any time before the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer before the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that he may give to the Trustee. The Trustee shall not tender shares of Employer Stock credited to a Participant's Accounts for which it has received no directions from the Plan Participant. The Trustee shall tender that number of shares of Employer Stock not credited to Participants' Accounts determined by multiplying the total number of such shares by a fraction, the numerator of which is the number of shares of Employer Stock credited to Participants' Accounts for which the Trustee has received directions from Participants to tender (which directions have not been withdrawn as of the date of this determination), and the denominator of which is the total number of shares of Employer Stock credited to Participants' Accounts.
A direction by a Participant to the Trustee to tender shares of Employer Stock credited to his Accounts shall not be considered a written election under the Plan by the Participant to withdraw or to have distributed to him any or all of such shares. The Trustee shall credit to each Account of the Plan Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that Account. Pending receipt of directions through the Administrator from the Participant as to the investment of the proceeds of the tendered shares, the Trustee shall invest the proceeds as the Administrator shall direct. To the extent that any Participant gives no direction as to the tendering of Employer stock that he has the right to direct under this Section 13.8(a), the Trustee shall not tender such Employer Stock.
Other Rights. With respect to all rights in connection with Employer Stock other than the right to vote and the right to tender, Participants are hereby appointed named fiduciaries to the same extent (if any) as provided in the foregoing paragraphs of this Section 13.8 with regard to the right to vote, and the Trustee shall follow the directions of Participants and the Plan Administrator with regard to the exercise of such rights to the same extent as with regard to the right to vote.
Insurance Contracts. If so provided in the Plan Agreement or other agreement between the Employer and the Trustee, the Plan Administrator may direct the Trustee to receive and hold or apply assets of the Trust to the purchase of individual or group insurance or annuity contracts ("policies" or "contracts") issued by any insurance company and in a form approved by the Plan Administrator (including contracts under which the contract holder is granted options to purchase insurance or annuity benefits), or financial agreements which are backed by group insurance or annuity contracts ("financial agreements"). If such investments are to be made, the Plan Administrator shall direct the Trustee to execute and deliver such applications and other documents as are necessary to establish record ownership, to value such policies, contracts or financial agreements under the method of valuation selected by the Plan Administrator, and to record or report such values to the Plan Administrator or any investment manager selected by the Plan Administrator, in the form and manner agreed to by the Plan Administrator.
The Plan Administrator may direct the Trustee to exercise or may exercise directly the powers of contract holder under any policy, contract or financial agreement, and the Trustee shall exercise such powers only upon direction of the Plan Administrator. The Trustee shall have no authority to act in its own discretion, with respect to the terms, acquisition, valuation, continued holding and/or disposition of any such policy, contract or financial agreement or any asset held thereunder. The Trustee shall be under no duty to question any direction of the Plan Administrator or to review the form of any such policy, contract or financial agreement or the selection of the issuer thereof, or to make recommendations to the Plan Administrator or to any issuer with respect to the form of any such policy, contract or financial agreement.
The Trustee shall be fully protected in acting in accordance with written directions of the Plan Administrator, and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. In the event that the Plan Administrator directs that any monies or property be paid or delivered to the contract holder other than for the benefit of specific individual beneficiaries, the Trustee agrees to accept such monies or property as assets of the Trust subject to all the terms hereof.
Registration and Voting of Non-Putnam Investment Company
Shares. All shares of registered investment companies other than
Investment Companies shall be registered in the name of the
Trustee or its nominee. Subject to any requirements of
applicable law and to the extent provided in an agreement between
Putnam and a third party investment provider, the Trustee shall
transmit to the Employer copies of any notices of shareholders'
meetings, proxies or proxy-soliciting materials, prospectuses or
the annual or other reports to shareholders, with respect to
shares of registered investment companies other than Investment
Companies held in the Trust Fund. Notwithstanding any other
provision of the Plan, the Trustee shall vote shares of
registered investment companies other than Investment Companies
in accordance with the directions of the Employer. Directions as
to voting such shares must be in writing on a form approved by
the Trustee or such other manner acceptable to the Trustee,
signed by the Employer and delivered to the Trustee within the
time prescribed by it. The Trustee shall vote those shares of
registered investment companies other than Investment Companies
for which no voting directions are received in the same
proportion as it votes those shares for which it has received
voting directions.
ARTICLE TOP-HEAVY PLANS
Superseding Effect. For any Plan Year in which Plan is determined to be a Top-Heavy Plan under Section 14.2(b), the provisions of this Article 14 will supersede any conflicting provisions in the Plan or the Plan Agreement.
Definitions. For purposes of this Article 14, the terms below shall be defined as follows:
Key Employee means any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the determination period was: (i) an officer of the
Employer having annual compensation greater than 50% of the
amount in effect under Section 415(b)(1)(A) of the Code;
(ii) an owner (or considered an owner under Section 318 of
the Code) of one of the ten largest interests in the
Employer having annual compensation exceeding the dollar
limitation under Section 415(c)(1)(A) of the Code; (iii) a
5% owner of the Employer; or (iv) a 1% owner of the Employer
having annual compensation of more than $150,000. Annual
compensation means compensation satisfying the definition
elected by the Employer in the Plan Agreement, but including
(i) amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h) or Section 403(b) of the Code, and (ii) amounts of
special pay such as overtime, bonuses and commissions which
are excluded from the definition of Compensation in the Plan
Agreement. The determination period is the Plan Year
containing the Determination Date and the four preceding
Plan Years. The determination of who is a Key Employee will
be made in accordance with Section 416(i)(1) of the Code and
the Regulations thereunder.
Top-Heavy: The Plan is Top-Heavy for any Plan Year if any of the following conditions exists:
If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans.
If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds 60%.
If this plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of Plans and the Top-Heavy Ratio for the Permissive Aggregation group exceeds 60%.
Top-Heavy Ratio means the following:
If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer has not maintained any qualified defined benefit plan which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder.
If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer maintains or has maintained one or more qualified defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the Present Value of accrued benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated qualified defined contributions plan or plans for all Participants, determined in accordance with (1) above, and the Present Value of accrued benefits under the qualified defined benefit plan or plans for all Participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date.
For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12- month period ending on the Determination Date; except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and accrued benefits of a Participant (A) who is not a Key Employee but who was a Key Employee in a prior Plan Year, or (B) who has not been credited with at least one Hour of Service for the Employer during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible Employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a
Key Employee shall be determined under (a) the method,
if any, that uniformly applies for accrual purposes
under all defined benefit plans maintained by the
Employer, or (b) if there is no such method, as if such
benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of
Section 411(b)(1)(C) of the Code.
Permissive Aggregation Group means the Required Aggregation Group of plans plus any other qualified plan or plans (or simplified employee pension plan) of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code.
Required Aggregation Group means (i) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated) and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of Section 401(a)(4) or 410 of the Code.
Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the Determination Date is the last day of that Plan Year.
Valuation Date means the last day of the Plan Year.
Present Value means present value based only on the interest and mortality rates specified by the Employer in the Plan Agreement.
Minimum Allocation.
Except as otherwise provided in paragraphs (c) and
(d) below, the Employer contributions and Forfeitures
allocated on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of 3% of such
Participant's Earnings, or in the case where the Employer
has no defined benefit plan which designates this Plan to
satisfy Section 401 of the Code, the largest percentage of
Employer contributions and Forfeitures, as a percentage of
the Key Employee's Earnings, allocated on behalf of any Key
Employee for that year. The minimum allocation is
determined without regard to any Social Security
contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would
have received a lesser allocation of the Employer's
contributions and Forfeitures for the Plan Year because of
(1) the Participant's failure to be credited with at least
1,000 Hours of Service, or (2) the Participant's failure to
make mandatory Employee contributions to the Plan, or (3)
the Participant's receiving Earnings less than a stated
amount. Neither Elective Deferrals, Employer Matching
Contributions nor Qualified Matching Contributions for non-
Key Employees shall be taken into account for purposes of
satisfying the requirement of this Section 14.3(a).
For purposes of computing the minimum allocation,
Earnings will mean Section 415 Compensation as defined in
Section 6.5(b) of the Plan.
The provision in paragraph (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year.
The provision in paragraph (a) above shall not apply to any Participant to the extent he is covered under any other plan or plans of the Employer, and the Employer has provided in the Plan Agreement that the minimum allocation requirement applicable to Top-Heavy Plans will be met in the other plan or plans. Notwithstanding the foregoing, if the Employer has adopted Putnam paired plans (as described in Section 4.6) and the Participant is eligible to participate in both paired plans, the minimum allocation described in paragraph (a) shall be provided by the Putnam Money Purchase Pension Plan.
The minimum allocation required (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Sections 411(a)(3)(B) or (D) of the Code.
Adjustment of Fractions. For any Plan Year in which the
Plan is Top-Heavy, the Defined Benefit Fraction and the Defined
Contribution Fraction described in Article 6 shall each be
computed using 100% of the dollar limitations specified in
Sections 415(b)(1)(A) and 415(c)(1)(A) instead of 125%. The
foregoing requirement shall not apply if the Top-Heavy Ratio does
not exceed 90% and the Employer has elected in the Plan Agreement
to provide increased minimum allocations or benefits satisfying
Section 416(h)(2) of the Code.
Minimum Vesting Schedules. For any Plan Year in which this Plan is Top-Heavy (and, if the Employer so elects in the Plan Agreement, for any subsequent Plan Year), a minimum vesting schedule will automatically apply to the Plan, as follows:
If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule 100% immediate vesting, the Three-Year Cliff, Five-Year Graded or Six-Year Graded schedule, then the schedule selected in the Plan Agreement shall continue to apply for any Plan Year to which this Section 14.5 applies.
If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Five-Year Cliff schedule, then the Three-Year Cliff schedule shall apply in any Plan Year to which this Section 14.5 applies.
If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Seven-Year Graded schedule, then the Six-Year Graded schedule shall apply in any Plan Year to which this Section 14.5 applies.
If the Employer has selected in the Plan Agreement
as the Plan's regular vesting schedule a schedule other than
those described in paragraphs (a), (b) and (c), then the
Top-
Heavy schedule specified by the Employer in the Plan
Agreement for this purpose shall apply in any Plan Year to
which this Section 14.5 applies.
The minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code except those
attributable to Elective Deferrals, rollover contributions
described in Section 4.5, Qualified Matching Contributions,
Qualified Nonelective Contributions, or Participant
Contributions, but including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued
before the Plan became Top-Heavy. Further, no reduction in a
Participant's nonforfeitable percentage may occur in the event
the Plan's status as Top-Heavy changes for any Plan Year.
However, the vested portion of the Employer Contribution Account
or Employer Matching Account of any Employee who does not have an
Hour of Service after the Plan has initially become Top-Heavy
will be determined without regard to this Section 14.5.
ARTICLE ADMINISTRATION OF THE PLAN
Plan Administrator. The Plan shall be administered by the Employer, as Plan Administrator and Named Fiduciary within the meaning of ERISA, under rules of uniform application; provided, however, that the Plan Administrator's duties and responsibilities may be delegated to a person appointed by the Employer or a committee established by the Employer for that purpose, in which case the committee shall be the Plan Administrator and Named Fiduciary. The members of such a committee shall act by majority vote, and may by majority vote authorize any one or ones of their number to act for the committee. The person or committee (if any) initially appointed by the Employer may be named in the Plan Agreement, but the Employer may remove any such person or committee member by written notice to him, and any such person or committee may resign by written notice to the Employer, without the necessity of amending the Plan Agreement. To the extent permitted under applicable law, the Plan Administrator shall have the sole authority to enforce the terms hereof on behalf of any and all persons having or claiming any interest under the Plan, and shall be responsible for the operation of the Plan in accordance with its terms. The Plan Administrator shall have discretionary authority to determine all questions arising out of the administration, interpretation and application of the Plan, all of which determinations shall be conclusive and binding on all persons. The Plan Administrator, in carrying out its responsibilities under the Plan, may rely upon the written opinions of its counsel and on certificates of physicians. Subject to the provisions of the Plan and applicable law, the Plan Administrator shall have no liability to any person as a result of any action taken or omitted hereunder by the Plan Administrator.
Claims Procedure. Claims for participation in or distribution of benefits under the Plan shall be made in writing to the Plan Administrator, or an agent designated by the Plan Administrator whose name shall have been communicated to all Participants and other persons as required by law. If any claim so made is denied in whole or in part, the claimant shall be furnished promptly by the Plan Administrator with a written notice:
setting forth the reason for the denial,
making reference to pertinent Plan provisions,
describing any additional material or information from the claimant which is necessary and why, and
explaining the claim review procedure set forth herein.
Within 60 days after denial of any claim for participation or distribution under the Plan, the claimant may request in writing a review of the denial by the Plan Administrator. Any claimant seeking review hereunder shall be entitled to examine all pertinent documents and to submit issues and comments in writing. The Plan Administrator shall render a decision on review hereunder; provided, that if the Plan Administrator determines that a hearing would be appropriate, its decision on review shall be rendered within 120 days after receipt of the request for review. The decision on review shall be in writing and shall state the reason for the decision, referring to the Plan provisions upon which it is based.
Employer's Responsibilities. The Employer shall be responsible for:
Keeping records of employment and other matters containing all relevant data pertaining to any person affected hereby and his eligibility to participate, allocations to his Accounts, and his other rights under the Plan;
Periodic, timely filing of all statements, reports and returns required to be filed by ERISA;
Timely preparation and distribution of disclosure materials required by ERISA;
Providing notice to interested parties as required by Section 7476 of the Code;
Retention of records for periods required by law; and
Seeing that all persons required to be bonded on account of handling assets of the Plan are bonded.
Recordkeeper. The Recordkeeper is hereby designated as agent of the Employer under the Plan to perform directly or through agents certain ministerial duties in connection with the Plan, in particular:
To keep and regularly furnish to the Employer a detailed statement of each Participant's Accounts, showing contributions thereto by the Employer and the Participant, Investment Products purchased therewith, earnings thereon and Investment Products purchased therewith, and each redemption or distribution made for any reason, including fees or benefits; and
To the extent agreed between the Employer and the Recordkeeper, to prepare for the Employer or to assist the Employer to prepare such returns, reports or forms as the Employer shall be required to furnish to Participants and Beneficiaries or other interested persons and to the Internal Revenue Service or the Department of Labor; all as may be more fully set forth in a service agreement executed by the Employer and the Recordkeeper. If the Employer does not appoint another person or entity as Recordkeeper, the Employer itself shall be the Recordkeeper.
Prototype Plan. Putnam is the sponsor of the Putnam Basic
Plan Document, a prototype plan approved as to form by the
Internal Revenue Service. Provided that an Employer's adoption
of the Plan is made known to and accepted by Putnam in accordance
with the Plan Agreement, Putnam will inform the Employer of
amendments to the prototype plan and provide such other services
in connection with the Plan as may be agreed between Putnam and
the Employer. Putnam may impose for its services as sponsor of
the prototype plan such fees as it may establish from time to
time in a fee schedule addressed to the Employer. Such fees
shall, unless paid by the Employer, be paid from the Trust Fund,
and shall in that case be charged pro rata against the Accounts
of all Participants. The Trustee is expressly authorized to
cause Investment Products to be sold or redeemed for the purpose
of paying such fees.
ARTICLE TRUSTEE
Powers and Duties of the Trustee. The Trustee shall have the authority, in addition to any authority given by law, to exercise the following powers in the administration of the Trust:
To invest all or a part of the Trust Fund in Investment Products in accordance with the investment instructions delivered by the Employer pursuant to Section 13.3, without restriction to investments authorized for fiduciaries, including without limitation any common, collective or commingled trust fund maintained by the Trustee (or any other such fund, acceptable to Putnam and the Trustee, that qualifies for exemption from federal income tax pursuant to Revenue Ruling 81-100). Any investment in, and any terms and conditions of, any such common, collective or commingled trust fund available only to employee trusts which meet the requirements of the Code, or corresponding provisions of subsequent income tax laws of the United States, shall constitute an integral part of this Agreement;
If Putnam and the Trustee have consented thereto in writing, to invest without limit in stock of the Employer or any affiliated company;
To dispose of all or part of the investments, securities or other property which may from time to time or at any time constitute the Trust Fund in accordance with the written directions furnished by the Employer for the investment of Participants' separate Accounts or the payment of benefits or expenses of the Plan, and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance therefore, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money;
To hold cash uninvested to the extent necessary to pay benefits or expenses of the Plan;
To follow the directions of an investment manager appointed pursuant to Section 13.7;
To cause any investment of the Trust Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund;
Upon written direction of or through the Employer, to vote in person or by proxy (in accordance with Sections 13.6 and 13.10 and, in the case of stock of the Employer, at the direction of the Employer or Participants in accordance with Section 13.8) with respect to all securities that are part of the Trust Fund;
To consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Trust Fund according to the terms of the Plan;
Upon the written direction of the Employer, to make loans from the Trust Fund to Participants in amounts and on terms approved by the Plan Administrator in accordance with the provisions of the Plan; provided that the Employer shall have the sole responsibility for computing and collecting all loan repayments required to be made under the Plan; and
To pay from the Trust Fund all taxes imposed or levied with respect to the Trust Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax assessment, claim or demand respecting the Trust Fund or any part thereof.
Limitation of Responsibilities. Except as may otherwise be required under applicable law, neither the Trustee nor any of its agents shall have any responsibility for:
Determining the correctness of the amount of any contribution for the sole collection or payment of contributions, which shall be the sole responsibility of the Employer;
Loss or breach caused by any Participant's exercise of control over his Accounts, which shall be the sole responsibility of the Participant;
Loss or breach caused by the Employer's exercise of control over Accounts pursuant to Section 13.3, which shall be the sole responsibility of the Employer;
Performance of any other responsibilities not specifically allocated to them under the Plan.
Fees and Expenses. The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by the Trustee from time to time in a fee schedule addressed to the Employer. Such fees, any taxes of any kind which may be levied or assessed upon or in respect of the Trust Fund and any and all expenses reasonably incurred by the Trustee shall, unless paid by the Employer, be paid from the Trust Fund and shall, unless allocable to the Accounts of specific Participants, be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such amounts. Charges and expenses incurred in connection with a specific Investment Product, unless allocable to the Accounts of specific Participants, shall be charged pro rata against the Accounts of all Participants for whose benefit amounts have been invested in the specific Investment Product.
Reliance on Employer. The Trustee and its agents shall rely upon any decision of the Employer, or of any person authorized by the Employer, purporting to be made pursuant to the terms of the Plan, and upon any information or statements submitted by the Employer or such person (including those relating to the entitlement of any Participant to benefits under the Plan), and shall not inquire as to the basis of any such decision or information or statements, and shall incur no obligation or liability for any action taken or omitted in reliance thereon. The Trustee and its agents shall be entitled to rely on the latest written instructions received from the Employer as to the person or persons authorized to act for the Employer hereunder, and to sign on behalf of the Employer any directions or instructions, until receipt from the Employer of written notice that such authority has been revoked.
Action Without Instructions. If the Trustee receives no instructions from the Employer in response to communications sent by registered or certified mail to the Employer at its last known address as shown on the books of the Trustee, then the Trustee may make such determinations with respect to administrative matters arising under the Plan as it considers reasonable, notwithstanding any prior instructions or directions given by or on behalf of the Employer, but subject to any instruction or direction given by or on behalf of the Participants. To the extent permitted by applicable law, any determination so made will be binding on all persons having or claiming any interest under the Plan or Trust, and the Trustee will incur no obligation or responsibility for any such determination made in good faith or for any action taken pursuant thereto. In making any such determination the Trustee may require that it be furnished with such relevant documents as it reasonable considers necessary.
Advice of Counsel. The Trustee may consult with legal counsel (who may, but need not be, counsel for the Employer) concerning any questions which may arise with respect to its rights and duties under the Plan, and the opinion of such counsel shall be full and complete protection to the extent permitted by applicable law in the respect of any action taken or omitted by the Trustee hereunder in accordance with the opinion of such counsel.
Accounts. The Trustee shall keep full accounts of all receipts and disbursements which pertain to investments in Investment Products, and of such other transactions as it is required to perform hereunder. Within a reasonable time following the close of each Plan Year, or upon its removal or resignation or upon termination of the Trust and at such other times as may be appropriate, the Trustee shall render to the Employer and any other persons as may be required by law an account of its administration of the Plan and Trust during the period since the last previous such accounting, including such information as may be required by law. The written approval of any account by the Employer and all other persons to whom an account is rendered shall be final and binding as to all matters and transactions stated or shown therein, upon the Employer and Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or any other person to whom an account is rendered to notify the party rendering the account within 60 days after the receipt of any account of his or its objection to the account shall be the equivalent of written approval. If the Employer or any other person to whom an account is rendered files any objections within such 60-day period with respect to any matters or transactions stated or shown in the account and the Employer or such other person and the party rendering the account cannot amicably settle the questions raised by such objections, the party rendering the account and the Employer or such person shall have the right to have such questions settled by judicial proceedings, although the Employer or such other person to whom an account is rendered shall have, to the extent permitted by applicable law, only 60 days from filing of written objection to the account to commence legal proceedings. Nothing herein contained shall be construed so as to deprive the Trustee of the right to have a judicial settlement of its accounts. In any proceeding for a judicial settlements of any account or for instructions, the only necessary parties shall be the Trustee, the Employer and persons to whom an account is required by law to be rendered.
Access to Records. The Trustee shall give access to its records with respect to the Plan at reasonable times and on reasonable notice to any person required by law to have access to such records.
Successors. Any corporation into which the Trustee may merge or with which it may consolidate or any corporation resulting from any such merger or consolidation shall be the successor of the Trustee without the execution or filing of any additional instrument or the performance of any further act.
Persons Dealing with Trustee. 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.
Resignation and Removal; Procedure. The Trustee may resign at any time by giving 60 days' written notice to the Employer and to Putnam. The Employer may remove the Trustee at any time by giving 60 days' written notice to the party removed and to Putnam. In any case of resignation or removal hereunder, the period of notice may be reduced to such shorter period as is satisfactory to the Trustee and the Employer. Notwithstanding anything to the contrary herein, any resignation hereunder shall take effect at the time notice thereof is given if the Employer may no longer participate in the prototype Plan and is deemed to have an individually designed plan at the time notice is given.
Action of Trustee Following Resignation or Removal. When the resignation or removal of the Trustee becomes effective, the Trustee shall perform all acts necessary to transfer the Trust Fund to its successor. However, the Trustee may reserve such portion of the Trust Fund as it may reasonably determine to be necessary for payment of its fees and any taxes and expenses, and any balance of such reserve remaining after payment of such fees, taxes and expenses shall be paid over to its successor. The Trustee shall have no responsibility for acts or omissions occurring after its resignation becomes effective.
Effect of Resignation or Removal. Resignation or removal of the Trustee shall not terminate the Trust. In the event of any vacancy in the position of Trustee, whether the vacancy occurs because of the resignation or removal of the Trustee, the Employer shall appoint a successor to fill the vacant position. If the Employer does not appoint such a successor who accepts appointment by the later of 60 days after notice of resignation or removal is given or by such later date as the Trustee and Employer may agree in writing to postpone the effective date of the Trustee's resignation or removal, the Trustee may apply to a court of competent jurisdiction for such appointment or cause the Trust to be terminated, effective as of the date specified by the Trustee, in writing delivered to the Employer. Each successor Trustee so appointed and accepting a trusteeship hereunder shall have all of the rights and powers and all of the duties and obligations of the original Trustee, under the provisions hereof, but shall have no responsibility for acts or omissions before he becomes a Trustee.
Fiscal Year of Trust. The fiscal year of the Trust will coincide with the Plan Year.
Limitation of Liability. Except as may otherwise be required by law and other provisions of the Plan, no fiduciary of the Plan, within the meaning of Section 3(21) of ERISA, shall be liable for any losses incurred with respect to the management of the Plan, nor shall he or it be liable for any acts or omissions except those caused by his or its own negligence or bad faith in failing to carry out his or its duties under the terms contained in the Plan.
Indemnification. Subject to the limitations of applicable
law, the Employer agrees to indemnify and hold harmless (i) all
fiduciaries, within the meaning of ERISA Sections 3(21) and 404,
and (ii) Putnam, for all liability occasioned by any act of such
party or omission to act, in good faith and without negligence,
and for all expenses incurred by any such party in determining
its duty or liability under ERISA with respect to any question
under the Plan.
ARTICLE AMENDMENT
General. The Employer reserves the power at any time or
times to amend the provisions of the Plan and the Plan Agreement
to any extent and in any manner that it may deem advisable. If,
however, the Employer makes any amendment (including an amendment
occasioned by a waiver of the minimum funding requirement under
Section 412(d) of the Code) other than
a change in an election made in the Plan Agreement,
amendments stated in the Plan Agreement which allow the Plan to satisfy Section 415 and to avoid duplication of minimums under Section 416 of the Code because of the required aggregation of multiple plans, or
model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed,
the Employer shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. In that event, Putnam shall have no further responsibility to provide to the Employer any amendments or other material incident to the prototype plan, and Putnam may resign immediately as Trustee and as Recordkeeper. Any amendment shall be made by delivery to the Trustee (and the Recordkeeper, if any) of a written instrument executed by the Employer providing for such amendment. Upon the delivery of such instrument to the Trustee, such instrument shall become effective in accordance with its terms as to all Participants and all persons having or claiming any interest hereunder, provided, that the Employer shall not have the power:
to amend the Plan in such a manner as would cause or permit any part of the assets of the Trust to be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries, or as would cause or permit any portion of such assets to revert to or become the property of the Employer.
to amend the Plan retroactively in such a manner as would have the effect of decreasing a Participant's accrued benefit, except that 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 (2), an amendment shall be treated as reducing a Participant's accrued benefit if it has the effect of reducing his Account balance, or of eliminating an optional form of benefit with respect to amounts attributable to contributions made performed before the adoption of the amendment; or
to amend the Plan so as to decrease the portion of a Participant's Account balance that has become vested, as compared to the portion that was vested, under the terms of the Plan without regard to the amendment, as of the later of the date the amendment is adopted or the date it becomes effective.
to amend the Plan in such a manner as would increase the duties or liabilities of the Trustee or the Recordkeeper unless the Trustee or the Recordkeeper consents thereto in writing.
Delegation of Amendment Power. The Employer and all
sponsoring organizations of the Putnam Basic Plan Document
delegate to Putnam Mutual Funds Corp., the power to amend the
Plan (including the power to amend this Section 18.2 to name a
successor to which such power of amendment shall be delegated),
for the purpose of adopting amendments which are certified to
Putnam Mutual Funds Corp., by counsel satisfactory to it, as
necessary or appropriate under applicable law, including any
regulation or ruling issued by the United States Treasury
Department or any other federal or state department or agency;
provided that Putnam Mutual Funds Corp., or such successor may
amend the Plan only if it has mailed a copy of the proposed
amendment to the Employer at its last known address as shown on
its books by the date on which it delivers a written instrument
providing for such amendment, and only if the same amendment is
made on said date to all plans in this form as to which Putnam
Mutual Funds Corp., or such successor has a similar power of
amendment. If a sponsoring organization does not adopt any
amendment made by Putnam Mutual Funds Corp., such sponsoring
organization shall cease to participate in this prototype Plan
and will be considered to have an individually designed plan.
If, upon the submission of this Putnam Basic Plan Document #07 to
the Internal Revenue Service for a determination letter, the
Internal Revenue Service determines that changes are required to
the Basic Plan Document but not to the form of Plan Agreement,
Putnam shall furnish a copy of the revised Basic Plan Document to
the Employer and the Employer will not be required to execute a
revised Plan Agreement.
ARTICLE TERMINATION OF THE PLAN AND TRUST
General. The Employer has established the Plan and the Trust with the bona fide intention and expectation that contributions will be continued indefinitely, but the Employer shall have no obligation or liability whatsoever to maintain the Plan for any given length of time and may discontinue contributions under the Plan or terminate the Plan at any time by written notice delivered to the Trustee, without any liability whatsoever for any such discontinuance or termination.
Events of Termination. The Plan will terminate upon the happening of any of the following events:
Death of the Employer, if a sole proprietor, or dissolution or termination of the Employer, unless within 60 days thereafter provision is made by the successor to the business with respect to which the Plan was established for the continuation of the Plan, and such continuation is approved by the Trustee;
Merger, consolidation or reorganization of the Employer into one or more corporations or organizations, unless the surviving corporations or organizations adopt the Plan by an instrument in writing delivered to the Trustee within 60 days after such a merger, consolidation and reorganization;
Sale of all or substantially all of the assets of the Employer, unless the purchaser adopts the Plan by an instrument in writing delivered to the Trustee within 60 days after the sale;
The institution of bankruptcy proceedings by or against the Employer, or a general assignment by the Employer to or for the benefit of its creditors; or
Delivery of notice of termination as provided in
Section 18.1.
Effect of Termination. Notwithstanding any other provisions of this Plan, other than Section 18.4, upon termination of the Plan or complete discontinuance of contributions thereunder, each Participant's Accounts will become fully vested and nonforfeitable, and upon partial termination of the Plan, the Accounts of each Participant affected by the partial termination will become fully vested and nonforfeitable. The Employer shall notify the Trustee in writing of such termination, partial termination or complete discontinuance of contributions. In the event of the complete termination of the Plan or discontinuance of contributions, the Trustee will, after payment of all expenses of the Trust Fund, make distribution of the Trust asses to the Participants or other persons entitled thereto, in such form as the Employer may direct pursuant to Article 10 or, in the absence of such direction, in a single payment in cash or in kind. Upon completion of such distributions under this Article, the Trust will terminate, the Trustee will be relieved from their obligations under the Trust, and no Participant or other person will have any further claim thereunder.
Approval of Plan. Notwithstanding any other provision of
the Plan, if the Employer fails to obtain or to retain the
approval by the Internal Revenue Service of the Plan as a
qualified plan under Section 401(a) of the Code, then (i) the
Employer shall promptly notify the Trustee, and (ii) the Employer
may no longer participate in the Putnam prototype plan, but will
be deemed to have an individually designed plan. If it is
determined by the Internal Revenue Service that the Plan upon its
initial adoption does not qualify under Section 401(a) of the
Code, all assets then held under the Plan will be returned within
one year of the denial of initial qualification to the
Participants and the Employer to the extent attributable to their
respective contributions and any income earned thereon, but only
if the application for qualification is made by the time
prescribed by law for filing the Employer's federal income tax
return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe. Upon
such distribution, the Plan will be considered to be rescinded
and to be of no force or effect.
ARTICLE TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS
General. Notwithstanding any other provision hereof, subject to the approval of the Trustee there may be transferred to the Trustee all or any of the assets held (whether by a trustee, custodian or otherwise) in respect of any other plan which satisfies the applicable requirements of Section 401(a) of the Code and which is maintained for the benefit of any Employee (provided, however, that the Employee is not a member of a class of Employees excluded from eligibility to participate in the Plan). Any such assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred and showing separately the respective contributions made by the Employer and by the Participants and the current value of the assets attributable thereto. Notwithstanding the foregoing, if a Participant's employment classification changes under Section 3.5 such that he begins participation in another plan of the Employer, his Account, if any, shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account.
Amounts Transferred. The Employer shall credit any assets transferred pursuant to Section 19.1 or Section 3.5 to the appropriate Accounts of the persons for whose benefit such assets have been transferred. Any amounts credited as contributions previously made by an employer or by such persons under such other plan shall be treated as contributions previously made under the Plan by the Employer or by such persons, as the case may be.
Merger or Consolidation. The Plan shall not be merged or
consolidated with any other plan, nor shall any assets or
liabilities of the Trust Fund be transferred to any other plan,
unless each Participant would receive a benefit immediately after
the transaction, if the Plan then terminated, which is equal to
or greater than the benefit he would have been entitled to
receive immediately before the transaction if the Plan had then
terminated.
ARTICLE MISCELLANEOUS
Notice of Plan. The Plan shall be communicated to all Participants by the Employer on or before the last day on which such communication may be made under applicable law.
No Employment Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or any other person any legal or equitable right against the Employer or the Trustee, except as provided herein or by ERISA; and in no event shall the terms of employment or service of any Participant be modified or in any way be affected hereby.
Distributions Exclusively From Plan. Participants and Beneficiaries shall look solely to the assets held in the Trust for the payment of any benefits under the Plan.
No Alienation. The benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected shall not be recognized, except as provided in Section 12.4 or in accordance with a Qualified Domestic Relations Order. The Plan Administrator shall determine whether a domestic relations order is qualified in accordance with written procedures adopted by the Plan Administrator. Notwithstanding the foregoing, an order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan.
Provision of Information. The Employer and the Trustee shall furnish to each other such information relating to the Plan and Trust as may be required under the Code or ERISA and any regulations issued or forms adopted by the Treasury Department or the Labor Department or otherwise thereunder.
No Prohibited Transactions. The Employer and the Trustee
shall, to the extent of their respective powers and authority
under the Plan, prevent the Plan from engaging in any transaction
known by that person to constitute a transaction prohibited by
Section 4975 of the Code and any rules or regulations with
respect thereto.
Governing Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States, and to the extent permitted by such laws, by the laws of the Commonwealth of Massachusetts
Gender. Whenever used herein, a pronoun in the masculine gender includes the feminine gender unless the context clearly indicates otherwise.
PUTNAM FLEXIBLE 401(K) AND PROFIT SHARING PLAN
PLAN AGREEMENT #001
This is the Plan Agreement for a Putnam nonstandardized prototype 401(k) plan with optional profit sharing plan provisions. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. By executing this Plan Agreement, the Employer establishes a 401(k) and profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #07, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Flexible 401(k) and Profit Sharing Plan.
* * * * *
Employer Information. The Employer adopting this Plan is:
Employer Name:
_____________________________________________________
Employer Identification Number:
__________________________
Employer Address:
_______________________________
_______________________________
_______________________________
SIC Code: _______
Employer Contact: Name:
___________________________________________
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Fiscal Year: __________ through __________
(month/day) (month/day)
Type of Entity (check one):
_____ Corporation _____ Partnership _____ Subchapter S Corporation
Plan Name: __________________________________
Plan Number: 00__(complete) Plan Information.
Plan Year. Check one:
_____ (1) The Calendar Year
_____ (2) The Plan Year
will be the same as the Fiscal
Year of the Employer shown in
1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly.
_____ (3) The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month).
The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan.
Effective Date of Adoption of Plan.
(1) Are you adopting this Plan to replace an existing plan?
_____ (a) Yes _____ (b) No
(2) If you answered Yes in 2.B(1) above, the Effective Date of your adoption of this Replacement Plan will be the first day of the current Plan Year unless you elect a later date in (2)(b) below. Please complete the following:
(3) If you answered No in 2B(1) above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began):
(a) The Effective Date is:_____________________________________ month/day/year
Identifying Highly Compensated Employees. Check either
(1) or (2).
_____ (1) The Plan will use the regular method under Plan Section 2.58(a) for identifying Highly Compensated Employees.
If you selected this option and your Plan Year is the calendar year, do you wish to make the regular method's "calendar year election" for identifying your Highly Compensated Employees?
_____ (a) Yes _____ (b) No
_____ (2) The Plan will use
the simplified method under Plan
Section
2.58(b) for identifying Highly
Compensated
Employees.
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Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below.
Classes of Eligible Employees. The Plan will cover all employees who have met the age and service requirements with the following exclusions:
_____ (1) No exclusions. All job classifications will be eligible.
_____ (2) The Plan will exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which will be included: ____________________.
_____ (3) The Plan will exclude employees who are non-resident aliens without U.S. source income.
_____ (4) Employees of the following Affiliated Employers (specify):
_____ (5) Leased Employees
_____ (6) Employees in the following other classes (specify):
Age Requirement (check and complete (1) or (2)):
_____ (1) No minimum age required for participation
_____ (2) Employees must reach age __ (not over 21) to participate
Service Requirements.
Elective Deferrals. To become
eligible, an employee must complete (choose one):
_____ (a) No minimum service required.
_____ (b) One 6-month Eligibility Period
_____ (c) One __-
month Eligibility Period (must be
less than 12)
_____ (d) One 12-
month Eligibility Period
Employer Matching Contributions. To become eligible, an employee must complete (choose one):
_____ (a) No minimum service required. _____ (b) One 6-month Eligibility Period _____ (c) One __-month Eligibility |
Period (must be less than 12)
_____ (d) One 12-month Eligibility Period
_____ (e) Two 12- month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(3)(a) to provide 100% full and immediate vesting of Employer Matching Contributions).
_____ (f) Not applicable. The Employer will not make Employer Matching Contributions.
Profit Sharing Contributions. To become eligible, an employee must complete (choose one):
_____ (a) No minimum service required.
_____ (b) One 6-month Eligibility Period
_____ (c) One __-
month Eligibility Period (must be
less than 12)
_____ (d) One 12-
month Eligibility Period
_____ (e) Two 12-
|
month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(3)(a) to provide for 100% full and immediate vesting of Profit Sharing Contributions)
_____ (f) Not applicable. The Employer will not make Profit Sharing Contributions.
If the Employer acquires a business, the
Eligibility Periods for an employee of the
acquired business will be the periods selected in
(1), (2) and (3) beginning on (check (a) or (b)):
_____ (a) the date the employee began work with the acquired business.
_____ (b) the date of the acquisition (i.e., the date the employee begins work for the Employer).
Hours of Service for Eligibility Periods.
(a) 6-Month Eligibility Period. To receive credit for a 6-month Eligibility Period, an employee must complete 6 months of service, during which he completes at least:
_____ (i) 500 Hours of Service
_____ (ii) ____________ Hours of Service
(under 500)
(b) 12-
Month Eligibility
Period. To receive
credit for a 12-
month Eligibility
Period, an employee
must complete 12
months of service,
during which he
completes at least:
_____ (i) 1,000 Hours of Service
_____ (ii) _____________ Hours of Service
(under 1,000)
|
(c) Other Eligibility Period. To receive credit for the Eligibility Period selected in 3.C(1)(c), 3.C(2)(c) and/or 3.C(3)(c) above, an employee must complete during it at least:
_____ (i) _____________ Hours of Service
(under 1000)
Method of Crediting Hours of Service For Eligibility and Vesting. Hours of Service will be credited to an employee by the following method (check one):
_____ (a) Actual hours for which an
employee is paid
_____ (b) Any employee who has
one actual paid hour in the following
period will be credited with the
number of Hours of Service indicated
(check one):
_____ (i) Day (10 Hours of
Service)
_____ (ii) Week (45 Hours of
Service)
_____ (iii) Semi-monthly payroll
period (95 Hours of Service)
_____ (iv) Month
(190 Hours of Service)
Entry Dates. Each employee in an eligible class
|
who completes the age and service requirements specified above will begin to participate in the Plan on (check one):
_____ (a) The first day of the month in which he fulfills the requirements.
_____ (b) The first of the following dates
occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the |
requirements) (check one):
_____ (i) The first day of the
month following the date he
fulfills the
requirements (monthly).
_____ (ii) The first day of the
first, fourth, seventh and tenth months in a Plan
Year
(quarterly).
___ (May be no later than (i) the first day of the Plan Year after which he fulfills the requirements, and (ii) the date six months after the date on which he fulfills the |
requirements, which ever occurs first.)
(For New Plans Only) Will all eligible Employees as of the Effective Date be required to meet the age and service requirements for participation specified in B and C above?
_____ (a) Yes
_____ (b) No. Eligible Employees will be eligible to become Participants as of the Effective Date even if they have not satisfied (check one or both):
_____ (i) the age requirement.
_____ (ii) the service requirement.
Contributions.
Elective Deferrals (Plan Section 5.2). Your Plan will
allow employees to elect pre-tax contributions under
Section 401(k) of the Code. You must complete this
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part A.
A Participant may make Elective Deferrals for each year in an amount not to exceed (check one):
_____ (a) ___% of his Earnings
_____ (b) ___% of his Earnings not to
exceed $_______ (specify a dollar
amount)
_____ (c) $_______ (specify a
dollar amount)
Will a Participant be required to make a minimum Elective Deferral in order to make Elective Deferrals under the Plan? (check one and complete as applicable)
_____ (a) No.
_____ (b) Yes. The minimum Elective Deferral will be ____% of the Participant's Earnings.
A Participant may begin to make Elective Deferrals, or change the amount of his Elective Deferrals, as of the following dates (check one):
_____ (a) First business day of each month (monthly).
_____ (b) First business day of the first, fourth, seventh and tenth months of the Plan Year (quarterly).
_____ (c) First business day of the first and seventh months of the Plan Year (semiannually).
_____ (d) First business day of the Plan Year only (annually).
Will Participants be permitted to make separate Elective Deferrals of bonuses, even if bonuses have otherwise been excluded from Compensation for the purpose of Elective Deferrals under 7.A(1)?
____________ (a) Yes ____________ (b)
No
Employer Matching Contributions. (Plan Section 5.8).
Complete this part B only if you will make Employer
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Matching Contributions under the Plan.
The Employer will contribute and will allocate to each Qualified Participant's Employee Matching Account an Employer Matching Contribution on the basis set forth below:
_____ (a) Discretionary matching
contributions. (The Employer may select
this option in addition to option (b) if
the Employer wishes to have the option
to make discretionary matching
contributions in addition to fixed
matching contributions.)
_____ (b) Fixed matching contributions.
_____ (i) based on Elective
Deferrals:
_____ (A)____% of Elective
Deferrals
_____ (B)____% of Elective
Deferrals up to ____%
of Earnings.
_____ (C)____% of Elective
Deferrals up to ____%
of Earnings and __% of
Elective Deferrals over
that percentage of
Earnings and up to ___%
of Earnings. (The
third percentage number
must be less than the
first percentage
number.)
_____ (D) ____% of Elective
Deferrals up to
$__________ of
Elective Deferrals.
_____ (E) ____% of Elective
Deferrals up to
$___________ of
Elective Deferrals and
____% of Elective
Deferrals over that
dollar amount and up to
$_________ of Elective
Deferrals. (The last
percentage must be less
than the first
percentage).
_____ (ii) based on after-tax
Participant Contributions:
____ (A)____% of Participant
Contributions
____ (B)____% of Participant
Contributions up to
____% of Earnings.
____ (C)____% of Participant
Contributions up to
____% of Earnings and
____% of Participant
Contributions over that
percentage of Earnings
and up to ___% of
Participant
Contributions. (The
third percentage must
be less than the first
percentage)
_____ (D)____% of Participant
Contributions up to
$_____________ of
Participant
Contributions.
_____ (E)____% of Participant
Contributions up to
$_____________ of
Participant
Contributions and
____% of Participant
Contributions over that
dollar amount and up to
$____________ of
Participant
Contributions. (The
last percentage must be
less than the first
percentage).
Qualified Participant. In order to receive an
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allocation of Employer Matching Contributions for
a Plan Year, an Employee must be a Qualified
Participant for that purpose. Select below either
(a) alone, or any combination of (b), (c) and (d).
_____ (a) To be a Qualified Participant eligible to receive Employer Matching Contributions for a Plan Year, an Employee must (check (i) or (ii)):
_____ (i) Either be
employed on the last day of the Plan
Year,
complete more than 500 Hours of Service
in the
Plan Year, retire, die or become disabled
in the
Plan Year.
_____ (ii) Either be
employed on the last day of the Plan
Year or
complete more than 500 Hours of Service
in the
Plan Year.
Stop here if you checked (a). If you did not
check (a), check (b), (c) or (d), or any
combination of (b), (c) and (d).
To be a Qualified Participant eligible to receive
Employer Matching Contributions for a Plan Year,
an Employee must:
_____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year.
_____ (c) Be an Employee on the last day of the Plan Year.
_____ (d) Retire, die or become disabled during the Plan Year.
(3) Will the Employer have the option of making all or any portion of its Employer Matching
Contributions in Employer Stock?
_____ (a) Yes _____ (b) No
Profit Sharing Contributions. (Plan Sections 4.1 and
4.2)
Profit Limitation. Will Profit Sharing
Contributions to the Plan be limited to the
|
current and accumulated profits of your Business? Check one:
_____ (a) Yes _____ (b) No
Amount. The Employer will contribute to the Plan
for each Plan Year (check one):
_____ (a) An amount chosen by the Employer
from year to year
|
_____ (b) ____% of the Earnings of all Qualified Participants for the Plan Year
_____ (c) $____ for each Qualified Participant
per__
_________(enter time period, e.g.
payroll
period, plan year)
|
Allocations to Participants
(a) Allocation to Participants. Profit Sharing Contributions will be allocated:
_______ (i) Pro
rata (percentage based on
compensation)
_______ (ii)
Uniform Dollar amount
_______ (iii)
Integrated With Social Security
(complete (b) and (c) below)
|
(b) Integration with Social Security. (Complete only if you have elected in 4.C(3)(a) to integrate your Plan with Social Security.) Profit Sharing Contributions will be allocated to Qualified Participants as you check below:
_____ (i) Profit Sharing Contributions will be allocated according to the Top-Heavy Integration Formula in Plan Section 4.2(c)(1) in every Plan Year, whether or not the Plan is top-heavy. _____ (ii) Profit Sharing Contributions will be allocated according to the Top-Heavy Integration Formula in Plan Section 4.2(c)(1) only in Plan Years in which the Plan is top-heavy. In all other Plan Years, contributions will be |
allocated according to the Non-Top-
Heavy Integration Formula in Plan
Section 4.2(c)(2).
(c) Integration Level. (Complete only if you have elected in 4.C(3)(a) to integrate your Plan with Social Security.) The Integration Level will be (check one):
_____ (i) The Social Security Wage Base in effect at the beginning of the Plan Year.
____ (ii) __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year.
____ (iii) $__________ (not more than the Social Security Wage Base).
Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living.
Qualified Participants. In order to receive
an allocation of Profit Sharing Contributions for
a Plan Year, an Employee must be a Qualified
Participant for this purpose. Select below either
(a) alone, or any combination of (b), (c) and (d).
_____ (a) To be a Qualified
Participant eligible to receive an
allocation of Profit Sharing
Contributions for a Plan Year, an
Employee must (check (i) or (ii)):
_____ (i) Either be employed on
the last day of the Plan Year,
complete more than 500 Hours
of Service in the Plan Year,
retire, die or become disabled
in the Plan Year.
_____ (ii) Either be employed on
the last day of the Plan Year
or complete more than 500
Hours of Service in the Plan
Year.
Stop here if you checked (a). If you did not
check (a), check (b), (c) or (d), or any
|
combination of (b), (c) and (d).
To be a Qualified Participant eligible to receive an allocation of Profit Sharing Contributions for a Plan Year, an Employee must:
_____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year.
_____ (c) Be an Employee on the last day of the Plan Year.
_____ (d) Retire, die or become disabled during the Plan Year.
Participant Contributions (Plan Section 4.6). Will your Plan allow Participants to make after-tax
contributions?
(1) Yes _____
(2) No
Qualified Matching Contributions (Plan Section 2.61).
Skip this part E if you will not make Qualified
|
Matching Contributions.
Qualified Matching Contributions will be made with respect to (check one):
_____ (a) Elective Deferrals made by all Qualified Participants
_____ (b) Elective Deferrals made only by Qualified Participants who are not Highly Compensated Participants
The amount of Qualified Matching Contributions made with respect to a Participant will be:
_____ (a) discretionary
_____ (b) fixed (check and complete (i),
(ii) or (iii))
_____ (i) _____% of Elective
Deferrals
_____ (ii) _____% of
Elective Deferrals that do not
exceed ____% of Earnings
_____ (iii) _____% of
Elective Deferrals that do not
exceed $_____.
|
Qualified Nonelective Contributions (Plan Section 2.62): Skip this part F if you will not make Qualified Nonelective Contributions.
(1) Qualified Nonelective Contributions will be made on behalf of (check one):
_____ (a) All Qualified Participants
_____ (b) Only Qualified Participants
who are not Highly Compensated Employees
(2) The amount of Qualified Nonelective Contributions for a Plan Year will be (check one):
_____ (a) ___% (not over 15%) of the Earnings of Participants on whose behalf Qualified Nonelective Contributions are made
_____ (b) An amount determined by the Employer from year to year, to be shared in proportion to their Earnings by Participants on whose behalf Qualified Nonelective Contributions are made
Forfeitures
(1) Employer Matching Contributions. Forfeitures of
Employer Matching Contributions will be used as
follows (check and complete (a) or (b)):
_____ (a) Applied to reduce the
following contributions required of the
Employer (check (i) and/or (ii)):
_____ (i) Employer Matching
Contributions
_____ (ii) Profit Sharing
Contributions
|
_____ (b) Reallocated as follows (check
(i) or (ii)):
_____(i) As additional Employer Matching Contributions
_____(ii) As additional Profit Sharing Contributions
(2) Profit Sharing Contributions. Forfeitures of Profit Sharing Contributions will be used as follows (check (a) or (b)):
_____ (a) Applied to reduce the
following contributions required of the
Employer (check (i) and/or (ii)):
_____ (i) Profit Sharing Contributions
_____ (ii) Employer Matching
Contributions
_____ (b) Reallocated as additional
|
Profit Sharing Contributions
Top-Heavy Minimum Contributions (Plan Section 14.3). Skip
paragraphs A and B below if you do not maintain any other
qualified plan in addition to this Plan.
For any Plan Year in which the Plan is Top-Heavy, the
Top-Heavy minimum contribution (or benefit) for Non-Key
employees participating both in this Plan and another
qualified plan maintained by the Employer will be
provided in (check one):
_____ (1) This Plan ______ (2) The other
qualified
plan
|
If you maintain a defined benefit plan in addition to
this Plan, and the Top-Heavy Ratio (as defined in Plan
Section 14.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased minimum
allocation or benefit pursuant to Plan Section 14.4.
Specify your election by completing the statement
below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as permitted under Plan
Section 14.4.
Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below:
If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one):
_____ (1) The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan.
_____ (2) The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below.
B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below:
If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Compensation (Plan Section 2.8).
Amount.
Elective Deferrals and Employer Matching
Contributions. Compensation for the purposes of
determining the amount and allocation of Elective
Deferrals and Employer Matching Contributions will
be determined as follows (choose either (a) or
(b), and (c) and/or (d) as applicable).
_____ (a) Compensation will include Form
W-2 earnings as defined in Section 2.8
of the Plan.
_____ (b) Compensation will include all
compensation included in the definition
of Code Section 415 Compensation in Plan
Section 6.5(b) of the Plan.
_____ (c) In addition to the amount
provided in either (a) or (b) above,
Compensation will also include any
amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP,
tax sheltered 403(b) arrangement, or
Code Section 457 deferred compensation
plan, and contributions described in
Code Section 414(h)(2) that are picked
up by a governmental employer.
_____ (d) Compensation will also exclude
the following amount (choose each that
applies):
_____ (i) overtime pay.
_____ (ii) bonuses.
_____ (iii) commissions.
_____ (iv) other pay
|
(describe):__________
_____ (v) compensation in excess of $_________
Profit Sharing Contributions. Compensation for
the purposes of determining the amount and
allocation of Profit Sharing Contributions shall
be determined as follows (choose either (a) or
(b), and (c) and/or (d), as applicable).
_____ (a) Compensation will include Form
W-2 earnings as defined in Section 2.8
of the Plan.
_____ (b) Compensation will include all
compensation included in the definition
of Code Section 415 Compensation in
Section 6.5(b) of the Plan.
_____ (c) In addition to the amount
provided in either (a) or (b) above,
compensation will also include any
amounts withheld from the employee under
a 401(k) plan, cafeteria plan, SARSEP,
tax sheltered 403(b) arrangement, or
Code Section 457 deferred compensation
plan, and contributions described in
Code Section 414(h)(2) that are picked
up by a governmental employer.
_____ (d) Compensation will also exclude
the following amounts (choose each that
applies):
_____ (i) overtime pay
_____ (ii) bonuses
_____ (iii) commissions
_____ (iv) other pay
|
describe: ___________
_____ (v) compensation in excess of $________
Note: No exclusion under (d) may be selected
if Profit Sharing Contributions will be
integrated with Social Security under
4.C(3)(a)(iii). In addition, no exclusion
under (d) will apply for purposes of
determining the top-heavy minimum
contribution if the Plan is top-heavy.
Measuring Period. Compensation will be based on the Plan Year. However, for an Employee's initial year of participation in the Plan, Compensation will be recognized as of:
_______ (1) the first day of the Plan Year. _______ (2) the date the Participant enters the Plan. |
Distributions and Withdrawals.
Retirement Distributions.
Normal Retirement Age (Plan Section 7.1). Normal retirement age will be the later of _______ (not over age 65) or ______ (not more than 5) years of participation in the Plan.
Early Retirement (Plan Section 7.1). Select one:
_____ (a) No early retirement will be permitted.
_____ (b) Early retirement will be permitted at age ____.
_____ (c) Early retirement will be permitted at age ____ with at least ________ Years of Service.
Annuities (Plan Section 9.3). Will your Plan permit distributions in the form of a life annuity? You must check Yes if this Plan replaces or serves as a transferee plan for an existing Plan that permits distributions in a life annuity form.
_____ (a) Yes _____ (b) No
Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions?
_____ (1) No
_____ (2) Yes. Indicate below from which Accounts hardship withdrawals will be permitted (check all that apply):
_____ (a) Elective
Deferral Account
_____ (b) Rollover Account
_____ (c) Employer Matching
Account
_____ (d) Employer
Contribution Account (i.e. Profit
Sharing Contributions)
Withdrawals after Age 59 1/2 (Plan Section 12.3).
Will
your Plan permit employees over age 59 1/2 to
withdraw
|
amounts upon request? You must check Yes if this Plan replaces an existing Plan that permits withdrawals after age 59 1/2.
_____ (1)Yes _____ (2) No
Withdrawals following Five Years of Participation
or Two Years after Contribution (Plan Section 12.4).
Will your Plan permit employees to withdraw amounts
from the vested portion of their Employer Matching
Contribution Accounts and Employer Contribution
Accounts (i.e., Profit Sharing Contributions) if either
(i) the Participant has been a Participant for at least
five years, or (ii) the amount withdrawn from each of
these Accounts is limited to the amounts that were
credited to that Account prior to the date two years
before the withdrawal? You must check yes if this Plan
replaces a Plan which permits withdrawals in these
circumstances.
_____ (1)Yes _____ (2) No
Loans (Plan Section 12.5). Will your Plan permit loans to employees from the vested portion for their Accounts?
_____ (1)Yes _____
(2) No
Automatic Distribution of Small Accounts (Plan
|
Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment?
_____ (1)Yes _____
(2) No
Vesting (Plan Article 8).
|
Time of Vesting (select (1) or (2) below and complete vesting schedule).
_____ (1) Single Vesting Schedule:
The vesting schedule selected below will apply to both Employer Matching Contributions and Profit Sharing Contributions.
_____ (2) Dual Vesting Schedules:
The vesting schedule marked with an "MC" below will apply to Employer Matching Contributions and the vesting schedule marked with a "PS" below will apply to Profit Sharing Contributions.
(3) Vesting Schedules:
_____ (a) 100% vesting immediately upon participation in the Plan.
_____ (b) Five-Year Graded Schedule:
Vested
Percentage 20% 40% 60% 80%
100%
Years of Service 1 2 3 4 5
_____ (c) Seven-Year Graded Schedule:
Vested
Percentage 20% 40%
60% 80% 100%
Years of Service 3 4 5 6 7
_____ (d) Six-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80%
100%
Years of
Service 2 3 4
5 6
_____ (e) Three-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of
Service 0-2 3
_____ (f) Five-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of
|
Service 0-4 5
_____ (g) Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule):
(i)
Vested Percentage __% __% __% __% __%
(ii) Years
of Service ___ ___ ___ ___ ___
|
(4) Top Heavy Schedule:
(a) If you selected above an "Other Schedule,"
specify in the space below the schedule that
will apply in Plan Years that the Plan is
top-
heavy. The schedule you specify must be at
|
least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be:
_____ (i) the same "Other
Schedule" selected above
_____ (ii) the
following schedule:
Vested
Percentage
__% __% __% __%
__%
Years
of Service ___ ___
___ ___ ___
|
_____ (iii) Six-Year Graded Schedule
______ (iv) Three-Year Cliff Schedule
(b) If the Plan becomes top-heavy in a Plan Year, will the top-heavy vesting schedule apply for all subsequent Plan Years?
_____ (i) Yes _____ (ii) No
Service for Vesting (select (1) or (2)).
_____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting
_____ (2) An employee's Years of Service for vesting will include all years except (check
all that apply):
___ (a) (New plan) service
before the effective date of the plan
___ (b) (Existing plan) service
before the effective date of the
existing plan
_____ (c) Service before the Plan Year
in which an employee reached age 18
_____ (d) Service for a business
acquired by the Employer, before the
date of acquisition
Hours of Service for Vesting. The number of Hours of
Service required for crediting a Year of Service for
vesting will be (check one):
_____ (1) 1,000 Hours of Service
_____ (2) ___________________ Hours of Service
(under 1,000)
|
Hours of Service for vesting will be credited according to the method selected under 3.C(6).
Year of Service Measuring Period for Vesting (Plan
Section 2.52). The periods of 12 months used for
measuring Years of Service will be (check one):
_____ (1) Plan Years
_____ (2) 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing.
Investments (Plan Sections 13.2 and 13.3).
Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam, or such other written instructions as the case may be, until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instructions as the case may be, as an available Investment Product for that purpose.
Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.)
_____ (1) The Employer will make all investment decisions with respect to all employee contributions, including Elective Deferrals, Participant Contributions, Deductible Employee Contributions and Rollover Contributions.
_____ (2) The Employer will make all investment decisions with respect to all Employer contributions, including Profit Sharing Contributions, Employer Matching
Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions. |
_____ (3) The Employer will make investment decisions with respect to Employer Matching Contributions and Qualified Matching Contributions.
_____ (4) The Employer will make investment decisions with respect to
Qualified Nonelective Contributions.
_____ (5) The Employer will make
investment decisions with respect to Profit
Sharing Contributions.
|
Changes. Investment instructions may be changed (check one):
_____ (1) on any Valuation Date
(daily)
_____ (2) on the first day of any
month (monthly)
_____ (3) on the first day of the
first, fourth, seventh and tenth months in a
Plan Year (quarterly)
Employer Stock. (Skip this paragraph if you did not
designate Employer Stock as an investment under the
|
Service Agreement.)
Voting. Employer Stock will be voted as
follows:
_____ (a) In accordance with the Employer's
instructions.
_____ (b) In accordance
with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
voting of Employer Stock in accordance
with Plan Section 13.8.
Tendering. Employer stock will be
tendered as follows:
_____ (a) In accordance with the Employer's
instructions.
|
_____ (b) In accordance with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
tendering of Employer Stock in
accordance with Plan Section 13.8.
Administration.
Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator.
The initial Plan Administrator will be (check one):
_____ This person: _______________________________
_____ A committee composed of these people:
_________________________________________________________________
_
_________________________________________________________________
_
|
Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and the Employer.
The initial Record keeper will be:
Determination Letter Required. You may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. In order to obtain reliance with respect to qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties.
Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #001 may be used only in conjunction with Putnam's Basic Plan Document #07.
* * * * *
If you have any questions regarding this Plan Agreement, contact Putnam at:
Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269
Phone: 1-800-752-5766
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
FLEXIBLE 401(k) AND PROFIT SHARING PLAN
The Employer named below hereby adopts a PUTNAM FLEXIBLE 401(k) AND PROFIT SHARING PLAN, and appoints __________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Flexible 401(k) and Profit Sharing Plan only upon Putnam's acceptance of this Plan Agreement.
Investment Options
The Employer hereby elects the following as the investment options available under the Plan:
________________________ __________________________ ________________________ ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ |
Employer signature(s) to adopt
Plan:
Date of
signature:
Please print name(s) of authorized person(s) signing above:
A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective.
* * * * *
ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
Putnam Fiduciary Trust Company, Trustee
* * * * *
ACCEPTANCE OF OTHER TRUSTEE
Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission, and Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype 401(k) and Profit Sharing Plan.)
_________________________________, Trustee
By: ______________________________ ___ Trustee's Tax I.D.
Number _______________
(Trustee)
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #07.
Putnam Mutual Funds Corp.
By: ______________________________
PUTNAM FLEXIBLE MONEY PURCHASE PENSION PLAN
PLAN AGREEMENT #002
This is the Plan Agreement for a Putnam nonstandardized prototype money purchase plan. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. By executing this Plan Agreement, the Employer establishes a money purchase plan and trust upon the terms and conditions of Putnam Basic Plan Document #07, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Flexible Money Purchase Pension Plan.
* * * * *
Employer Information. The Employer adopting this Plan is:
Employer Name:
_____________________________________________________
Employer Identification Number:
__________________________
Employer Address:
_______________________________
_______________________________
_______________________________
SIC Code: _______
Employer Contact: Name:
___________________________________________
|
Fiscal Year: __________ through __________
(month/day) (month/day)
Type of Entity (check one):
_____ Corporation _____ Partnership _____ Subchapter S Corporation
Plan Name: __________________________________
Plan Number: 00__(complete)
Plan Information.
Plan Year. Check one:
_____ (1) The Calendar Year
_____ (2) The Plan Year
will be the same as the Fiscal
Year of the Employer shown in
1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly.
_____ (3) The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month).
The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan.
Effective Date of Adoption of Plan.
(1) Are you adopting this Plan to replace an existing plan?
_____ (a) Yes _____ (b) No
(2) If you answered Yes in 2.B(1) above, the Effective Date of your adoption of this Replacement Plan will be the first day of the current Plan Year unless you elect a later date in (2)(b) below. Please complete the following:
(3) If you answered No in 2B(1) above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began):
(a) The Effective Date is:_____________________________________ month/day/year
Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below.
Classes of Eligible Employees. The Plan will cover all employees who have met the age and service requirements with the following exclusions:
_____ (1) No exclusions. All job classifications will be eligible.
_____ (2) The Plan will exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which will be included: ____________________.
_____ (3) The Plan will exclude employees who are non-resident aliens without U.S. source income.
_____ (4) Employees of the following Affiliated Employers (specify):
_____ (5) Leased Employees
_____ (6) Employees in the following other classes (specify):
Age Requirement (check and complete (1) or (2)):
_____ (1) No minimum age required for participation
_____ (2) Employees must reach age __ (not over 21) to participate
C. Service Requirements:
To become eligible, an employee must complete (choose one):
_____ (a) No minimum service required.
_____ (b) One 6-month Eligibility Period
_____ (c) One __-
month Eligibility Period (must be
less than 12)
_____ (d) One 12-
month Eligibility Period
_____ (e) Two 12-
|
month Eligibility Periods (may only
be chosen if you adopt the vesting
schedule under item 9.A(1)(a) to
provide for 100% full and immediate
vesting).
If the Employer acquires a business, the
Eligibility Period for an employee of the acquired
business will be the period selected in (1),
beginning on (check (a) or (b)):
_____ (a) the date the employee began work with the acquired business.
_____ (b) the date of the acquisition (i.e., the date the employee begins work for the Employer).
Hours of Service for Eligibility Periods.
(a) 6-Month Eligibility Period. To receive credit for a 6-month Eligibility Period, an employee must complete 6 months of service, during which he completes at least:
_____ (i) 500 Hours of Service
_____ (ii) ____________ Hours of Service
(under 500)
(b) 12-
Month Eligibility
Period. To receive
credit for a 12-
month Eligibility
Period, an employee
must complete 12
months of service,
during which he
completes at least:
_____ (i) 1,000 Hours of Service
_____ (ii) _____________ Hours of Service
(under 1,000)
|
(c) Other Eligibility Period. To receive credit for the Eligibility Period selected in 3.C(1)(c), an employee must complete during it at least:
_____ (i) _____________ Hours of Service
(under 1000)
Method of Crediting Hours of Service For Eligibility and Vesting. Hours of Service will be credited to an employee by the following method (check one):
_____ (a) Actual hours for which an
employee is paid
_____ (b) Any employee who has
one actual paid hour in the following
period will be credited with the
number of Hours of Service indicated
(check one):
_____ (i) Day (10 Hours of
Service)
_____ (ii) Week (45 Hours of
Service)
_____ (iii) Semi-monthly payroll
period (95 Hours of Service)
_____ (iv) Month
(190 Hours of Service)
Entry Dates. Each employee in an eligible class
|
who completes the age and service requirements specified above will begin to participate in the Plan on (check one):
_____ (a) The first day of the month in which he fulfills the requirements.
_____ (b) The first of the following dates
occurring after he fulfills the
requirements (or, if earlier, the
first day of the first Plan Year that
begins after the date he fulfills the
requirements) (check one):
_____ (i) The first day of the
month following the date he fulfills the
requirements (monthly).
|
_____ (ii) The first day of the
first, fourth, seventh and tenth months in a
Plan Year
(quarterly).
___ (May be no later than (i) the first day of the Plan Year after which he fulfills the requirements, and (ii) the date six months after the date on which he fulfills the |
requirements, which ever occurs first.)
D. (For New Plans Only) Will all eligible Employees as of the Effective Date be required to meet the age and service requirements for participation specified in B and C above?
_____ (a) Yes
_____ (b) No. Eligible Employees will be eligible to become Participants as of the Effective Date even if they have not satisfied (check one or
both): _____ (i) the age requirement. _____ (ii) the service requirement. |
Contributions.
Employer Contributions. (Plan Sections 4.1 and 4.3)
Amount. The Employer will contribute to the Plan for each Plan Year a Base Contribution Percentage of ___% (not more than 25%) of the Earnings of all Qualified Participants for the Plan Year.
Allocations.
(a) Allocations to Qualified Participants. Contributions under 4.A(1) will be allocated to Qualified Participants in proportion to their Earnings, unless you choose to integrate the Plan with Social Security. If the Plan is integrated with Social Security, the Base Contribution Percentage you choose under 4.A(1) may not be less than 3% unless you will perform annual top-heavy testing for the Plan.
Will the Plan be integrated with Social Security?
______ (i) Yes ______ (ii) No
(b) Integration Level. (Complete only if you have elected in 4.A(2)(a) to integrate your Plan with Social Security.) The Integration Level will be (check one):
_____ (i) The Social Security Wage Base in effect at the beginning of the Plan Year.
____ (ii) __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year.
____ (iii) $__________ (not more than the Social Security Wage Base).
Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living.
Qualified Participants. In order to receive an allocation for a Plan Year, an Employee must be a Qualified Participant. Select below either (a) alone, or any combination of (b), (c) and (d).
_____ (a) To be a Qualified Participant, an Employee must (check (i) or (ii)):
_____ (i) Either be employed on the last day of the Plan Year, complete more than 500 Hours of Service in the Plan Year, retire, die or become disabled in the Plan Year.
_____ (ii) Either be
employed on the last day of the Plan
Year or
complete more than 500 Hours of
Service in the
Plan Year.
Stop here if you checked (a). If you did not
check (a), check (b), (c) or (d), or any
|
combination of (b), (c) and (d).
To be a Qualified Participant, an Employee must:
_____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year.
_____ (c) Be an Employee on the last day of the Plan Year.
_____ (d) Retire, die or become disabled during the Plan Year.
Participant Contributions (Plan Section 4.6). Will your Plan allow Participants to make after-tax contributions?
(1) Yes _____ (2) No
Forfeitures (Plan Section 4.4). Forfeitures will be used as follows (check (1) or (2)):
_____ (1) Applied to reduce contributions required of the Employer under 4.A(1).
_____ (2) Reallocated as additional contributions under 4.A(1).
Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan in addition to this Plan.
For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one):
_____ (1) This Plan ______ (2) The other
qualified
plan
|
If you maintain a defined benefit plan in addition to
this Plan, and the Top-Heavy Ratio (as defined in Plan
Section 14.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased minimum
allocation or benefit pursuant to Plan Section 14.4.
Specify your election by completing the statement
below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as permitted under Plan
Section 14.4.
Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below:
If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one):
_____ (1) The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan.
_____ (2) The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below.
B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below:
If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %__________________________
Compensation (Plan Section 2.8).
Amount. Compensation for the purposes of determining
the amount and allocation of contributions shall be
determined as follows (choose either (1) or (2), and
(3) and/or (4), as applicable).
_____ (1) Compensation will include Form W-2
earnings as defined in Section 2.8 of the
Plan.
_____ (2) Compensation will include all
|
compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan.
_____ (3) In addition to the amount provided in either (1) or (2) above, compensation will also include any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer.
_____ (4) Compensation will also exclude the following amounts (choose each that applies):
_____ (a) overtime pay
_____ (b) bonuses
_____ (c) commissions
_____ (d) other pay describe:
___________
_____ (e) compensation in excess
of $________
|
Note: No exclusion under (4) may be selected if contributions will be integrated with Social Security under 4.A(2)(a). In addition, no exclusion under (4) will apply for purposes of determining the top-heavy minimum contribution if the Plan is top-heavy.
Measuring Period. Compensation will be based on the Plan Year. However, for an Employee's initial year of participation in the Plan, Compensation will be recognized as of:
_______ (1) the first day of the Plan Year. _______ (2) the date the Participant enters the Plan. |
Distributions and Withdrawals.
Retirement Distributions.
Normal Retirement Age (Plan Section 7.1). Normal retirement age will be the later of _______ (not over age 65) or _____ (not more than 5) years of participation in the Plan.
Early Retirement (Plan Section 7.1).
Select one:
_____ (a) No early retirement
will be permitted.
_____ (b) Early retirement
|
will be permitted at age ____.
_____ (c) Early retirement will be permitted at age ____ with at least ________ Years of Service.
Loans (Plan Section 12.5). Will your Plan permit loans to employees from the vested portion for their Accounts?
_____ (1) Yes _____ (2) No
Automatic Distribution of Small Accounts (Plan
Section 9.1). Will your Plan automatically distribute
vested account balances not exceeding $3,500, within 60
days after the end of the Plan Year in which a
Participant separates from employment?
_____ (1) Yes _____ (2) No
Vesting (Plan Article 8).
Time of Vesting.
(1) Vesting Schedules:
_____ (a) 100% vesting immediately upon participation in the Plan.
_____ (b) Five-Year Graded Schedule:
Vested
Percentage 20% 40%
60% 80% 100%
Years of Service 1 2 3
4 5
_____ (c) Seven-Year Graded Schedule:
Vested
Percentage 20% 40%
60% 80% 100%
Years of Service 3 4 5 6
7
_____ (d) Six-Year Graded Schedule:
Vested Percentage 20% 40% 60%
80% 100%
Years of
Service 2 3 4
5 6
_____ (e) Three-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of
Service 0-2 3
_____ (f) Five-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of
|
Service 0-4 5
_____ (g) Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule):
(i)
Vested Percentage __% __% __% __% __%
(ii) Years
of Service ___ ___ ___ ___ ___
|
(2) Top Heavy Schedule:
(a) If you selected above an "Other Schedule,"
specify in the space below the schedule that
will apply in Plan Years that the Plan is
top-
heavy. The schedule you specify must be at
|
least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be:
_____ (i) the same "Other
Schedule" selected above
_____ (ii) the
following schedule:
Vested
Perce
ntage
__% __% __%
__% __%
Years
of Service ___ ___ ___
___ ___
|
_____ (iii) Six-Year Graded Schedule
______ (iv) Three-Year Cliff Schedule
(b) If the Plan becomes top-heavy in a Plan Year, will the top-heavy vesting schedule apply for all subsequent Plan Years?
_____ (i) Yes _____ (ii) No Service for Vesting (select (1) or (2)).
_____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting
_____ (2) An employee's Years of Service for vesting will include all years except (check
all that apply):
_____ (a) (New plan)
service before the effective date of the
plan
_____ (b) (Existing plan)
service before the effective date of the
existing plan
_____ (c) Service before the Plan Year
in which an employee reached age 18
_____ (d) Service for a business
acquired by the Employer, before the
date of acquisition
Hours of Service for Vesting. The number of Hours of
Service required for crediting a Year of Service for
vesting will be (check one):
_____ (1) 1,000 Hours of Service
_____ (2) ___________________ Hours of Service
(under 1,000)
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Hours of Service for vesting will be credited according to the method selected under 3.C(6).
Year of Service Measuring Period for Vesting (Plan
Section 2.52). The periods of 12 months used for
measuring Years of Service will be (check one):
_____ (1) Plan Years
_____ (2) 12-month Eligibility Periods
Investments (Plan Sections 13.2 and 13.3).
Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam, or such other written instructions as the case may be, until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instructions as the case may be, as an available Investment Product for that purpose.
Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.)
_____ (1) The Employer will make all investment decisions with respect to all employee contributions, including Participant Contributions, Deductible Employee Contributions and Rollover Contributions.
_____ (2) The Employer will make all investment decisions with respect to all Employer contributions.
Changes. Investment instructions may be changed (check one):
_____ (1) on any Valuation Date
(daily)
_____ (2) on the first day of any
month (monthly)
_____ (3) on the first day of the
first, fourth, seventh and tenth months in a
Plan Year (quarterly)
Employer Stock. (Skip this paragraph if you did not
designate Employer Stock as an investment under the
|
Service Agreement.)
Voting. Employer Stock will be voted as
follows:
_____ (a) In accordance with the Employer's
instructions.
_____ (b) In accordance
with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
voting of Employer Stock in accordance
with Plan Section 13.8.
Tendering. Employer stock will be
tendered as follows:
_____ (a) In accordance with the Employer's
instructions.
|
_____ (b) In accordance with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
tendering of Employer Stock in
accordance with Plan Section 13.8.
Administration.
Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator.
The initial Plan Administrator will be (check one):
_____ This person: _______________________________
_____ A committee composed of these people:
_________________________________________________________________
_
_________________________________________________________________
_
|
Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and the Employer.
The initial Record keeper will be:
Determination Letter Required. You may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. In order to obtain reliance with respect to qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties.
Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #002 may be used only in conjunction with Putnam's Basic Plan Document #07.
* * * * *
If you have any questions regarding this Plan Agreement, contact Putnam at:
Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269
Phone: 1-800-752-5766
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
FLEXIBLE MONEY PURCHASE PENSION PLAN
The Employer named below hereby adopts a PUTNAM FLEXIBLE MONEY PURCHASE PENSION PLAN, and appoints __________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Flexible Money Purchase Pension Plan only upon Putnam's acceptance of this Plan Agreement.
Investment Options
The Employer hereby elects the following as the investment options available under the Plan:
________________________ __________________________ ________________________ ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ |
Employer signature(s) to adopt
Plan:
Date of
signature:
Please print name(s) of authorized person(s) signing above:
A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective.
* * * * *
ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
Putnam Fiduciary Trust Company, Trustee
* * * * *
ACCEPTANCE OF OTHER TRUSTEE
Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission, and Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype Money Purchase Pension Plan.)
_________________________________, Trustee
By: ______________________________ ___ Trustee's Tax I.D.
Number _______________
(Trustee)
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #07.
Putnam Mutual Funds Corp.
By: ______________________________
2057121.01
PUTNAM FLEXIBLE PROFIT SHARING PLAN
PLAN AGREEMENT #003
This is the Plan Agreement for a Putnam nonstandardized prototype profit sharing plan. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. By executing this Plan Agreement, the Employer establishes a profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #07, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Flexible Profit Sharing Plan.
* * * * *
Employer Information. The Employer adopting this Plan is:
Employer Name:
_____________________________________________________
Employer Identification Number:
__________________________
Employer Address:
_______________________________
_______________________________
_______________________________
SIC Code: _______
Employer Contact: Name:
___________________________________________
|
Fiscal Year: __________ through __________
(month/day) (month/day)
Type of Entity (check one):
_____ Corporation _____ Partnership _____ Subchapter S Corporation
Plan Name: __________________________________
Plan Number: 00__(complete)
Plan Information.
Plan Year. Check one:
_____ (1) The Calendar Year
_____ (2) The Plan Year
will be the same as the Fiscal
Year of the Employer shown in
1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly.
_____ (3) The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month).
The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan.
Effective Date of Adoption of Plan.
(1) Are you adopting this Plan to replace an existing plan?
_____ (a) Yes _____ (b) No
(2) If you answered Yes in 2.B(1) above, the Effective Date of your adoption of this Replacement Plan will be the first day of the current Plan Year unless you elect a later date in (2)(b) below. Please complete the following:
(3) If you answered No in 2B(1) above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began):
(a) The Effective Date is:_____________________________________ month/day/year
Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below.
Classes of Eligible Employees. The Plan will cover all employees who have met the age and service requirements with the following exclusions:
_____ (1) No exclusions. All job classifications will be eligible.
_____ (2) The Plan will exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which will be included: ____________________.
_____ (3) The Plan will exclude employees who are non-resident aliens without U.S. source income.
_____ (4) Employees of the following Affiliated Employers (specify):
_____ (5) Leased Employees
_____ (6) Employees in the following other classes (specify):
Age Requirement (check and complete (1) or (2)):
_____ (1) No minimum age required for participation
_____ (2) Employees must reach age __ (not over 21) to participate
Service Requirements:
To become eligible, an employee must complete (choose one):
_____ (a) No minimum service required.
_____ (b) One 6-month Eligibility Period
_____ (c) One __-
month Eligibility Period (must be
less than 12)
_____ (d) One 12-
month Eligibility Period
_____ (e) Two 12-
|
month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(1)(a) to provide for 100% full and immediate vesting of Profit Sharing Contributions)
If the Employer acquires a business, the Eligibility Period for an employee of the acquired business will be the period selected in (1), beginning on (check (a) or (b)):
_____ (a) the date the employee began work with the acquired business.
_____ (b) the date of the acquisition (i.e., the date the employee begins work for the Employer).
Hours of Service for Eligibility Periods.
(a) 6-Month Eligibility Period. To receive credit for a 6-month Eligibility Period, an employee must complete 6 months of service, during which he completes at least:
_____ (i) 500 Hours of Service
_____ (ii) ____________ Hours of Service
(under 500)
(b) 12-
Month Eligibility
Period. To receive
credit for a 12-
month Eligibility
Period, an employee
must complete 12
months of service,
during which he
completes at least:
_____ (i) 1,000 Hours of Service
_____ (ii) _____________ Hours of Service
(under 1,000)
|
(c) Other Eligibility Period. To receive credit for the Eligibility Period selected in 3.C(1)(c), an employee must complete during it at least:
_____ (i) _____________ Hours of Service
(under 1000)
Method of Crediting Hours of Service For Eligibility and Vesting. Hours of Service will be credited to an employee by the following method (check one):
_____ (a) Actual hours for which an
employee is paid
_____ (b) Any employee who has
one actual paid hour in the following
period will be credited with the
number of Hours of Service indicated
(check one):
_____ (i) Day (10 Hours of
Service)
_____ (ii) Week (45 Hours of
Service)
_____ (iii) Semi-monthly payroll
period (95 Hours of Service)
_____ (iv) Month
(190 Hours of Service)
Entry Dates. Each employee in an eligible class
|
who completes the age and service requirements specified above will begin to participate in the Plan on (check one):
_____ (a) The first day of the month in which he fulfills the requirements.
_____ (b) The first of the following dates
occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the |
requirements) (check one):
_____ (i) The first day of the
month following the date he
fulfills the
requirements (monthly).
_____ (ii) The first day of the
first, fourth, seventh and tenth months in
a Plan Year
(quarterly).
___ (May be no later than (i) the first day of the Plan Year after which he fulfills the requirements, and (ii) the date six months after the date on which he fulfills the |
requirements, which ever occurs first.)
(For New Plans Only) Will all eligible Employees as of the Effective Date be required to meet the age and service requirements for participation specified in B and C above?
_____ (a) Yes
_____ (b) No. Eligible Employees will be eligible to become Participants as of the Effective Date even if they have not satisfied (check one or
both): _____ (i) the age requirement. _____ (ii) the service requirement. |
Contributions.
Profit Sharing Contributions. (Plan Sections 4.1 and 4.2)
Profit Limitation. Will Profit Sharing Contributions to the Plan be limited to the current and accumulated profits of your Business? Check one:
_____ (a) Yes _____ (b) No.
Amount. The Employer will contribute to the Plan
for each Plan Year (check one):
_____ (a) An amount chosen by the Employer
from year to year
|
_____ (b) ____% of the Earnings of all Qualified Participants for the Plan Year
_____ (c) $____ for each Qualified Participant per ___________ (enter time period, e.g.
payroll period, plan year)
Allocations.
(a) Allocation to Qualified Participants. Profit Sharing Contributions
will be allocated:
_______ (i) Pro
rata (percentage based on
compensation)
_______ (ii)
Uniform Dollar amount
_______ (iii)
Integrated With Social Security
(complete (b) and (c) below)
|
(b) Integration with Social Security. (Complete only if you have elected
in 4.A(3)(a) to integrate your Plan with
Social Security.) Profit Sharing
Contributions will be allocated to Qualified
Participants as you check below:
_____ (i) Profit Sharing
Contributions will be allocated
according to the Top-Heavy
Integration Formula in Plan Section
4.2(c)(1) in every Plan Year, whether
or not the Plan is top-heavy.
_____ (ii) Profit
Sharing Contributions will be
allocated according to the Top-Heavy
Integration Formula in Plan Section
4.2(c)(1) only in Plan Years in which
the Plan is top-heavy. In all other
Plan Years, contributions will be
|
allocated according to the Non-Top-
Heavy Integration Formula in Plan
Section 4.2(c)(2).
(c) Integration Level. (Complete only if you have elected in 4.A(3)(a) to integrate your Plan with Social Security.) The Integration Level will be (check one):
_____ (i) The Social Security Wage Base in effect at the beginning of the Plan Year.
____ (ii) __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year.
____ (iii) $__________ (not more than the Social Security Wage Base).
Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living.
Qualified Participants. In order to receive an allocation of Profit Sharing Contributions for a Plan Year, an Employee must be a Qualified Participant. Select below either (a) alone, or any combination of (b), (c) and (d).
_____ (a) To be a Qualified Participant, an Employee must (check (i) or (ii)):
_____ (i) Either be employed on the last day of the Plan Year, complete more than 500 Hours of Service in the Plan Year, retire, die or become disabled in the Plan Year.
_____ (ii) Either be
employed on the last day of the
Plan Year or
complete more than 500 Hours of
Service in the
Plan Year.
Stop here if you checked (a). If you did not
check (a), check (b), (c) or (d), or any
|
combination of (b), (c) and (d).
To be a Qualified Participant, an Employee must:
_____ (b) Be credited with _____ (choose 1,
501 or 1,000) Hours of Service in the
Plan Year.
_____ (c) Be an Employee on the last day of
the Plan Year.
|
_____ (d) Retire, die or become disabled during the Plan Year.
Participant Contributions (Plan Section 4.6). Will your Plan allow Participants to make after-tax contributions?
(1) Yes _____ (2) No
Forfeitures (Plan Section 4.4). Forfeitures of Profit Sharing Contributions will be used as follows (check (1) or (2)):
_____ (1) Applied to reduce Profit Sharing Contributions required of the Employer.
_____ (2) Reallocated as additional Profit Sharing Contributions.
Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan in addition to this Plan.
For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one):
_____ (1) This Plan ______ (2) The other
qualified
plan
|
If you maintain a defined benefit plan in addition to
this Plan, and the Top-Heavy Ratio (as defined in Plan
Section 14.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased minimum
allocation or benefit pursuant to Plan Section 14.4.
Specify your election by completing the statement
below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as permitted under Plan
Section 14.4.
Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below:
If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one):
_____ (1) The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan.
_____ (2) The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below.
B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below:
If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %__________________________
Compensation (Plan Section 2.8).
Amount. Compensation for the purposes of determining the amount and allocation of Profit Sharing Contributions shall be determined as follows (choose either (1) or (2), and (3) and/or (4), as applicable).
_____ (1) Compensation will include Form W-2
earnings as defined in Section 2.8 of the
Plan.
_____ (2) Compensation will include all
|
compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan.
_____ (3) In addition to the amount provided in either (1) or (2) above, compensation will also include any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer.
_____ (4) Compensation will also exclude the following amounts (choose each that applies):
_____ (a) overtime pay _____ (b) bonuses _____ (c) commissions _____ (d) other pay describe: ___________ |
_____ (e) compensation in excess of $________
Note: No exclusion under (4) may be selected if Profit Sharing Contributions will be integrated with Social Security under 4.A(3)(a)(iii). In addition, no exclusion under (4) will apply for purposes of determining the top-heavy minimum contribution if the Plan is top-heavy.
Measuring Period. Compensation will be based on the Plan Year. However, for an Employee's initial year of participation in the Plan, Compensation will be recognized as of:
_______ (1) the first day of the Plan Year. _______ (2) the date the Participant enters the Plan. |
Distributions and Withdrawals.
Retirement Distributions.
Normal Retirement Age (Plan Section 7.1). Normal retirement age will be the later of _______ (not over age 65) or _______ (not more than 5) years of participation in the Plan.
Early Retirement (Plan Section 7.1). Select one:
_____ (a) No early retirement will be permitted.
_____ (b) Early retirement will be permitted at age ____.
_____ (c) Early retirement will be permitted at age ____ with at least ________ Years of Service.
Annuities (Plan Section 9.3). Will your Plan permit distributions in the form of a life annuity? You must check Yes if this Plan replaces or serves as a transferee plan for an existing Plan that permits distributions in a life annuity form.
_____ (a) Yes _____ (b) No
Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions?
_____ (1) No
_____ (2) Yes. Indicate below from which Accounts hardship withdrawals will be permitted (check all that apply):
_____ (a) Rollover Account
_____ (b) Employer
Contribution Account (i.e. Profit
Sharing Contributions)
Withdrawals after Age 591/2 (Plan Section 12.3).
Will
your Plan permit employees over age59 1/2 to
withdraw
|
amounts upon request? You must check Yes if this Plan replaces an existing Plan that permits withdrawals after age 59 1/2.
_____ (1)Yes _____ (2) No
Withdrawals following Five Years of Participation or Two Years after Contribution (Plan section 12.4). Will your Plan permit employees to withdraw amounts from the vested portion of their Employer Contribution Accounts if either (i) the Participant has been a Participant for at least five years, or (ii) the amount withdrawn from the Employer Contribution Account is limited to the amounts that were credited to that Account prior to the date two years before the withdrawal? You must check yes if this Plan replaces a Plan which permits withdrawals in these circumstances.
_____ (1) Yes _____ (2) No
Loans (Plan Section 12.5). Will your Plan permit loans to employees from the vested portion for their Accounts?
_____ (1)Yes _____
(2) No
Automatic Distribution of Small Accounts (Plan
|
Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment?
_____ (1)Yes _____ (2) No
Vesting (Plan Article 8).
Time of Vesting.
(1) Vesting Schedules:
_____ (a) 100% vesting immediately upon participation in the Plan.
_____ (b) Five-Year Graded Schedule:
Vested
Percentage 20% 40%
60% 80% 100%
Years of Service 1 2 3 4
5
_____ (c) Seven-Year Graded
Schedule:
Vested
Percentage 20% 40% 60%
80% 100%
Years of Service 3 4 5 6
7
_____ (d) Six-Year Graded Schedule:
Vested Percentage 20% 40% 60%
80% 100%
Years of
Service 2 3 4
5 6
_____ (e) Three-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of
Service 0-2 3
_____ (f) Five-Year Cliff Schedule:
Vested Percentage 0% 100%
Years of
|
Service 0-4 5
_____ (g) Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule):
Vested Percentage __% __% __% __% __%
(ii) Years
of Service ___ ___
___ ___ ___
|
(2) Top Heavy Schedule:
(a) If you selected above an "Other Schedule,"
specify in the space below the schedule that
will apply in Plan Years that the Plan is
top-
heavy. The schedule you specify must be at
|
least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be:
_____ (i) the same "Other
Schedule" selected above
_____ (ii) the
following schedule:
Vested
Perce
ntage
__% __% __% __% __%
Years
of Service ___ ___ ___ ___ ___
|
_____ (iii) Six-Year Graded Schedule
______ (iv) Three-Year Cliff Schedule
(b) If the Plan becomes top-heavy in a Plan Year, will the top-heavy vesting schedule apply for all subsequent Plan Years?
_____ (i) Yes _____ (ii) No
Service for Vesting (select (1) or (2)).
_____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting
_____ (2) An employee's Years of Service for vesting will include all years except (check
all that apply):
_____ (a) (New plan)
service before the effective date of the
plan
_____ (b) (Existing plan)
service before the effective date of the
existing plan
_____ (c) Service before the Plan Year
in which an employee reached age 18
_____ (d) Service for a business
acquired by the Employer, before the
date of acquisition
Hours of Service for Vesting. The number of Hours of
Service required for crediting a Year of Service for
vesting will be (check one):
_____ (1) 1,000 Hours of Service
_____ (2) ___________________ Hours of Service
(under 1,000)
|
Hours of Service for vesting will be credited according to the method selected under 3.C(6).
Year of Service Measuring Period for Vesting (Plan
Section 2.52). The periods of 12 months used for
measuring Years of Service will be (check one):
_____ (1) Plan Years
_____ (2) 12-month Eligibility Periods
Investments (Plan Sections 13.2 and 13.3).
Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam, or such other written instructions as the case may be, until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instructions as the case may be, as an available Investment Product for that purpose.
Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.)
_____ (1) The Employer will make all investment decisions with respect to all employee contributions, including Participant Contributions, Deductible Employee Contributions and Rollover Contributions.
_____ (2) The Employer will make all investment decisions with respect to all Profit Sharing Contributions.
Changes. Investment instructions may be changed (check one):
_____ (1) on any Valuation Date
(daily)
_____ (2) on the first day of any
month (monthly)
_____ (3) on the first day of the
first, fourth, seventh and tenth months in a
Plan Year (quarterly)
Employer Stock. (Skip this paragraph if you did not
designate Employer Stock as an investment under the
|
Service Agreement.)
Voting. Employer Stock will be voted as
follows:
_____ (a) In accordance with the Employer's
instructions.
_____ (b) In accordance
with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
voting of Employer Stock in accordance
with Plan Section 13.8.
Tendering. Employer stock will be
tendered as follows:
_____ (a) In accordance with the Employer's
instructions.
|
_____ (b) In accordance with the Participant's instructions.
Participants are hereby appointed named
fiduciaries for the purpose of the
tendering of Employer Stock in
accordance with Plan Section 13.8.
Administration.
Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator.
The initial Plan Administrator will be (check one):
_____ This person: _______________________________
_____ A committee composed of these people:
_________________________________________________________________
_
_________________________________________________________________
_
|
Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and the Employer.
The initial Record keeper will be:
Determination Letter Required. You may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. In order to obtain reliance with respect to qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties.
Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #003 may be used only in conjunction with Putnam's Basic Plan Document #07.
* * * * *
If you have any questions regarding this Plan Agreement,
contact Putnam at:
Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269
Phone: 1-800-752-5766
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
FLEXIBLE PROFIT SHARING PLAN
The Employer named below hereby adopts a PUTNAM FLEXIBLE PROFIT SHARING PLAN, and appoints __________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Flexible Profit Sharing Plan only upon Putnam's acceptance of this Plan Agreement.
Investment Options
The Employer hereby elects the following as the investment options available under the Plan:
________________________ __________________________ ________________________ ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ |
Employer signature(s) to adopt Plan: Date of signature:
Please print name(s) of authorized person(s) signing above:
A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective.
* * * * *
ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above.
Putnam Fiduciary Trust Company, Trustee
* * * * *
ACCEPTANCE OF OTHER TRUSTEE
Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission, and Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype Profit Sharing Plan.)
_________________________________, Trustee
By: ______________________________ ___ Trustee's Tax I.D.
Number _______________
(Trustee)
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #07.
Putnam Mutual Funds Corp.
By: ______________________________
2057121.01
PUTNAM HEALTH SCIENCES TRUST
CLASS M
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam Health Sciences Trust, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust;
(b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and
(c) the Trust has received the proceeds of the initial public offering of its Class M shares.
SECTION 3.
This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust.
SECTION 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its assignment.
SECTION 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust.
Executed as of June 30, 1995.
PUTNAM MUTUAL FUNDS CORP. PUTNAM HEALTH SCIENCES TRUST
/s/ William N. Shiebler /s/ Charles E. Porter
By: ---------------------- By: --------------------------
William N. Shiebler Charles E. Porter
President Executive Vice President
|
DEALER SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this Dealer Service Agreement, we are authorized to pay you service fees in connection with the accounts of your customers that hold shares of certain Putnam funds listed in SCHEDULE 1 that have adopted distribution plans pursuant to Rule 12b-1 (the "12b-1 Funds"). Payment of the service fees is subject to your initial and continuing satisfaction of the following terms and conditions which may be revised by us from time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Sales Contract with us with respect to the Putnam Family of Mutual Funds (the "Putnam Funds").
(b) You are the dealer of record for accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (DEALER FIRM REQUIREMENTS) during the period for which a service fee is to be paid. Putnam Fund accounts are accounts in any open-end Putnam Fund, but excluding any accounts for your firm's own retirement plans.
(c) One or more of your current employees must be the designated registered representative(s) on accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (REGISTERED REPRESENTATIVE REQUIREMENTS) during the period for which a service fee is to be paid.
(d) You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand that such payments will be based solely on Putnam's records.
For each Putnam Fund account registered in the name of one of your customers, you will advise us, preferably by electronic means, before the end of the second month in each calendar quarter, of the registered representative's name, identification number, branch number, and telephone number.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above in Paragraph 1, you will be paid a service fee on assets in the 12b-1 Funds for which you are the dealer of record and which are serviced by a registered representative of your firm meeting the Registered Representative Requirements, if any, at the annual rates specified in SCHEDULE 3 (excluding any accounts for your firm's own retirement plans).
(b) You understand and agree that:
(i) all service fee payments are subject to the limitations contained in each 12b-1 Fund's Distribution Plan, which may be varied or discontinued at any time;
(ii) your failure to provide the services described in Paragraph 4 below as may be amended by us from time to time, or otherwise comply with the terms of this Agreement, will render you ineligible to receive service fees; and
(iii) failure of an assigned registered representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REGISTERED REPRESENTATIVES
(a) You will pass through to your registered representatives a significant share of the service fees paid to you pursuant to this Agreement.
(b) You will assist us in distributing to your registered representatives periodic statements which we will have prepared showing the aggregate average net asset value of shares in Putnam Funds with which they are credited on our records.
4. REQUIRED SERVICES
(a) You will assign one of your registered representatives to each Putnam Fund account on your records and reassign the Putnam Fund account should that representative leave your firm.
(b) You and your registered representatives will assist us and our affiliates in providing the following services to shareholders of the Putnam Funds:
(i) Maintain regular contact with shareholders in assigned accounts and assist in answering inquiries concerning the Putnam Funds.
(ii) Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (nominee name accounts).
(iii) Assist us and our affiliates in the establishment and maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative changes, such as changing dividend options, account designations, address, automatic investment programs or systematic investment plans.
(v) Assist in processing purchase and redemption transactions.
(vi) Provide any other information or services as the customer or we may reasonably request.
(c) You will support our marketing efforts by granting reasonable requests for visits to your offices by our wholesalers and by including all Putnam Funds on your "approved" list.
(d) Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed amended as provided in any written notice delivered by us to you.
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for not more than one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). This Agreement shall automatically terminate in the event of its assignment (as defined by the 1940 Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice delivered or mailed by registered mail, postage prepaid, to the other party, or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees of any 12b-1 Fund or by the vote of the holders of the outstanding voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of the 12b-1 Funds, and such Trustees shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made.
8. MISCELLANEOUS
(a) All communications mailed to us should be sent to the address listed below. Any notice to you shall be duly given if mailed or delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set forth below.
Dealer: -------------------------
By: ---------------------------- Authorized Signature, Title
Dated: -------------------------
Please return the signed Putnam copy of this Agreement to Putnam Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203.
SCHEDULE 1: THE 12B-1 FUNDS
Service fees will be paid on the following Putnam Funds at the rates set forth in the Prospectus of that Fund:
Putnam Adjustable Rate U.S. Government Fund
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
-Putnam Asset Allocation: Growth Portfolio
-Putnam Asset Allocation: Balanced Portfolio
-Putnam Asset Allocation: Conservative Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Trust
-Putnam California Intermediate Tax Exempt Fund
-Putnam California Tax Exempt Income Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Federal Income Trust
Putnam Florida Tax Exempt Income Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam Income Fund
Putnam Intermediate Tax Exempt Fund
Putnam Intermediate U.S. Government Fund
Putnam Investment Funds
-Putnam International New Opportunities Fund
Putnam Investors Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Natural Resources Fund
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Tax Exempt Income Trust
-Putnam New York Intermediate Tax Exempt Fund
-Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC Emerging Growth Fund
Putnam Overseas Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Trust
Putnam Tax Exempt Income Fund
Putnam Tax-Free Income Trust
-Putnam Tax-Free High Yield Fund
-Putnam Tax-Free Insured Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
SCHEDULE 2: MINIMUM ASSETS
DEALER FIRM REQUIREMENTS. The minimum aggregate average net asset value of all accounts in Putnam Funds specified by Paragraph 1(b) is $250,000. We will review this requirement prior to the start of each year and inform you of any changes.
REGISTERED REPRESENTATIVE REQUIREMENTS. With respect to Paragraph 1(c), there is no minimum asset qualification requirement in the Putnam Funds applicable to each of your representatives. We will review this requirement prior to the start of each year and inform you of any changes.
NF-57
10/2/95
FINANCIAL INSTITUTION
SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this FINANCIAL INSTITUTION SERVICE AGREEMENT, we are authorized to pay you service fees in connection with the accounts of your customers that hold shares of certain Putnam funds listed in SCHEDULE 1 that have adopted distribution plans pursuant to Rule 12b-1 (the "12b-1 Funds"). Payment of the service fees is subject to your initial and continuing satisfaction of the following terms and conditions which may be revised by us from time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Financial Institution Sales Contract with us with respect to the Putnam Family of Mutual Funds (the "Putnam Funds"), whose shares you have agreed to make available to your customers on an agency basis.
(b) You are the financial institution of record for accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (FINANCIAL INSTITUTION REQUIREMENTS) during the period for which a service fee is to be paid. Putnam Fund accounts are accounts in any open-end Putnam Fund but excluding any accounts for your organization's own retirement plans.
(c) One or more of your current employees must be the designated registered representative(s) in the case of a bank affiliated dealer, or agent representative(s) in the case of a bank (both referred to as "representatives"), on accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (REPRESENTATIVE REQUIREMENTS) during the period for which a service fee is to be paid.
(d) You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand that such payments will be based solely on Putnam's records:
For each Putnam Fund account registered in the name of one of your customers, you will advise us, preferably by electronic means, before the end of the second month in each calendar quarter, of the representative's name, identification number, branch number, and telephone number.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above in Paragraph 1, you will be paid, at the end of each calendar quarter, a service fee on assets of your customers in the 12b-1 Funds for which you are the financial institution of record and which are serviced by a representative of your organization meeting the Representative Requirements, if any at the annual rates specified in SCHEDULE 3 (excluding any accounts for your organization's own retirement plans), provided that you have evaluated such service fees and have concluded that it is consistent with applicable laws, rules, regulations and regulatory interpretations for you to receive such service fees.
(b) You understand and agree that:
(i) all service fee payments are subject to the limitations contained in each 12b-1 Fund's Distribution Plan, which may be varied or discontinued at any time;
(ii) your failure to provide the services described in Paragraph 4 below as may be amended by us from time to time, or otherwise comply with the terms of this Agreement, will render you ineligible to receive service fees; and
(iii) failure of an assigned representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REPRESENTATIVES
(a) Where consistent with applicable laws, rules, regulations and regulatory interpretations, you will pass through to your representatives a significant share of the service fees paid to you pursuant to this Agreement, or you will otherwise use the payments of service fees to advance the objective of providing and improving service to shareholders of the Putnam Funds in a manner specifically approved by Putnam Mutual Funds (for example, via training courses for representatives or shareholder seminars).
(b) You will assist us in distributing to your representatives periodic statements which we will have prepared showing the aggregate average net asset value of shares in Putnam Funds with which they are credited on our records.
4. REQUIRED SERVICES
(a) You will assign one of your representatives to each Putnam Fund account on your records and reassign the Putnam Fund account should that representative leave your organization.
(b) You and your representatives will assist us and our affiliates in providing the following services to shareholders of the Putnam Funds:
(i) Maintain regular contact with shareholders in assigned accounts and assist in answering inquiries concerning the Putnam Funds.
(ii) Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (nominee name accounts).
(iii) Assist us and our affiliates in the establishment and maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative changes, such as changing dividend options, account designations, address, automatic investment programs or systematic investment plans.
(v) Assist in processing purchase and redemption transactions.
(vi) Provide any other information or services as the customer or we may reasonably request.
(c) You will grant reasonable requests for visits to your offices by our wholesalers and include all Putnam Funds on your menu or list of investments made available by you to your customers.
(d) Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed amended as provided in any written notice delivered by us to you.
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). This Agreement shall automatically terminate in the event of its assignment (as defined by the 1940 Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice to the other party, or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees of any 12b-1 Fund or by the vote of the holders of the outstanding voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of the 12b-1 Funds, and such Trustees shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made.
8. COMPLIANCE WITH LAWS
With respect to the receipt of service fees under the terms of this Agreement, you will comply with all applicable federal and state laws and rules, and all applicable regulations and interpretations of regulatory agencies or authorities, which may affect your business practices, including any requirement of written authorization or consent by your customers to your receipt of service fees, and any requirement to provide disclosure to your customers of such service fees.
9. MISCELLANEOUS
(a) All communications mailed to us should be sent to the address listed below. Any notice to you shall be duly given if mailed or delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: --------------------------
William N. Shiebler,
President and
Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set forth below.
Financial Institution: --------------------------
By: --------------------------
Authorized Signature, Title
--------------------------
--------------------------
Address
Dated: --------------------------
|
Please return the signed Putnam copy of this Agreement to Putnam Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203.
SCHEDULE 1: THE 12B-1 FUNDS
Service fees will be paid on the following Putnam Funds at the rates set forth in the Prospectus of that Fund:
Putnam Adjustable Rate U.S. Government Fund
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
-Putnam Asset Allocation: Growth Portfolio
-Putnam Asset Allocation: Balanced Portfolio
-Putnam Asset Allocation: Conservative Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Trust
-Putnam California Intermediate Tax Exempt Fund
-Putnam California Tax Exempt Income Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Federal Income Trust
Putnam Florida Tax Exempt Income Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam Income Fund
Putnam Intermediate Tax Exempt Fund
Putnam Intermediate U.S. Government Fund
Putnam Investment Funds
-Putnam International New Opportunities Fund
Putnam Investors Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Natural Resources Fund
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Tax Exempt Income Trust
-Putnam New York Intermediate Tax Exempt Fund
-Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC Emerging Growth Fund
Putnam Overseas Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Trust
Putnam Tax Exempt Income Fund
Putnam Tax-Free Income Trust
-Putnam Tax-Free High Yield Fund
-Putnam Tax-Free Insured Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
SCHEDULE 2: MINIMUM ASSETS
FINANCIAL INSTITUTION REQUIREMENTS. The minimum aggregate average net asset value of all accounts in Putnam Funds specified by Paragraph 1(b) is $250,000. We will review this requirement prior to the start of each year and inform you of any changes.
REPRESENTATIVE REQUIREMENTS. With respect to Paragraph
1(c), there is no minimum asset qualification requirement in the
Putnam Funds applicable to each of your representatives. We will
review this requirement prior to the start of each year and
inform you of any changes. We reserve the right to set a minimum
at any time.
NF-58
10/2/95
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Health Sciences Trust -- Class A Shares Fiscal period ending: 8/31/95
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $1,000 $1,000 $1,000
ERV = Ending Redeemable Value $1,176 $1,906 $4,424
T = Average Annual Total Return 17.62% 13.77% 16.03%*
*Life of fund, if less than 10 years
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Health Sciences Trust-- Class B Shares
Fiscal period ending: 8/31/95
Inception date (if less than 10 years of performance): 3/1/93
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $1,000 N/A $1,000
ERV = Ending Redeemable Value $1,188 N/A $1,503
T = Average Annual Total Return 18.83% N/A 17.71%*
*Life of fund, if less than 10 years
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Health Sciences Trust -- Class M Shares
Fiscal period ending: 8/31/95
Inception date (if less than 10 years of performance): 7/3/95
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment N/A N/A $1,000
ERV = Ending Redeemable Value N/A N/A $1,028
T = Average Annual Total Return N/A N/A 2.78%*
*Life of fund, if less than 10 years
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 6 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Health Sciences Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | AUG 31 95 |
| PERIOD END | AUG 31 95 |
| INVESTMENTS AT COST | 674,758,814 |
| INVESTMENTS AT VALUE | 1,038,975,955 |
| RECEIVABLES | 8,781,510 |
| ASSETS OTHER | 61 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 1,047,757,526 |
| PAYABLE FOR SECURITIES | 707,500 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3,915,789 |
| TOTAL LIABILITIES | 4,623,289 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 651,910,344 |
| SHARES COMMON STOCK | 25,670,157 |
| SHARES COMMON PRIOR | 26,250,524 |
| ACCUMULATED NII CURRENT | 4,339,409 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 22,667,343 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 364,217,141 |
| NET ASSETS | 1,043,134,237 |
| DIVIDEND INCOME | 14,910,015 |
| INTEREST INCOME | 1,889,601 |
| OTHER INCOME | 0 |
| EXPENSES NET | 10,979,634 |
| NET INVESTMENT INCOME | 5,819,982 |
| REALIZED GAINS CURRENT | 23,154,465 |
| APPREC INCREASE CURRENT | 177,658,264 |
| NET CHANGE FROM OPS | 206,632,711 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | (6,665,340) |
| DISTRIBUTIONS OF GAINS | (13,402,834) |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 8,052,125 |
| NUMBER OF SHARES REDEEMED | (9,437,527) |
| SHARES REINVESTED | 535,035 |
| NET CHANGE IN ASSETS | 198,112,367 |
| ACCUMULATED NII PRIOR | 5,522,832 |
| ACCUMULATED GAINS PRIOR | 14,582,675 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6,018,819 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 10,979,634 |
| AVERAGE NET ASSETS | 837,816,912 |
| PER SHARE NAV BEGIN | 29.77 |
| PER SHARE NII | .23 |
| PER SHARE GAIN APPREC | 6.99 |
| PER SHARE DIVIDEND | (.26) |
| PER SHARE DISTRIBUTIONS | (.52) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 36.21 |
| EXPENSE RATIO | 1.12 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 6 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Health Sciences Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | AUG 31 95 |
| PERIOD END | AUG 31 95 |
| INVESTMENTS AT COST | 674,758,814 |
| INVESTMENTS AT VALUE | 1,038,975,955 |
| RECEIVABLES | 8,781,510 |
| ASSETS OTHER | 61 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 1,047,757,526 |
| PAYABLE FOR SECURITIES | 707,500 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3,915,789 |
| TOTAL LIABILITIES | 4,623,289 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 651,910,344 |
| SHARES COMMON STOCK | 3,172,817 |
| SHARES COMMON PRIOR | 1,880,595 |
| ACCUMULATED NII CURRENT | 4,339,409 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 22,667,343 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 364,217,141 |
| NET ASSETS | 1,043,134,237 |
| DIVIDEND INCOME | 14,910,015 |
| INTEREST INCOME | 1,889,601 |
| OTHER INCOME | 0 |
| EXPENSES NET | 10,979,634 |
| NET INVESTMENT INCOME | 5,819,982 |
| REALIZED GAINS CURRENT | 23,154,465 |
| APPREC INCREASE CURRENT | 177,658,264 |
| NET CHANGE FROM OPS | 206,632,711 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | (276,702) |
| DISTRIBUTIONS OF GAINS | (1,193,139) |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 2,716,923 |
| NUMBER OF SHARES REDEEMED | (1,465,953) |
| SHARES REINVESTED | 41,252 |
| NET CHANGE IN ASSETS | 198,112,367 |
| ACCUMULATED NII PRIOR | 5,522,832 |
| ACCUMULATED GAINS PRIOR | 14,582,675 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6,018,819 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 10,979,634 |
| AVERAGE NET ASSETS | 82,952,512 |
| PER SHARE NAV BEGIN | 29.47 |
| PER SHARE NII | .11 |
| PER SHARE GAIN APPREC | 6.76 |
| PER SHARE DIVIDEND | (.12) |
| PER SHARE DISTRIBUTIONS | (.52) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 35.72 |
| EXPENSE RATIO | 1.88 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 6 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Health Sciences Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | AUG 31 95 |
| PERIOD END | AUG 31 95 |
| INVESTMENTS AT COST | 674,758,814 |
| INVESTMENTS AT VALUE | 1,038,975,955 |
| RECEIVABLES | 8,781,510 |
| ASSETS OTHER | 61 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 1,047,757,526 |
| PAYABLE FOR SECURITIES | 707,500 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3,915,789 |
| TOTAL LIABILITIES | 4,623,289 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 651,910,344 |
| SHARES COMMON STOCK | 8,870 |
| SHARES COMMON PRIOR | 0 |
| ACCUMULATED NII CURRENT | 4,339,409 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 22,667,343 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 364,217,141 |
| NET ASSETS | 1,043,134,237 |
| DIVIDEND INCOME | 14,910,015 |
| INTEREST INCOME | 1,889,601 |
| OTHER INCOME | 0 |
| EXPENSES NET | 10,979,634 |
| NET INVESTMENT INCOME | 5,819,982 |
| REALIZED GAINS CURRENT | 23,154,465 |
| APPREC INCREASE CURRENT | 177,658,264 |
| NET CHANGE FROM OPS | 206,632,711 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | (276,702) |
| DISTRIBUTIONS OF GAINS | (1,193,139) |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 8,913 |
| NUMBER OF SHARES REDEEMED | (43) |
| SHARES REINVESTED | 0 |
| NET CHANGE IN ASSETS | 198,112,367 |
| ACCUMULATED NII PRIOR | 5,522,832 |
| ACCUMULATED GAINS PRIOR | 14,582,675 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6,018,819 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 10,979,634 |
| AVERAGE NET ASSETS | 201,189 |
| PER SHARE NAV BEGIN | 33.96 |
| PER SHARE NII | (.02) |
| PER SHARE GAIN APPREC | 2.23 |
| PER SHARE DIVIDEND | 0 |
| PER SHARE DISTRIBUTIONS | (.52) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 36.17 |
| EXPENSE RATIO | .30 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
PUTNAM FUNDS
Plan pursuant to Rule 18f-3(D) under the Investment Company act of 1940
Effective July 1, 1995*
Each of the open-end investment companies managed by Putnam Investment Management, Inc. (each a "Fund" and, together, the "Funds") may from time to time issue one or more of the following classes of shares: Class A shares, Class B shares, Class C shares, Class M shares and Class Y shares. Each class is subject to such investment minimums and other conditions of eligibility as are set forth in the Funds' registration statements as from time to time in effect. The differences in expenses among these classes of shares, and the conversion and exchange features of each class of shares, are set forth below in this Plan. Except as noted below, expenses are allocated among the classes of shares of each Fund based upon the net assets of each Fund attributable to shares of each class. This Plan is subject to change, to the extent permitted by law and by the Agreement and Declaration of Trust and By-laws of each Fund, by action of the Trustees of each Fund.
CLASS A SHARES
DISTRIBUTION AND SERVICE FEES
Class A shares pay distribution and service fees pursuant to plans (the "Class A Plans") adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). Class A shares also bear any costs associated with obtaining shareholder approval of the Class A Plans (or an amendment to a Class A Plan). Pursuant to the Class A Plans, Class A shares may pay up to 0.35% of the relevant Fund's average net assets attributable to the Class A shares* (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class A Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect.
CONVERSION FEATURES
Class A shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class A shares of any Fund may be exchanged, at the holder's option, for Class A shares of any other Fund that offers Class A shares without the payment of a sales charge beginning 15 days after purchase, provided that Class A shares of such other Fund are available to residents of the relevant state. The holding period for determining any contingent deferred sales charge (a "CDSC") will include the holding period of the shares exchanged, and will be calculated using the schedule of any Fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such Class A shares.
INITIAL SALES CHARGE
Class A shares are offered at a public offering price that is equal to their net asset value ("NAV") plus a sales charge of up to 5.75% of the public offering price (which maximum may be less for certain Funds, as described in each Fund's registration statement as from time to time in effect). The sales charges on Class A shares are subject to reduction or waiver as permitted by Rule 22d-1 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect.
CONTINGENT DEFERRED SALES CHARGE
Purchases of Class A shares of $1 million or more that are redeemed within one or two years of purchase are subject to a CDSC of 1.00% and 0.50%, respectively, of either the purchase price or the NAV of the shares redeemed, whichever is less. Class A shares are not otherwise subject to a CDSC.
The CDSC on Class A shares is subject to reduction or waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect.
CLASS B SHARES
DISTRIBUTION AND SERVICE FEES
Class B shares pay distribution and service fees pursuant to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "Class B Plans"). Class B shares also bear any costs associated with obtaining shareholder approval of the Class B Plans (or an amendment to a Class B Plan). Pursuant to the Class B Plans, Class B shares may pay up to 1.00% of the relevant Fund's average net assets attributable to Class B shares (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class B Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect.
CONVERSION FEATURES
Class B shares automatically convert to Class A shares of the same Fund at the end of the month eight years after purchase (or such earlier date as the Trustees of a Fund may authorize), except that Class B shares purchased through the reinvestment of dividends and other distributions on Class B shares convert to Class A shares at the same time as the shares with respect to which they were purchased are converted and Class B shares acquired by the exchange of Class B shares of another Fund will convert to Class A shares based on the time of the initial purchase.
EXCHANGE FEATURES
Class B shares of any Fund may be exchanged, at the holder's option, for Class B shares of any other Fund that offers Class B shares without the payment of a sales charge beginning 15 days after purchase, provided that Class B shares of such other Fund are available to residents of the relevant state. The holding period for determining any CDSC will include the holding period of the shares exchanged, and will be calculated using the schedule of any Fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such Class B shares.
INITIAL SALES CHARGE
Class B shares are offered at their NAV, without an initial sales charge.
CONTINGENT DEFERRED SALES CHARGE
Class B shares that are redeemed within 6 years of purchase are subject to a CDSC of up to 5.00% of either the purchase price or the NAV of the shares redeemed, whichever is less (which period may be shorter and which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect); such percentage declines the longer the shares are held, as described in the Funds' registration statements as from time to time in effect. Class B shares purchased with reinvested dividends or capital gains are not subject to a CDSC.
The CDSC on Class B shares is subject to reduction or waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect.
CLASS C SHARES
DISTRIBUTION AND SERVICE FEES
Class C shares pay distribution and service fees pursuant to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "Class C Plans"). Class C shares also bear any costs associated with obtaining shareholder approval of the Class C Plans (or an amendment to a Class C Plan). Pursuant to the Class C Plans, Class C shares may pay up to 1.00% of the relevant Fund's average net assets attributable to the Class C shares (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class C Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect.
CONVERSION FEATURES
Class C shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class C shares of any Fund may be exchanged, at the holder's option, for Class C shares of any other Fund that offers Class C shares without the payment of a sales charge beginning 15 days after purchase, provided that Class C shares of such other Fund are available to residents of the relevant state. The holding period for determining any CDSC will include the holding period of the shares exchanged, and will be calculated using the schedule of any Fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such Class C shares.
INITIAL SALES CHARGE
Class C shares are offered at their NAV, without an initial sales charge.
CONTINGENT DEFERRED SALES CHARGE
Class C shares are subject to a 1.00% CDSC if the shares are redeemed within one year of purchase. The CDSC on Class C shares is subject to reduction or waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect.
CLASS M SHARES
DISTRIBUTION AND SERVICE FEES
Class M shares pay distribution and service fees pursuant to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "Class M Plans"). Class M shares also bear any costs associated with obtaining shareholder approval of the Class M Plans (or an amendment to a Class M Plan). Pursuant to the Class M Plans, Class M shares may pay up to 1.00% of the relevant Fund's average net assets attributable to Class M shares (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class M Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect.
CONVERSION FEATURES
Class M shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class M shares of any Fund may be exchanged, at the holder's option, for Class M shares of any other Fund that offers Class M shares without the payment of a sales charge beginning 15 days after purchase, provided that Class M shares of such other Fund are available to residents of the relevant state.
INITIAL SALES CHARGE
Class M shares are offered at a public offering price that is equal to their NAV plus a sales charge of up to 3.50% of the public offering price (which maximum may be less for certain Funds, as described in each Fund's registration statement as from time to time in effect). The sales charges on Class M shares are subject to reduction or waiver as permitted by Rule 22d-1 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect.
CONTINGENT DEFERRED SALES CHARGE
Class M shares are not subject to any CDSC.
CLASS Y SHARES
DISTRIBUTION AND SERVICE FEES
Class Y shares do not pay a distribution fee.
CONVERSION FEATURES
Class Y shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class Y shares of any Fund may be exchanged, at the holder's option, for Class Y shares of any other Fund that offers Class Y shares without the payment of a sales charge beginning 15 days after purchase, provided that Class Y shares of such other Fund are available to residents of the relevant state, and further provided that shares of such other Fund are available through the relevant employer's plan.
INITIAL SALES CHARGE
Class Y shares are offered at their NAV, without an initial sales charge.
CONTINGENT DEFERRED SALES CHARGE
Class Y shares are not subject to any CDSC.
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