As filed with the Securities and Exchange Commission on
July 18 , 1996
Registration No. 33--3515
811-
07513
- ------------------------------------------------------------
- -----
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
- ----
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 / X /
- ----
- ----
Pre-Effective Amendment No. 2
/ X /
- ----
- ----
Post-Effective Amendment No.
/ /
and
- ----
- ----
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY / X /
ACT OF 1940
- ----
- ----
Amendment No. 1
/ X /
(Check appropriate box or boxes)
- ----
---------------
PUTNAM FUNDS TRUST
(Exact name of registrant as specified in
charter)
One Post Office Square, Boston, Massachusetts
02109
(Address of principal executive offices)
Registrant's Telephone Number, including Area
Code
(617) 292-1000
--------------
JOHN R. VERANI, Vice President
PUTNAM FUNDS TRUST
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
---------------
Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
----------------------
Approximate date of commencement of proposed sale
to the
public: As soon as practicable after the effective date of
this
Registration Statement.
---------------------
PUTNAM FUNDS 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.. How performance is
shown
4. General Description of
Registrant....................... Objective; How
objective
is pursued;
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............. Not applicable
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
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)
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
Holders of Securities............ Management (Trustees;
Officers); Charges
and
expenses (Share
ownership)
16. Investment Advisory and Other
Services......................... Management (Trustees;
Officers; The
management
contract; Principal
underwriter; Investor
servicing agent and
custodian); Charges
and
expenses;
Distribution
plans; Independent
accountants
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
information (Part A);
Suspension of
redemptions
19. Purchase, Redemption, and Pricing
of Securities Being Offered...... How to buy shares
(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)
23. Financial Statements............. Statements of assets
and
liabilities
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
AUGUST
1 , 1996
PUTNAM INTERNATIONAL GROWTH AND INCOME FUND
CLASS A, B AND M SHARES
INVESTMENT STRATEGY: GROWTH & INCOME
This prospectus explains concisely what you should know
before
investing in Putnam International Growth and Income Fund
(the
"fund"), a portfolio of Putnam Funds Trust (the "Trust").
Please
read it carefully and keep it for future reference. You can
find
more detailed information in the August 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
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.
OBJECTIVES
Read this section to make sure the fund's objectives are
consistent with your own.
HOW THE FUND PURSUES ITS OBJECTIVES
This section explains in detail how the fund seeks its
investment
objectives.
RISK FACTORS.
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
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
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
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
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
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
This section tells you what distribution fees are charged
against
each class of shares.
HOW TO SELL SHARES
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
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
This section explains how the fund determines the value of
its
shares.
HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX
INFORMATION
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.
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 estimated expenses for the first
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 (after feesexpenses (after
expenses
(after expense limitation) expense
limitation) expense
limitation)
- --------------- ----- --------------- ---------
Class A .62% .25% .84%
1.71%
Class B .62% 1.00% .84%
2.46%
Class M .62% .75%
.84% 2.21%
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 expects to incur during its first fiscal year.
The
expenses shown in the table do not reflect the application
of
credits related to brokerage service and expense offset
arrangements that reduce certain fund expenses. In the
absence
of the expense limitation, management fees, "Other
expenses" and total fund operating expenses would be 0.80%,
O.84%
and 1.89% for class A shares; 0.80%, 0.84% and 2.64% for
class B
shares; and 0.80%, 0.84% and 2.39% for class M
shares.
The 12b-1 fees shown in the table reflect amounts currently
payable under each distribution plan. "Other expenses" are
based
on estimated expenses the fund expects to incur during its
first
fiscal year.
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
year years
CLASS A $74 $108
CLASS B $75 $107
CLASS B (NO REDEMPTION) $25 $77
CLASS M $57 $102
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 will vary.
* 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."
OBJECTIVES
PUTNAM INTERNATIONAL GROWTH AND INCOME FUND SEEKS CAPITAL
GROWTH.
CURRENT INCOME IS A SECONDARY OBJECTIVE. The fund is not
intended to be a complete investment program, and there is
no
assurance it will achieve its objectives.
HOW THE FUND PURSUES ITS OBJECTIVES
BASIC INVESTMENT STRATEGY
The fund will invest primarily in common stocks that offer
potential for capital growth, and may, consistent with its
investment objectives, invest in stocks that offer potential
for
current income. Under normal market conditions, the fund
expects
to invest substantially all of its assets in securities of
issuers traded on markets outside the United
States . The fund will normally diversify its investment
among a number of different countries, and, except when
investing
for defensive purposes as described below, will invest
in at
least three countries other than the United States.
The
fund may invest in securities of issuers in emerging market
countries (as defined below under "Investment policies and
techniques; risk factors --Foreign investments") , as
well
as securities of issuers in more developed countries.
Investing
in emerging market countries involves special risks.
See
"Investment policies and techniques; risk factors -- Foreign
investments."
The fund may also purchase corporate bonds, notes and
debentures,
preferred stocks, securities convertible into common stock
or
other equity securities , or U.S. or foreign
government
securities if Putnam Investment Management, Inc., the fund's
investment manager ("Putnam Management"), determines that
their
purchase would help further the fund's investment
objectives.
The types of securities held by the fund may vary from time
to
time in light of the fund's investment objectives, changes
in
interest rates, and economic and other factors. When
selecting
portfolio securities for the fund that have the potential
for
capital growth, Putnam Management will seek to identify
securities that are significantly undervalued in relation to
underlying asset values or earnings potential. The fund may
also
hold a portion of its assets in cash or high-quality money
market
instruments.
Common stocks of foreign issuers have historically
offered
lower yields than common stocks of comparable U.S. issuers.
In
addition, foreign withholding taxes will further reduce the
amount of income available for distribution to fund
shareholders.
As a result, the fund's yield is expected to be lower than
that
of funds with similar investment objectives that invest
primarily
in U.S. issuers. See "How the fund makes distributions to
shareholders."
INVESTMENT POLICIES AND TECHNIQUES; RISK FACTORS
FOREIGN INVESTMENTS. 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
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 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 emerging
market countries. For these purposes, a country is
considered to
be an "emerging market country" based on Putnam Management's
evaluation of its level of economic development or the size
and
experience of its securities markets. 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.
A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE
RISKS
AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS
INCLUDED
IN THE SAI.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Putnam Management
may
engage in foreign currency exchange transactions to protect
against uncertainty in the level of future exchange rates.
Putnam Management may engage in foreign currency exchange
transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
the
value of specific portfolio positions ("position hedging").
The fund may engage in transaction hedging to protect
against a
change in the foreign currency exchange rate between the
date on
which the fund contracts to purchase or sell the security
and the
settlement date, or to "lock in" the U.S. dollar equivalent
of a
dividend or interest payment in a foreign currency. The
fund may
purchase or sell a foreign currency on a spot (or cash)
basis at
the prevailing spot rate as part of its transaction hedging
strategies. If conditions warrant, the fund may also enter
into
contracts to purchase or sell foreign currencies at a future
date
("forward contracts") and may purchase and sell foreign
currency
futures contracts as part of its transaction hedging
strategies.
A foreign currency forward contract is a negotiated
agreement to
exchange currency at a future time at a rate or rates that
may be
higher or lower than the spot rate. Foreign currency
futures
contracts are standardized exchange-traded contracts and
have
margin requirements. The fund may also purchase exchange-
listed
and over-the-counter call and put options on foreign
currency
futures contracts and on foreign currencies.
The fund may engage in "position hedging" to protect against
the
decline in the value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated
or
quoted (or an increase in the value of the foreign
currencies for
securities which the fund intends to buy, when the fund
holds
cash reserves or short-term investments). For position
hedging
purposes, the fund may purchase or sell foreign currency
futures
contracts, foreign currency forward contracts, and put and
call
options on foreign currency futures contracts and on foreign
currencies on exchanges or over-the-counter markets. In
connection with position hedging, the fund may also purchase
or
sell foreign currencies on a spot basis.
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 involve currencies other than
those 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.
Hedging transactions involve costs and may result in losses.
The decision as to whether and to what extent the fund
will
engage in foreign currency exchange transactions will
depend on a number of factors, including prevailing
market
conditions, the composition of the fund's portfolio, and the
availability of suitable transactions. Accordingly, there
can be
no assurance that the fund will engage in foreign currency
exchange transactions at any given time or from time to
time. In
addition, the currencies of certain foreign countries are
not
widely traded, and as a result, foreign currency exchange
transactions may not be available with respect to
such
currencies .
The fund's ability to engage in hedging transactions may
be
limited by tax considerations. The fund's hedging
transactions
may affect the character or amount of its distributions.
INVESTMENTS IN SECURITIES OF SMALL-CAPITALIZATION
COMPANIES.
The fund may invest a portion of its assets in securities of
small-capitalization companies (defined for these purposes
as
companies with equity market capitalizations of less than $1
billion). These securities may involve certain special
risks.
Such companies may have limited product lines, markets or
financial resources, and may be dependent on a limited
management
group. Such securities may trade less frequently and in
smaller
volume than more widely held securities. The values of
these
securities may fluctuate more sharply than those of other
securities, and the fund may experience some difficultly in
establishing or closing out positions in these securities at
prevailing market prices. There may be less publicly
available
information about the issuers of these securities or less
market
interest in such securities than in the case of larger
companies,
and it may take a longer period of time for the prices of
such
securities to reflect the full value of their issuers'
underlying
earnings potential or assets.
INVESTMENTS IN FIXED-INCOME SECURITIES. The fund may invest
in
fixed-income securities rated at the time of
purchase C
or better by Moody's Investor Services, Inc. ("Moody's") or
Standard & Poor's ("S&P"), and in unrated securities which
Putnam
Management determined to be comparable quality . The
values
of fixed-income securities generally fluctuate in response
to
changes in interest rates. Thus, a decrease in interest
rates
will generally result in an increase in the value of the
fixed-
income securities held by the fund . Conversely,
during
periods of rising interest rates, the value of the fixed-
income
securities held by the fund will generally decline. The
values
of lower-rated fixed-income securities (i.e., securities
rated
below Baa by Moody's or BBB by S&P or unrated securities of
comparable quality) , commonly known as "junk bonds,"
generally fluctuate more than those of higher-rated fixed-
income
securities. Securities in the lower rating categories may,
depending on the rating, have large uncertainties or major
exposure to adverse conditions. The rating services'
descriptions of securities in the various rating categories,
including the speculative characteristics of securities in
the
lower rating categories, are set forth in the SAI.
The lower ratings of these securities reflect a greater
possibility that adverse changes in the financial condition
of
their issuers, or in general economic conditions, or both,
or an
unanticipated rise in interest rates, may impair the ability
of
their issuers to make payments of interest and principal.
In
addition, under such circumstances the values of such
securities
may be more volatile, and the markets for such securities
may be
less liquid, than those for higher-rated securities, and the
fund
may as a result find it more difficult to determine the fair
value of such securities. When the fund invests in
securities in the lower ratings categories, the achievement
of
the fund's goals is more dependent on Putnam Management's
ability
than would be the case if the fund were investing in
securities
in the higher rating categories.
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, 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 markups and other
transaction costs on the sale of securities and reinvestment
in
other securities. These transactions may result in
realization
of taxable capital gains. While it is impossible to predict
portfolio turnover rates, based on its experience, Putnam
Management believes that such rate will not exceed 150%.
FINANCIAL FUTURES AND RELATED OPTIONS. The fund may buy and
sell
financial futures contracts on stock indexes and foreign
currencies. A futures contract is a contract to buy or sell
units of a particular stock index, or a certain amount of a
foreign currency, at an agreed price on a specified future
date.
In addition to or as an alternative to purchasing
or
selling futures contracts, the fund may buy and sell call
and put
options on futures contracts , stock indexes and
foreign currencies . The fund may engage in futures and
options transactions for hedging purposes and for nonhedging
purposes, such as to earn additional income or to adjust its
exposure to relevant markets.
THE USE OF FINANCIAL 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 financial
futures
and options and movements in the prices of the underlying
stock
index or currencies, or of the securities or currencies
which are
the subject of the hedge. The successful use of futures and
options further depends on Putnam Management's ability to
forecast market movements correctly.
Other risks arise from the fund's potential inability to
close
out its futures or related options positions, and there can
be no
assurance that a liquid secondary market will exist for any
futures contract or option at a particular time. The use of
futures and options transactions for purposes other than
hedging
entails greater risks. The fund's ability to terminate
option
positions established in the over-the-counter market may be
more
limited than for exchange-traded options and may also
involve the
risk that securities dealers participating in such
transactions
would fail to meet their obligations to the fund. Because
the
markets for options and futures on foreign stock indexes and
currencies are relatively new and still developing, the
fund's
ability to engage in such transactions may be limited.
Certain
provisions of the Internal Revenue Code and certain
regulatory
requirements may also limit the fund's ability to engage in
futures and options transactions.
A MORE DETAILED EXPLANATION OF FUTURES AND OPTIONS
TRANSACTIONS,
INCLUDING THE RISKS ASSOCIATED WITH THEM, IS INCLUDED IN THE
SAI.
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 fund may also
invest
in warrants to purchase equity securities. The
aggregate
value of the securities underlying options may not exceed
25% of
the fund's assets. The use of these strategies may be
limited by
applicable law.
A MORE DETAILED EXPLAINED EXPLANATION OF OPTIONS
TRANSACTIONS,
INCLUDING THE RISKS ASSOCIATED WITH THEM, IS INCLUDED IN THE
SAI.
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.
DEFENSIVE STRATEGIES
At times Putnam Management may judge that conditions
in
securities markets make pursuing the basic investment
strategy of
the fund inconsistent with the best interests of the
fund's
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
cash
or money market instruments, preferred stocks, debt
securities
issued by the U.S. government or any foreign government or
their
agencies or instrumentalities, or in any other securities
Putnam
Management considers consistent with such defensive
strategies.
In addition, when pursuing such defensive strategies, the
fund may
invest without limit in securities primarily traded in U.S.
markets. It is impossible to predict when, or for how long,
the
fund will use alternative strategies.
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, a currency
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
(with respect to 75% of its total assets) 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 its assets) 5% of its total
assets
(taken at current value) in securities of any one issuer;*
(b) 25% of its total assets in any one industry (securities
of the
U.S. government, its agencies or instrumentalities are not
considered to represent industries);*
(c) 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
objectives without shareholder approval.
HOW PERFORMANCE IS SHOWN
THE FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE
INCLUDED IN ADVERTISEMENTS ABOUT THE FUND. "Yield" for each
class of shares is calculated by dividing the annualized net
investment income per share during a recent 30-day period by
the
maximum public offering price per share of the class on the
last
day of that period.
"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
objectives 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)
----- -------------------------
Justin M. Scott 1996 Employed as an
Managing Director investment
professional by
Putnam Management since
1988.
The fund pays its share of 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. Expenses of the
Trust
directly charged or attributable to the fund will be paid
from
the assets of the fund. General expenses of the Trust will
be
allocated among the fund and other series of the Trust on a
basis
that the Trustees deem fair and equitable, which may be
based on
the relative assets of the fund and other series of
the
Trust or the nature of the services performed and relative
applicability to the fund. The fund also
reimburses Putnam Management for a portion of the
compensation
and related expenses of certain officers of the Trust and
their
staff who provide administrative services to the Trust. 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.
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 following
annual
rates, expressed as a percentage of the fund's average net
assets: 0.80% of the first $500 million of the average net
asset
value of the fund; 0.70% of the next $500 million;
0.65%
of the next $500 million; 0.60% of the next $5 billion;
0.575% of
the next $5 billion; 0.555% of the next $5 billion; 0.54% of
the
next $5 billion; and 0.53% of any excess thereafter.
In order to limit the fund's expenses during its start-up
period,
Putnam Management has agreed to limit its compensation (and,
to
the extent necessary, bear other expenses) through July 1,
1997,
to the extent that expenses of the fund (exclusive of
brokerage,
interest, taxes, deferred organizational and extraordinary
expense, and payments under the fund's distribution plans)
would
exceed 1.45% of the fund's average net assets. For the
purpose of
determining any such limitation on Putnam Management's
compensation, fund expenses shall not reflect the
application of
commissions or cash management credits that may reduce
designated
fund expenses. With Trustee approval, this expense
limitation may
be terminated earlier, in which event shareholders would be
notified and this prospectus would be revised.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized on
January
22, 1996. 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. As of August
1 , 1996, Putnam Investments, Inc. and Putnam
Investments,
Inc. Profit Sharing Retirement Plan each owned more than 25%
of
the shares of the fund and therefore each may be deemed to
"control" the fund.
The Trust is an open-end, diversified management
investment
company with an unlimited number of authorized shares of
beneficial interest. Shares of the Trust may be
divided
without shareholder approval into two or more series
of
shares representing separate investment portfolios. Only
shares
of Putnam International Growth and Income Fund are offered
by this
prospectus.
Any such series of shares 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
four 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 without regard to series or classes of shares
on all
matters except, (i) when required by the Investment Company
Act of
1940 or when the Trustees have determined that the matter
affects
the interests of one or more series or classes materially
differently, shares will be voted by individual series or
class;
and (ii) when the Trustees have determined that the matter
affects
only the interest of one or more series or classes, only
shareholders of that series or class shall be entitled to
vote
thereon. 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 Trust 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 TRUST'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,
Chairman
and Managing Director, First Reserve Corporation; RONALD J.
JACKSON, Former Chairman, President and Chief Executive
Officer of
Fisher-Price, Inc., Trustee of Salem Hospital and Overseer
of the
Peabody Essex Museum; 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 and Director of Acquisitions, Cabot
Partners Limited Partnership; DONALD S. PERKINS,* Director
of
various corporations, including Cummins Engine Company,
Inc.,
Lucent Technologies Inc., Springs Industries, Inc. 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 and Chief
Executive Officer, 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 Trust'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.
Sales
personnel may receive different compensation depending on
which
class of shares they sell. 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 NONE NONE
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 also 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, 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 the fund's average net assets attributable to
class A shares, subject to the authority of the Trustees to
reduce the amount of payments or to suspend the class A plan
for
such periods as they may determine. Subject to these
limitations, the amount of such payments and the specific
purposes for which they are made shall be determined by the
Trustees.
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 0.25% of such average net
asset
value for class A shares (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 at least
quarterly
and any net realized capital gains at least annually.
Distributions from capital gains are made after applying any
available capital loss carryovers.
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 net 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.
Fund investments in foreign securities may be subject to
withholding taxes at the source on dividend or interest
payments.
In that case, the fund's yield on those securities would be
decreased.
If at the end of the fund's fiscal year more than 50% of the
value of the fund's total assets represents securities of
foreign
corporations, the fund intends to make an election permitted
by
the Internal Revenue Code to treat any foreign taxes it paid
as
paid by its shareholders. In this case, shareholders who
are
U.S. citizens, U.S. corporations and, in some cases, U.S.
residents generally will be required to include in U.S.
taxable
income their pro rata share of such taxes, but may then
generally
be entitled to claim a foreign tax credit or deduction (but
not
both) for their share of such taxes.
Fund transactions in foreign currencies and hedging
activities
may give rise to ordinary income or loss to the extent such
income or loss results from fluctuations in value of the
foreign
currency concerned. In addition, such activities will
likely
produce a difference between book income and taxable income.
This difference may cause a portion of the fund's income
distributions to constitute a return of capital for tax
purposes
or require the fund to make distributions exceeding book
income
to qualify as a regulated investment company for tax
purposes.
Investment in a an entity that qualifies as a "passive
foreign
investment company" under the Code could be subject the fund
to a
U.S. federal income tax or other charge on certain "excess
distributions" with respect to the investment, and on the
proceeds from disposition of the investment.
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.
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.
PUTNAM INTERNATIONAL GROWTH AND INCOME FUND
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
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
PUTNAM INTERNATIONAL GROWTH AND INCOME FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
AUGUST
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 August 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.
TABLE OF CONTENTS
PART I
SECURITIES RATINGS . . . . . . . . . . . . . . . . . . . . .
. . . . . .I-3
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . .
. . . . . .I-6
CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . .
. . . . . .I-8
ADDITIONAL OFFICERS . . . . . . . . . . . . . . . . . . . .
. . . . . I-10
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . .
. . . . . I-10
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-42
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
SAI
PART I
SECURITIES RATINGS
THE FOLLOWING RATING SERVICES DESCRIBE RATED SECURITIES AS
FOLLOWS:
MOODY'S INVESTORS SERVICE, INC.
BONDS
Aaa -- Bonds which are rated Aaa are judged to be of the
best
quality. They carry the smallest degree of investment risk
and
are generally referred to as "gilt-edged". Interest
payments are
protected by a large or by an exceptionally stable margin
and
principal is secure. While the various protective elements
are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa -- Bonds which are rated Aa are judged to be of high
quality
by all standards. Together with the Aaa group they comprise
what
are generally known as high-grade bonds. They are rated
lower
than the best bonds because margins of protection may not be
as
large as in Aaa securities or fluctuation of protective
elements
may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger
than
the Aaa securities.
A -- Bonds which are rated A possess many favorable
investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and
interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds which are rated Baa are considered as medium
grade
obligations (i.e., they are neither highly protected nor
poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may
be
lacking or may be characteristically unreliable over any
great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics
as
well.
Ba -- Bonds which are rated Ba are judged to have
speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may
be
very moderate and thereby not well safeguarded during both
good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics
of
the desirable investment. Assurance of interest and
principal
payments or of maintenance of other terms of the contract
over
any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca -- Bonds which are rated Ca represent obligations which
are
speculative in a high degree. Such issues are often in
default
or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of
bonds
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
STANDARD & POOR'S
BONDS
AAA -- Debt rated 'AAA' has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay
principal
is extremely strong.
AA -- Debt rated 'AA' has a very strong capacity to pay
interest
and repay principal and differs from the higher rated issues
only
in small degree.
A -- Debt rated 'A' has a strong capacity to pay interest
and
repay principal although it is somewhat more susceptible to
the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB -- Debt rated 'BBB' is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to
lead to a weakened capacity to pay interest and repay
principal
for debt in this category than in higher rated categories.
BB-B-CCC-CC-C -- Debt rated 'BB', 'B', 'CCC', 'CC' and 'C'
is
regarded as having predominantly speculative characteristics
with
respect to capacity to pay interest and repay principal.
'BB'
indicates the least degree of speculation and 'C' the
highest.
While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties
or
major exposures to adverse conditions.
BB -- Debt rated 'BB' has less near-term vulnerability to
default
than other speculative issues. However, it faces major
ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity
to
meet timely interest and principal payments. The 'BB' rating
category is also used for debt subordinated to senior debt
that
is assigned an actual or implied 'BBB-' rating.
B -- Debt rated 'B' has a greater vulnerability to default
but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or
economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The 'B' rating category is
also
used for debt subordinated to senior debt that is assigned
an
actual or implied 'BB' or 'BB-' rating.
CCC -- Debt rated 'CCC' has a currently identifiable
vulnerability to default, and is dependent upon favorable
business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event
of
adverse business, financial, or economic conditions, it is
not
likely to have the capacity to pay interest and repay
principal.
The 'CCC' rating category is also used for debt subordinated
to
senior debt that is assigned an actual or implied 'B' or 'B-
'
rating.
CC -- The rating 'CC' typically is applied to debt
subordinated
to senior debt that is assigned an actual or implied 'CCC'-
rating.
C -- The rating 'C' typically is applied to debt
subordinated to
senior debt which is assigned an actual or implied 'CCC-'
debt
rating. The 'C' rating may be used to cover a situation
where
bankruptcy petition has been filed, but debt service
payments are
continued.
INVESTMENT RESTRICTIONS
AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE
CHANGED
WITH RESPECT TO THE FUND WITHOUT A VOTE OF THE MAJORITY OF
THE
OUTSTANDING VOTING SECURITIES OF THE FUND, 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) 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.
(3) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, and
securities
which represent interests in real estate, and it may acquire
and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
(4) Purchase or sell commodities or commodity contracts,
except that the fund may purchase and sell financial futures
contracts and options and may enter into foreign currency
exchange contracts and other financial transactions not
involving
physical commodities .
(5) Make loans, except by purchase of debt obligations in
which
the fund may invest consistent with its investment policies,
entering into repurchase agreements, or by lending of
its
portfolio securities.
(6) With respect to 75% of its total assets, invest in the
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 or principal by the U.S.
government or its agencies or instrumentalities.
(7) With respect to 75% of its total assets, acquire more
than
10% of the outstanding voting securities of any
issuer.
(8) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a
result of
such purchase, more than 25% of the fund's total assets
would be
invested in any one industry.
(9) Issue any class of securities which is senior to the
fund's shares of beneficial interest, except for permitted
borrowings.
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 a 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 value) 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 Exchange.
(3) Pledge, hypothecate, mortgage or otherwise encumber
its
assets in excess of 33 1/3% of its total assets (taken at
cost) in
connection with permitted borrowings.
(4) Buy or sell oil, gas or other mineral leases, rights
or
royalty contracts, although it may purchase securities which
represent interests in, are secured by interest in, or which
are
issued by issuers which deal in, such leases, rights, or
contracts, and it may acquire and dispose of such leases,
rights,
or contracts acquired through the exercise of its rights as
a
holder of debt obligations secured thereby.
(5) Invest in securities of registered open-end investment
companies, except as they may be acquired as part of a
merger or
consolidation or acquisition of assets or by purchases in
the open
market involving only customary brokers' commissions.
(6) 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 in equal amount to, the securities sold short.
(7) 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 (c) acquire real estate
through exercise of its rights as holder of obligations
secured by
real estate or interests therein or sell real estate so
acquired.
(8) Invest in the securities of any issuer, if, to the
knowledge of the fund and 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% of such securities.
(9) Invest in securities of an issuer which, together with
any
predecessors, controlling persons, general partners and
guarantors, have a record of less than three years'
continuous
business operation or relevant business experience, 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 obligations of the U.S.
government or its instrumentalities or agencies.
--------------------
All percentage limitations on investments (other than
pursuant
to non-fundamental restriction (1)) 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
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
estimated fees to be paid to each Trustee by the fund for
the
current fiscal year and the fees paid to each Trustee by all
of
the Putnam funds during calendar year 1995:
COMPENSATION TABLE
Estimated
Total
aggregate
compensation
compensation from
all
Trustees from the fund* Putnam
funds**
- ------------------------------------------------------------
- --
Jameson A. Baxter/1994 $581 $150,854
Hans H. Estin/1972 581 150,854
John A. Hill/1985*** 581 149,854
Ronald J. Jackson/1996**** 581 N/A
Elizabeth T. Kennan/1992 581 148,854
Lawrence J. Lasser/1992 581 150,854
Robert E. Patterson/1984 581 152,854
Donald S. Perkins/1982 581 150,854
William F. Pounds/1971 581 149,854
George Putnam/1957 581 150,854
George Putnam, III/1984 581 150,854
Eli Shapiro/1995***** 581 95,372
A.J.C. Smith/1986 581 149,854
W. Nicholas Thorndike/1992 581 152,854
* Reflects estimated amounts to be paid for the
current fiscal year . 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 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
December 31, 1995 was $51,141, including income earned
on
such amounts.
**** Elected as a Trustee in May 1996.
***** 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
As of the date of this SAI, Putnam Investments, Inc. owned
of
record and beneficially all of the shares of the fund.
Putnam
Investments, Inc. is incorporated in Massachusetts, and its
parent corporation, Marsh & McLennan Companies, Inc., is
incorporated in Delaware. The address of Putnam
Investments,
Inc. is One Post Office Square, Boston, MA 02109.
ADDITIONAL OFFICERS
In addition to the persons listed as officers of the fund in
Part
II of this SAI, the following person is also
a
Vice President of the fund and Vice President of certain of
the
Putnam funds. Officers of Putnam Management hold the same
offices in Putnam Management's parent company, Putnam
Investments, Inc.
JUSTIN M. SCOTT. Managing Director of Putnam Management.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENT
Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts
02110, 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 following report of Independent Accountants and
Statement
of Assets and Liabilities have been included in this SAI in
reliance upon the report of the independent accountants,
given on
their authority as experts in auditing and accounting.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Trustees of the
Putnam International Growth and Income Fund
In our opinion, the accompanying statement of assets and
liabilities presents fairly, in all material respects, the
financial position of Putnam International Growth and Income
Fund
(the "fund"), a series of Putnam Funds Trust, at July 2,
1996, in
conformity with generally accepted accounting principles.
This
financial statement is the responsibility of the fund's
management; our responsibility is to express an opinion on
this
financial statement based on our audit. We conducted our
audit
of this financial statement in accordance with generally
accepted
auditing standards which require that we plan and perform
the
audit to obtain reasonable assurance about whether the
financial
statement is free of material misstatement. An audit
includes
examining, on a test basis, evidence supporting the amounts
and
disclosures in the financial statement, assessing the
accounting
principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
July 3, 1996
STATEMENT OF ASSETS AND LIABILITIES
PUTNAM INTERNATIONAL GROWTH AND INCOME FUND
(A SERIES OF PUTNAM FUNDS TRUST)
July 2, 1996
Assets:
Cash. . . . . . . . . . . . . . . . . . . . . .
$100,000
Deferred organization expenses
(Note 1). . . . . . . . . . . . . . . . . . . .
64,834
- -----------
Total assets. . . . . . . . . . . . . . . . . . . .
164,834
Liabilities:
Estimated organization expenses payable
(Note 1). . . . . . . . . . . . . . . . . . . . . .
64,834
- ---------
Commitments (Notes 1, 2 and 3)
Net assets applicable to 3,921.647 class A shares,
3,921.569 class B shares and 3,921.569 class M shares
outstanding . . . . . . . . . . . . . . . . . .
$100,000
========
Computation of net asset value, redemption and
offering price per share:
Net asset value and redemption price per class A
share ($33,334 divided by 3,921.647 shares) . . . . .
$8.50
=====
Offering price per class A share (100/94.25
of $8.50), reduced on sales of $50,000 or more
and in certain other circumstances -- see "HOW
TO BUY SHARES" . . . . . . . . . . . . . . . . . .
$9.02
=====
Net asset value and offering price per class B
share ($33,333 divided by 3,921.569 shares)
(redemption price per share is equal to net asset
value less any applicable contingent deferred sales
charge) -- see "HOW TO BUY SHARES". . . . . . . . . .
. $8.50
=====
Net asset value and redemption price per class M
share ($33,333 divided by 3,921.569 shares). . . . .
$8.50
=====
Offering price per class M share (100/96.50
of $8.50), reduced on sales of $50,000 or more
and in certain other circumstances -- see "HOW
TO BUY SHARES" . . . . . . . . . . . . . . . . . .
$8.81
=====
See Notes to Statement of Assets and Liabilities
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
NOTE 1. ORGANIZATION
Putnam Funds Trust (the "Trust") was organized as a
Massachusetts
business trust under an Agreement and Declaration of Trust,
dated
January 22, 1996, and is registered under the Investment
Company
Act of 1940, as amended, as an open-end, diversified,
management
investment company, consisting of a series of investment
portfolios, each of which is represented by a separate
series of
shares of beneficial interest. The Trust currently consists
of
one series: Putnam International Growth and Income Fund
(the
"fund"), and offers class A, class B and class M shares.
The
Trust's Agreement and Declaration of Trust permits the
issuance
of an unlimited number of shares. The Trust has had no
operations other than those relating to organizational
matters
and the initial capital contribution of $100,000 to the
fund.
The fund's outstanding shares are owned by Putnam
Investments,
Inc. and Putnam Investments, Inc. Profit Sharing Retirement
Plan.
Upon the sale of its shares to the public, the fund will
become
liable for registration fees payable to the Securities and
Exchange Commission and for not more than $125,000 of
expenses in
connection with its organization and the initial public
offering
of its shares. Putnam Investment Management, Inc. ("Putnam
Management"), a wholly owned subsidiary of Putnam
Investments,
Inc., will pay any such expenses in excess of that amount
and
will pay all such expenses in the event that the initial
public
offering is withdrawn. At July 2, 1996, estimated deferred
organization expenses for the fund are $64,834 based upon
estimated registration, legal and accounting costs. The
fund
will amortize such expenses borne by it over its first five
years
of operation based upon projected net asset levels. Putnam
Investments, Inc. has agreed that if any of the initial
shares of
the fund are redeemed during such amortization period by any
holder thereof, the redemption proceeds will be reduced by
the
amount of the then unamortized organization expenses in the
same
ratio as the number of shares redeemed bears to the number
of
initial shares held at the time of redemption.
NOTE 2. MANAGEMENT CONTRACT
The Trust has entered into a Management Contract with Putnam
Management. As compensation for the services rendered,
facilities furnished, and expenses borne by Putnam
Management,
the fund will pay Putnam Management a fee, computed and paid
quarterly based on the average net assets of the fund for
the
quarter. Such fee is based on the following annual rates:
0.80% of the first $500 million of the average net asset
value of
the fund; 0.70% of the next $500 million; 0.65% of the next
$500
million; 0.60% of the next $5 billion; 0.575% of the next $5
billion; 0.555% of the next $5 billion; 0.54% of the next $5
billion; and 0.53% of any excess thereafter.
NOTE 3. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") with
respect to its class A, class B and class M shares pursuant
to
Rule 12b-1 under the Investment Company Act of 1940. The
purpose
of the Plans is to compensate Putnam Mutual Funds Corp., a
wholly-owned subsidiary of Putnam Investments, Inc., for
services
provided and expenses incurred by it in distributing shares
of
the fund. The Plans provide for payments by the fund to
Putnam
Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and
1.00%
of the average net assets attributable to class A, class B
and
class M shares, respectively. The Trustees have approved
payment
by the fund at an annual rate of 0.25%, 1.00% and 0.75% of
the
average net assets attributable to class A, class B and
class M
shares, respectively.
<PAGE>
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-42
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
<PAGE>
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.
<PAGE>
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 (IOs and POs), 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 or
more than 35% of its assets in IOs and POs 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., Freeport Copper and Gold, Inc., McMoRan
Oil and Gas, Inc., General Mills, Inc., Houghton Mifflin Company,
Marsh & McLennan Companies, Inc. and Rockefeller Group, Inc.
+William F. Pounds (68), Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., IDEXX Laboratories, Inc.,
Perseptive Biosystems, Inc., Management Sciences for Health,
Inc., and Sun Company, Inc.
Jameson A. Baxter (52), Trustee. President, Baxter Associates,
Inc. (a management and financial consultant). 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.
John A. Hill (54), Trustee. Chairman and Managing Director,
First Reserve Corporation (a registered investment adviser).
Director, Maverick Tube Corporation, PetroCorp Incorporated,
Snyder Oil Corporation, Weatherford Enterra, Inc. (an oil field
service company) and various First Reserve Funds.
Ronald J. Jackson (52), Trustee. Former Chairman, President and
Chief Executive Officer of Fisher-Price, Inc. Trustee of Salem
Hospital and Overseer of the Peabody Essex Museum.
Elizabeth T. Kennan (58), 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 (53), 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.
+Robert E. Patterson (51), Trustee. Executive Vice President and
Director of Acquisitions, Cabot Partners Limited Partnership (a
registered investment adviser).
*Donald S. Perkins (69), Trustee. Director of various
corporations, including AON Corp., Cummins Engine Company, Inc.,
Current Assets L.L.C., Illinova and Illinois Power Company,
Inland Steel Industries, Inc., LaSalle Street Fund, Inc., Lucent
Technologies Inc., Springs Industries, Inc. (a textile
manufacturer), and Time Warner Inc.
*#George Putnam III (44), Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information) and New
Generation Advisers, Inc. (a registered investment adviser).
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 (62), Trustee. Chairman and Chief Executive
Officer, Marsh & McLennan Companies, Inc. Director, Trident
Corp.
W. Nicholas Thorndike (63), Trustee. Director of various
corporations and charitable organizations, including Courier
Corporation, Data General Corporation, Bradley Real Estate, Inc.,
and Providence Journal Co.
Officers Name (Age)
Charles E. Porter (57), Executive Vice President. Managing
Director of Putnam Investments, Inc. and Putnam Management.
Patricia C. Flaherty (49), Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Management.
William N. Shiebler (54), 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 (61), 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 1993, Mr. Jackson was
Chairman of the Board, President and Chief Executive Officer of
Fisher-Price, Inc. 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.
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 $93 billion in assets
in nearly 5 million shareholder accounts at December 31, 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
December 31, 1995, Putnam Management and its affiliates managed
over $125 billion in assets, including over $17 billion in tax-
exempt securities and over $55 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.
<PAGE>
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 Diversified
Equity Trust, Putnam Diversified Income Trust II, Putnam Equity
Income Fund, Putnam Europe Growth Fund, The Putnam Fund for
Growth & Income, Putnam Funds Trust, Putnam Global Governmental
Income Trust, Putnam Growth and Income Fund II, Putnam High Yield
Advantage Fund, Putnam Intermediate Tax Exempt Fund, Putnam
Investment Funds, Putnam Intermediate U.S. Government Income
Fund, Putnam Investment-Grade Bond Fund, Putnam Municipal Income
Fund, Putnam Natural Resources Fund, Putnam OTC Emerging Growth
Fund, Putnam Overseas Growth Fund, Putnam Preferred Income 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, or prior to December 1, 1995, a plan sponsored by an
employer or by affiliated employers which have at least 750
employees and, beginning December 1, 1995, 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 200 eligible employees, or prior
to December 1, 1995, a plan sponsored by an employer with more
than 750 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.
<PAGE>
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 Aggregate Bond Index is an index
composed of securities from The Lehman Brothers
Government/Corporate Bond Index, The Lehman Brothers
Mortgage-Backed Securities Index and The Lehman Brothers
Asset-Backed Securities Index and is frequently used as a
broad market measure for fixed-income securities.
The Lehman Brothers Asset-Backed Securities Index is an
index composed of credit card, auto, and home equity
loans. Included in the index are pass-through, bullet
(noncallable), and controlled amortization structured debt
securities; no subordinated debt is included. All
securities have an average life of at least one year.
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 Russell 2000 Index is composed of the 2,000 smallest
securities in the Russell 3000 Index, representing
approximately 7% of the Russell 3000 total market
capitalization. The Russell 3000 Index is composed of
3,000 large U.S. companies ranked by market
capitalization, representing approximately 98% of the U.S.
equity market.
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.
Standard & Poor's/Barra Value Index is an index
constructed by ranking the securities in the Standard &
Poor's 500 Composite Stock Price Index by price-to-book
ratio and including the securities with the lowest price-
to-book ratios that represent approximately half of the
market capitalization of the Standard & Poor's 500
Composite Stock Price Index.
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.
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.
PUTNAM FUNDS 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 --
July 2, 1996
Notes to financial statements(a).
(2) Supporting Schedules:
Schedules I through IX omitted because
the
required matter is not present.
(a) Included in Part B.
- --------------------------
(B) EXHIBITS:
1. Agreement and Declaration of Trust dated
January 22, 1996 -- Incorporated by
reference
to Registrant's Initial Registration
Statement.
2. By-Laws, as amended through January
22 , 1996 -- Exhibit 1.
3. Not applicable.
4a. Not applicable.
4b. Portions of Agreement and Declaration of
Trust Relating to Shareholders' Rights --
Incorporated by reference to Registrant's
Initial Registration Statement.
4c. Portions of By-Laws Relating to
Shareholders'
Rights -- Incorporated by reference to
Registrant's Initial Registration
Statement.
5. Management Contract dated June
7 , 1996 -- Exhibit 2.
6a. Distributor's Contract for Class
A
, Class B and Class M
shares
dated June 7 , 1996 -- Exhibit
3 .
6b. Copy of Specimen Dealer Sales Contract --
Exhibit 4 .
6c. Copy of Specimen Financial Institution
Sales
Contract -- Exhibit 5 .
7. Not applicable.
8. Copy of Custodian Agreement with Putnam
Fiduciary Trust Company dated May 3, 1991
as
amended July 13, 1992 -- Exhibit
6 .
9. Copy of Investor Servicing Agreement
dated
June 3, 1991 with Putnam Fiduciary Trust
Company -- Exhibit 7 .
10. Opinion of Ropes & Gray, including
consent --
Exhibit 8 .
11. Not applicable.
12. Not applicable.
13. Investment Letter from Putnam
Investments,
Inc. to the Registrant -- Exhibit
9 .
14a. Copy of Prototype Individual Retirement
Account Plan -- Exhibit 10 .
14b. Copy of Prototype Basic Plan Document and
related Plan Agreements -- Exhibit
11.
15a. Class A Distribution Plan and
Agreement dated June 7 , 1996 --
Exhibit 12.
15b. Class B Distribution Plan and
Agreement dated June 7 , 1996 --
Exhibit 13.
15c. Class M Distribution Plan and
Agreement dated June 7 , 1996 --
Exhibit 14 .
15c. Copy of Specimen Dealer Service Agreement
- --
Exhibit 15 .
15d. Copy of Specimen Financial Institution
Service Agreement -- Exhibit 16 .
16. Not applicable.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
As of July 17, 1996 , Putnam Investments,
Inc.
owned all of the outstanding shares of the Registrant.
Also, as
of May 31, 1996 , Putnam Investments, Inc. owned
91.0% of the outstanding shares of Putnam American
Rennaisance Fund class A shares, 95.30% of the outstanding
shares
of Putnam Balanced Fund class A shares, 84.60% of the
outstanding
shares of Putnam Emerging Growth Fund class A shares, 92.30%
of
the outstanding shares of Putnam Genesis Fund class A
shares,
95.80% of the outstanding shares of Putnam Global Growth and
Income Fund class A shares, 96.70% of the outstanding shares
of
Putnam International Fund class A shares, 94.10% of the
outstanding shares of Putnam Japan Fund class A shares, and
may
be deemed to control such funds .
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The information required by this item is included
in
Part B (Fund Charges and Expenses).
ITEM 27. INDEMNIFICATION
The information required by this item is
incorporated
herein by reference to the Registrant's Initial Registration
Statement on Form N-1A under the Investment Company Act of
1940
(File No. 811-07513).
<PAGE>
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
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
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
Susan M. Braid Prior to October, 1995, Manager,
Vice President Pioneer Group, Inc., 60 State St.,
Boston, MA 02109
Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109
Brian E. Broyles Prior to September, 1995, Accounts
Assistant Vice President Payable Manager, Entex Information
Services, Six International Drive,
Rye Brook, NY 10573
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
Louis F. Chrostowski Prior to August, 1995, Manager of
Vice President Compensation and Benefits, Itek
Optical Systems, 10 MacGuire Rd.,
Lexington, MA 02173
Beth C. Cotner Prior to September, 1995, Executive
Senior Vice President Vice President, Director of U.S.
Equity Funds, Kemper Financial
Services, 120 S. LaSalle St.,
Chicago, IL 60603
Peter J. Curran Prior to January, 1996, Vice President
Senior Vice President ITT Sheraton Director Worldwide
Staffing, ITT Sheraton Corporation,
60 State St., Boston, MA 02109
Judith S. Deming Prior to May, 1995, Asset Manager,
Assistant Vice President Fidelity Management & Research
Company, 82 Devonshire St., 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
Joseph J. Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacramento, CA
95813
<PAGE>
Michael T. Fitzgerald Prior to September, 1994, Senior
Senior Vice President Vice President, Vantage Global
Advisers, 1201 Morningside Dr.,
Manhattan Beach, CA 90266
Brian J. Fullterton Prior to November, 1995, Vice
Senior Vice President President, Pension and 401(k)
Derivatives Marketing, J.P. Morgan,
60 Wall Street, New York, NY 10260
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
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
<PAGE>
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
Paula Kienert Prior to June, 1995, Senior Reference
Assistant Vice President Librarian, Fidelity Investments, 82
Devonshire Street, Boston, MA 02109
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 Strategic Portfolio Management, 1200
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
Helen Mazareas Prior to May, 1995, Librarian,
Assistant Vice President Scudder, Stevens & Clark, 2
International Place, Boston, MA
02110
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
Samuel Perry Prior to January, 1996, Regional Vice
Vice President President, AIM Distributors, Inc.,
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
<PAGE>
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
<PAGE>
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
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
Herbert S. Wagner, III Prior to August, 1995, Investment
Assistant Vice President The First National Bank of Chicago,
One First National Plaza, Chicago,
IL 60670
Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140
<PAGE>
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 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 Diversified Income
Trust II, 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, Putnam
Growth Fund, The Putnam Fund for Growth and Income, Putnam Growth
and Income Fund II, Putnam Health Sciences Trust, Putnam High
Yield Trust, Putnam High Yield Advantage Fund, Putnam Income
Fund, Putnam Intermediate Tax Exempt Fund, Putnam Intermediate
U.S. Government Income Fund, Putnam Investment Funds, 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 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, Putnam Voyager Fund II.<PAGE>
<TABLE>
<CAPTION>
(b) The directors and officers of the Registrant's principal underwriter are:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<C> <C> <C>
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
Christian E. Aymond 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
Susan M. Braid Vice President None
Leslee R. Bresnahan Senior Vice President None
James D. Brockelman Senior Vice President None
Brian E. Broyles Assistant Vice President None
Gail D. Buckner Senior Vice President None
Robert W. Burke Senior Managing Director None
Susan D. Cabana Vice President 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
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
Peter J. Curran Senior 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
Lisa M. DeMont 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
Brian J. Fullerton 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. Latham Vice President None
James D. Lathrop Vice President None
Charles C. Ledbetter Vice President None
Kevin Lemire Assistant Vice President None
Anthony J. Leonard 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
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
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
Larence J. Olewinksi 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
Douglas H. Powell Vice President None
Jane E. Price Assistant 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
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
William N. Shiebler Director and President Vice President
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
Cynthia Tercha Vice President None
Richard B. Tibbetts Senior Vice President None
Patrice M. Tirado Vice President None
Janet E. Tosi Assistant 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
</TABLE>
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. Aymond, 212 Lochview Drive, 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, 1130 Green Meadow Court, Acworth, GA 30102
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, 274 Water St., Newburyport, MA 01950
Ms. Dahill, 270-1 C Iven Ave., St. David's, PA 19087
Mr. Deliandis, 5161 Muirfield Lane, Concord, CA 94521
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, 1026 E. Olympus Ridge Cove, Salt Lake City, UT 84117
Ms. Kelly, 31 Jeffrey's Neck Road, Ipswich, MA 01938
Ms. Kinsman, 9599 Brookview Circle, Woodbury, MN 55125
Ms. Kirk, 200 East 62nd Street, New York, NY 10021
Ms. Kraunelis, 584 East Eighth St., South Boston, MA 02127
Mr. Lathrop, 14814 Straub Hill Lane, Chesterfield, MO 63017
Mr. Ledbetter, 820 South Monaco, Denver, CO 80224
Mr. Leonard, 3673 Hopper Ridge Road, Cincinnati, OH 45255
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, 201 Plantation Club Drive, Melbourne, FL 32940
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, 7 Anthony Place, Riverside, CT 06878
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. Olewinski, 7707 Hamilton Avenue, Burr Ridge, IL 60521
Mr. O'Steen, 2091-B Lake Park Drive, Smyrna, GA 30080
Mr. Papes, 12891 S. Summit, Olatag, KS 66062
Mr. Pataccoli, 333 39th St., Manhattan Beach, CA 90266
Mr. Perry, 4031 West Main, Houston, TX 77027
Mr. Joe Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. John Phoenix, 2987 Jackson Ave., Coconut Grove, FL 33133
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, 172 Rime Village, Hoover, AL 35216
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
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, 8 Surf St., Marblehead, MA 01945
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tasiopolous, 5 Homestead Farms Drive, Norwell, MA 02061
Ms. Tercha, 611 East 18th St., Houston, TX 77009
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
Ms. Williamson, 158 Summer St., Hingham, MA 02043
Mr. White, 10 Mannion Place, Littleton, MA 01460
Mr. Woloshin, 100 West 89th St., New York, NY 10024
Ms. Zebedee, 1616 Queen Ann Ave., N., Seattle, WA 98109
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
(a) Registrant hereby undertakes to file a post-
effective amendment to this Registration Statement on Form
N-1A,
using financial statements which need not be certified,
within
four to six months from the effective date of this
Registration
Statement.
(b) Registrant hereby undertakes, if requested to
do so
by the holders of at least 10% of its outstanding shares, to
call
a meeting of shareholders for the purposes of voting upon
the
question of removal of a Trustee or Trustees and to assist
in
communications with other shareholders as required by
Section
16(c) of the Investment Company Act of 1940.
(c) 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 hereby consent to the use in the Statement of Additional
Information constituting part of this Registration Statement
on
Form N-1A (File No. 33-00515) of our report dated
July
3 , 1996 relating to the statement of assets and
liabilities of the Fund, which appears in such Statement
of
Additional Informaton. We also consent to the
reference to us under the heading "Independent
Accountants and Financial Statements" in such
Statement of
Additional Information.
PRICE WATERHOUSE LLP
July 17, 1996
Boston, Massachusetts
--------------------------
NOTICE
A copy of the Agreement and Declaration of Trust of
Putnam
Funds 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933
and the Investment Company Act of 1940, the Registrant has
duly
caused this Amendment to the 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 18th day of July , 1996.
PUTNAM FUNDS 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
Funds Trust has been signed below by the following persons
in the
capacities and on the dates indicated:
Pursuant to the requirements of the Securities Act of
1933,
this Amendment to the Registration Statement of Putnam
Diversified Income Trust II 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
Ronald J. Jackson 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
July 18 , 1996
PUTNAM FUNDS TRUST
EXHIBIT INDEX
2. By-Laws, as amended through January 22, 1996 --
Exhibit 1.
5. Management Contract dated June 7, 1996 -- Exhibit 2.
6a. Distributor's Contract for Class A, Class B and Class
M shares
dated June 7, 1996 -- Exhibit 3.
6b. Copy of Specimen Dealer Sales Contract -- Exhibit 4.
6c. Copy of Specimen Financial Institution Sales Contract
- --
Exhibit 5.
8. Copy of Custodian Agreement with Putnam Fiduciary
Trust
Company dated May 3, 1991 as amended July 13, 1992 --
Exhibit 6.
9. Copy of Investor Servicing Agreement dated June 3,
1991
with Putnam Fiduciary Trust Company -- Exhibit 7.
10. Opinion of Ropes & Gray, including consent -- Exhibit
8.
13. Investment Letter from Putnam Investments, Inc. to the
Registrant -- Exhibit 9.
14a. Copy of Prototype Individual Retirement Account Plan -
- -
Exhibit 10.
14b. Copy of Prototype Basic Plan Document and related Plan
Agreements -- Exhibit 11.
15a. Class A Distribution Plan and Agreement dated June 7,
1996
-- Exhibit 12.
15b. Class B Distribution Plan and Agreement dated June 7,
1996
-- Exhibit 13.
15c. Class M Distribution Plan and Agreement dated June 7,
1996
-- Exhibit 14.
15d. Copy of Specimen Dealer Service Agreement -- Exhibit
15.
15e. Copy of Specimen Financial Institution Service
Agreement -
- Exhibit 16.
BYLAWS
OF
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 BALANCED RETIREMENT FUND,
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET
FUND,
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST,
PUTNAM DIVERSIFIED INCOME TRUST,
PUTNAM EQUITY INCOME FUND,
PUTNAM EUROPE GROWTH FUND,
PUTNAM FLORIDA TAX EXEMPT INCOME FUND,
THE GEORGE PUTNAM FUND OF BOSTON,
PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST,
PUTNAM GLOBAL GROWTH FUND,
PUTNAM HEALTH SCIENCES TRUST,
PUTNAM HIGH YIELD TRUST,
PUTNAM INCOME FUND,
PUTNAM INVESTORS FUND,
PUTNAM INTERMEDIATE U.S. GOVERNMENT INCOME
FUND
PUTNAM MANAGED INCOME TRUST,
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 NEW JERSEY TAX EXEMPT INCOME FUND,
PUTNAM NEW OPPORTUNITIES FUND,
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 PENNSYLVANIA TAX EXEMPT INCOME 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
(AS AMENDED THROUGH FEBRUARY 1, 1994),
PUTNAM INTERMEDIATE TAX EXEMPT FUND
(AS AMENDED THROUGH MARCH 7, 1994),
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST,
PUTNAM NEW YORK TAX EXEMPT INCOME TRUST
(AS AMENDED THROUGH APRIL 8, 1994),
PUTNAM DIVERSIFIED EQUITY TRUST
(AS APPROVED APRIL 13, 1994)
PUTNAM HIGH YIELD ADVANTAGE FUND,
PUTNAM OVERSEAS GROWTH FUND
(AS AMENDED THROUGH JUNE 1, 1994),
PUTNAM FEDERAL INCOME TRUST
(AS AMENDED THROUGH JUNE 6, 1994),
PUTNAM NATURAL RESOURCES FUND
(AS AMENDED THROUGH JULY 1, 1994),
THE PUTNAM FUND FOR GROWTH AND INCOME
(AS AMENDED THROUGH JULY 7, 1994),
PUTNAM DIVERSIFIED INCOME TRUST II,
PUTNAM GROWTH AND INCOME FUND II,
(AS AMENDED THROUGH OCTOBER 5, 1994) AND
PUTNAM PREFERRED INCOME FUND,
(AS AMENDED THROUGH OCTOBER 6, 1994) AND
PUTNAM INVESTMENT FUNDS
(AS AMENDED THROUGH OCTOBER 30, 1994)
PUTNAM FUNDS TRUST
(AS AMENDED THROUGH JANUARY 22, 1996)
ARTICLE 1
Agreement and Declaration of Trust and Principal
Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws
shall
be subject to the Agreement and Declaration of Trust, as
from
time to time in effect (the "Declaration of Trust"), of the
Massachusetts business trust established by the Declaration
of
Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal
office of
the Trust shall be located in Boston, Massachusetts.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the
Trustees may
be held without call or notice at such places and at such
times
as the Trustees may from time to time determine, provided
that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the
Trustees may
be held at any time and at any place designated in the call
of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees,
sufficient
notice thereof being given to each Trustee by the Clerk or
an
Assistant Clerk or by the officer or the Trustees calling
the
meeting.
2.3 NOTICE OF SPECIAL MEETINGS. It shall be
sufficient
notice to a Trustee of a special meeting to send notice by
mail
at least forty-eight hours or by telegram at least twenty-
four
hours before the meeting addressed to the Trustee at his or
her
usual or last known business or residence address or to give
notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a special
meeting need not be given to any Trustee if a written waiver
of
notice, executed by him or her before or after the meeting,
is
filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at
its
commencement the lack of notice to him or her. Neither
notice of
a meeting nor a waiver of a notice need specify the purposes
of
the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority
of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of
the
votes cast upon the question, whether or not a quorum is
present,
and the meeting may be held as adjourned without further
notice.
2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in
accordance
with the provisions of the Declaration of Trust any action
is
taken by the Trustees by a written consent of less than all
of
the Trustees, then prompt notice of any such action shall be
furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action
shall not
be impaired by any delay or failure to furnish such notice.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the
Trust
shall be a Chairman of the Trustees, a President, a
Treasurer, a
Clerk and such other officers, if any, as the Trustees from
time
to time may in their discretion elect. The Trust may also
have
such agents as the Trustees from time to time may in their
discretion appoint. The Chairman of the Trustees and the
President shall be a Trustee and may but need not be a
shareholder; and any other officer may but need not be a
Trustee
or a shareholder. Any two or more offices may be held by
the
same person. A Trustee may but need not be a shareholder.
3.2 ELECTION. The Chairman of the Trustees, the
President,
the Treasurer and the Clerk shall be elected by the Trustees
upon
the occurrence of any vacancy in any such office. Other
officers, if any, may be elected or appointed by the
Trustees at
any time. Vacancies in any such other office may be filled
at
any time.
3.3 TENURE. The Chairman of the Trustees, the
President,
the Treasurer and the Clerk shall hold office in each case
until
he or she dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall
retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties
and
powers herein and in the Declaration of Trust set forth,
such
duties and powers as are commonly incident to the office
occupied
by him or her as if the Trust were organized as a
Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 CHAIRMAN; PRESIDENT. Unless the Trustees
otherwise
provide, the Chairman of the Trustees or, if there is none
or in
the absence of the Chairman of the Trustees, the President
shall
preside at all meetings of the shareholders and of the
Trustees.
Unless the Trustees otherwise provide, the President shall
be the
chief executive officer.
3.6 TREASURER. Unless the Trustees shall provide
otherwise, the Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any
arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar
agent, be
in charge of the valuable papers, books of account and
accounting
records of the Trust, and shall have such other duties and
powers
as may be designated from time to time by the Trustees or by
the
President.
3.7 CLERK. The Clerk shall record all proceedings of
the
shareholders and the Trustees in books to be kept therefor,
which
books or a copy thereof shall be kept at the principal
office of
the Trust. In the absence of the Clerk from any meeting of
the
shareholders or Trustees, an Assistant Clerk, or if there be
none
or if he or she is absent, a temporary Clerk chosen at such
meeting shall record the proceedings thereof in the
aforesaid
books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer
may
resign at any time by written instrument signed by him or
her and
delivered to the Chairman of the Trustees, the President or
the
Clerk or to a meeting of the Trustees. Such resignation
shall be
effective upon receipt unless specified to be effective at
some
other time. The Trustees may remove any officer elected by
them
with or without cause. Except to the extent expressly
provided
in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation
or
removal, or any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 QUORUM; VOTING. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee
may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee
may
participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by
means
of which all persons participating in the meeting can hear
each
other at the same time and participation by such means shall
constitute presence in person at a meeting.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render
reports at the time and in the manner required by the
Declaration
of Trust or any applicable law. Officers and Committees
shall
render such additional reports as they may deem desirable or
as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the
Trust
shall end on such date as is determined in advance or in
arrears
by the Treasurer, and subsequent fiscal years shall end on
such
date in subsequent years.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with
the
name of the Trust and the year of its organization cut or
engraved thereon but, unless otherwise required by the
Trustees,
the seal shall not be necessary to be placed on and its
absence
shall not impair the validity of, any document, instrument
or
other paper executed and delivered by or on behalf of the
Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or
in
particular cases authorize the execution thereof in some
other
manner, all deeds, leases, contracts, notes and other
obligations
made by the Trustees shall be signed by the President, the
Vice
Chairman, a Vice President or the Treasurer and need not
bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by
the
Trustees, the Trust will issue and sell for cash or
securities
from time to time, full and fractional shares of its shares
of
beneficial interest, such shares to be issued and sold at a
price
of not less than the par value per share, if any, and not
less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and
these
Bylaws and, in the case of fractional shares, at a
proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance
with
the provisions for determining the value of the assets of
the
Trust as stated in the Declaration of Trust and these
Bylaws.
The officers of the Trust are severally authorized to take
all
such actions as may be necessary or desirable to carry out
this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing
certificates
for shares, the Trustees or the transfer agent may either
issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in
either
case be deemed, for all purposes hereunder, to be the
holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented
and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of
share
certificates. In that event, each shareholder shall be
entitled
to a certificate stating the number of shares of each class
owned
by him, in such form as shall be prescribed from time to
time by
the Trustees. Such certificate shall be signed by the
President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the
certificate
is signed by a transfer agent or by a registrar. In case
any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer
before
such certificate is issued, it may be issued
by the Trust with
the same effect as if he were such officer at the time of
its
issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the
Trust,
with the approval of any two officers of the Trust, is
authorized
to issue and countersign replacement certificates for the
shares
of the Trust which have been lost, stolen or destroyed upon
(i)
receipt of an affidavit or affidavits of loss or non-receipt
and
of an indemnity agreement executed by the registered holder
or
his legal representative and supported by an open penalty
surety
bond, said agreement and said bond in all cases to be in
form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee
of
shares transferred as collateral security shall be entitled
to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face
that it
is held as collateral security, and the name of the pledgor
shall
be stated thereon, who alone shall be liable as a
shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not
affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S
BUSINESS
10.1 CERTAIN DEFINITIONS. When used herein the
following
words shall have the following meanings: "Distributor" shall
mean
any one or more corporations, firms or associations which
have
distributor's or principal underwriter's contracts in effect
with
the Trust providing that redeemable shares issued by the
Trust
shall be offered and sold by such Distributor. "Manager"
shall
mean any corporation, firm or association which may at the
time
have an advisory or management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR
TRUSTEES.
The Trust will not lend any of its assets to the Distributor
or
Manager or to any officer or director of the Distributor or
Manager or any officer or Trustee of the Trust, and shall
not
permit any officer or Trustee or any officer or director of
the
Distributor or Manager to deal for or on behalf of the Trust
with
himself or herself as principal or agent, or with any
partnership, association or corporation in which he or she
has a
financial interest; provided that the foregoing provisions
shall
not prevent (a) officers and Trustees of the Trust or
officers
and directors of the Distributor or Manager from buying,
holding
or selling shares in the Trust or from being partners,
officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of
securities
or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment
Company
Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any
security dealer who is, or one or more of whose partners,
shareholders, officers or directors is, an officer or
Trustee of
the Trust or an officer or director of the Distributor or
Manager; (c) employment of legal counsel, registrar,
transfer
agent, shareholder servicing agent, dividend disbursing
agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an
officer
or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and
office
hire and expenses with any other investment company in which
an
officer or Trustee of the Trust or an officer or director of
the
Distributor or Manager is an officer or director or
otherwise
financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY
CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust
shall be held by or deposited with one or more banks or
trust companies having (according to its last published
report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and
willing to act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any
Custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling
of securities pursuant to which all securities of any
particular class or series of any issue deposited
within the system may be transferred or pledged by
bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the
Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract
with each Custodian regarding the powers, duties and
compensation of such Custodian with respect to the cash
and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or
inability to serve of any Custodian or upon change of
any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned
by the Trust be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian
can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by
the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall
function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to
each
shareholder of record at least semi-annually a statement of
the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net
asset
value per share of each class or series of shares of the
Trust
shall mean: (i) the value of all the assets properly
allocable
to such class or series; (ii) less total liabilities
properly
allocable to such class or series; (iii) divided by the
number of
shares of such class or series outstanding, in each case at
the
time of each determination. Except as otherwise determined
by
the Trustees, the net asset value per share of each class or
series shall be determined no less frequently than once
daily,
Monday through Friday, on days on which the New York Stock
Exchange is open for trading, at such time or times that the
Trustees set at least annually.
In valuing the portfolio investments of any class or
series
of shares for the determination of the net asset value per
share
of such class or series, securities for which market
quotations
are readily available shall be valued at prices which, in
the
opinion of the Trustees or the person designated by the
Trustees
to make the determination, most nearly represent the market
value
of such securities, and other securities and assets shall be
valued at their fair value as determined by or pursuant to
the
direction of the Trustees, which in the case of debt
obligations,
commercial paper and repurchase agreements may, but need
not, be
on the basis of yields for securities of comparable
maturity,
quality and type, or on the basis of amortized cost.
Expenses
and liabilities of the Trust shall be accrued each day.
Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their
designates may in their sole discretion deem fair and
reasonable
under the circumstances. No accruals shall be made in
respect of
taxes on unrealized appreciation of securities owned unless
the
Trustees shall otherwise determine.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the
holder or
holders of at least one-tenth of the outstanding shares
entitled
to vote at such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to
call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk,
call
the meeting by giving notice thereof in the manner required
when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of
record
may apply to the Trustees for assistance in communicating
with
other shareholders for the purpose of calling a meeting in
order
to vote upon the question of removal of a Trustee. When ten
or
more shareholders of record who have been such for at least
six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least
$25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust
who
are entitled to vote or act at any meeting or any
adjournment
thereof, or who are entitled to receive payment of any
dividend
or of any other distribution, the Trustees may from time to
time
fix a time, which shall be not more than 90 days before the
date
of any meeting of shareholders or more than 60 days before
the
date of payment of any dividend or of any other
distribution, as
the record date for determining the shareholders of such
class or
series having the right to notice of and to vote at such
meeting
and any adjournment thereof or the right to receive such
dividend
or distribution, and in such case only shareholders of
record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the
record
date; or without fixing such record date the Trustees may
for any
such purposes close the register or transfer books for all
or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably
designed
to verify that such instructions have been authorized by
such
shareholder shall constitute execution of such proxy by or
on
behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of
a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of
the
Trust (or that series) and be identical in all respects,
except
as set forth below: (a) each class of shares shall be
charged
with the expense of any Distribution Plan adopted by the
Trust
pursuant to Rule 12b-1 under the Investment Company Act of
1940
with respect to such class of shares, (b) each class of
shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by
the
Trustees, (c) each class of shares shall be charged with any
other expenses properly allocated to such class, as
determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a
separate
class on matters which pertain to any Rule 12b-1
Distribution
Plan pertaining to such class of shares, (e) each class of
shares
will have only such exchange privileges as may from time to
time
be described in the Trust's prospectus with respect to such
class, (f) each class of shares shall bear such designation
as
may be approved from time to time by the Trustees and (g)
reinvestments of distributions from the Trust paid with
respect
to the shares of a particular class will be paid in
additional
shares of such class.
12.2. CONVERSION OF CLASS B SHARES. Except as
hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Trust
will
automatically convert into Class A shares of the Trust at
the end
of the month eight years after the month of purchase, or at
such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares
purchased on
or before such date as the Trustees may specify. Class B
shares
acquired by exchange from Class B shares of another Putnam
Fund
will convert into Class A shares based on the date of the
initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment 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,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
ARTICLE 13
AMENDMENTS TO THE BYLAWS
13.1 GENERAL. These Bylaws may be amended or
repealed, in
whole or in part, by a majority of the Trustees then in
office at
any meeting of the Trustees, or by one or more writings
signed by
such a majority.
PUTNAM FUNDS TRUST
MANAGEMENT CONTRACT
Management Contract dated as of June 7, 1996 between
PUTNAM
FUNDS TRUST, a Massachusetts business trust (the "Fund"),
and
PUTNAM INVESTMENT MANAGEMENT, INC., a Massachusetts
corporation
(the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish
continuously
an investment program for each series of the Fund, will
determine
what investments shall be purchased, held, sold or exchanged
by
each series of the Fund and what portion, if any, of the
assets
of each series of the Fund shall be held uninvested and
shall, on
behalf of each series of the Fund, make changes in such
series'
investments. Subject always to the control of the Trustees
of
the Fund and except for the functions carried out by the
officers
and personnel referred to in Section 1(d), the Manager will
also
manage, supervise and conduct the other affairs and business
of
the Fund and matters incidental thereto. In the performance
of
its duties, the Manager will comply with the provisions of
the
Agreement and Declaration of Trust and By-Laws of the Fund
and
the stated investment objectives, policies and restrictions
of
each series of the Fund, and will use its best efforts to
safeguard and promote the welfare of the Fund and to comply
with
other policies which the Trustees may from time to time
determine
and shall exercise the same care and diligence expected of
the
Trustees.
(b) The Manager, at its expense, except as such expense
is
paid by the Fund as provided in Section 1(d), will furnish
(1)
all necessary investment and management facilities,
including
salaries of personnel, required for it to execute its duties
faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct
of
the affairs of the Fund, including determination of the net
asset
value of each series of the Fund, but excluding shareholder
accounting services. Except as otherwise provided in
Section
1(d), the Manager will pay the compensation, if any, of the
officers of the Fund.
(c) The Manager, at its expense, shall place all orders
for
the purchase and sale of portfolio investments for the
Fund's
account with brokers or dealers selected by the Manager. In
the
selection of such brokers or dealers and the placing of such
orders, the Manager shall use 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 for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the
most
favorable price and execution available, the Manager,
bearing in
mind the Fund's best interests at all times, shall consider
all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market
for
the security, 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
or
dealer involved and the quality of service rendered by the
broker
or dealer in other transactions. Subject to such policies
as the
Trustees of the Fund may determine, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of
its
having caused the Fund to pay a broker or dealer that
provides
brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction
in
excess of the amount of commission another broker or dealer
would
have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and
research
services provided by such broker or dealer, viewed in terms
of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other
clients of
the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with
purchases
or sales of portfolio investments for the Fund's account,
neither
the Manager nor any officer, director, employee or agent of
the
Manager shall act as a principal or receive any commission
other
than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the
compensation in whole or in part of such officers of the
Fund and
persons assisting them as may be determined from time to
time by
the Trustees of the Fund. The Fund will also pay or
reimburse
the Manager for all or part of the cost of suitable office
space,
utilities, support services and equipment attributable to
such
officers and persons, as may be determined in each case by
the
Trustees of the Fund. The Fund will pay the fees, if any,
of the
Trustees of the Fund.
(e) The Manager shall pay all expenses incurred in
connection with the organization of the Fund and the initial
public offering and sale of its shares of beneficial
interest,
provided that upon the issuance and sale of such shares to
the
public pursuant to the offering, and only in such event, the
Fund
shall become liable for, and to the extent requested
reimburse
the Manager for, registration fees payable to the Securities
and
Exchange Commission and for an additional amount not
exceeding
$125,000 as its agreed share of such expenses.
(f) The Manager shall not be obligated to pay any
expenses
of or for the Fund not expressly assumed by the Manager
pursuant
to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Fund may be a shareholder,
director, officer or employee of, or be otherwise interested
in,
the Manager, and in any person controlled by or under common
control with the Manager, and that the Manager and any
person
controlled by or under common control with the Manager may
have
an interest in the Fund. It is also understood that the
Manager
and any person controlled by or under common control with
the
Manager have and may have advisory, management, service or
other
contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished
and for
the expenses borne by the Manager pursuant to paragraphs
(a),
(b), (c) and (e) of Section 1, a fee, computed and paid
quarterly
at the following annual rates for each series of the Fund:
(a) 0.80% of the first $500 million of the average net
asset value of each series;
(b) 0.70% of the next $500 million of such average net
asset value;
(c) 0.65% of the next $500 million of such average net
asset value;
(d) 0.60% of the next $5 billion of such average net
asset
value;
(e) 0.575% of the next $5 billion of such average net
asset
value;
(f) 0.555% of the next $5 billion of such average net
asset
value;
(g) 0.54% of the next $5 billion of such average net
asset
value; and
(h) 0.53% of any excess thereafter.
Such average net asset value shall be determined by taking
an
average of all of the determinations of such net asset value
during such quarter at the close of business on each
business day
during such quarter while this Contract is in effect. Such
fee
shall be payable for each fiscal quarter within 30 days
after the
close of such quarter and shall commence accruing as of the
date
of the initial issuance of shares of the Fund to the public.
The fees payable by the Fund to the Manager pursuant to
this
Section 3 shall be reduced by any commissions, fees,
brokerage or
similar payments received by the Manager or any affiliated
person
of the Manager in connection with the purchase and sale of
portfolio investments of the Fund, less any direct expenses
approved by the Trustees incurred by the Manager or any
affiliated person of the Manager in connection with
obtaining
such payments.
In the event that expenses of the Fund or any series of
the
Fund for any fiscal year should exceed the expense
limitation on
investment company expenses imposed by any statute or
regulatory
authority of any jurisdiction in which shares of the Fund or
such
series are qualified for offer or sale, the compensation due
the
Manager for such fiscal year shall be reduced by the amount
of
excess by a reduction or refund thereof. In the event that
the
expenses of the Fund or any series of the Fund exceed any
expense
limitation which the Manager may, by written notice to the
Fund,
voluntarily declare to be effective subject to such terms
and
conditions as the Manager may prescribe in such notice, the
compensation due the Manager shall be reduced, and, if
necessary,
the Manager shall assume expenses of the Fund or such series
to
the extent required by the terms and conditions of such
expense
limitation.
If the Manager shall serve for less than the whole of a
quarter, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and
this
Contract shall not be amended as to any series of the Fund
unless
such amendment be approved at a meeting by the affirmative
vote of
a majority of the outstanding shares of such series, and by
the
vote, cast in person at a meeting called for the purpose of
voting
on such approval, of a majority of the Trustees of the Fund
who
are not interested persons of the Fund or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution,
and
shall remain in full force and effect as to a particular
series
continuously thereafter (unless terminated automatically as
set
forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this
Contract as to any series by not more than sixty days' nor
less
than thirty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund or the shareholders
by
the affirmative vote of a majority of the outstanding shares
of
such series, and (ii) a majority of the Trustees of the Fund
who
are not interested persons of the Fund or of the Manager, by
vote
cast in person at a meeting called for the purpose of voting
on
such approval, do not specifically approve at least annually
the
continuance of this Contract with respect to such series,
then
this Contract shall automatically terminate with respect to
such
series at the close of business on the second anniversary of
its
execution, or upon the expiration of one year from the
effective
date of the last such continuance, whichever is later.
Action by the Fund under (a) above may be taken either
(i)
by vote of a majority of its Trustees, or (ii) by the
affirmative
vote of a majority of the outstanding shares of the relevant
series.
Termination of this Contract pursuant to this Section 5
will
be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote
of
a majority of the outstanding shares" of a series means the
affirmative vote, at a duly called and held meeting of
shareholders of such series, (a) of the holders of 67% or
more of
the shares of such series present (in person or by proxy)
and
entitled to vote at such meeting, if the holders of more
than 50%
of the outstanding shares of such series entitled to vote at
such
meeting are present in person or by proxy, or (b) of the
holders
of more than 50% of the outstanding shares of such series
entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated
person", "control", "interested person" and "assignment"
shall
have their respective meanings defined in the Investment
Company
Act of 1940 and the Rules and Regulations thereunder (the
"1940
Act"), subject, however, to such exemptions as may be
granted by
the Securities and Exchange Commission under said Act; the
term
"specifically approve at least annually" shall be construed
in a
manner consistent with the 1940 Act, and the Rules and
Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the Securities
Exchange
Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or
gross
negligence on the part of the Manager, or reckless disregard
of
its obligations and duties hereunder, the Manager 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 hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND
SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the
Fund
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 Fund 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 relevant series of the Fund.
IN WITNESS WHEREOF, PUTNAM FUNDS TRUST and PUTNAM
INVESTMENT
MANAGEMENT, INC. have each caused this instrument to be
signed in
duplicate in its behalf by its President or a Vice President
thereunto duly authorized, all as of the day and year first
above
written.
PUTNAM FUNDS TRUST
By: /s/ Charles E. Porter
-------------------------------
- -
Charles E. Porter
Executive Vice President
PUTNAM INVESTMENT MANAGEMENT, INC.
By: /s/ Gordon H. Silver
-------------------------------
- -
Gordon H. Silver
Senior Managing Director
PUTNAM FUNDS TRUST
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated June 7, 1996, by and
between
PUTNAM FUNDS TRUST, a Massachusetts business trust (the
"Trust"),
and PUTNAM MUTUAL FUNDS CORP., a Massachusetts corporation
("Putnam").
WHEREAS, the Trust and Putnam are desirous of entering
into
this agreement to provide for the distribution by Putnam of
shares of the various portfolio series of the Trust (each a
"Fund");
NOW, THEREFORE, in consideration of the mutual
agreements
contained in the Terms and Conditions of Distributor's
Contract
attached to and forming a part of this Contract (the "Terms
and
Conditions"), the Trust hereby appoints Putnam as a
distributor
of shares of the Trust, and Putnam hereby accepts such
appointment, all as set forth in the Terms and Conditions.
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 relevant Fund.
IN WITNESS WHEREOF, PUTNAM FUNDS TRUST and PUTNAM
MUTUAL
FUNDS CORP. have each caused this Distributor's Contract to
be
signed in duplicate in its behalf, all as of the day and
year
first above written.
PUTNAM FUNDS TRUST
By: /s/ Charles E. Porter
---------------------------
- --
Charles E. Porter
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
By: /s/ William N. Shiebler
---------------------------
- --
William N. Shiebler
President
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Trust reserves
the
right to refuse at any time or times to sell hereunder any
shares
of beneficial interest ("shares") of a Fund for any reason
deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution
of
shares of a Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement
from
time to time in effect between the Trust and Putnam with
respect
to such Fund or any particular class of shares of such Fund,
(b)
any contingent deferred sales charges applicable to the
redemption of shares of such Fund or of any particular class
of
shares of such Fund, determined in the manner set forth in
the
then current Prospectus and Statement of Additional
Information
of such Fund and (c) subject to the provisions of Section 3
below, any front-end sales charges applicable to the sale of
shares of such Fund or of any particular class of shares of
such
Fund, less any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam
will
have the right, as principal, to sell shares of a Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a
discount
determined by Putnam, which discount shall not exceed the
amount
of the sales charge referred to below, or (b) at net asset
value.
Upon receipt of an order to purchase shares from an
investment
dealer with whom Putnam has a Sales Contract, Putnam will
promptly purchase shares from the relevant Fund to fill such
order. The public offering price of a class of shares of a
Fund
shall be the net asset value of such shares then in effect,
plus
any applicable front-end sales charge determined in the
manner
set forth in the then current Prospectus and Statement of
Additional Information of the Fund or as permitted by the
Investment Company Act of 1940, as amended, and the Rules
and
Regulations of the Securities and Exchange Commission
promulgated
thereunder. In no event shall the public offering price
exceed
1000/915ths of such net asset value, and in no event shall
any
applicable sales charge exceed 8 1/2% of the public offering
price. The net asset value of the shares shall be
determined in
the manner provided in the Agreement and Declaration of
Trust of
the Trust as then amended and when determined shall be
applicable
to transactions as provided for in the then current
Prospectus
and Statement of Additional Information of the relevant
Fund.
Putnam will also have the right, as principal, to
purchase
shares from a Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a
contingent
deferred sales charge to such persons as may be approved by
the
Trustees of the Trust, all such sales to comply with the
provisions of the Investment Company Act of 1940, as
amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Trust,
to
sell shares at the public offering price or at net asset
value to
such persons and upon such conditions as the Trustees of the
Trust may from time to time determine.
On every sale the Trust shall receive the applicable net
asset value of the shares. Putnam will reimburse the Trust
for
any increased issue tax paid on account of sales charges.
Upon
receipt of registration instructions in proper form and
payment
for shares, Putnam will transmit such instructions to the
Trust
or its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE TRUST. The Trust reserves the
right
to issue shares at any time directly to its shareholders as
a
stock dividend or stock split and to sell shares to its
shareholders or to other persons approved by Putnam at not
less
than net asset value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the
Trust in connection with the repurchase of shares by the
Trust
upon the terms and conditions set forth in the then current
Prospectus and Statement of Additional Information of the
relevant Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use
its
best efforts to place shares sold by it on an investment
basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the
Trust
or a Fund except in accordance with Section 5, and will not
take
"long" or "short" positions in shares contrary to the
Agreement
and Declaration of Trust of the Trust.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities
Dealers,
Inc. and the sale of securities laws of any jurisdiction in
which
it sells, directly or indirectly, any shares. Putnam also
agrees
to furnish to the Trust sufficient copies of any agreements
or
plans it intends to use in connection with any sales of
shares in
adequate time for the Trust to file and clear them with the
proper authorities before they are put in use, and not to
use
them until so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its
officers
or employees as such is or shall be an employee of the
Trust.
Putnam is responsible for its own conduct and the
employment,
control and conduct of its agents and employees and for
injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its
agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance
against
public liability in such an amount as the Trustees of the
Trust
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying
shares
for sale under the so-called "Blue Sky" laws of any state
(except
expenses of any action by the Trust relating to its
Agreement and
Declaration of Trust or other matters in which the Trust has
a
direct concern), and expenses of preparing, printing and
distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of
1933,
as amended, and the Investment Company Act of 1940, as
amended,
and the preparation and printing of Prospectuses and
Statements
of Additional Information and reports as required by said
Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale
of
shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF TRUST. Putnam agrees to indemnify
and
hold harmless the Trust and each person who has been, is, or
may
hereafter be a Trustee of the Trust against expenses
reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any
of
them may be a party, which arises out of or is alleged to
arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam
is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon
written
information furnished by the Trust. Putnam also agrees
likewise
to indemnify and hold harmless the Trust and each such
person in
connection with any claim or in connection with any action,
suit
or proceeding which arises out of or is alleged to arise out
of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment,
automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The
foregoing
rights of indemnification shall be in addition to any other
rights to which the Trust or a Trustee may be entitled as a
matter of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate,
without
the payment of any penalty, in the event of its assignment.
This
Contract may be amended only if such amendment be approved
either
by action of the Trustees of the Trust or at a meeting of
the
shareholders of the relevant Fund by the affirmative vote of
a
majority of the outstanding shares of such Fund, and by a
majority of the Trustees of the Trust who are not interested
persons of the Trust or of Putnam by vote cast in person at
a
meeting called for the purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This
Contract shall take effect upon the date first above written
and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated with respect to a particular Fund as follows:
(a) Either by the Trust or Putnam by not more than
sixty (60) days' nor less than ten (10) days' written
notice delivered or mailed by registered mail, postage
prepaid, to the other party; or
(b) If the continuance of this Contract is not
specifically approved at least annually by the Trustees
of the Trust or the shareholders of the relevant Fund by
the affirmative vote of a majority of the outstanding
shares of such Fund, and by a majority of the Trustees
of the Trust who are not interested persons of the Trust
or of Putnam by vote cast in person at a meeting called
for the purpose of voting on such approval, then this
Contract shall automatically terminate at the close of
business on the second anniversary of its execution, or
upon the expiration of one year from the effective date
of the last such continuance, whichever is later.
Action by the Trust under (a) above may be taken either
(i)
by vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the relevant Fund.
The
requirement under (b) above that continuance of this
Contract be
"specifically approved at least annually" shall be construed
in
a manner consistent with the Investment Company Act of 1940,
as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this Contract,
the
"affirmative vote of a majority of the outstanding shares of
a
Fund" means the affirmative vote, at a duly called and held
meeting of shareholders of such Fund, (a) of the holders of
67%
or more of the shares of such Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders
of
more than 50% of the outstanding shares of such Fund
entitled to
vote at such meeting are present in person or by proxy, or
(b)
of the holders of more than 50% of the outstanding shares of
such Fund entitled to vote at such meeting, whichever is
less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in
the
Investment Company Act of 1940, as amended, subject,
however, to
such exemptions as may be granted by the Securities and
Exchange
Commission under said Act.
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.
By:
------------------------------
William N. Shiebler, President
and Chief Executive Officer
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
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of the 3rd day of May, 1991, as amended
July 13, 1992, between each of the Putnam Funds listed in
Schedule A, each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and Putnam
Fiduciary Trust Company (the "Custodian").
WHEREAS, the Custodian represents to the Fund that it is
eligible to serve as a custodian for a management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and
WHEREAS, the Fund wishes to appoint the Custodian as the
Fund's custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF CUSTODIAN. The Fund hereby employs and
appoints the Custodian as custodian of its assets for the term
and subject to the provisions of this Agreement. At the
direction of the Custodian, the Fund agrees to deliver to the
Sub-Custodians appointed pursuant to Section 2 below (the "Sub-
Custodians") securities, funds and other property owned by it.
The Custodian shall have no responsibility or liability for or on
account of securities, funds or other property not so delivered
to the Sub-Custodians. Upon request, the Fund shall deliver to
the Custodian or to such Sub-Custodians as the Custodian may
direct such proxies, powers of attorney or other instruments as
may be reasonably necessary or desirable in connection with the
performance by the Custodian or any Sub-Custodian of their
respective obligations under this Agreement or any applicable
Sub-Custodian Agreement.
2. APPOINTMENT OF SUB-CUSTODIANS. The Custodian may at any
time and from time to time appoint, at its own cost and expense,
as a Sub-Custodian for the Fund any bank or trust company which
meets the requirements of the 1940 Act and the rules and
regulations thereunder to act as a custodian, provided that the
Fund shall have approved in writing any such bank or trust
company and the Custodian gives prompt written notice to the Fund
of any such appointment. The agreement between the Custodian and
any Sub-Custodian shall be substantially in the form of the Sub-
Custodian agreement attached hereto as Exhibit 1 (the "Sub-
Custodian Agreement") unless otherwise approved by the Fund,
provided, however, that the agreement between the Custodian and
any Sub-Custodian appointed primarily for the purpose of holding
foreign securities of the Fund shall be substantially in the form
of the Sub-Custodian Agreement attached hereto as Exhibit 1(A)
(the "Foreign Sub-Custodian Agreement"; the "Sub-Custodian
Agreement" and the "Foreign Sub-Custodian Agreement" are herein
referred to collectively and each individually as the "Sub-
Custodian Agreement"). All Sub-Custodians shall be subject to
the instructions of the Custodian and not the Fund. The
Custodian may, at any time in its discretion, remove any bank or
trust company which has been appointed as a Sub-Custodian but
shall in such case promptly notify the Fund in writing of any
such action. Securities, funds and other property of the Fund
delivered pursuant to this Agreement shall be held exclusively by
Sub-Custodians appointed pursuant to the provisions of this
Section 2.
The Sub-Custodians which the Fund has approved to date are
set forth in Schedule B hereto. Schedule B shall be amended from
time to time as Sub-Custodians are changed, added or deleted. The
Fund shall be responsible for informing the Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Custodian to put the appropriate
arrangements in place with such Sub-Custodian pursuant to such
Sub-Custodian Agreement.
With respect to the securities, funds or other property held
by a Sub-Custodian, the Custodian shall be liable to the Fund if
and only to the extent that such Sub-Custodian is liable to the
Custodian. The Custodian shall nevertheless be liable to the
Fund for its own negligence in transmitting any instructions
received by it from the Fund and for its own negligence in
connection with the delivery of any securities, funds or other
property of the Fund to any such Sub-Custodian.
In the event that any Sub-Custodian appointed pursuant to
the provisions of this Section 2 fails to perform any of its
obligations under the terms and conditions of the applicable Sub-
Custodian Agreement, the Custodian shall use its best efforts to
cause such Sub-Custodian to perform such obligations. In the
event that the Custodian is unable to cause such Sub-Custodian to
perform fully its obligations thereunder, the Custodian shall
forthwith terminate such Sub-Custodian and, if necessary or
desirable, appoint another Sub-Custodian in accordance with the
provisions of this Section 2. The Custodian may with the
approval of the Fund commence any legal or equitable action which
it believes is necessary or appropriate in connection with the
failure by a Sub-Custodian to perform its obligations under the
applicable Sub-Custodian Agreement. Provided the Custodian shall
not have been negligent with respect to any such matter, such
action shall be at the expense of the Fund. The Custodian shall
keep the Fund fully informed regarding such action and the Fund
may at any time upon notice to the Custodian elect to take
responsibility for prosecuting such action. In such event the
Fund shall have the right to enforce and shall be subrogated to
the Custodian's rights against any such Sub-Custodian for loss or
damage caused the Fund by such Sub-Custodian.
At the written request of the Fund, the Custodian will
terminate any Sub-Custodian appointed pursuant to the provisions
of this Section 2 in accordance with the termination provisions
of the applicable Sub-Custodian Agreement. The Custodian will
not amend any Sub-Custodian Agreement in any material manner
except upon the prior written approval of the Fund and shall in
any case give prompt written notice to the Fund of any amendment
to the Sub-Custodian Agreement.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD BY SUB-CUSTODIANS.
3.1 HOLDING SECURITIES - The Custodian shall cause one or
more Sub-Custodians to hold and, by book-entry or otherwise,
identify as belonging to the Fund all non-cash property delivered
to such Sub-Custodian.
3.2 DELIVERY OF SECURITIES - The Custodian shall cause Sub-
Custodians holding securities of the Fund to release and deliver
securities owned by the Fund held by the Sub-Custodian or in a
Securities System account of the Sub-Custodian only upon receipt
of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following
cases:
3.2.1 Upon sale of such securities for the account
of the Fund and receipt of payment therefor;
PROVIDED, HOWEVER, that a Sub-Custodian may
release and deliver securities prior to the
receipt of payment therefor if (i) in the
Sub-Custodian's judgment, (A) release and
delivery prior to payment is required by the
terms of the instrument evidencing the
security or (B) release and delivery prior
to payment is the prevailing method of
settling securities transactions between
institutional investors in the applicable
market and (ii) release and delivery prior
to payment is in accordance with generally
accepted trade practice and with any
applicable governmental regulations and the
rules of Securities Systems or other
securities depositories and clearing
<PAGE>
agencies in the applicable market. The
Custodian agrees, upon request, to advise
the Fund of all pending transactions in
which release and delivery will be made
prior to the receipt of payment therefor;
3.2.2 Upon the receipt of payment in connection
with any repurchase agreement related to
such securities entered into by the Fund;
3.2.3 In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 3.12 hereof;
3.2.4 To the depository agent in connection with
tender or other similar offers for portfolio
securities of the Fund; provided that, in
any such case, the cash or other
consideration is thereafter to be delivered
to the Sub-Custodian;
3.2.5 To the issuer thereof or its agent, when
such securities are called, redeemed,
retired or otherwise become payable;
provided that, in any such case, the cash or
other consideration is to be delivered to
the Sub-Custodian;
3.2.6 To the issuer thereof, or its agent for
transfer into the name of the Fund or into
the name of any nominee or nominees of the
Sub-Custodian or into the name or nominee
name of any agent appointed pursuant to
Section 3.11 or any other name permitted
pursuant to Section 3.3; or for exchange for
a different number of bonds, certificates or
other evidence representing the same
aggregate face amount or number of units;
provided that, in any such case, the new
securities are to be delivered to the Sub-
Custodian;
3.2.7 Upon the sale of such securities for the
account of the Fund, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Sub-Custodian shall have no
<PAGE>
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such
securities except as may arise from the Sub-
Custodian's own negligence or willful
misconduct;
3.2.8 For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the issuer
of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit
agreement; provided that, in any such case,
the new securities and cash, if any, are to
be delivered to the Sub-Custodian;
3.2.9 In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Sub-
Custodian;
3.2.10 For delivery in connection with any loans of
securities made by the Fund, but only
against receipt of adequate collateral as
agreed upon from time to time by the
Custodian and the Fund, which may be in the
form of cash or obligations issued by the
United States government, its agencies or
instrumentalities; except that in connection
with any loan of securities held in a
Securities System for which collateral is to
credited to the Sub-Custodian's account in
another Securities System, the Sub-Custodian
will not be held liable or responsible for
delivery of the securities prior to the
receipt of such collateral.
3.2.11 For delivery as security in connection with
any borrowings by the Fund requiring a
pledge of assets by the Fund, but only
against receipt of amounts borrowed;
3.2.12 Upon receipt of instructions from the
transfer agent ("Transfer Agent") for the
Fund, for delivery to such Transfer Agent or
to the shareholders of the Fund in
connection with distributions in kind, as
may be described from time to time in the
Fund's Declaration of Trust and currently
effective registration statement, if any, in
satisfaction of requests by Fund
shareholders for repurchase or redemption;
3.2.13 For delivery to another Sub-Custodian of the
Fund; and
3.2.14 For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the
securities to be delivered, setting forth
the purpose for which such delivery is to be
made, declaring such purposes to be proper
corporate purposes, and naming the person or
persons to whom delivery of such securities
shall be made.
3.3 REGISTRATION OF SECURITIES. Securities of the
Fund held by the Sub-Custodians hereunder (other than bearer
securities) shall be registered in the name of the Fund or
in the name of any nominee of the Fund or of any nominee of
the Sub-Custodians or any 17f-5 Sub-Custodian or Foreign
Depository (as each of those terms is defined in the Foreign
Sub-Custodian Agreement, which nominee shall be assigned
exclusively to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in common
with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 3.12.
Notwithstanding the foregoing, a Sub-Custodian, agent, 17f-5
Sub-Custodian or Foreign Depository may hold securities of
the Fund in a nominee name which is used for its other
clients provided that such name is not used by the Sub-
Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository
for its own securities and that securities of the Fund are,
by book-entry or otherwise, at all times identified as
belonging to the Fund and distinguished from other
securities held for other clients using the same nominee
name. In addition, and notwithstanding the foregoing, a
Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository may hold securities of the Fund in its
own name if such registration is the prevailing method in
the applicable market by which custodians register
securities of institutional clients and provided that
securities of the Fund are, by book-entry or otherwise, at
all times identified as belonging to the Fund and
distinguished from other securities held for other clients
or for the Sub-Custodian or agent thereof or 17f-5 Sub-
Custodian or Foreign Depository. All securities accepted by
a Sub-Custodian under the terms of a Sub-Custodian Agreement
shall be in good delivery form.
3.4 BANK ACCOUNTS. The Custodian shall cause one or
more Sub-Custodians to open and maintain a separate bank account
or accounts in the name of the Fund or the Custodian, subject
only to draft or order by the Sub-Custodian acting pursuant to
the terms of a Sub-Custodian Contract or by the Custodian acting
pursuant to this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Sub-Custodian for the Fund may be
deposited by it to its credit as sub-custodian or to the
Custodian's credit as custodian in the Banking Department of the
Sub-Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act
as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited
with each such bank or trust company shall be approved by vote of
a majority of the Trustees of the Fund. Such funds shall be
deposited by the Sub-Custodian or the Custodian in its capacity
as sub-custodian or custodian, respectively, and shall be
withdrawable by the Sub-Custodian or the Custodian only in that
capacity. The Sub-Custodian shall be liable for actual losses
incurred by the Fund attributable to any failure on the part of
the Sub-Custodian to report accurate cash availability
information with respect to the Fund's or the Custodian's bank
accounts maintained by the Sub-Custodian or any of its agents.
3.5 PAYMENTS FOR SHARES. The Custodian shall cause one or
more Sub-Custodians to deposit into the Fund's account amounts
received from the Transfer Agent of the Fund for shares of the
Fund issued by the Fund and sold by its distributor. The
Custodian will provide timely notification to the Fund of any
receipt by the Sub-Custodian from the Transfer Agent of payments
for shares of the Fund.
3.6 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall cause one
or more Sub-Custodians, upon the receipt of Proper Instructions,
to make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian with
respect to amounts received by the Sub-Custodians for the
purchase of shares of the Fund.
3.7 COLLECTION OF INCOME. The Custodian shall cause one or
more Sub-Custodians to collect on a timely basis all income and
other payments with respect to registered securities held
hereunder, including securities held in a Securities System, to
which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Sub-Custodian or agent thereof and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Custodian
shall cause the Sub-Custodian to detach and present for payment
all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held under the applicable Sub-Custodian Agreement.
Arranging for the collection of income due the Fund on securities
loaned pursuant to the provisions of Section 3.2.10 shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Sub-
Custodian of the income to which the Fund is properly entitled.
3.8 PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall cause one or more
Sub-Custodians to pay out monies of the Fund in the following
cases only:
3.8.1 Upon the purchase of securities for the
account of the Fund but only (a) against the
delivery of such securities to the Sub-
Custodian (or any bank, banking firm or
trust company doing business in the United
States or abroad which is qualified under
the Investment Company Act of 1940, as
amended, to act as a custodian and has been
designated by the Sub-Custodian as its agent
for this purpose) or any 17f-5 Sub-Custodian
or any Foreign Depository registered in the
name of the Fund or in the name of a nominee
of the Sub-Custodian referred to in Section
3.3 hereof or in proper form for transfer;
PROVIDED, HOWEVER, that the Sub-Custodian
may cause monies of the Fund to be paid out
prior to delivery of such securities if (i)
in the Sub-Custodian's judgment, (A) payment
prior to delivery is required by the terms
of the instrument evidencing the security or
(B) payment prior to delivery is the
prevailing method of settling securities
transactions between institutional investors
in the applicable market and (ii) payment
prior to delivery is in accordance with
generally accepted trade practice and with
any applicable governmental regulations and
the rules of Securities Systems or other
securities depositories and clearing
agencies in the applicable market; the
Custodian agrees, upon request, to advise
the Fund of all pending transactions in
which payment will be made prior to the
receipt of securities in accordance with the
provision to the foregoing sentence; (b) in
the case of a purchase effected through a
Securities System, in accordance with the
conditions set forth in Section 3.13 hereof;
or (c)(i) in the case of a repurchase
agreement entered into between the Fund and
the Sub-Custodian, another bank, or a
broker-dealer against delivery of the
securities either in certificate form or
through an entry crediting the Sub-
Custodian's account at the Federal Reserve
Bank with such securities or (ii) in the
case of a repurchase agreement entered into
between the Fund and the Sub-Custodian,
against delivery of a receipt evidencing
purchase by the Fund of Securities owned by
the Sub-Custodian along with written
evidence of the agreement by the Sub-
Custodian to repurchase such securities from
the Fund; or (d) for transfer to a time
deposit account of the Fund in any bank,
whether domestic or foreign, which transfer
may be effected prior to receipt of a
confirmation of the deposit from the
applicable bank or a financial intermediary;
3.8.2 In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 3.2 hereof;
3.8.3 For the redemption or repurchase of Shares
issued by the Fund as set forth in Section
3.10 hereof;
3.8.4 For the payment of any expense or liability
incurred by the Fund, including but not
limited to the following payments for the
account of the Fund: interest, taxes,
management, accounting, transfer agent and
legal fees, including the Custodian's fee;
and operating expenses of the Fund whether
or not such expenses are to be in whole or
part capitalized or treated as deferred
expenses;
3.8.5 For the payment of any dividends or other
distributions declared to shareholders of
the Fund;
3.8.6 For transfer to another Sub-Custodian of the
Fund;
3.8.7 For any other proper purpose, but only upon
receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the
amount of such payment, setting forth the
purpose for which such payment is to be
made, declaring such purpose to be a proper
purpose, and naming the person or persons to
whom such payments is to be made.
3.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. Except as otherwise provided in this
Agreement, in any and every case where payment for purchase of
securities for the account of the Fund is made by a Sub-Custodian
in advance of receipt of the securities purchased in the absence
of specific written instructions from the Fund to so pay in
advance, the Custodian shall cause the Sub-Custodian to be
absolutely liable to the Fund in the event any loss results to
the Fund from the payment by the Sub-Custodian in advance of
delivery of such securities.
3.10 PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF
THE FUND. From such funds as may be available, the Custodian
shall, upon receipt Proper Instructions, cause one or more Sub-
Custodians to make funds available for payment to a shareholder
who has delivered to the Transfer Agent a request for redemption
or repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Custodian is
authorized, upon receipt of Proper Instructions, to cause one or
more Sub-Custodian, to wire funds to or through a commercial bank
designated by the redeeming shareholder. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian,
upon receipt of Proper Instructions, shall cause one or more Sub-
Custodians to honor checks drawn on the Sub-Custodian by a
shareholder when presented to the Sub-Custodian in accordance
with such procedures and controls as are mutually agreed upon
from time to time among the Fund, the Custodian and the Sub-
Custodian.
3.11 APPOINTMENT OF AGENTS. The Custodian may permit
any Sub-Custodian at any time or times in its discretion to
appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to
carry out such of the provisions of this Section 3 as the Sub-
Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian or
any Sub-Custodian of its responsibilities or liabilities
hereunder and provided that any such agent shall have been
approved by vote of the Trustees of the Fund. The Custodian may
also permit any Sub-Custodian to which foreign securities of the
Fund have been delivered to direct such securities to be held by
17f-5 Sub-Custodians and to use the facilities of Foreign
Depositories, as those terms are defined in the Foreign Sub-
Custodian Agreement, in accordance with the terms of the Foreign
Sub-Custodian Agreement.
The agents which the Fund and the Custodian have approved to
date are set forth in Schedule B hereto. Schedule B shall be
amended from time to time as agents are changed, added or
deleted. The Fund shall be responsible for informing the
Custodian, and the Custodian shall be responsible for informing
the appropriate Sub-Custodian, sufficiently in advance of a
proposed investment which is to be held at a location not listed
on Schedule B, in order that there shall be sufficient time for
the Sub-Custodian to complete the appropriate contractual and
technical arrangements with such agent. Any Sub-Custodian
Agreement shall provide that the engagement by the Sub-Custodian
of one or more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities thereunder.
3.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The
Custodian may permit any Sub-Custodian to deposit and/or maintain
securities owned by the Fund in a clearing agency registered with
the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable rules and regulations (including Rule
17f-4 of the 1940 Act) and subject to the following provisions:
3.12.1 The Sub-Custodian may, either directly or
through one or more agents, keep securities
of the Fund in a Securities System provided
that such securities are represented in an
account ("Account") of the Sub-Custodian in
the Securities System which shall not
include any assets of the Sub-Custodian
other than assets held as a fiduciary,
custodian or otherwise for customers;
3.12.2 The records of the Sub-Custodian with
respect to securities of the Fund which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Fund;
3.12.3 The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon
(i) receipt of advice from the Securities
System that such securities have been
transferred to the Account, and (ii) the
making of an entry on the records of the
Sub-Custodian to reflect such payment and
transfer for the account of the Fund. The
Sub-Custodian shall transfer securities sold
for the account of the Fund upon (i) receipt
of advice from the Securities System that
payment for such securities has been
transferred to the Account, and (ii) the
making of an entry on the records of the
Sub-Custodian to reflect such transfer and
payment for the account of the Fund. Copies
of all advices from the Securities System of
transfers of securities for the account of
the Fund shall identify the Fund, be
maintained for the Fund by the Sub-Custodian
or such an agent and be provided to the Fund
at its request. The Sub-Custodian shall
furnish the Fund confirmation of each
transfer to or from the account of the Fund
in the form of a written advice or notice
and shall furnish to the Fund copies of
daily transaction sheets reflecting each
day's transactions in the Securities System
for the account of the Fund on the next
business day;
3.12.4 The Sub-Custodian shall provide the Fund
with any report obtained by the Sub-
Custodian on the Securities System's
accounting system, internal accounting
controls and procedures for safeguarding
securities deposited in the Securities
System;
3.12.5 The Sub-Custodian shall utilize only such
Securities Systems as are approved by the
Board of Trustees of the Fund, and included
on a list maintained by the Custodian;
<PAGE>
3.12.6 Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be
liable to the Fund for any loss or damage to
the Fund resulting from use of the
Securities System by reason of any
negligence, misfeasance or misconduct of the
Sub-Custodian or any of its agents or of any
of its or their employees or from failure of
the Sub-Custodian or any such agent to
enforce effectively such rights as it may
have against the Securities System; at the
election of the Fund, it shall be entitled
to be subrogated to the rights of the Sub-
Custodian with respect to any claim against
the Securities System or any other person
which the Sub-Custodian may have as a
consequence of any such loss or damage if
and to the extent that the Fund has not been
made whole for any such loss or damage.
3.12A DEPOSITARY RECEIPTS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall instruct a 17f-5 Sub-
Custodian or an agent of the Sub-Custodian appointed pursuant to
the applicable Foreign Sub-Custodian Agreement (an "Agent") to
surrender securities to the depositary used by an issuer of
American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to
the 17f-5 Sub-Custodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to
such securities ADRs in the name of the Sub-Custodian, or a
nominee of the Sub-Custodian, for delivery to the Sub-Custodian.
Only upon receipt of Proper Instructions, the Sub-Custodian
shall surrender ADRs to the issuer thereof against a written
receipt therefor adequately describing the ADRs surrendered and
written evidence satisfactory to the Sub-Custodian that the
issuer of the ADRs has acknowledged receipt of instructions to
cause its depository to deliver the securities underlying such
ADRs to a 17f-5 Sub-Custodian or an Agent.
3.12BFOREIGN EXCHANGE TRANSACTIONS AND FUTURES
CONTRACTS. Only upon receipt of Proper Instructions, the Sub-
Custodian shall enter into foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such
banking institutions, including the Sub-Custodian and 17f-5 Sub-
Custodian(s) appointed pursuant to the applicable Foreign Sub-
Custodian Agreement, as principals, as approved and authorized by
the Fund. Foreign exchange contracts, futures contracts and
options, other than those executed with the Sub-Custodian, shall
for all purposes of this Agreement be deemed to be portfolio
securities of the Fund.
3.12COPTION TRANSACTIONS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall enter into option
transactions in accordance with the provisions of any agreement
among the Fund, the Custodian and/or the Sub-Custodian and a
broker-dealer.
3.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The
Custodian shall cause one or more Sub-Custodians as may be
appropriate to execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities of the Fund held by the Sub-Custodian and in
connection with transfers of securities.
3.14 PROXIES. The Custodian shall, with respect to the
securities held by the Sub-Custodians, cause to be promptly
executed by the registered holder of such securities, if the
securities are registered other than in the name of the Fund or a
nominee of the fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Fund such proxies, all proxy soliciting materials
and all notices relating to such securities.
3.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO
SECURITIES. The Custodian shall cause the Sub-Custodians to
transmit promptly to the Custodian, and the Custodian shall
transmit promptly to the Fund, all written information
(including, without limitation, pendency of calls and maturities
of securities and expirations of rights in connection therewith)
received by the Sub-Custodian from issuers of the securities
being held for the account of the Fund. With respect to tender
or exchange offers, the Custodian shall cause the Sub-Custodian
to transmit promptly to the Fund, all written information
received by the Sub-Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Fund shall notify the
Custodian of the action the Fund desires such Sub-Custodian to
take, provided, however, neither the Custodian nor the Sub-
Custodian shall be liable to the Fund for the failure to take any
such action unless such instructions are received by the
Custodian at least four business days prior to the date on which
the Sub-Custodian is to take such action or, in the case of
foreign securities, such longer period as shall have been agreed
upon in writing by the Custodian and the Sub-Custodian.
3.16 PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more person or persons who are authorized by the Trustees
of the Fund and the Custodian. Each such writing shall set forth
the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian or Sub-Custodian, as the case may
be, reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. All oral instructions shall be confirmed
in writing. Proper Instructions also include communications
effected directly between electro-mechanical or electronic
devices provided that the Trustees have approved such procedures.
Notwithstanding the foregoing, no Trustee, officer, employee or
agent of the Fund shall be permitted access to any securities or
similar investments of the Fund deposited with any Sub-Custodian
or any agent of any Sub-Custodian for any reason except in
accordance with the provisions of Rule 17f-2 under the 1940 Act.
3.17 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The
Custodian may in its discretion, and may permit one or more Sub-
Custodians in their discretion, without express authority from
the Fund to:
3.17.1 make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Agreement, or in the case of a Sub-
Custodian, under the applicable Sub-
Custodian Agreement, provided that all such
payments shall be accounted for to the Fund;
3.17.2 surrender securities in temporary form for
securities in definitive form;
3.17.3 endorse for collection, in the name of the
Fund, checks, drafts and other negotiable
instruments; and
3.17.4 in general, attend to all non-discretionary
details in connection with the sale,
exchange, substitution, purchase, transfer
and other dealings with the securities and
property of the Fund except as otherwise
directed by the Trustees of the Fund.
3.18 EVIDENCE OF AUTHORITY. The Custodian shall be
protected in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper believed by it
to be genuine and to have been properly executed by or on behalf
of the Fund.
3.19 INVESTMENT LIMITATIONS. In performing its duties
generally, and more particularly in connection with the purchase,
sale and exchange of securities made by or for the Fund, the
Custodian may assume, unless and until notified in writing to the
contrary, that Proper Instructions received by it are not in
conflict with or in any way contrary to any provisions of the
Fund's Declaration of Trust or By-Laws (or comparable documents)
or votes or proceedings of the shareholders or Trustees of the
Fund. The Custodian shall in no event be liable to the Fund and
shall be indemnified by the Fund for any violation of any
investment limitations to which the Fund is subject or other
limitations with respect to the Fund's powers to expend funds,
encumber securities, borrow or take similar actions affecting its
portfolio.
4. PERFORMANCE STANDARDS. The Custodian shall use its best
efforts to perform its duties hereunder in accordance with the
standards set forth in Schedule C hereto. Schedule C may be
amended from time to time as agreed to by the Custodian and the
Trustees of the Fund.
5. RECORDS. The Custodian shall create and maintain all
records relating to the Custodian's activities and obligations
under this Agreement and cause all Sub-Custodians to create and
maintain all records relating to the Sub-Custodian's activities
and obligations under the appropriate Sub-Custodian Agreement in
such manner as will meet the obligations of the Fund under the
1940 Act, with particular attention to Sections 17(f) and 31
thereof and Rules 17f-2, 31a-1 and 31a-2 thereunder, applicable
federal and state tax laws, and any other law or administrative
rules or procedures which may be applicable to the Fund. All
such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian or
during the regular business hours of the Sub-Custodian, as the
case may be, be open for inspection by duly authorized officers,
employees or agents of the Custodian and Fund and employees and
agents of the Securities and Exchange Commission. At the Fund's
request, the Custodian shall supply the Fund and cause one or
more Sub-Custodians to supply the Custodian with a tabulation of
securities owned by the Fund and held under this Agreement. When
requested to do so by the Fund and for such compensation as shall
be agreed upon, the Custodian shall include and cause one or more
Sub-Custodians to include certificate numbers in such
tabulations.
6. OPINION AND REPORTS OF FUND'S INDEPENDENT ACCOUNTANTS. The
Custodian shall take all reasonable actions, as the Fund may from
time to time request, to furnish such information with respect to
its activities hereunder as the Fund's independent public
accountants may request in connection with the accountant's
verification of the Fund's securities and similar investments as
required by Rule 17f-2 under the 1940 Act, the preparation of the
Fund's registration statement and amendments thereto, the Fund's
reports to the Securities and Exchange Commission, and with
respect to any other requirements of such Commission.
The Custodian shall also direct any Sub-Custodian to take
all reasonable actions, as the Fund may from time to time
request, to furnish such information with respect to its
activities under the applicable Sub-Custodian Agreement as the
Fund's independent public accountant may request in connection
with the accountant's verification of the Fund's securities and
similar investments as required by Rule 17f-2 under the 1940 Act,
the preparation of the Fund's registration statement and
amendments thereto, the Fund's reports to the Securities and
Exchange Commission, and with respect to any other requirements
of such Commission.
7. REPORTS OF CUSTODIAN'S AND SUB-CUSTODIANS' INDEPENDENT
ACCOUNTANTS. The Custodian shall provide the Fund, at such times
as the Fund may reasonably require, with reports by its
independent public accountant on its accounting system, internal
accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in Securities
Systems, relating to services provided by the Custodian under
this Agreement. The Custodian shall also cause one or more of
the Sub-Custodians to provide the Fund, at such time as the Fund
may reasonably require, with reports by independent public
accountants on their accounting systems, internal accounting
controls and procedures for safeguarding securities, including
securities deposited and/or maintained in Securities Systems,
relating to services provided by those Sub-Custodians under their
respective Sub-Custody Agreements. Such reports, which shall be
of sufficient scope and in sufficient detail as may reasonably be
required by the Fund, shall provide reasonable assurance that any
material inadequacies would be disclosed by such examinations,
and, if there is no such inadequacies, shall so state.
8. COMPENSATION. The Custodian shall be entitled to reasonable
compensation for its services and expenses as custodian, as
agreed upon from time to time between the Fund and the Custodian.
Such expenses shall not include, however, the fees paid by the
Custodian to any Sub-Custodian.
9. RESPONSIBILITY OF CUSTODIAN. The Custodian shall exercise
reasonable care and diligence in carrying out the provisions of
this Agreement and shall not be liable to the Fund for any action
taken or omitted by it in good faith without negligence. So long
as and to the extent that it is in the exercise of reasonable
care, neither the Custodian nor any Sub-Custodian shall be
responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and, if in
writing, reasonably believed by it to be signed by the proper
party or parties. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian or a Sub-Custodian
with respect to redemptions effected by check shall be in
accordance with a separate Agreement entered into between the
Custodian and the Fund. It is also understood that the Custodian
shall not be liable for any loss resulting from a Sovereign Risk.
A "Sovereign Risk" shall mean nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event
beyond the Custodian's control.
If the Fund requires the Custodian which in turn may require
a Sub-Custodian to take any action with respect to securities,
which action involves the payment of money or which action may,
in the opinion of the Custodian or the Sub-Custodian result in
the Custodian or its nominee or a Sub-Custodian or its nominee
being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the
Custodian or the Custodian requiring any Sub-Custodian to take
such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assessed against it or its nominee or any Sub-
Custodian or its nominee in connection with the performance of
this Agreement, or any Sub-Custodian Agreement except, as to the
Custodian, such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct,
and as to a Sub-Custodian, such as may arise from such Sub-
Custodian's or its nominee's own negligent action, negligent
failure to act or willful misconduct. The negligent action,
negligent failure to act or willful misconduct of the Custodian
shall not diminish the Fund's obligation to indemnify the
Custodian in the amount, but only in the amount, of any indemnity
required to be paid to a Sub-Custodian under its Sub-Custodian
Agreement. The Custodian may assign this indemnity from the Fund
directly to, and for the benefit of, any Sub-Custodian. The
Custodian is authorized, and may authorize any Sub-Custodian, to
charge any account of the Fund for such items and such fees. To
secure any such authorized charges and any advances of cash or
securities made by the Custodian or any Sub-Custodian to or for
the benefit of the Fund for any purpose which results in the Fund
incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the
Fund (except a Fund specified in Schedule D to this Agreement)
hereby grants to the Custodian a security interest in and pledges
to the Custodian securities up to a maximum of 10% of the value
of the Fund's net assets for the purpose of securing payment of
any such advances and hereby authorizes the Custodian on behalf
of the Fund to grant to any Sub-Custodian a security interest in
and pledge of securities held for the Fund (including those which
may be held in a Securities System) up to a maximum of 10% of the
value of the net assets held by such Sub-Custodian. The specific
securities subject to such security interest may be designated in
writing from time to time by the Fund or its investment adviser.
In the absence of any designation of securities subject to such
security interest, the Custodian or the Sub-Custodian, as the
case may be, may designate securities held by it. Should the
Fund fail to repay promptly any authorized charges or advances of
cash or securities, the Custodian or the Sub-Custodian shall be
entitled to use such available cash and to dispose of pledged
securities and property as is necessary to repay any such
authorized charges or advances and to exercise its rights as a
secured party under the U.C.C. The Fund agrees that a Sub-
Custodian shall have the right to proceed directly against the
Fund and not solely as subrogee to the Custodian with respect to
any indemnity hereunder assigned to a Sub-Custodian, and in that
regard, the Fund agrees that it shall not assert against any Sub-
Custodian proceeding against it any defense or right of set-off
the Fund may have against the Custodian arising out of the
negligent action, negligent failure to act or willful misconduct
of the Custodian, and hereby waives all rights it may have to
object to the right of a Sub-Custodian to maintain an action
against it.
10. SUCCESSOR CUSTODIAN. If a successor custodian shall be
appointed by the Trustees of the Fund, the Custodian shall, upon
termination, cause to be delivered to such successor custodian,
duly endorsed and in the form for transfer, all securities, funds
and other properties then held by the Sub-Custodians and all
instruments held by the Sub-Custodians relative thereto and cause
the transfer to an account of the successor custodian all of the
Fund's securities held in any Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Trustees of the Fund, cause to be delivered at
the office of the Custodian and transfer such securities, funds
and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Trustees shall have
been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which meets the
requirements of the 1940 Act and the rules and regulations
thereunder, such securities, funds and other properties.
Thereafter, such bank or trust company shall be the successor of
the Custodian under this Agreement.
In the event that such securities, funds and other
properties remain in the possession of the Custodian or any Sub-
Custodian after the date of termination hereof owing to failure
of the Fund to procure the certified copy of the vote referred to
or of the Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services
during such period as the Sub-Custodians retain possession of
such securities, funds and other properties and the provisions of
this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement
shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties
hereto and may be terminated by either party by an instrument in
writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided either party
may at any time immediately terminate this Agreement in the event
of the appointment of a conservator or receiver for the other
party or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is
sought.
Upon termination of the Agreement, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian and
through the Custodian any Sub-Custodian for its costs, expenses
and disbursements.
12. INTERPRETATION. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the subject matter hereof. In connection with the operation of
this Agreement, the Custodian and the Fund may from time to time
agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
13. GOVERNING LAW. This instrument is executed and delivered in
The Commonwealth of Massachusetts and shall be governed by and
construed according to the internal laws of said Commonwealth,
without regard to principles of conflicts of law.
14. NOTICES. Notices and other writings delivered or mailed
postage prepaid to the Fund addressed to the Fund attention: John
Hughes, or to such other person or address as the Fund may have
designated to the Custodian in writing, or to the Custodian at
One Post Office Square, Boston, Massachusetts 02109 attention:
George Crane, or to such other address as the Custodian may have
designated to the Fund in writing, shall be deemed to have been
properly delivered or given hereunder to the respective
addressee.
15. BINDING OBLIGATION. This Agreement shall be binding on and
shall inure to the benefit of the Fund and the Custodian and
their respective successors and assigns, provided that neither
party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the
other party.
16. DECLARATION OF TRUST. A copy of the Declaration of Trust of
each of the Funds is on file with the Secretary of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of each of
the Funds as Trustees and not individually and that the
obligations of this instrument are not binding on any of the
Trustees or officers or shareholders individually, but are
binding only on the assets and property of each Fund with respect
to its obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf as of the day
and year first above written.
THE PUTNAM FUNDS LISTED
IN SCHEDULE A
By ----------------------------
Vice President and Treasurer
PUTNAM FIDUCIARY TRUST COMPANY
By ----------------------------
President
Putnam Investments, Inc. ("Putnam"), the sole owner of the
Custodian, agrees that Putnam shall be the primary obligor with
respect to compensation due the Sub-Custodians pursuant to the
Sub-Custodian Agreements in connection with the Sub-Custodians'
performance of their responsibilities thereunder and agrees to
take all actions necessary and appropriate to assure that the
Sub-Custodians shall be compensated in the amounts and on the
schedules agreed to by the Custodian and the Sub-Custodians
pursuant to those Agreements.
PUTNAM INVESTMENTS, INC.
By ------------------------------
<PAGE>
EXHIBIT 1
MASTER SUB-CUSTODIAN AGREEMENT
AGREEMENT made this day of , 199 , between
Putnam Fiduciary Trust Company, a Massachusetts-chartered trust
company (the "Custodian"), and , a
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that
it is eligible to serve as a custodian for a management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian
Agreement between it and each of the Putnam Funds listed in
Schedule A, each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-
custodians for the purpose of holding cash and securities of the
Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian
as the Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF CUSTODIAN. The Custodian hereby employs
and appoints the Sub-Custodian as a Sub-Custodian for the Fund
for the term and subject to the provisions of this Agreement.
Upon request, the Custodian shall deliver to the Sub-Custodian
such proxies, powers of attorney or other instruments as may be
reasonably necessary or desirable in connection with the
performance by the Sub-Custodian of its obligations under this
Agreement on behalf of the Fund.
2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF
THE FUND HELD BY IT. The Custodian may from time to time deposit
securities or cash owned by the Fund with the Sub-Custodian. The
Sub-Custodian shall have no responsibility or liability for or on
account of securities, funds or other property of the Fund not so
delivered to it. The Sub-Custodian shall hold and dispose of the
securities hereafter held by or deposited with the Sub-Custodian
as follows:
2.1 HOLDING SECURITIES. The Sub-Custodian shall hold and
physically segregate for the account of the Fund all non-cash
property, including all securities owned by the Funds, other than
securities which are maintained pursuant to Section 2.13 in a
Securities System. All such securities are to be held or
disposed of for, and subject at all times to the instructions of,
the Custodian pursuant to the terms of this Agreement. The Sub-
Custodian shall maintain adequate records identifying the
securities as being held by it as Sub-Custodian of the Fund.
2.2 DELIVERY OF SECURITIES. The Sub-Custodian shall
release and deliver securities of the Fund held by it hereunder
(or in a Securities System account of the Sub-Custodian) only
upon receipt of Proper Instructions (as defined in Section 2.17),
which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of
the Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by
the Fund;
3) In the case of a sale effected through a
Securities System, in accordance with the provisions of Section
2.13 hereof;
4) To the depository agent in connection with tender
or other similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is to be delivered to the Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any nominee or
nominees of the Sub-Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.12; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Sub-Custodian;
7) Upon the sale of such securities for the account
of the Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that, in any such case, the Sub-Custodian shall
have no responsibility or liability for any loss arising from the
<PAGE>
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement; provided that,
in any such case, the new securities and cash, if any, are to be
delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and
the Sub-Custodian, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by the Fund,
but only against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer
agent for the Fund (the "Transfer Agent"), for delivery to such
Transfer Agent or to the shareholders of the Fund in connection
with distributions in kind, as may be described from time to time
in the Fund's Declaration of Trust and currently effective
registration statement, if any, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to another Sub-Custodian of the Fund;
and
14) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the securities to be
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purposes to be proper corporate
purposes, and naming the person or persons to whom delivery of
such securities is to be made.
<PAGE>
2.3 REGISTRATION OF SECURITIES. Securities of the Fund
held by the Sub-Custodian hereunder (other than bearer
securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Sub-
Custodian, which nominee shall be assigned exclusively to the
Fund, unless the Fund has authorized in writing the appointment
of a nominee to be used in common with other registered
investment companies having the same investment adviser as the
Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.12. Notwithstanding the foregoing, a Sub-
Custodian or agent thereof may hold securities of the Fund in a
nominee name which is used for its other clients provided such
name is not used by the Sub-Custodian or agent for its own
securities and that securities of the Fund are physically
segregated at all times from other securities held for other
clients using the same nominee name. All securities accepted by
the Sub-Custodian under the terms of this Agreement shall be in
"street name" or other good delivery form.
2.4 BANK ACCOUNTS. The Sub-Custodian shall open and
maintain a separate bank account or accounts in the name of the
Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received for the account of the Funds, other than cash maintained
by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the 1940 Act. Funds held by the Sub-
Custodian for the Fund shall be deposited by it to its credit as
Sub-Custodian of the Fund in the Banking Department of the Sub-
Custodian or other banks. Such funds shall be deposited by the
Sub-Custodian in its capacity as Sub-Custodian and shall be
withdrawable by the Sub-Custodian only in that capacity. The
Sub-Custodian shall be liable for losses incurred by the Fund
attributable to any failure on the part of the Sub-Custodian to
report accurate cash availability information with respect to the
Fund's bank accounts maintained by the Sub-Custodian or any of
its agents, provided that such liability shall be determined
solely on a cost-of-funds basis.
2.5 PAYMENTS FOR SHARES. The Sub-Custodian shall receive
from any distributor of the Fund's shares or from the Transfer
Agent of the Fund and deposit into the Fund's account such
payments as are received for shares of the Fund issued or sold
from time to time by the Fund. The Sub-Custodian will provide
timely notification to the Custodian, and the Transfer Agent of
any receipt by it of payments for shares of the Fund.
2.6 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon
mutual agreement between the Custodian and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions,
1) invest in such instruments as may be set forth in
such instructions on the same day as received all federal funds
received after a time agreed upon between the Sub-Custodian and
the Custodian; and
2) make federal funds available to the Fund as of
specified times agreed upon from time to time by the Custodian
and the Sub-Custodian in the amount of checks, when cleared
within the Federal Reserve System, received in payment for shares
of the Fund which are deposited into the Fund's account or
accounts.
2.7 COLLECTION OF INCOME. The Sub-Custodian shall collect
on a timely basis all income and other payments with respect to
registered securities held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date
of payment by the issuer, such securities are held hereunder and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Sub-
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. Arranging for the collection of income due the Fund
on securities loaned pursuant to the provisions of Section
2.2(10) shall be the responsibility of the Custodian. The Sub-
Custodian will have no duty or responsibility in connection
therewith, other than to provide the Custodian with such
information or data as may be necessary to assist the Custodian
in arranging for the timely delivery to the Sub-Custodian of the
income to which the Fund is properly entitled.
2.8 PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Sub-Custodian shall cause monies
of a Fund to be paid out in the following cases only:
1) Upon the purchase of securities for the account of
the Fund but only (a) against the delivery of such securities to
the Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is qualified
under the 1940 Act, as amended, to act as a custodian and has
been designated by the Sub-Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a
nominee referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in
Section 2.13 hereof; or (c) in the case of repurchase agreements
entered into between the Fund and the Sub-Custodian, or another
bank, (i) against delivery of the securities either in
certificate form or through an entry crediting the Sub-
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Sub-Custodian
along with written evidence of the agreement by the Sub-Custodian
to repurchase such securities from the Fund;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as set forth in Section
2.2 hereof;
3) For the redemption or repurchase of shares issued
by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes,
management, accounting, custodian and Sub-Custodian, transfer
agent and legal fees, including the Custodian's fee; and
operating expenses of the Fund whether or not such expenses are
to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant
to the governing documents of the Fund;
6) For transfer to another Sub-Custodian of the Fund;
and
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the amount of such
payment, setting forth the purpose for which such payment is to
be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. In any and every case where payment for
purchase of securities for the account of a Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased
in the absence of specific written instructions from the
Custodian to so pay in advance, the Sub-Custodian shall be
absolutely liable to the Fund and the Custodian in the event any
loss results to the Fund or the Custodian from the failure of the
Sub-Custodian to make such payment against delivery of such
securities, except that in the case of repurchase agreements
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Sub-Custodian may transfer funds to
the account of such bank prior to the receipt of written evidence
that the securities subject to such a repurchase agreement have
been transferred by book-entry into a segregated non-proprietary
account of the Sub-Custodian maintained with any Federal Reserve
Bank or of the safe-keeping receipt, provided that such
securities have in fact been so transferred by book-entry.
2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES
OF THE FUND. From such funds as may be available for the purpose
but subject to the limitations of the Declaration of Trust and
By-Laws and any applicable votes of the Trustees of the Fund
pursuant thereto, the Sub-Custodian shall, upon receipt of
instructions from the Custodian, make funds available for payment
to shareholders of the Fund who have delivered to the Transfer
Agent a request for redemption or repurchase of their shares. In
connection with the redemption or repurchase of shares of the
Fund, the Sub-Custodian, upon receipt of Proper Instructions, is
authorized to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of shares of the Fund, the Sub-
Custodian, upon receipt of Proper Instructions, shall honor
checks drawn on the Sub-Custodian by a shareholder, when
presented to the Sub-Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time among
the Fund, the Custodian and the Sub-Custodian.
2.11 VARIANCES. The Sub-Custodian may accept
securities or cash delivered in settlement of trades
notwithstanding variances between the amount of securities or
cash so delivered and the amount specified in the instructions
furnished to it by the Custodian, provided that the variance in
any particular transaction does not exceed (i) $25 in the case of
transactions of $1,000,000 or less, and (ii) $50 in the case of
transactions exceeding $1,000,000. The Sub-Custodian shall
maintain a record of any such variances and notify the Custodian
of such variances in periodic transaction reports submitted to
the Custodian. The Sub-Custodian will not advise any party with
whom the Fund effects securities transactions of the existence of
these variance provisions without the consent of the Fund and the
Custodian.
2.12 APPOINTMENT OF AGENTS. Without limiting its own
responsibility for its obligations assumed hereunder, the Sub-
Custodian may at any time and from time to time engage, at its
own cost and expense, as an agent to act for the Fund on the Sub-
Custodian's behalf with respect to any such obligations any bank
or trust company which meets the requirements of the 1940 Act,
and the rules and regulations thereunder, to perform services
delegated to the Sub-Custodian hereunder, provided that the Fund
shall have approved in writing any such bank or trust company and
the Sub-Custodian shall give prompt written notice to the
Custodian and the Fund of any such engagement. All agents of the
Sub-Custodian shall be subject to the instructions of the Sub-
Custodian and not the Custodian. The Sub-Custodian may, at any
time in its discretion, and shall at the Custodian's direction,
remove any bank or trust company which has been appointed as an
agent, and shall in either case promptly notify the Custodian and
the Fund in writing of the completion of any such action.
The agents which the Fund has approved to date are set forth
in Schedule B hereto. Schedule B shall be amended from time to
time as approved agents are changed, added or deleted. The
Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such agent. The engagement by the Sub-Custodian of one or
more agents to carry out such of the provisions of this Section 2
shall not relieve the Sub-Custodian of its responsibilities or
liabilities hereunder.
2.13 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The
Sub-Custodian may deposit and/or maintain securities owned by the
Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury (collectively referred to herein as "Securities System")
in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations
(including Rule 17f-4 of the 1940 Act), and subject to the
following provisions:
1) The Sub-Custodian may keep securities of the Fund
in a Securities System provided that such securities are
represented in an account ("Account") of the Sub-Custodian in the
Securities System which shall not include any assets other than
assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Sub-Custodian with respect to
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
3) The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Sub-Custodian to reflect such payment and
transfer for the account of the Fund. The Sub-Custodian shall
transfer securities sold for the account of the Fund upon (a)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (b) the
making of an entry on the records of the Sub-Custodian to reflect
such transfer and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers of securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Sub-Custodian and be provided to
the Fund or the Custodian at the Custodian's request. The Sub-
Custodian shall furnish the Custodian confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Custodian
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund
on the next business day;
4) The Sub-Custodian shall provide the Custodian with
any report obtained by the Sub-Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Sub-Custodian shall have received the initial
or annual certificate, as the case may be, required by Section
2.10 hereof;
6) Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be liable to the Fund
and the Custodian for any loss or damage to the Fund or the
Custodian resulting from use of the Securities System by reason
of any negligence, misfeasance or misconduct of the Sub-Custodian
or any of its agents or of any of its or their employees or from
failure of the Sub-Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Custodian, it shall be entitled to
be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which
the Sub-Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund and the Custodian have
not been made whole for any such loss or damage.
2.14 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub-
Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities held by it hereunder and in connection with transfers
of securities.
2.15 PROXIES. The Sub-Custodian shall, with respect to
the securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are
registered otherwise than in the name of a Fund, all proxies,
without indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Custodian such proxies,
all proxy soliciting materials and all notices relating to such
securities.
2.16 COMMUNICATIONS RELATING TO FUND PORTFOLIO
SECURITIES. The Sub-Custodian shall transmit promptly to the
Custodian all written information (including, without limitation,
pendency of calls and maturities of securities and expirations of
rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the
Fund. With respect to tender or exchange offers, the Sub-
Custodian shall transmit promptly to the Custodian all written
information received by the Sub-Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange
offer or any other similar transactions, the Custodian shall
notify the Sub-Custodian of the action the Fund desires the Sub-
Custodian to take; provided, however, that the Sub-Custodian
shall not be liable to the Fund or the Custodian for the failure
to take any such action unless such instructions are received by
the Sub-Custodian at least two business days prior to the date on
which the Sub-Custodian is to take such action.
2.17 PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more persons who are authorized by the Trustees of the
Fund and by vote of the Board of Directors of the Custodian.
Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of
the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Sub-
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. The Custodian shall cause all oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Clerk or an Assistant Clerk as to the
authorization by the Trustees of the Funds accompanied by a
detailed description of procedures approved by the Trustees,
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices, provided that
the Trustees, the Custodian and the Sub-Custodian are satisfied
that such procedures afford adequate safeguards for the Fund's
assets. Notwithstanding the foregoing, no Trustee, officer,
employee or agent of the Fund shall be permitted access to any
securities or similar investments of the Fund deposited with the
Sub-Custodian or any agent for any reason except in accordance
with the provisions of Rule 17f-2 under the 1940 Act.
2.18 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The
Sub-Custodian may in its discretion, without express authority
from the Custodian:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating
to its duties under this Agreement, provided that all such
payments shall be accounted for to the Fund and the Custodian;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities and
property of the Fund held by the Sub-Custodian hereunder except
as otherwise directed by the Custodian or the Trustees of the
Fund.
2.19 EVIDENCE OF AUTHORITY. The Sub-Custodian shall be
protected in acting upon any instruction, notice, request,
consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed
by or on behalf of the Fund or the Custodian as custodian of the
Fund. The Sub-Custodian may receive and accept a certified copy
of a vote of the Trustees of the Fund or the Board of Directors
of the Custodian, as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination or of any action by the Trustees pursuant to the
Declaration of Trust and By-Laws and the Board of Directors of
the Custodian, as the case may be as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Sub-Custodian of written notice to the contrary.
3. PERFORMANCE STANDARDS; PROTECTION OF THE FUND. The
Sub-Custodian shall use its best efforts to perform its duties
hereunder in accordance with the standards set forth in Schedule
C hereto. Schedule C may be amended from time to time as agreed
to by the Custodian and the Trustees of the Fund.
4. RECORDS. The Sub-Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trustees of the Fund to keep the books of account of the
Funds or, if directed in writing to do so by the Custodian, shall
itself keep such books of account. The Sub-Custodian shall
create and maintain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Custodian under its Custodian Agreement with
the Fund under the 1940 Act, with particular attention to
Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2
thereunder, applicable federal and state tax laws, and any other
law or administrative rules or procedures which may be applicable
to the Fund or the Custodian. All such records shall be the
property of the Fund and shall at all times during the regular
business hours of the Sub-Custodian be open for inspection by
duly authorized officers, employees or agents of the Custodian
and the Fund and employees and agents of the Securities and
Exchange Commission. The Sub-Custodian shall, at the Custodian's
request, supply the Custodian with a tabulation of securities
owned by the Fund and held under this Agreement and shall, when
requested to do so by the Custodian and for such compensation as
shall be agreed upon between the Custodian and Sub-Custodian,
include certificate numbers in such tabulations.
5. OPINION AND REPORTS OF THE FUND'S INDEPENDENT
ACCOUNTANTS. The Sub-Custodian shall take all reasonable
actions, as the Custodian may from time to time request, to
obtain from year to year favorable opinions from the Fund's
independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's
registration statements and amendments thereto, the Fund's
reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
6. REPORTS OF SUB-CUSTODIAN'S INDEPENDENT ACCOUNTANTS.
The Sub-Custodian shall provide the Custodian, at such times as
the Custodian may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and
in sufficient detail as may reasonably be required by the
Custodian, shall provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, shall so state.
7. COMPENSATION. The Sub-Custodian shall be entitled to
reasonable compensation for its services and expenses as Sub-
Custodian, as agreed upon from time to time between the Custodian
and the Sub-Custodian.
8. RESPONSIBILITY OF SUB-CUSTODIAN. The Sub-Custodian
shall exercise reasonable care and diligence in carrying out the
provisions of this Agreement and shall not be liable to the Fund
or the Custodian for any action taken or omitted by it in good
faith without negligence. So long as and to the extent that it
is in the exercise of reasonable care, the Sub-Custodian shall
not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be
signed by the proper party or parties. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the Sub-
Custodian with respect to redemptions effected by check shall be
in accordance with a separate agreement entered into between the
Custodian and the Sub-Custodian.
The Sub-Custodian shall protect the Fund and the Custodian
from direct losses to the Fund resulting from any act or failure
to act of the Sub-Custodian in violation of its duties hereunder
or of law and shall maintain customary errors and omissions and
fidelity insurance policies in an amount not less than $25
million to cover losses to the Fund resulting from any such act
or failure to act.
If the Custodian requires the Sub-Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the Sub-
Custodian, result in the Sub-Custodian's being liable for the
payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in
an amount and form satisfactory to it.
The Custodian agrees to indemnify and hold harmless the Sub-
Custodian from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assessed against it or its nominee in connection with
the performance of this Agreement, except such as may arise from
its own negligent action, negligent failure to act or willful
misconduct. To secure any such authorized charges and any
advances of cash or securities made by the Sub-Custodian to or
for the benefit of the Fund for any purpose which results in the
Fund's incurring an overdraft at the end of any business day or
for extraordinary or emergency purposes during any business day,
the Custodian on behalf of the Fund, unless prohibited from doing
so by one or more of the Fund's fundamental investment
restrictions, hereby represents that it has obtained from the
Fund authorization to apply available cash in any account
maintained by the Sub-Custodian on behalf of the Fund and a
security interest in and pledge to it of securities held for the
Fund by the Sub-Custodian, in an amount not to exceed the amount
not prohibited by such restrictions, for the purposes of securing
payment of any such advances, and that the Fund has agreed, from
time to time, to designate in writing, or to cause its investment
adviser to designate in writing, the specific securities subject
to such security interest and pledge. The Custodian hereby
assigns the benefits of such security interest and pledge to the
Sub-Custodian, and agrees that, should the Fund or the Custodian
fail to repay promptly any advances of cash or securities, the
Sub-Custodian shall be entitled to use such available cash and to
dispose of such pledged securities as is necessary to repay any
such advances.
9. SUCCESSOR SUB-CUSTODIAN. If a successor Sub-Custodian
shall be appointed by the Custodian, the Sub-Custodian shall,
upon termination, cause to be delivered to such successor Sub-
Custodian, duly endorsed and in the form for transfer, all
securities then held by it, shall cause the transfer to an
account of the successor Sub-Custodian all of the Fund's
securities held in a Securities System and shall cause to be
delivered to such successor Sub-Custodian all funds and other
property held by it or any of its agents.
If no such successor Sub-Custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be delivered
at the office of the Sub-Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor
Sub-Custodian or certified copy of a vote of the Trustees shall
have been delivered to the Sub-Custodian on or before the date
when such termination shall become effective, then the Sub-
Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing
business in Boston, Massachusetts, of its own selection, having
an aggregate capital, surplus, and undivided profits, as shown by
its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Sub-Custodian
and its agents and all instruments held by the Sub-Custodian and
its agents relative thereto and all other property held by it and
its agents under this Agreement and to cause to be transferred to
an account of such successor Sub-Custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Sub-Custodian
under this Agreement.
In the event that securities, funds and other properties
remain in the possession of the Sub-Custodian after the date of
termination hereof owing to failure of the Custodian to obtain
the certified copy of vote referred to or of the Trustees to
appoint a successor Sub-Custodian, the Sub-Custodian shall be
entitled to fair compensation for its services during such period
as the Sub-Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement
relating to the duties and obligations of the Sub-Custodian shall
remain in full force and effect.
Upon termination, the Sub-Custodian shall, upon receipt of a
certified copy of a vote of the Trustees of the Fund, cause to be
delivered to any other Sub-Custodian designated in such vote such
assets, securities and other property of the Fund as are
designated in such vote, or pursuant to Proper Instructions,
cause such assets, securities and other property of the Fund as
are designated by the Custodian to be delivered to one or more of
the sub-custodians designated on Schedule D hereto, as from time
to time amended.
10. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This
Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to
the other party, such termination to take effect not sooner than
thirty (30) days after the date of mailing; provided, however,
that the Sub-Custodian shall not act under Section 2.13 hereof in
the absence of receipt of an initial certificate of the Clerk or
an Assistant Clerk that the Trustees of the Fund have approved
the initial use of a particular Securities System and the receipt
of an annual certificate of the Clerk or an Assistant Clerk that
the Trustees have reviewed the use by the Fund of such Securities
System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940; and provided, further, however,
that the Custodian shall not amend or terminate this Agreement in
contravention of any applicable federal or state regulations or
any provision of the Declarations of Trust or By-Laws of the
Fund; and provided, further, that the Custodian may at any time,
by action of its Board of Directors, or the Trustees of the Fund,
as the case may be, immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
Sub-Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of this Agreement, the Custodian shall pay
to the Sub-Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Sub-
Custodian for its reimbursable costs, expenses and disbursements.
11. AMENDMENT AND INTERPRETATION. This Agreement
constitutes the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof. No provision
of this Agreement may be amended or terminated except by a
statement in writing signed by the party against which
enforcement of the amendment or termination is sought.
In connection with the operation of this Agreement, the Sub-
Custodian and the Custodian may from time to time agree in
writing on such provisions interpretive of or in addition to the
provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
12. GOVERNING LAW. This Agreement is executed and
delivered in The Commonwealth of Massachusetts and shall be
governed by and construed according to the laws of said
Commonwealth.
13. NOTICES. Notices and other writings delivered or
mailed postage prepaid to the Custodian addressed to the
Custodian attention: , or to such other person or
address as the Custodian may have designated to the Sub-Custodian
in writing, or to the Sub-Custodian at , or to such
other address as the Sub-Custodian may have designated to the
Custodian in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
14. BINDING OBLIGATION. This Agreement shall be binding on
and shall inure to the benefit of the Custodian and the Sub-
Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent
of the other party.
15. PRIOR AGREEMENTS. This Agreement supersedes and
terminates, as of the date hereof, all prior contracts between
the Fund or the Custodian and the Sub-Custodian relating to the
custody of the Fund's assets.
16. DECLARATION OF TRUST. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given
that the obligations of or arising out of this instrument are not
binding upon any of the Trustees or beneficiaries individually
but binding only upon the assets and property of the Funds.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199 .
PUTNAM FIDUCIARY TRUST COMPANY
By ---------------------------
(SUB-CUSTODIAN)
By ---------------------------
<PAGE>
EXHIBIT 1(A)
MASTER FOREIGN SUB-CUSTODIAN AGREEMENT
AGREEMENT made this day of , 199 , between
Putnam Fiduciary Trust Company, a Massachusetts-chartered trust
company (the "Custodian"), and ,
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that
it is eligible to serve as a custodian for a management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian
Agreement between it and each of the Putnam Funds listed in
Schedule A to this Agreement, each of such Funds acting on its
own behalf separately from all the other Funds and not jointly or
jointly and severally with any of the other Funds (each of the
Funds being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize
sub-custodians for the purpose of holding cash and securities of
the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian
as the Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF SUB-CUSTODIAN. The Custodian hereby
employs and appoints the Sub-Custodian as a sub-custodian for
safekeeping of securities and other assets of the Fund for the
term and subject to the provisions of this Agreement. Upon
request, the Custodian shall deliver to the Sub-Custodian such
proxies, powers of attorney or other instruments as may be
reasonably necessary or desirable in connection with the
performance by the Sub-Custodian of its obligations under this
Agreement on behalf of the Fund.
2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF
THE FUND HELD BY IT. The Custodian may from time to time deposit
or direct the deposit of securities or cash owned by the Fund
with the Sub-Custodian. The Sub-Custodian shall have no
responsibility or liability for or on account of securities,
funds or other property of the Fund not so delivered to it.
Except for securities and funds held by 17f-5 Sub-Custodians (as
defined in Section 2.11(b)) the Sub-Custodian shall hold and
dispose of the securities or cash hereafter held by or deposited
with the Sub-Custodian as follows:
2.1. HOLDING SECURITIES. The Sub-Custodian shall hold
and, by book-entry or otherwise, identify as belonging to the
Fund all non-cash property which has been delivered to the
Sub-Custodian. All such securities are to be held or disposed of
for, and subject at all times to the instructions of, the
Custodian pursuant to the terms of this Agreement. The
Sub-Custodian shall maintain adequate records identifying the
securities as being held by it as sub-custodian of the Fund.
2.2. DELIVERY OF SECURITIES. The Sub-Custodian shall
release and deliver securities of the Fund held by it hereunder
(or in a Securities System account of the Sub-Custodian) only
upon receipt of Proper Instructions (as defined in Section 2.19),
which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account
of the Fund and receipt of payment therefor, provided, however,
that the Sub-Custodian may release and deliver securities prior
to the receipt of payment therefor if (i) in the Sub-Custodian's
judgment, (A) release and delivery prior to payment is required
by the terms of the instrument evidencing the security or (B)
release and delivery prior to payment is the prevailing method of
settling securities transactions between institutional investors
in the applicable market and (ii) release and delivery prior to
payment is in accordance with generally accepted trade practice
and with any applicable governmental regulations and the rules of
Securities Systems or other securities depositories and clearing
agencies in the applicable market. The Sub-Custodian agrees,
upon request, to advise the Custodian of all pending transactions
in which release and delivery will be made prior to the receipt
of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by
the Fund;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender
or other similar offers for such securities; provided that, in any
such case, the cash or other consideration is thereafter to be
delivered to the Sub-Custodian;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is thereafter to be delivered to the Sub-Custodian;
6) To the issuer thereof, or its agent, for
transfer into the name of the Fund or into the name of any nominee
or nominees of the Sub-Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.11 or any other name
permitted pursuant to Section 2.3; or for exchange for a different
number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided that, in
any such case, the new securities are thereafter to be delivered
to the Sub-Custodian;
7) Upon the sale of such securities for the
account of the Fund, to the broker or its clearing agent, against
a receipt, for examination in accordance with "street delivery"
custom; provided that, in any such case, the Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement; provided that,
in any such case, the new securities and cash, if any, thereafter
are to be delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of interim
receipts or temporary securities for definitive securities;
provided that, in any such case, the now securities and cash, if
any, are thereafter to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt of
collateral the adequacy and timing of receipt of which shall be as
agreed upon from time to time in writing by the Custodian and the
Sub-Custodian, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities;
11) For delivery as security in connection with
any borrowings by the Fund requiring a pledge of assets by the
Fund, but only against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer
agent for the Fund (the "Transfer Agent"), for delivery to such
Transfer Agent or to the shareholders of the Fund in connection
with distributions in kind, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to the Custodian or another
sub-custodian of the Fund; and
14) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the securities to be
delivered, setting forth the purpose for which such delivery is to
be made, declaring such purposes to be proper corporate purposes,
and naming the person or persons to whom delivery of such
securities is to be made.
2.3. REGISTRATION OF SECURITIES. Securities of the
Fund held by the Sub-Custodian hereunder (other than bearer
securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the
Sub-Custodian or any 17f-5 Sub-Custodian or Foreign Depository (as
each of those terms is defined in Section 2.11(b)), which nominee
shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of
any agent appointed pursuant to Section 2.11(a). Notwithstanding
the foregoing, the Sub-Custodian or agent thereof or any 17f-5
Sub-Custodian or Foreign Depository may hold securities of the
Fund in a nominee name which is used for its other clients
provided that such name is not used by the Sub-Custodian, agent,
17f-5 Sub-Custodian or Foreign Depository for its own securities
and that securities of the Fund are, by book-entry or otherwise,
at all times identified as belonging to the Fund and distinguished
from other securities held for other clients using the same
nominee name. In addition, and notwithstanding the foregoing, the
Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign
Depository may hold securities of the Fund in its own name if such
registration is the prevailing method in the applicable market by
which custodians register securities of institutional clients and
provided that securities of the Fund are, by book-entry or
otherwise, at all times identified as belonging to the Fund and
distinguished from other securities held for other clients or for
the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository. All securities accepted by the Sub-Custodian
under the terms of this Agreement shall be in good delivery form.
2.4. BANK ACCOUNTS. The Sub-Custodian shall open and
maintain a separate bank account or accounts in the name of the
Fund or of the Custodian for the benefit of the Fund, subject only
to draft or order by the Sub-Custodian acting pursuant to the
terms of this Agreement or by the Custodian acting pursuant to the
Custodian Agreement, and shall hold in such account or accounts,
subject to the provisions hereof, to the Sub-Custodian's credit as
sub-custodian of the Fund or the Custodian's credit as custodian
for the Fund, cash received for the account of the Fund other than
cash maintained by the Fund in a bank account established and used
in accordance with Rule 17f-3 under the 1940 Act or cash held as
deposits with 17f-5 Sub-Custodians in accordance with the
following paragraph. The responsibilities of the Sub-Custodian
for cash, including foreign currency, of the Fund accepted on the
Sub-Custodian's books as a deposit shall be that of a U.S. bank
for a similar deposit.
The Sub-Custodian may open a bank account on the books of a
17f-5 Sub-Custodian in the name of the Fund or of the Sub-
Custodian as a sub-custodian for the Fund, and may deposit cash,
including foreign currency, of the Fund in such account, and such
funds shall be withdrawable only pursuant to draft or order of the
Sub-Custodian. The records for such account will be maintained by
the Sub-Custodian but such account shall not constitute a deposit
liability of the Sub-Custodian. The responsibilities of the Sub-
Custodian for deposits maintained in such account shall be the
same as and no greater than the Sub-Custodian's responsibility in
respect of other portfolio securities of the Fund.
The Sub-Custodian shall be liable for actual losses incurred
by the Fund attributable to any failure on the part of the Sub-
Custodian to report accurate cash availability information with
respect to the bank accounts referred to in this Section 2.4.
2.5. PAYMENTS FOR SHARES. The Sub-Custodian shall
maintain custody of amounts received from the Transfer Agent of
the Fund for shares of the Fund issued by the Fund and sold by its
distributor and deposit such amounts into the Fund's account. The
Sub-Custodian will provide timely notification to the Custodian
and the Transfer Agent of any receipt by it of payments for shares
of the Fund.
2.6. AVAILABILITY OF FEDERAL FUNDS. Upon mutual
agreement between the Custodian and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions, make
federal funds available to the Custodian for the account of the
Fund as of specified times agreed upon from time to time by the
Custodian and the Sub-Custodian with respect to amounts received
by the Sub-Custodian for the purchase of shares of the Fund.
2.7. COLLECTION OF INCOME. The Sub-Custodian shall
collect on a timely basis all income and other payments with
respect to registered securities held hereunder, including
securities held in a Securities System, to which the Fund shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held hereunder and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the
Sub-Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. Arranging for the collection of income due the Fund on
securities loaned pursuant to the provisions of Section 2.2(10)
shall be the responsibility of the Custodian. The Sub-Custodian
will have no duty or responsibility in connection therewith, other
than to provide the Custodian with such information or data as may
be necessary to assist the Custodian in arranging for the timely
delivery to the Sub-Custodian of the income to which the Fund is
properly entitled.
2.8. PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Sub-Custodian shall cause monies
of the Fund to be paid out in the following cases only:
1) Upon the purchase of securities for the account
of the Fund but only (a) against the delivery of such securities
to the Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is qualified
under the 1940 Act, as amended, to act as a custodian and has been
designated by the Sub-Custodian as its agent for this purpose) or
any 17f-5 Sub-Custodian or any Foreign Depository (as each of
those terms is defined in Section 2.11(b)) registered in the name
of the Fund or in the name of a nominee referred to in Section 2.3
hereof or in proper form for transfer, provided, however, that the
Sub-Custodian may cause monies of the Fund to be paid out prior to
delivery of such securities if (i) in the Sub-Custodian's
judgment, (A) payment prior to delivery is required by the terms
of the instrument evidencing the security or (B) payment prior to
delivery is the prevailing method of settling securities
transactions between institutional investors in the applicable
market and (ii) payment prior to delivery is in accordance with
generally accepted trade practice and with any applicable
governmental regulations and the rules of Securities Systems or
other securities depositories and clearing agencies in the
applicable market. The Sub-Custodian agrees, upon request, to
advise the Custodian of all pending transactions in which payment
will be made prior to the receipt of securities in accordance with
the proviso to the foregoing sentence; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; or (c) (i) in the
case of a repurchase agreement entered into between the Fund and
the Sub-Custodian, another bank or a broker-dealer, against
delivery of the securities either in certificate form or through
an entry crediting the Sub-Custodian's or its agent's
non-proprietary account at any Federal Reserve Bank with such
securities or (ii) in the case of a repurchase agreement entered
into between the Fund and the Sub-Custodian, against delivery of a
receipt evidencing purchase by the Fund of securities owned by the
Sub-Custodian along with written evidence of the agreement by the
Sub-Custodian to repurchase such securities from the Fund; or (d)
for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign, which transfer may be effected prior
to receipt of a confirmation of the deposit from the applicable
bank or a financial intermediary;
2) In connection with conversion, exchange or
surrender or tender or exercise of securities owned by the Fund as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of shares
issued by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes, management,
accounting, custodian and sub-custodian, transfer agent and legal
fees, including the Custodian's fee; and operating expenses of the
Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends or other
distributions declared to shareholders of the Fund;
6) For transfer to the Custodian or another
sub-custodian of the Fund; and
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or Assistant Clerk, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. Except as otherwise provided in this
Agreement, in any and every case where payment for purchase of
securities for the account of the Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased in
the absence of Proper Instructions from the Custodian to so pay in
advance, the Sub-Custodian shall be absolutely liable to the Fund
and the Custodian in the event any loss results to the Fund or the
Custodian from the payment by the Sub-Custodian in advance of
delivery of such securities.
2.10. PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES
OF THE FUND. From such funds as may be available, the
Sub-custodian shall, upon receipt of Proper Instructions, make
funds available for payment to a shareholder of the Fund who has
delivered to the Transfer Agent a request for redemption or
repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Sub-Custodian,
upon receipt of Proper Instructions, is authorized to wire funds
to or through a commercial bank designated by the redeeming
shareholder. In connection with the redemption or repurchase of
shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, shall honor checks drawn on the Sub-Custodian by a
shareholder, when presented to the Sub-Custodian in accordance
with such procedures and controls as are mutually agreed upon from
time to time among the Fund, the Custodian and the Sub-Custodian.
2.11. APPOINTMENT OF AGENTS AND SUB-CUSTODIANS PURSUANT
TO RULE 17F-5.
(a) Agents. Without limiting its own responsibility
for its obligations assumed hereunder, the Sub-Custodian may at
any time and from time to time engage, at its own cost and
expense, as an agent to act for the Fund on the Sub-Custodian's
behalf with respect to any such obligations any bank or trust
company which meets the requirements of the 1940 Act, and the
rules and regulations thereunder, to perform services delegated to
the Sub-Custodian hereunder, provided that the Fund and the
Custodian shall have approved in writing any such bank or trust
company. All agents of the Sub-Custodian shall be subject to the
instructions of the Sub-Custodian and not the Custodian. The Sub-
Custodian may, at any time in its discretion, and shall at the
Custodian's direction, remove any bank or trust company which has
been appointed as an agent, and shall in either case promptly
notify the Custodian and the Fund in writing of the completion of
any such action.
The agents which the Fund has approved to date are set forth
in Schedule B hereto. Schedule B shall be amended from time to
time as approved agents are changed, added or deleted. The
Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such agent. The engagement by the Sub-Custodian of one or
more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder.
(b) 17f-5 Sub-Custodians. Securities, funds and other
property of the Fund may be held by sub-custodians appointed
pursuant to the provisions of this Section 2.11 (each, a "17f-5
Sub-Custodian"). The Sub-Custodian may, at any time and from time
to time, appoint any bank or trust company (that meets the
requirements of a custodian or a foreign custodian under the
Investment Company Act of 1940 and the rules and regulations
thereunder, including without limitation Rule 17f-5 thereunder, or
that has received an order of the Securities and Exchange
Commission ("SEC") exempting it from any of such requirements that
it does not meet) to act as a 17f-5 Sub-Custodian for the Fund,
provided that the Fund shall have approved in writing (1) any such
bank or trust company and the sub-custodian agreement to be
entered into between such bank or trust company and the Sub-
Custodian, and (2) the 17f-5 Sub-Custodian's offices or branches
at which the 17f-5 Sub-Custodian is authorized to hold securities,
cash and other property of the Fund. Upon such approval by the
Fund, the Sub-Custodian is authorized on behalf of the Fund to
notify each 17f-5 Sub-Custodian of its appointment as such. The
Sub-Custodian may, at any time in its discretion, remove any bank
or trust company that has been appointed as a 17f-5 Sub-Custodian.
Those 17f-5 Sub-Custodians and their offices or branches
which the Fund has approved to date are set forth on Schedule C
hereto. Such Schedule C shall be amended from time to time as
17f-5 Sub-Custodians, branches or offices are changed, added or
deleted. The Custodian shall be responsible for informing the
Sub-Custodian sufficiently in advance of a proposed investment
which is to be held at a location not listed on Schedule C, in
order that there shall be sufficient time for the Fund to give the
approval required by the preceding paragraph and for the Sub-
Custodian to put the appropriate arrangements in place with such
17f-5 Sub-Custodian pursuant to such sub-custodian agreement.
With respect to the securities and funds held by a 17f-5 Sub-
Custodian, either directly or indirectly, including demand and
interest bearing deposits, currencies or other deposits and
foreign exchange contracts, the Sub-Custodian shall be liable to
the Custodian and the Fund if and only to the extent that such
17f-5 Sub-Custodian is liable to the Sub-Custodian and the Sub-
Custodian recovers under the applicable sub-custodian agreement,
provided, however, that the foregoing limitation shall not apply
if such 17f-5 Sub-Custodian's liability to the Sub-Custodian is
limited because the applicable sub-custodian agreement does not
contain provisions substantially similar to the provisions of
Section 2 (but not including Section 2.12) of this Agreement. The
Sub-Custodian shall also be liable to the Custodian and the Fund
for its own negligence in transmitting any instructions received
by it from the Fund or the Custodian and for its own negligence in
connection with the delivery of any securities or funds held by it
to any such 17f-5 Sub-Custodian.
The Custodian or the Fund may authorize the Sub-Custodian or
one or more of the 17f-5 Sub-Custodians to use the facilities of
one or more foreign securities depositories or clearing agencies
(each, a "Foreign Depository") that is permitted to be used by
registered investment companies by a Rule or Rules of the SEC or
that has received an order of the SEC exempting it from any of
such requirements that it does not meet. The records of the Sub-
Custodian or a 17f-5 Sub-Custodian employing a Foreign Depository
or clearing agency shall identify those securities belonging to
the Fund which are maintained in such a Foreign Depository. The
engagement by the Sub-Custodian of one or more Foreign
Depositories shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder. The Foreign
Depositories which the Fund has approved to date are set forth in
Schedule C hereto. Schedule C shall be amended from time to time
as approved Foreign Depositories are changed, added or deleted.
The Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule C, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such Foreign Depository.
In the event that any 17f-5 Sub-Custodian appointed pursuant
to the provisions of this Section 2.11 fails to perform any of its
obligations under the terms and conditions of the applicable sub-
custodian agreement, the Sub-Custodian shall use its best efforts
to cause such 17f-5 Sub-Custodian to perform such obligations. In
the event that the Sub-Custodian is unable to cause such 17f-5
Sub-Custodian to perform fully its obligations thereunder, the
Sub-Custodian shall forthwith upon the Custodian's request
terminate such 17f-5 Sub-Custodian as a sub-custodian for the Fund
and, if necessary or desirable, appoint another 17f-5 Sub-
Custodian in accordance with the provisions of this Section 2.11.
At the election of the Custodian, it shall have the right to
enforce and shall be subrogated to the Sub-Custodian's rights
against any such 17f-5 Sub-Custodian for loss or damage caused the
Fund by such 17f-5 Sub-Custodian.
At the written request of the Fund, the Sub-Custodian will
terminate as a sub-custodian for the Fund any 17f-5 Sub-Custodian
appointed pursuant to the provisions of this Section 2.11 in
accordance with the termination provisions under the applicable
sub-custodian agreement. The Sub-Custodian will not amend any
sub-custodian agreement or agree to change or permit any changes
thereunder except upon the prior written approval of the Fund.
In the event the Sub-Custodian makes any payment to a 17f-5
Sub-Custodian under the indemnification provisions of any sub-
custodian agreement, no more than thirty days after written notice
to the Custodian of the Sub-Custodian's having made such payment,
the Custodian will reimburse the Sub-Custodian the amount of such
payment except in respect of any negligence or misconduct of the
Sub-Custodian.
2.12. DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS.
The Sub-Custodian may deposit and/or maintain securities owned by
the Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury or by a federal agency (collectively referred to herein
as "Securities System") in accordance with applicable rules and
regulations (including Rule 17f-4 of the 1940 Act), and subject to
the following provisions:
1) The Sub-Custodian may, either directly or
through one or more agents, keep securities of the Fund in a
Securities System provided that such securities are represented in
an account ("Account") of the Sub-Custodian or such an agent in
the Securities System which shall not include any assets other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Sub-Custodian with respect
to securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
3) The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-Custodian shall transfer
securities sold for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Sub-Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for the
Fund by the Sub-Custodian or such an agent and be provided to the
Fund or the Custodian at the Custodian's request. The
Sub-Custodian shall furnish the Custodian confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Custodian copies
of daily transaction statements reflecting each day's transactions
in the Securities System for the account of the Fund on the next
business day;
4) The Sub-Custodian shall provide the Custodian
with any report obtained by the Sub-Custodian on the Securities
System's accounting system, internal accounting controls and
procedures for safeguarding securities deposited in the Securities
System;
5) The Sub-Custodian shall utilize only such
Securities Systems as are set forth in a list provided by the
Custodian of Securities Systems approved for use by the Board of
Trustees of the Fund, which list will be amended from time to time
by the Custodian as may be necessary to reflect any subsequent
action taken by the Trustees of the Fund;
6) Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be liable to the Fund and
the Custodian for any loss or damage to the Fund or the Custodian
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Sub-Custodian or any
of its agents or of any of its or their employees or from failure
of the Sub-Custodian or any such agent or employee to enforce
effectively such rights as it may have against the Securities
System. At the election of the Custodian, it shall be entitled to
be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which
the Sub-Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund and the Custodian have
not been made whole for any such loss or damage.
2.13. DEPOSITARY RECEIPTS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall instruct a 17f-5 Sub-
Custodian appointed pursuant to Section 2.11(b) hereof or an agent
of the Sub-Custodian appointed pursuant to Section 2.11(a) hereof
(an "Agent") to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary
Receipts (hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to
the 17f-5 Sub-Custodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to such
securities ADRs in the name of the Sub-Custodian, or a nominee of
the Sub-Custodian, for delivery to the Sub-Custodian in Boston,
Massachusetts, or at such other place as the Sub-Custodian may
from time to time designate.
Only upon receipt of Proper Instructions, the Sub-Custodian
shall surrender ADRs to the issuer thereof against a written
receipt therefor adequately describing the ADRs surrendered and
written evidence satisfactory to the Sub-Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its
depository to deliver the securities underlying such ADRs to a
17f-5 Sub-Custodian or an Agent.
2.14. FOREIGN EXCHANGE TRANSACTIONS AND FUTURES
CONTRACTS. Only upon receipt of Proper Instructions, the Sub-
Custodian shall enter into foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such
banking institutions, including the Sub-Custodian and 17f-5 Sub-
Custodian(s) appointed pursuant to Section 2.11(b), as principals,
as approved and authorized by the Fund. In connection with such
transaction, the Sub-Custodian is authorized to make free outgoing
payments of cash in the form of U.S. Dollars or foreign currency
without receiving confirmation of a foreign exchange contract,
futures contract or option thereon or confirmation that the
countervalue currency completing the foreign exchange contract or
futures contract has been delivered or received or that the option
has been delivered or received. Foreign exchange contracts,
futures contracts and options, other than those executed with the
Sub-Custodian as principal, shall for all purposes of this
Agreement be deemed to be portfolio securities of the Fund.
2.15. OPTION TRANSACTIONS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall enter into option
transactions in accordance with the provisions of any agreement
among the Fund, the Custodian, and/or the Sub-Custodian and a
broker-dealer.
2.16. OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The
Sub-Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities held by it hereunder and in connection with transfers
of securities.
2.17. PROXIES. The Sub-Custodian shall, with respect
to the securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are
registered other than in the name of the Fund, all proxies that
are received by the Sub-Custodian, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Custodian such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.18. COMMUNICATIONS RELATING TO FUND PORTFOLIO
SECURITIES. The Sub-Custodian shall transmit promptly to the
Custodian all written information (including, without limitation,
pendency of calls and maturities of securities and expirations of
rights in connection therewith) received by the Sub-Custodian from
issuers of the securities being held for the account of the Fund.
With respect to tender or exchange offers, the Sub-Custodian shall
transmit promptly to the Custodian all written information
received by the Sub-Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any
other similar transactions, the Custodian shall notify the
Sub-Custodian of the action the Fund desires the Sub-Custodian to
take; provided, however, that the Sub-Custodian shall not be
liable to the Fund or the Custodian for the failure to take any
such action unless Proper Instructions are received by the
Sub-Custodian at least two business days prior to the date on
which the Sub-Custodian is to take such action, or in the case of
foreign securities, such longer periods as shall have been agreed
upon in writing by the Custodian and the Sub-Custodian, which may
be in the form of written operating procedures or standards.
2.19. PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more persons who are authorized by the Trustees of the Fund
and by the Custodian. Each such writing shall set forth the
specific transaction or type of transaction involved. Oral
instructions will be considered Proper Instructions if the
Sub-Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the
transaction involved. The Custodian shall cause all oral
instructions to be confirmed in writing. Proper Instructions
shall also include communications effected directly between the
Custodian and Sub-Custodian by electro-mechanical or electronic
devices, provided that the Custodian and the Sub-Custodian have
approved such procedures. Notwithstanding the foregoing, no
Trustee, officer, employee or agent of the Fund
shall be permitted access to any securities or similar investments
of the Fund deposited with the Sub-Custodian or any agent for any
reason except in accordance with the provisions of Rule 17f-2
under the 1940 Act.
2.20. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The
Sub-Custodian may in its discretion, without express authority
from the Custodian:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating to
its duties under this Agreement, provided that all such payments
shall be accounted for to the Custodian;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities and
property of the Fund held by the Sub-Custodian hereunder except as
otherwise directed by the Custodian.
2.21. EVIDENCE OF AUTHORITY. The Sub-Custodian shall
be protected in acting upon any instruction, notice, request,
consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by
or on behalf of the Fund or the Custodian as custodian of the
Fund.
2.22. PERFORMANCE STANDARDS. The Sub-Custodian shall
use its best efforts to perform its duties hereunder in accordance
with such standards as are agreed upon from time to time by the
Custodian and the Sub-Custodian.
3. RECORDS. The Sub-Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trustees of the Fund to keep the books of account of the
Fund or, if directed in writing to do so by the Custodian, shall
itself keep such books of account. The Sub-Custodian shall create
and maintain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular
attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1
and 31a-2 thereunder; the Sub-Custodian shall also create and
maintain such records as are required by applicable federal and
state tax laws, and any other law or administrative rules or
procedures which may be applicable to the Fund or the Custodian,
such laws, rules or procedures to be specified by the Custodian
from time to time. All such records shall be the property of the
Fund and shall at all times during the regular business hours of
the Sub-Custodian be open for inspection by duly authorized
officers, employees or agents of the Custodian and the Fund and
employees and agents of the Securities and Exchange Commission.
The Sub-Custodian shall, at the Custodian's request, supply the
Custodian with a tabulation of securities owned by the Fund and
held under this Agreement and shall, when requested to do so by
the Custodian and for such compensation as shall be agreed upon
between the Custodian and Sub-Custodian, include certificate
numbers in such tabulations.
4. Opinion and Reports of the Fund's Independent Accountant.
The Sub-Custodian shall take all reasonable actions, as the
Custodian may from time to time request, to furnish such
information with respect to its activities hereunder as the Fund's
independent public accountant may request in connection with the
accountant's verification of the Fund's securities and similar
investments as required by Rule 17f-2 under the 1940 Act, the
preparation of the Fund's registration statement and amendments
thereto, the Fund's reports to the Securities and Exchange
Commission and with respect to any other requirements of such
Commission.
5. Reports of Sub-Custodian's Independent Accountant. The
Sub-Custodian shall provide the Custodian, at such times as the
Custodian may reasonably require, with reports by an independent
public accountant on the accounting system, internal accounting
controls and procedures for safeguarding securities, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and in
sufficient detail as may reasonably be required by the Custodian,
shall provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and if there are no such
inadequacies, shall so state.
6. Compensation. The Sub-Custodian shall be entitled to
reasonable compensation for its services and expenses as
sub-custodian, as agreed upon from time to time between the
Custodian and the Sub-Custodian.
7. Responsibility of Sub-Custodian. The Sub-Custodian shall
exercise reasonable care and diligence in carrying out the
provisions of this Agreement and shall not be liable to the Fund
or the Custodian for any action taken or omitted by it in good
faith without negligence or willful misconduct. So long as and to
the extent that it is in the exercise of reasonable care, the
Sub-Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received
by it or delivered by it pursuant to this Agreement and shall be
held harmless in acting upon any notice, request, consent,
certificate or other instrument reasonably believed by it to be
genuine and, if in writing, reasonably believed to be signed by
the proper party or parties. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund)
on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the
Sub-Custodian with respect to redemptions effected by check shall
be in accordance with a separate agreement entered into between
the Custodian and the Sub-Custodian. It is also understood that
the Sub-Custodian shall not be liable for any loss resulting from
a Sovereign Risk. A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other
charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event
beyond the Sub-Custodian's control.
The Sub-Custodian shall protect the Fund and the Custodian
from losses to the Fund resulting from any act or failure to act
of the Sub-Custodian in violation of its duties hereunder or of
any law applicable to the Sub-Custodian's duties hereunder.
If the Custodian requires the Sub-Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the
Sub-Custodian, result in the Sub-Custodian's being liable for the
payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in
an amount and form satisfactory to the Sub-Custodian.
The Custodian agrees to indemnify and hold harmless the
Sub-Custodian from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
(collectively, "Authorized Charges") incurred or assessed against
it or its nominee in connection with the performance of this
Agreement, except such as may arise from its own negligent action,
negligent failure to act or willful misconduct. The Sub-Custodian
is authorized to charge any account of the Fund for such items and
such fees. To secure any such Authorized Charges and any advances
of cash or securities made by the Sub-Custodian to or for the
benefit of the Fund for any purpose which results in the Fund's
incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the
Custodian on behalf of the Fund hereby represents that it has
obtained from the Fund authorization to apply available cash in
any account maintained by the Sub-Custodian on behalf of the Fund
and a security interest in and pledge to the Sub-Custodian of
securities of the Fund held by the Sub-Custodian (including those
which may be held in a Securities System) up to a maximum of 10%
of the value of the net assets held by the Sub-Custodian for the
purposes of securing payment of any Authorized Charges and any
advances of cash or securities, and that the Fund has agreed, from
time to time, to designate in writing, or to cause its investment
adviser to, or permit the Custodian to, designate in writing, the
securities subject to such security interest and pledge with such
specificity and detail as the Sub-Custodian may reasonably request
(and in the absence of such designation to permit the Sub-
Custodian so to designate securities). The Custodian hereby
grants on behalf of the Fund a security interest and pledge to the
Sub-Custodian, as aforesaid, in securities and available cash, as
security for any Authorized Charges and any advances of cash or
securities and agrees that, should the Fund or the Custodian fail
to repay promptly any Authorized Charges and any advances of cash
or securities, the Sub-Custodian shall be entitled to use such
available cash and to dispose of such pledged securities as is
necessary to repay any such Authorized Charges or any advances of
cash or securities and to exercise the rights of a secured party
under the Uniform Commercial Code.
The Custodian agrees not to amend the third paragraph of
Section 9 of the Custodian Agreement unless it provides the Sub-
Custodian with at least thirty (30) days' prior written notice of
the substance of any proposed amendments, provided that the
foregoing shall not be construed to in any way to provide that the
Sub-Custodian's consent shall be required to make such an
amendment effective or that the Sub-Custodian's failure to give
such consent shall in any way affect its obligations under this
Agreement.
8. SUCCESSOR SUB-CUSTODIAN. If a successor sub-custodian
shall be appointed by the Custodian, the Sub-Custodian shall, upon
termination and upon receipt of Proper Instructions, cause to be
delivered to such successor sub-custodian, duly endorsed and in
the form for transfer, all securities, funds and other property of
the Fund then held by it and all instruments held by the
Sub-Custodian related thereto and cause the transfer to an account
of the successor sub-custodian all of the Fund's securities held
in any Securities Systems.
If no such successor sub-custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be
transferred such securities, funds and other property in
accordance with such vote.
In the event that no written order designating a successor
sub-custodian or certified copy of a vote of the Trustees shall
have been delivered to the Sub-Custodian on or before the date
when such termination shall become effective, then the Sub-
Custodian shall have the right to deliver to a bank or trust
company, which meets the requirements of the 1940 Act and the
rules and regulations thereunder, all securities, funds and other
properties of the Fund. Thereafter, such bank or trust company
shall be the successor of the Sub-Custodian under this Agreement.
In the event that securities, funds and other property remain
in the possession of the Sub-Custodian after the date of
termination hereof owing to failure of the Custodian to obtain a
certified copy of the Trustees appointing a successor sub-
custodian, the Sub-Custodian shall be entitled to fair
compensation for its services during such period as the Sub-
Custodian retains possession of such securities, funds and other
property and the provisions of this Agreement relating to the
duties and obligations of the Sub-Custodian shall remain in full
force and affect.
9. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This
Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to the
other party, such termination to take effect not sooner than
thirty (30) days after the date of mailing; provided, that either
party may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
other party or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is
sought.
Upon termination of this Agreement, the Custodian shall pay
to the Sub-Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the
Sub-Custodian for its reimbursable costs, expenses and
disbursements. The provisions of Section 7, including, until any
Authorized Charges and any advances of cash or securities referred
to therein are repaid, all liens and security interests created
pursuant thereto, and all rights to indemnification, shall survive
any termination of this Agreement.
10. INTERPRETATION. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the subject matter hereof. In connection with the operation of
this Agreement, the Sub-Custodian and the Custodian may from time
to time agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement.
No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
11. GOVERNING LAW. This Agreement is executed and delivered
in The Commonwealth of Massachusetts and shall be governed by and
construed according to the internal laws of said Commonwealth,
without regard to principles of conflicts of law.
12. NOTICES. Notices and other writings delivered or mailed
postage prepaid to the Custodian addressed to the Custodian
attention: George H. Crane, Senior Vice President, The Putnam
Companies, 99 High Street, Boston, MA 02109 or to such other
person or address as the Custodian may have designated to the Sub-
Custodian in writing, or to the Sub-Custodian attention:
or to such other address as the SubCustodian may have designated
to the Custodian in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
13. BINDING OBLIGATION. This Agreement shall be binding on
and shall inure to the benefit of the Custodian and the Sub-
Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent
of the other party.
14. PRIOR AGREEMENTS. This Agreement supersedes and
terminates, as of the date hereof, all prior contracts between the
Fund or the Custodian and the Sub-Custodian relating to the
custody of the Fund's assets.
15. DECLARATION OF TRUST. A copy of the Declaration of
Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that the
obligations of or arising out of this instrument are not binding
upon any of the Trustees or beneficiaries individually but binding
only upon the assets and property of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199 .
PUTNAM FIDUCIARY TRUST COMPANY
By--------------------------------
Name:
Title:
(Sub-Custodian)
By---------------------------------
Name:
Title:
The Sub-Custodian and Putnam Investments, Inc. ("Putnam"),
the sole owner of the Custodian, agree that Putnam shall be the
primary obligor with respect to compensation due the Sub-Custodian
pursuant to Section 6 of this Agreement in connection with the
Sub-Custodian's performance of its responsibilities hereunder.
The Custodian and Putnam agree to take all actions necessary and
appropriate to assure that the Sub-Custodian shall be compensated
<PAGE>
in the amounts and on the schedule agreed to by the Custodian and
the Sub-Custodian pursuant to Section 6.
PUTNAM INVESTMENTS, INC.
By:-------------------------------
Name:
Title:
PUTNAM FIDUCIARY TRUST COMPANY
By:--------------------------------
Name:
Title:
(Sub-Custodian)
By:----------------------------------
Name:
Title:
S:\shared\boiler\newfunds\pre-eff\NF-27d.rev
INVESTOR SERVICING AGREEMENT
AGREEMENT made as of the 3rd day of June, 1991,
between
each of the Putnam Funds listed in Appendix A hereto (as the
same
may from time to time be amended to add one or more
additional
Putnam Funds or to delete one or more of such Funds), each
of
such Funds acting severally on its own behalf and not
jointly
with any of such other Funds (each of such Funds being
hereinafter referred to as the "Fund"), and The Putnam
Management
Company, Inc. (the "Manager"), a Delaware corporation, and
Putnam
Fiduciary Trust Company (the "Agent"), a Massachusetts trust
company.
W I T N E S S E T H:
WHEREAS, the Fund is an investment company registered
under the Investment Company Act of 1940; and
WHEREAS, the Fund desires to engage the Manager and
the
Agent to provide all services required by the Fund in
connection
with the establishment, maintenance and recording of
shareholder
accounts, including without limitation all related tax and
other
reporting requirements, and the implementation of investment
and
redemption arrangements offered in connection with the sale
of
the Fund's shares; and
WHEREAS, the Agent, an affiliate of the Manager, is
willing to provide such services on the terms and subject to
the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
the
mutual covenants set forth herein, the parties hereto agree
as
follows:
1. APPOINTMENT.
The Fund hereby appoints the Agent as its "Investor
Servicing Agent" on the terms and conditions set forth
herein.
In such capacity the Agent shall act as transfer,
distribution
disbursing and redemption agent for the Fund and shall act
as
agent for the shareholders of the Fund in connection with
the
various shareholder investment and/or redemption plans from
time
to time made available to shareholders. The Agent hereby
accepts
such appointment and agrees to perform the respective duties
and
functions of such offices in accordance with the terms of
this
agreement and in a manner generally consistent with the
practices
and standards customarily followed by other high quality
investor
servicing agents for registered investment companies.
Notwithstanding such appointment, however, the
parties
agree that the Manager may, upon thirty (30) days prior
written
notice to the Fund, assume such appointment and perform such
duties and functions itself. Pending any such assumption,
however, the Manager hereby guarantees the performance of
the
Agent hereunder and shall be fully responsible to the Fund,
financially and otherwise, for the performance by the Agent
of
its agreements contained herein.
2. GENERAL AUTHORITY AND DUTIES.
By its acceptance of the foregoing appointment, the
Agent
shall be responsible for performing all functions and duties
which, in the reasonable judgment of the Fund, are necessary
or
desirable in connection with the establishment, maintenance
and
recording of the Fund's shareholder accounts and the conduct
of
its relations with shareholders with respect to their
accounts.
Without limiting the generality of the foregoing, the Agent
shall
be responsible:
(a) as transfer agent, for performing all
functions
customarily performed by transfer agents for registered
investment companies, including without limitation all
functions necessary or desirable to establish and
maintain
accounts evidencing the ownership of securities issued
by
the Fund and, to the extent applicable, the issuance of
certificates representing such securities, the recording
of
all transactions pertaining to such accounts, and
effecting
the issuance and redemption of securities issued by the
Fund;
(b) as distribution disbursing agent, for
performing
all functions customarily performed by distribution
disbursing agents for registered investment companies,
including without limitation all functions necessary or
desirable to effect the payment to shareholders of
distributions declared from time to time by the Trustees
of
the Fund;
(c) as redemption agent for the Fund, for
performing
all functions necessary or desirable to effect the
redemption of securities issued by the Fund and payment
of
the proceeds thereof; and
(d) as agent for shareholders of the Fund,
performing
all functions necessary or desirable to maintain all
plans
or arrangements from time to time made available to
shareholders to facilitate the purchase or redemption of
securities issued by the Fund.
In performing its duties hereunder, in addition to
the
provisions set forth herein, the Agent shall comply with the
terms of the Declaration of Trust, the Bylaws and the
current
Prospectus and Statement of Additional Information of the
Fund,
and with the terms of votes adopted from time to time by the
Trustees and shareholders of the Fund, relating to the
subject
matters of this Agreement, all as the same may be amended
from
time to time.
3. STANDARD OF SERVICE; COMPLIANCE WITH LAWS.
The Agent will use its best efforts to provide high
quality services to the Fund's shareholders and in so doing
will
seek to take advantage of such innovations and technological
improvements as may be appropriate or desirable with a view
to
improving the quality and, where possible, reducing the cost
of
its services to the Fund. In performing its duties
hereunder,
the Agent shall comply with the provisions of all applicable
laws
and regulations and shall comply with the requirements of
any
governmental authority, having jurisdiction over the Agent
or the
Fund with respect to the duties of the Agent hereunder.
4. COMPENSATION.
The Fund shall pay to the Agent, for its services
rendered
and its costs incurred in connection with the performance of
its
duties hereunder, such compensation and reimbursements as
may
from time to time be approved by vote of the Trustees of the
Fund.
5. DUTY OF CARE; INDEMNIFICATION.
The Agent will at all times act in good faith and
exercise
reasonable care in performing its duties hereunder. The
Agent
will not be liable or responsible for delays of errors
resulting
from circumstances beyond its control, including acts of
civil or
military authorities, national emergencies, labor
difficulties,
fire, mechanical breakdown beyond its control, flood or
catastrophe, acts of God, insurrection, war, riots or
failure
beyond its control of transportation, communication or power
supply.
The Agent may rely on certifications of the Clerk,
the
President, the Vice Chairman, the Executive Vice President,
the
Senior Vice President or the Treasurer of the Fund as to any
action taken by the shareholders or trustees of the Fund,
and
upon instructions not inconsistent with this Agreement
received
from the President, Vice Chairman, the Executive Vice
President,
the Senior Vice President or the Treasurer of the Fund. If
any
officer of the Fund shall no longer be vested with authority
to
sign for the Fund, written notice thereof shall forthwith be
given to the Agent by the Fund and, until receipt of such
notice
by it, the Agent shall be entitled to recognize and act in
good
faith upon certificates or other instruments bearing the
signatures or facsimile signatures of such officers. The
Agent
may request advice of counsel for the Fund, at the expense
of the
Fund, with respect to the performance of its duties
hereunder.
The Fund will indemnify and hold the Agent harmless
from
any and all losses, claims, damages, liabilities and
expenses
(including reasonable fees and expenses of counsel) arising
out
of (i) any action taken by the Agent in good faith
consistent
with the exercise of reasonable care in accordance with such
certifications, instructions or advice, (ii) any action
taken by
the Agent in good faith consistent with the exercise of
reasonable care in reliance upon any instrument or
certificate
for securities believed by it (a) to be genuine, and (b) to
be
executed by any person or persons authorized to execute the
same;
PROVIDED, HOWEVER, that the Agent shall not be so
indemnified in
the event of its failure to obtain a proper signature
guarantee
to the extent the same is required by the Declaration of
Trust,
Bylaws, current Prospectus or Statement of Additional
Information
of the Fund or a vote of the Trustees of the Fund, and such
requirement has not been waived by vote of the Trustees of
the
Fund, or (iii) any other action taken by the Agent in good
faith
consistent with the exercise of reasonable care in
connection
with the performance of its duties hereunder.
In the event that the Agent proposes to assert the
right
to be indemnified under this Section 5 in connection with
any
action, suit or proceeding against it, the Agent shall
promptly
after receipt of notice of commencement of such action, suit
or
proceeding notify the Fund of the same, enclosing a copy of
all
papers served. In such event, the Fund shall be entitled to
participate in such action, suit or proceeding, and, to the
extent that it shall wish, to assume the defense thereof,
and
after notice from the Fund to the Agent of its election so
to
assume the defense thereof the Fund shall not be liable to
the
Agent for any legal or other expenses. The parties shall
cooperate with each other in the defense of any such action,
suit
or proceeding. In no event shall the Fund be liable for any
settlement of any action or claim effected without its
consent.
6. MAINTENANCE OF RECORDS.
The Agent will maintain and preserve all records
relating
to its duties under this Agreement in compliance with the
requirements of applicable statutes, rules and regulations,
including, without limitation, Rule 31a-1 under the
Investment
Company Act of 1940. Such records shall be the property of
the
Fund and shall at all times be available for inspection and
use
by the officers and agents of the Fund. The Agent shall
furnish
to the Fund such information pertaining to the shareholder
accounts of the Fund and the performance of its duties
hereunder
as the Fund may from time to time request. The Agent shall
notify the Fund promptly of any request or demand by any
third
party to inspect the records of the Fund maintained by it
and
will act upon the instructions of the Fund in permitting or
refusing such inspection.
7. FUND ACCOUNTS.
All moneys of the Fund from time to time made
available
for the payment of distributions to shareholders or
redemptions
of shares, or otherwise coming into the possession or
control of
the Agent or its officers, shall be deposited and held in
one or
more accounts maintained by the Agent solely for the benefit
of
the Funds.
8. INSURANCE.
The Agent will at all times maintain in effect
insurance
coverage, including, without limitation, Errors and
Omissions,
Fidelity Bond and Electronic Data Processing coverages, at
levels
of coverage consistent with those customarily maintained by
other
high quality investor servicing agents for registered
investment
companies and with such policies as the Trustees of the Fund
may
from time to time adopt.
9. EMPLOYEES.
The Agent shall be responsible for the employment,
control
and conduct of its agents and employees and for injury to
such
agents or employees or to others caused by such agents or
employees. The Agent shall assume full responsibility for
its
agents and employees under applicable statutes and agrees to
pay
all applicable employer taxes thereunder with respect to
such
agents and employees, and such agents and employees shall in
no
event be considered to be agents or employees of the Fund.
10. TERMINATION.
This Agreement shall continue indefinitely until
terminated by not less than ninety (90) days prior written
notice
given by the Fund to the Agent, or by not less than six
months
prior written notice given by the Agent to the Fund.
In the event that in connection with any such
termination
a successor to any of the Agent's duties or responsibilities
hereunder is designated by the Fund by written notice to the
Agent, the Agent will cooperate fully in the transfer of
such
duties and responsibilities, including provision for
assistance
by the Agent's personnel in the establishment of books,
records
and other data by such successor. The Fund will reimburse
the
Agent for all expenses incurred by the Agent in connection
with
such transfer.
11. MISCELLANEOUS.
This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth
of
Massachusetts.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit
any
of the provisions of this Agreement or otherwise affect
their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall
be deemed an original, but all of which taken together shall
constitute one and the same instrument.
A copy of the Declaration of Trust (including any
amendments thereto) of the Fund is on file with the
Secretary of
The Commonwealth of Massachusetts, and notice is hereby
given
that this instrument is executed on behalf of the Trustees
of the
Fund as Trustees and not individually and that the
obligations of
or arising out of this instrument are not binding upon any
of the
Trustees or officers or shareholders individually, but
binding
only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this
Agreement
to be executed by their duly authorized officers as of the
date
and year first above written.
THE PUTNAM FUNDS, listed on Appendix
A
/s/Charles E. Porter
By -------------------------------
- ----
Charles E. Porter
Executive Vice President
PUTNAM FIDUCIARY TRUST COMPANY
/s/John R. Verani
By -------------------------------
- ----
John R. Verani
President
THE PUTNAM MANAGEMENT COMPANY, INC.
/s/Gordon H. Silver
By -------------------------------
- ----
Gordon H. Silver
Senior Managing Director
APPENDIX A
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
- Balanced Portfolio
- Conservative Portfolio
- Growth Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Trust
-California Tax Exempt Income Fund
Putnam California Tax Exempt Money Market Fund
Putnam Capital Appreciation Fund
Putnam Capital Manager Trust
-PCM Voyager Fund
-PCM Growth & Income Fund
-PCM Money Market Fund
-PCM High Yield Fund
-PCM U.S. Government and High Quality Bond Fund
-PCM Global Asset Allocation Fund
-PCM Global Growth Fund
-PCM Utilities Growth & Income Fund
-PCM Diversified Income Fund
-PCM New Opportunities Fund
-PCM Asia Pacific Growth Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Diversified Income Trust II
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Federal Income Trust
Putnam Florida Tax Exempt Income Fund
Putnam Funds Trust
-Putnam International Growth and 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 U.S. Government Fund
Putnam Investment Funds
-Putnam Balanced Fund
-Putnam American Renaissance Fund
-Putnam Emerging Growth Fund
-Putnam Genesis Fund
-Putnam Global Growth and Income Fund
-Putnam Global Utilities Fund
-Putnam International Fund
-Putnam International New Opportunities Fund
-Putnam Japan Fund
-Putnam New Value Fund
-Putnam Real Estate Opportunities Fund
-Putnam Research 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
-New York Tax Exempt Income Fund
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 Tax Exempt Income Fund
Putnam Tax Exempt Money Market Fund
Putnam Tax-Free Income Trust
-Tax-Free High Yield Fund
-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
Dated: June 7, 1996
NF-26.96
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
617 951-7000
July 18, 1996
Putnam Funds Trust
One Post Office Square
Boston, Massachusetts 02109
Gentlemen:
We are furnishing this opinion in connection with the
Registration Statement on Form N-1A (the "Registration
Statement") filed under the Securities Act of 1933, as
amended,
by Putnam Funds Trust (the "Fund") for the registration of
an
indefinite number of its shares of beneficial interest (the
"Shares") of Putnam International Growth and Income Fund, a
series of
shares of beneficial interest (the "series"), of the Fund.
The Shares
are proposed to be sold pursuant to a Distributor's Contract
dated
June 7, 1996 (the "Distributor's Contract") between the Fund
and Putnam Mutual Funds Corp.
We have acted as counsel for the Fund since its
organization. We are familiar with the action taken by its
Trustees to authorize this issuance of the Shares. We have
examined its records of Trustee and shareholder action, its
Bylaws, and its Agreement and Declaration of Trust on file
at the
office of the Secretary of State of The Commonwealth of
Massachusetts. We have examined copies of such Registration
Statement, in the form filed or to be filed with the
Securities
and Exchange Commission, and such other documents as we deem
necessary for the purpose of this opinion.
We assume that upon sale of the Shares the Fund will
receive
the net asset value thereof.
Based upon the foregoing, we are of the opinion that the
Fund is authorized to issue an unlimited number of Shares,
and
that when the Shares are issued and sold pursuant to the
Distributor's Contract, they 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 the
Trustees. The Agreement and Declaration of Trust provides
for
indemnification out of the property of the particular series
of shares
of that series for all loss and expense of any shareholder
held
personally liable solely by
ROPES & GRAY
Putnam Funds Trust -2-
July 18, 1996
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
that series of shares itself would be unable to meet its
obligations.
We consent to the filing of this opinion as an exhibit
to
such Registration Statement.
Very truly yours,
Ropes & Gray
July 2, 1996
Putnam Funds Trust
One Post Office Square
Boston, MA 02109
Gentlemen:
In connection with your sale to us today of 3,921.647 Class
A
shares, 3,921.569 Class B shares and 3,921.569 Class M
shares of
beneficial interest (the "Shares") in Putnam International
Growth
and Income Fund (the "Fund"), a series of Putnam Funds
Trust, we
understand that: (i) the Shares have not been registered
under
the Securities Act of 1933, as amended; (ii) your sale of
the
Shares to us is in reliance on the sale's being exempt under
Section 4(2) of the Act as not involving any public
offering; and
(iii) in part, your reliance on such exemption is predicated
on
our representation, which we hereby confirm, that we are
acquiring the Shares for investment and for our own account
as
the sole beneficial owner hereof, and not with a view to or
in
connection with any resale or distribution of any or all of
the
Shares or of any interest therein. We hereby agree that we
will
not sell, assign or transfer the Shares or any interest
therein
except upon repurchase or redemption by the Fund unless and
until
the Shares have been registered under the Securities Act of
1933,
as amended, or you have received an opinion of your counsel
indicating to your satisfaction that such sale, assignment
or
transfer will not violate the provisions of the Securities
Act of
1933, as amended, or any rules and regulations promulgated
thereunder.
We further agree, pursuant to the requirements of the Staff
of
the Securities and Exchange Commission, that if any of the
Shares
are redeemed during the first five years of the Fund's
operations
by any holder thereof, the redemption proceeds will be
reduced by
the amount of the then unamortized organizational expenses
in the
same ratio as the number of Shares redeemed bears to the
number
of Shares held at the time of redemption.
This letter is intended to take effect as an instrument
under
seal, shall be construed under the laws of Massachusetts,
and is
delivered at Boston, Massachusetts, as of the date written
above.
Very truly yours,
PUTNAM INVESTMENTS, INC.
By: /s/ Lawrence J. Lasser
-----------------------------
Lawrence J. Lasser, President
<PAGE>
PUTNAM INDIVIDUAL RETIREMENT ACCOUNT PLAN
ARTICLE I
INTRODUCTION
By executing the related Adoption Agreement, the
Participant, or the Employer on behalf of the Participants, has
established an Individual Retirement Account Plan for the
exclusive benefit of the Participant(s) and his or their
Beneficiaries intended to qualify under Section 408(a) or 408(c),
in the case of a Plan established by the Employer on behalf of
the Participants, of the Code.
ARTICLE II
DEFINITIONS
As used in this Plan the following terms shall have the
following meanings, unless a different meaning is plainly
required by the context:
2.1 "Agreement" shall mean the Adoption Agreement pursuant
to which the Participant or the Employer has adopted the Plan.
2.2 "Annuity" shall mean an annuity contract or
participating in any annuity contract which is made available as
a funding option by the Trustee to an Employer or a particular
class of Participants under the Plan. Each such contract or
participating interest, when it is issued in the name of any
person other than the Trustee, shall provide that it is non-
transferable, that the owner shall have no right or power to
sell, assign, discount or pledge as collateral or security for
the performance of any obligation or for any other purpose, any
interest in such annuity contract other than to the issuer.
2.3 "Beneficiary" shall mean the person or persons
designated by a Participant pursuant to Section 7.4.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as
it may be amended from time to time.
2.5 "Compensation" shall mean wages, salaries, professional
fees, or other amounts derived from or received for personal
service actually rendered (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips, and bonuses) and includes earned income, as defined in
Section 401(c)(2) of the Code (reduced by the deduction the self-
employed individual takes for contributions to a plan qualified
under Section 401(a) of the Code). For purposes of this
definition, section 401(c)(2) shall be applied as if the term
trade or business for purposes of section 1402 included service
described in subsection (c)(6). Compensation shall not include
any amounts derived from or received as earnings or profits from
property (including, but not limited to, interest and dividends)
or amounts not includible in gross income. Compensation shall
not include any amount received as a pension or annuity or as
deferred compensation. Compensation shall include any amount
includible in the individual's gross income under Section 71 of
the Code with respect to a divorce or separation instrument
described in subparagraph (A) of Section 71(b)(2) of the Code.
2.6 "Designated Beneficiary" shall mean the Beneficiary who
is considered as such under Sections 401(a)(9) and 408 of the
Code and the regulations promulgated thereunder.
2.7 "Effective Date" shall mean the date on which the
Employer or Participant signs the Agreement.
2.8 "Employer" shall mean the employer or an association of
employees (within the meaning of Section 408(c) of the Code)
named in the Agreement, if any is so named.
2.9 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as it may be amended from time to time.
2.10 "Excess Contribution" shall mean the amount of any
contribution (other than a Rollover Contribution) made by or on
behalf of a Participant for any Plan Year which is in excess of
the contribution limitations under Sections 219 and 408(o) of the
Code.
2.11 "Investment Company Shares" shall mean shares issued
by any registered investment company for which Putnam Investment
Management, Inc., or its affiliate, serves as investment advisor,
or for which Putnam Mutual Funds Corp., or its affiliate, serves
as principal underwriter; provided, however, that in the case of
any open-end investment company, the then current prospectus of
such investment company offers its shares for purchase under the
Plan.
2.12 "IRA Account" shall mean the property held in trust by
the Trustee for the account of the Participant and his
Beneficiaries.
2.13 "Participant" shall mean each individual named as a
participant in the Agreement.
2.14 "Plan" shall mean The Putnam Individual Retirement
Account Plan set forth in this instrument, as it may be amended
from time to time.
2.15 "Plan Year" shall mean the calendar year.
2.16 "Required Beginning Date" shall mean April 1 following
the calendar year in which the Participant attains age 70 1/2.
2.17 "Rollover Contribution" shall mean, after December 31,
1992, a rollover contribution described in Section 402(c),
403(a)(4), 403(b)(8), or 408(d)(3). Prior to January 1, 1990 a
Rollover Contribution includes a rollover contribution described
in Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8),
or 408(d)(3) of the Code.
2.18 "Simplified Employee Pension Program" shall mean an
arrangement as defined in Section 408(k) of the Code.
2.19 "Term Deposit" shall mean a deposit offered by a bank
and which is made available as a funding option by the Trustee to
an Employer or a particular class of Participants under the Plan.
2.20 "Trustee" shall mean Putnam Fiduciary Trust Company.
2.21 A pronoun in the masculine gender includes the
feminine gender unless the context indicates otherwise.
<PAGE>
ARTICLE III
CONTRIBUTIONS
3.1 For each Plan Year, contributions to the IRA Account of
each Participant may be made in accordance with the following
provisions:
(a) The contribution made by or on behalf of each
Participant may not exceed the less of $2,000 or
100% of the Participant's Compensation.
(b) If the Participant has no Compensation (or elects
to be treated as having no Compensation) and is
the spouse of another Participant in a similar
individual account retirement plan, the
contribution may not exceed the amount in (a);
provided, that the aggregate of (a) and (b) may
not exceed the lesser of $2,250 or 100% of the
spouse's Compensation.
(c) A contribution on behalf of a Participant by an
Employer pursuant to a Simplified Employee Pension
Program shall be made in accordance with the terms
of the Simplified Employee Pension Program and in
accordance with Section 408(k) of the Code.
(d) If the Participant has attained age 70 1/2 before the
close of a Plan Year, no contribution may be made
for the Plan Year except Rollover Contributions or
Employer contributions made pursuant to a
Simplified Employee Pension.
3.2 In addition to the current cash contributions
contemplated by Section 3.1, any Participant may cause a Rollover
Contribution to be contributed to his IRA Account at any time.
3.3 In no event shall a contribution, other than a Rollover
Contribution or an employer contribution to a Simplified Employee
Pension Program, by or on behalf of a Participant be made if (a)
the contribution, when added to other contributions (other than
Rollover Contributions) for the same Plan Year, exceeds the
applicable limits set forth in Section 3.1, or (b) the
contribution is not in cash.
A Rollover Contribution shall not be accepted under the Plan
unless it is in cash or is in a form of investment permitted
under Article V.
The Participant assumes sole responsibility for making sure
that all contributions made to his IRA Account satisfy the
applicable limits set forth in Section 3.1 and the Trustee shall
have no duty to determine whether such contributions are in
excess of such limits.
3.4 The Employer shall notify the Trustee in writing or
other medium acceptable to the Trustee of the amount of each
contribution made by it on behalf of each Participant (and such
Participant's spouse).
3.5 For purposes of Section 3.1, a contribution to a
Participant's IRA Account shall be deemed to have been made for
the Plan Year in which it is made unless the Participant directs
that it was made with respect to the preceding Plan Year. A
contribution shall be deemed to have been made on the last day of
the preceding Plan Year if the contribution is made on account of
such Plan Year, and it is made no later than the due date of the
Participant's Federal income tax return.
3.6 The deductibility or non-deductibility of contributions
made by or on behalf of the Participant (other than contributions
made under Section 3.1(c)) shall be determined under Sections 219
and 408(o) of the Code. The Participant, and not the Trustee,
determines whether contributions are deductible or non-
deductible.
ARTICLE IV
PARTICIPANT'S IRA ACCOUNTS
4.1 Each Participant's interest in his IRA Account shall be
fully vested and nonforfeitable at all times.
4.2 The Trustee shall keep records showing the amount of
each Participant's interest in his IRA Account. The Trustee
shall establish and maintain such other accounts and records as
it deems in its discretion to be reasonably required in order to
discharge its duties under the Plan.
4.3 The Trustee shall have no duty to account for
deductible contributions separately from nondeductible
contributions. In determining the taxable amount of a
distribution, the Participant shall only rely on his annual
Federal income tax returns and not on any reports of the Trustee.
The Trustee shall withhold Federal income tax from any
distribution from the Participant's IRA Account as if the total
amount of the distribution is includible in the Participant's
income, unless otherwise permitted by applicable law.
ARTICLE V
INVESTMENT OF THE IRA ACCOUNT
The Participant shall determine what proportion of each
contribution by or on behalf of the Participant to the IRA
Account shall be invested in Investment Company Shares, an
Annuity, a Term Deposit, and/or in such other securities that are
acceptable to the Trustee. The Participant shall from time to
time direct the Trustee with respect to the investment and
reinvestment of assets held in the IRA Account by means of
written instructions given to the Trustee in such manner required
by the Trustee. Notwithstanding the foregoing, the Employer may
limit on the Agreement the funding choices available to the
Participant.
The Trustee shall invest all contributions made to the IRA
Account and all income received thereon in the funding option(s)
in accordance with the Participant's directions and shall
reinvest in each such funding option all income, interest or
other distributions thereon (unless directed otherwise by the
Participant). If at any time investment instructions given by
the Participant to the Trustee are unclear in the opinion of the
Trustee, the Trustee may invest part or all of the assets in the
IRA Account in the Putnam Daily Dividend Trust or any other
similar fund. The Trustee reserves the right, however, when
prudent, to postpone the investment of initial contributions for
seven days from the date of adoption of the Agreement.
The Participant may change the choice of funding options as
often as desired but subject to any restrictions or penalties
imposed by the underlying investment. Any such change shall be
made in the manner required by the Trustee; except that the
Employer may place further restrictions on the change of funding
options by the Participant if the Employer so elects in the
Agreement.
The Trustee assumes no responsibility for rendering advice
with respect to the investment and reinvestment of the
Participant's IRA Account and shall not be liable for any loss
incurred with respect to any investment made or retained in
accordance with the Participant's instructions. The Participant
shall have and exercise exclusive responsibility and control over
the investment of the assets of his IRA Account in accordance
with the terms of this Plan and the Agreement, and the Trustee
shall have no duty to question his instructions in that regard or
to advise him regarding purchase, retention, or sale of such
assets.
No part of the IRA Account shall be invested in life
insurance contracts or in collectibles, as defined in Section
408(m) of the Code, except as otherwise permitted under Section
408(m)(3) which permits investment in certain gold and silver
coins and coins issued under the laws of any state. No part of
the IRA Account shall be commingled with any other property
except in a common trust fund or common investment fund (within
the meaning of Section 408(a)(5) of the Code and the regulations
thereunder), and no part of the IRA Account shall be commingled
with other property in any common trust fund or common investment
fund which includes assets other than the assets of individual
retirement accounts as described in Section 408(a) or (c) of the
Code and the assets of trusts exempt from taxation under Section
501(a) of the Code which are parts of plans described in Section
401(a) of the Code.
If the Participant authorizes the Employer to withhold
contributions from the Participant's pay and remit them to the
Trustee periodically, those contributions may be invested in a
group trust maintained by the Trustee, and commingled with
contributions made by other individual retirement plan
participants pending allocation of the Participant's
contributions to his IRA Account. The group trust assets shall
be invested, and its earnings shall be allocated, as described in
the Adoption Agreement signed by the Participant, and the
governing instrument of that group trust shall be deemed to be
adopted as a part of this Plan.
ARTICLE VI
POWERS AND DUTIES OF THE TRUSTEE
6.1 Each Participant may direct the manner in which any
Investment Company Shares and such other securities (including
fractional shares) held in his IRA Account shall be voted with
respect to any matters coming before any meeting of shareholders
of the investment company which issued such shares. The
Participant's directions must be in writing on a form approved by
the Trustee, signed by the Participant and delivered to the
Trustee within the time prescribed by it. Subject to any
requirements of applicable law, the Trustee shall deliver to each
Participant copies of any notices of shareholders' meetings,
proxies and proxy-soliciting materials, prospectuses and the
annual and other reports to shareholders which have been received
by the Trustee with respect to Investment Company Shares and any
other securities held for that Participant. The Trustee shall
not vote any Investment Company Shares or any other securities
except upon receipt by the Trustee of adequate written
instructions from the Participant.
6.2 In addition to and not in limitation of such powers as
the Trustee has by law or under any other provisions of the Plan,
the Trustee shall, subject to the limitations set forth in
Article V hereof, have the following powers:
(a) to deal with all or any part of the IRA Account;
(b) to retain uninvested such cash as it may deem
necessary or advisable, without liability for
interest thereon;
(c) to enforce by suit or otherwise, or to waive, its
rights on behalf of the IRA Account, and to defend
claims asserted against it or the IRA Account,
provided that the Trustee is indemnified by the
Participant to its satisfaction against liability
and expenses;
(d) to compromise, adjust and settle any and all
claims against or in favor of it or the IRA
Account;
(e) to register securities in its own name (with or
without indication of its fiduciary capacity
hereunder), including commingling with other
securities held by the Trustee as provided in
Article V;
(f) to enter into contracts or participating interests
for investments permitted under the Plan;
(g) to make, execute, acknowledge and deliver any and
all instruments that it deems necessary or
appropriate to carry out the powers herein
granted; and
(h) except as otherwise provided herein, generally to
exercise any of the powers of an owner with
respect to all or any part of the IRA Account.
6.3 Within a reasonable period after (a) the end of each
Plan Year and (b) the termination of the Plan, the Trustee shall
render to each Participant, and to other persons as required by
law, accounts for its administration under the Plan during the
preceding Plan Year or interim period. The Trustee shall make
reports regarding such accounts to the Commissioner of Internal
Revenue or his delegate and individuals for whom the IRA Account
is maintained with respect to contributions, distributions and
such other matters as the Commissioner or his delegate may be
required by regulation. The Participant or, in the case of a
Plan adopted by an Employer, the Employer shall furnish such
information as is necessary to prepare such reports. Such
reports shall be filed at such time and in such manner and
furnished to such individuals at such time and in such manner as
may be required by regulation. The Trustee shall also give
access to its records with respect to the Plan at reasonable
times and upon reasonable notice to any person designated by a
Participant or to any person required by law to have access to
such records. Should no person or persons to whom an account is
rendered, as required by law, file with the Trustee written
objection to specific items in such account within a period of 60
days after its mailing, and commence legal proceedings within a
further 60 days after the filing of written objection, the
account shall be considered approved to the extent permitted by
applicable law, with the same effect as though it had been
judicially allowed. If any Participant, or any other person
required by law to receive such accounts, files any exceptions or
objections within such 60-day period with respect to any matters
or transactions stated or shown in the account and questions
raised in such exception or objections cannot be amicably
settled, the Trustee or any person required by law to receive
such accounts shall have the right to have such questions settled
by judicial proceedings although the Participant or any person
required by law to receive such accounts shall have, to the
extent permitted by applicable law, only 60 days from the filing
of written objection to the account to commence legal
proceedings. Nothing herein contained shall be construed as
depriving the Trustee of the right to have a judicial settlement
of accounts. In any proceeding for a judicial settlement, the
only necessary parties, except as required by law, shall be the
Trustee and all persons to whom the accounting was rendered; and
any judgment or decree entered in any such proceeding shall, to
the extent permitted by applicable law, be binding and conclusive
on all persons claiming to have any interest in the IRA Account.
6.4 The Trustee shall be entitled to reasonable
compensation for services, determined from time to time on such
basis as shall be specified in the last preceding account
rendered by the Trustee. Unless otherwise provided, the
Trustee's compensation and all reasonable expenses incurred by it
in the administration of the Plan shall be paid from the
Participant's IRA Account. The Trustee is expressly authorized
to cause IRA Account assets to be redeemed for the purpose of
paying such amounts.
6.5 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, as the case may be, without the execution or filing of
any additional instrument or the performance of any further act.
6.6 Except as may otherwise be required by law and other
provisions of this Plan,
(a) the Trustee shall be responsible only for the
management and disbursement of amounts actually
contributed to the IRA Account;
(b) the Trustee shall not have any responsibility for
determining the correctness of the amount of any
contributions, the propriety of any contribution
as a Rollover Contribution, the failure of a
Participant or an Employer to make the
contributions provided for in the Agreement, the
correctness of any disbursement made pursuant to
the written directions of a Participant or an
Employer, the taxable amount of a distribution or
whether any Participant is an individual by or on
behalf of whom deductible contributions within the
meaning of Section 219 of the Code may be made;
(c) the Trustee shall not be liable for any acts or
omissions except its own negligence or bad faith
in failing to carry out the terms contained in the
Plan and the Agreement; and
(d) the Trustee shall not be liable for any loss or
breach caused by any Participant's exercise of
control over assets in his IRA Account.
ARTICLE VII
PAYMENTS TO PARTICIPANT AND BENEFICIARY
7.1 Subject to the further provisions of this Article VII,
the Trustee shall make distributions to a Participant and/or his
Beneficiary from the Participant's IRA Account in accordance with
instructions in writing from the Participant (or his Beneficiary
if the Participant is deceased). It shall be the responsibility
of the Participant (or his Beneficiary if the Participant is
deceased) to determine that any such distribution is in
accordance with Sections 408(a)(6) and 408(b)(3) of the Code and
the regulations promulgated thereunder. The Trustee shall not
assume any responsibility to make any distributions to the
Participant (or his Beneficiary if the Participant is deceased)
unless and until such written instructions specify the occasion
for such distribution, the amount of such distribution, the
elected manner of distribution, and any written statement
required by this Article VII. Prior to making any such
distributions from the IRA Account, the Trustee shall be
furnished with any and all applications, certificates, tax
waivers, signature guarantees, and other documents (including
power of any legal representative's authority) deemed necessary
or desirable by the Trustee, but the Trustee shall not be liable
for complying with written instructions which appear on their
face to be genuine, or for refusing to comply if not satisfied
that such instructions are genuine, and assumes no duty of
further inquiry. Upon receipt of proper written instructions as
required above, the Trustee shall cause the assets of the IRA
Account to be distributed in cash and/or in Investment Company
Shares or other securities, as specified in such written
instructions, to the Participant (or his Beneficiary if the
Participant is deceased).
7.2 (a) Distributions to a Participant may be paid in any
one or more of the following ways as the Participant may direct
the Trustee in writing, on a form acceptable to the Trustee:
(i) in a lump sum in cash and/or in Investment
Company Shares or other securities;
(ii) in systematic monthly, quarterly, semiannual or
annual installments in cash and/or in Investment
Company Shares or other securities over a period
not to exceed the life expectancy of the
Participant or the joint life and last survivor
expectancy of the Participant and his Designated
Beneficiary;
(iii) in systematic monthly, quarterly, semiannual or
annual installments in cash and/or in Investment
Company Shares or other securities over a period
designated by the Participant;
(iv) in a dollar amount designated by the Participant
in cash and/or in Investment Company Shares or
other securities;
(v) in installments in cash consisting of current
dividends and capital gains earned by the IRA
Account;
(vi) in installments in cash consisting only of
current dividends earned by the IRA Account; or
(vii) if the IRA Account is invested in an Annuity, in
periodic payments under any form of annuity
payment then available under the Annuity.
Payments under the Annuity must be made in
periodic payments at intervals of no longer than
one year and must be either nonincreasing or
increase only as provided in Q & A F-3 of section
1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
(b) With respect to any distributions made under this
Article VII to or on behalf of a Participant who has not attained
the age of 59 1/2 (unless the distribution is made after the
Participant's death or the Participant has become disabled), the
Trustee prior to making a distribution must receive a written
statement, on a form acceptable to it, addressed to the Trustee
from that Participant declaring his intention as to the
disposition of the amount distributed.
A Participant shall be considered to be disabled only if he
is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or to be of long continued and
indefinite duration. All other distributions may be subject to
any penalties imposed by the Code. Any distributions from the
Term Deposit or Annuity may be subject to penalties and other
conditions.
7.3 Unless distribution of the entire balance standing in
the credit of a Participant's IRA Account has commenced in
accordance with Section 7.1 by the Participant's Required
Beginning Date, the Participant shall direct the Trustee to begin
the distribution of his remaining balance in his IRA Account
beginning no later than his Required Beginning Date pursuant to
the distribution method specified in either Section 7.2(a)(i) or
(ii) as the Participant may select in writing on a form
acceptable to the Trustee.
If distribution is to be made over a period under Section
7.2(a)(ii) above, the minimum amount to be distributed for each
year, beginning with the Participant's Required Beginning Date
and each December 31 thereafter, shall be made in accordance with
the requirements of Section 408(a)(6), Proposed Regulation
Section 1.408-8, and the incidental death benefit rules described
in Proposed Regulation Section 1.401(a)(9)-2. Such minimum
amount shall be at least an amount equal to the lesser of the
balance standing to the credit of the Participant's IRA Account
or the quotient obtained by dividing the Participant's entire
interest in his IRA Account as of the close of business on
December 31 of the preceding year by the life expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and his Designated Beneficiary, whichever is
applicable. Life expectancy and joint and last survivor
expectancy shall be computed by use of the return multiples
contained in Section 1.72-9 of the Income Tax Regulation. The
initial life expectancy or joint life and last survivor
expectancy shall be computed using the attained ages of the
Participant and his designated Beneficiary as of their birthdays
in the year the Participant attains age 70 1/2. The life expectancy
of the Participant (and the life expectancy of his spouse, if
applicable) shall be recalculated annually using their attained
ages as of their birthdays in the year for which the minimum
annual payment is being determined. The life expectancy of any
other Designated Beneficiary shall not be recalculated. If the
Designated Beneficiary of a Participant is not his spouse, 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. Therefore,
the period over which annual distributions shall be made to the
Participant and his Beneficiary shall not exceed the applicable
period determined by use of the table contained in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
7.4 If a Participant dies after his Required Beginning Date
but before his entire interest in his IRA Account has been
distributed or if the Participant dies before his Required
Beginning Date and payments have irrevocably commenced under an
Annuity, the Participant's remaining interest in his IRA Account
shall continue to be distributed to his Beneficiary at least as
rapidly as under the method of distribution being used prior to
the Participant's death. The Beneficiary shall be the person
whom the Participant shall have designated in a writing prior to
this death, which writing shall have been deposited with the
Trustee in a form acceptable to it. Such designation may be
changed by the Participant during his lifetime, except as
otherwise provided by the terms of the Annuity, if applicable.
If no Beneficiary has been properly designated, or if no
Beneficiary survives the Participant, distribution shall be made
to the Participant's surviving spouse, or if no spouse, to his
issue per stirpes, or if none, to his estate.
7.5 If the Participant dies prior to his Required Beginning
Date (except where the IRA Account has been invested in an
Annuity and payments have irrevocably commenced), the following
provisions shall apply:
(a) Distribution to his Beneficiary may be made by one of
the following methods as the Beneficiary shall request
in writing on a form acceptable to the Trustee:
(i) lump sum in cash and/or in Investment Company
Shares or other securities distributed no later
than December 31 of the year containing the fifth
anniversary of the Participant's death;
(ii) in systematic monthly, quarterly, semiannual or
annual installments in cash and/or in Investment
Company Shares or other securities over a period
of time ending no later than December 31 of the
year containing the fifth anniversary of the
Participant's death; provided, however, that the
Trustee shall not be required to pay installments
amounting to less than fifty dollars per month;
(iii) in substantial equal monthly, quarterly,
semiannual or annual installments in cash and/or
in Investment Company Shares or other securities
over a period of years not exceeding the life
expectancy of the Designated Beneficiary;
provided, however, that the Trustee shall not be
required to pay installments amounting to less
than fifty dollars per month; or
(iv) if the IRA Account is invested in an Annuity, in
periodic payments under any form of annuity
payment then available under the Annuity.
(b) The Beneficiary who is other than a surviving spouse
shall elect one of the distribution methods described
in (a) above no later than December 31 of the year
following the year of the Participant's death and shall
so inform the Trustee in writing. The Beneficiary who
is a surviving spouse shall elect one of the
distribution methods described in (a) above no later
than December 31 of the year containing the fifth (5th)
anniversary of the Participant's death and shall so
inform the Trustee in writing. If the Beneficiary or
Beneficiaries do not make such election, the Trustee
shall make a distribution in cash in accordance with
Section 7.5(a)(i) if the Beneficiary is other than the
surviving spouse, and in accordance with Section
7.5(a)(iii) if the Beneficiary is the Participant's
surviving spouse.
(c) If distribution is to be made in accordance with either
Section 7.5(a)(iii) or (iv), it must commence by
December 31 of the year following the year of the
Participant's death; provided, however, that if the
Participant's spouse is the Designated Beneficiary,
distribution may be delayed until December 31 of the
year the Participant would have attained age 70 1/2, if
later. The minimum amount to be distributed each year
shall be at least an amount equal to the lesser of the
balance standing to the credit of the Participant's IRA
Account or the quotient obtained by dividing the
Participant's entire interest in his IRA Account as of
the close of business on December 31 of the preceding
year by the life expectancy of the Designated
Beneficiary. The Beneficiary may elect at any time to
receive a greater amount of distribution or to
accelerate the method of distribution.
Life expectancy shall be calculated by use of the return
multiples specified in Section 1.72-9 of the Income Tax
Regulations. The initial life expectancy shall be computed using
the attained age of the Designated Beneficiary as of his birthday
in the year distributions are required to commence. Life
expectancy of a surviving spouse shall be recalculated annually
using the spouse's attained age as of the spouse's birthday in
the year for which the minimum annual payment is being
determined. In the case of any other Designated Beneficiary,
payments for any calendar year after the year in which
distributions are required to commence shall be based on the
initial life expectancy minus the number of whole years passed
since distribution first commenced.
7.6 Notwithstanding the foregoing, if the Designated
Beneficiary is the Participant's surviving spouse, such spouse
may treat the IRA Account as the spouse's own individual
retirement account (IRA). This election will be deemed to have
been made if such surviving spouse makes a regular IRA
contribution to the account, makes a rollover to or from such
account, or fails to receive distribution pursuant to Section 7.4
or 7.5 above.
7.7 In making distributions to a Participant, the Trustee
shall, to the extent allowed by applicable law, be entitled to
rely on the written certification by a Participant as to the
Participant's and Designated Beneficiary's age or as to the
Participant's having become disabled within the meaning of
Section 7.2(b).
7.8 Whenever the consent of the Participant or a direction
by the Participant is required under this Article VII, action by
the Trustee may be taken without such consent or direction by
reason of death, illness or absence of the Participant.
7.9 Notwithstanding any of the foregoing, any Employer
contribution to the IRA Account pursuant to a Simplified Employee
Pension Program may be withdrawn by the Participant at any time.
ARTICLE VIII
RETURN OF EXCESS CONTRIBUTIONS; LIABILITY OF TAXES
8.1 If a Participant, an Employer on behalf of the Participant
if the Agreement so provides, or the Commissioner of Internal
Revenue notifies the Trustee in writing that there has been made
by or on behalf of the Participant a contribution which has been
determined by the Participant, the Employer or the Commissioner
to be an Excess Contribution, or nondeductible contribution, the
Trustee shall, as soon as practicable, pay to such Participant in
cash (if permitted by the terms of the investment in his IRA
Account) an amount equal to the amount of the Excess Contribution
or nondeductible contribution made by him or on his behalf and,
if the payment is made on or prior to the due date of the
Participant's tax return (including extensions) for the year in
which the Excess Contribution or nondeductible contribution was
made, the net income attributable thereto (reduced by any
administrative charge or penalty applicable thereto).
Alternatively, the Participant may, by written instructions on a
form acceptable to the Trustee, elect to treat the Excess
Contribution and the net income attributable thereto (reduced by
any administrative charge applicable thereto), to the extent it
does not exceed the limitations under Section 219 and 408(o) of
the Code, as a contribution for the Plan Year in which notice is
received (and reducing, as is appropriate, the contributions that
can be made under Section 3.1 for such Plan Year).
8.2 If a Participant or an Employer on behalf of the
Participant in the case of an IRA Account established under a
Simplified Employee Pension Program, notifies the Trustee in
writing that there has been an employer contribution to the IRA
Account which is in excess of the limitation under Section 402(h)
or 408(k)(6)(A)(iii) of the Code, the Trustee shall, as soon as
practicable, pay to such Participant in cash (if permitted by the
terms of the investment in his IRA Account) an amount equal to
the amount of such excess employer contribution made on his
behalf, as adjusted for income or loss, and reduced by any
administrative charge or penalty applicable thereto.
8.3 In the event the Trustee shall be required to pay any
tax with respect to an IRA Account, the amount of such tax
(including interest) shall be paid from such IRA Account.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 A Participant may at any time terminate the Plan adopted by
the Participant, and an Employer may at any time terminate a Plan
adopted by the Employer. Termination may be effected by
delivering to the Trustee a written notice of termination
addressed to the Trustee and signed by the Participant or the
Employer. On termination, if permitted by the terms of the
investment, distribution of the IRA Account (reduced by any
penalty applicable thereto) shall be made by payment of a lump
sum in cash and/or in Investment Company Shares or other
securities to the Participant as the Participant elects. Upon
complete distribution of the assets in the IRA Account, this Plan
shall terminate and shall have no further force and effect and
the Trustee shall be relieved from all further liability with
respect to the Plan, the IRA Account, and all assets thereof so
established.
9.2 Putnam Fiduciary Trust Company may at any time and from
time to time modify or amend this Plan as is necessary or
appropriate to qualify this Plan as an Individual Retirement
Account under Section 408(a) of the Code, or as is necessary or
appropriate under any applicable law by delivering to the Trustee
and mailing to the Employer, or, in the case of a Plan where
there is no Employer, the Participant at his last known address
shown on the books of the Trustee, a copy of such amendment.
Each Participant and each Employer shall be deemed to have
consented to any modification or amendment so made. No amendment
of this Plan shall cause any part of the IRA Account to be used
for a purpose other than for the exclusive benefit of the
Participant and his Beneficiary. No amendment shall change the
rights, duties or responsibilities of the Trustee without the
written consent of either of them.
ARTICLE X
TRANSFER TO OTHER QUALIFIED PLANS
A Participant or an Employer, subject to the provisions of
the Agreement and to the extent allowed by applicable law, may
request the Trustee to transfer assets held in the IRA Account of
the Participant or Participants to another bank or banks as
custodian or trustee or to any other plan or plans maintained by
the Participant or the Employer or the Employers of a Participant
for the benefit of the Participant, provided the Trustee, before
transfer, may at its discretion require an opinion of counsel
satisfactory to it that the requirements of Section 401(a) or
Section 408, whichever is applicable, of the Code or any
successor provision of law are satisfied by such other plan or
plans; and provided, further, that the Trustee shall have the
right to reduce from the amount to be transferred (a) any amounts
referred to in Section 6.4, and (b) any amounts required to be
distributed in the calendar year of the transfer to the
Participant under Section 408(a)(6) or 408(b)(3) of the Code.
Upon such transfer, the provisions of the plan to which such
transfer is made shall govern and the provisions of this Plan
shall have no further effect.
ARTICLE XI
RESIGNATION OF THE TRUSTEE
11.1 Either the Trustee may resign at any time upon thirty (30)
days' notice, in writing, to the Participant or the Employer in
the case of a Plan established by the Employer.
11.2 Within thirty (30) days of the effective date of a
successor trustee's appointment, the Trustee shall perform all
acts necessary to transfer and deliver the assets and records of
the IRA Account to its successor. However, the Trustee may
reserve such portion of the IRA Account 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
the successor.
11.3 Resignation of the Trustee will not terminate the Plan
adopted by an Employer or a Participant. In the event of any
vacancy due to the resignation of the Trustee, the Trustee shall
appoint a successor unless the Agreement is sooner terminated.
Any successor Trustee shall be a "bank" within the meaning of
Section 581 of the Code or another person found qualified to act
as a trustee or custodian under an individual retirement account
plan by the Secretary of the Treasury, or his delegate. The
appointment of a successor Trustee shall be effective upon
receipt by the Trustee of such written acceptance which shall be
submitted to the Participant, the Employer in the case of a Plan
established by the Employer and the Trustee. In the event no
successor Trustee is appointed within thirty (30) days after
resignation becomes effective, each Participant or Employer may
request the Trustee to transfer the assets held in the
Participant's IRA Account as is provided in Article X.
ARTICLE XII
NOTICES
12.1 All notices required to be given by the Trustee to a
Participant or an Employer shall be deemed to have been given
when sent by mail to the address of the Participant or the
Employer indicated by the Trustee's records.
12.2 All notices required to be given by a Participant or
an Employer to the Trustee shall be deemed to have been given
when received by the Trustee.
12.3 Whenever the Trustee is required or authorized to take
any action under the Plan on the direction of a Participant, such
action shall be taken on the direction of the duly appointed
representative of the Participant or his estate, in the event of
his incompetency or death.
ARTICLE XIII
SPENDTHRIFT PROVISION
To the extent permitted by applicable law, a Participant's
beneficial interest in the Plan shall not be assignable, subject
to hypothecation, pledge, or lien, nor subject to attachment or
receivership, nor shall it pass to any trustee in bankruptcy or
be reached or applied by the legal process for the payment of any
obligation of the Participant or any Beneficiary hereunder;
provided, however, that in the case of the Participant's death
the value of his IRA Account shall be paid, as provided in
Article VII; and provided, further, that the Participant (or the
Trustee) shall have the right to direct the transfer or
distribution of the value of his IRA Account, or any part thereof
as provided in Article VII, VIII, X or XI.
ARTICLE XIV
GOVERNING LAW
The terms of this Plan and the Agreement shall be construed,
administered and enforced according to the laws of the
Commonwealth of Massachusetts except to the extent such laws are
preempted by the provisions of ERISA.
<PAGE>
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,
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
12
(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, 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 Name:
_____________________________________________________
Business Address: _______________________________
_______________________________ SIC
Code: _______
_______________________________
Person for Putnam to Contact:
______________________________________________
Phone: __________________________
Federal Tax Identification Number:
__________________________
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
_________________________________________
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
______________________________________________________________
Effective Date of amendment
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):
The Effective Date is:
______________________________________
month/day/year
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:
_____ 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 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.
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.
_____
The
Emplo
yer
will
make
inves
tment
decis
ions
with
respe
ct to
Profi
t
Shari
ng
Contr
ibuti
ons
made
pursu
ant
to
Secti
on
5.B.
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.
_________________________________________________________________
_______
_________________________________________________________________
_______
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:
_______________________________________________________
___
Name
_______________________________________________________
___
Address
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).
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 $________.
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:
____________________________________________________
Telephone:___________________
____________________________________________________
Telephone:___________________
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
Firm:
_________________________________________________________________
___________
Branch:
_________________________________________________________________
___________
Address:
_________________________________________________________________
___________
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
Person for Putnam to Contact: ________________________________
Telephone:
_______________
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:
_________________________________________________________________
____________________
Name of Insurance Trustee
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:
By:______________________________________________________________
____________________
(Authorized Signature)
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
Person for Putnam to Contact: ________________________________
Telephone:
_______________
* * * * *
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 Name:
_____________________________________________________
Business Address: _______________________________
_______________________________ SIC
Code: _______
_______________________________
Person for Putnam to Contact:
______________________________________________
Phone: __________________________
Federal Tax Identification Number:
__________________________
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
________________________________________
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
______________________________________________________________
Effective Date of amendment
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):
The Effective Date is:
______________________________________
month/day/year
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.)
_____ 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.
_________________________________________________________________
_______
_________________________________________________________________
_______
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:
_______________________________________________________
___
Name
_______________________________________________________
___
Address
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:
____________________________________________________
Telephone:________________
____________________________________________________
Telephone:________________
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
Firm:
_________________________________________________________________
___________
Branch:
_________________________________________________________________
___________
Address:
_________________________________________________________________
___________
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
Person for Putnam to Contact: ________________________________
Telephone:
_______________
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:
_________________________________________________________________
____________________
Name of Insurance Trustee
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:
By:______________________________________________________________
____________________
(Authorized Signature)
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
Person for Putnam to Contact: ________________________________
Telephone:
_______________
* * * * *
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 Name:
_____________________________________________________
Business Address: _______________________________
_______________________________
_______________________________
Person for Putnam to Contact:
______________________________________________
Phone: __________________________
Federal Tax Identification Number:
__________________________
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
_______________________________________________
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
______________________________________________________________
Effective Date of amendment
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).
The Effective Date is:
______________________________________
month/day/year
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:
_____ 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 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)
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
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)
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.
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, 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
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
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):
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
Other Investment Options
______ Putnam Stable Value Fund
______ Existing Guaranteed Investment Contract
("GIC")
______________________________
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.
_____
The
Emplo
yer
will
make
inves
tment
decis
ions
with
respe
ct to
Profi
t
Shari
ng
Contr
ibuti
ons
made
pursu
ant
to
Secti
on
5.B.
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
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 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
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
_____ 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, 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:
__________________________________
(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:
_________________________________________________________________
_
_________________________________________________________________
_
_________________________________________________________________
_
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.
_______________________________________________________
___
Name
_______________________________________________________
___
Address
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)
_____ (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).
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 $______.
(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
_____ 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:
____________________________________________________
Telephone:________________
____________________________________________________
Telephone:________________
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
Firm:
_________________________________________________________________
___________
Branch:
_________________________________________________________________
___________
Address:
_________________________________________________________________
___________
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:
_________________________________________________________________
______________
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
12
(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: _____________________________________
B. Employer Identification Number:
__________________________
C. Employer Address: _______________________________
_______________________________
_______________________________
D. SIC Code: _______
E. Employer Contact: Name:
___________________________________________
Title: __________________ Phone #:
_______________
F. Fiscal Year: __________ through __________
(month/day) (month/day)
G. Type of Entity (check one):
_____ Corporation _____ Partnership _____
Subchapter S Corporation
_____ Sole proprietorship _____ Other
_______________________
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).
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.
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
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)
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
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
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
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
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
_____ 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
apply to both Employer Matching Contributions
and Employer 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 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
_____ 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:
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.
(i) Vested Percentage __% __% __% __%
__%
(ii) Years of Service ___ ___ ___ ___
___
_____ (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
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):
_____ (1) This person:
_______________________________
_____ (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
By:
_________________________________________________________________
_____________
* * * * *
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)
_________________________________________________________________
___________________
Address of 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
12
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:
___________________________________________
Title: __________________ Phone #:
_______________
Fiscal Year: __________ through __________
(month/day) (month/day)
Type of Entity (check one):
_____ Corporation _____ Partnership _____
Subchapter S Corporation
_____ Sole proprietorship _____ Other
_______________________
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:
(a)
______________________________________________________________
Original Effective Date of the Plan
you are Replacing
(b)
______________________________________________________________
Effective Date of this Replacement
Plan
(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.
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).
_____
(iii) The first day of the
first month and the seventh
month in a Plan Year
(semiannually).
_____ (c) Other:
_____________________________________
___ (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
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).
_____ (e) Other:
__________________________
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
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
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:
Interest rate: %__________________________
Mortality Table:
__________________________
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.
_____ (6) Other (Describe. An
Employer may elect to make investment
decisions with respect to a specified portion
of a specific type of contribution to the
Plan.):
_______________________________________
_____________________________________________
____
_____________________________________________
____
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:
_______________________________________________________
___
Name
_______________________________________________________
___
Address
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:
________________________ __________________________
________________________
________________________ __________________________
________________________
________________________ __________________________
________________________
The following investment option shall be the default option:
___________________________________
(select the default option from among the investment options
listed above).
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
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, 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)
_________________________________________________________________
___________________
Address of Trustee
Person for Putnam to Contact: ________________________________
Telephone:
_______________
* * * * *
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:
___________________________________________
Title: __________________ Phone #:
_______________
Fiscal Year: __________ through __________
(month/day) (month/day)
Type of Entity (check one):
_____ Corporation _____ Partnership _____
Subchapter S Corporation
_____ Sole proprietorship _____ Other
_______________________
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:
(a)
______________________________________________________________
Original Effective Date of the Plan
you are Replacing
(b)
______________________________________________________________
Effective Date of this Replacement
Plan
(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).
_____
(iii) The first day of the
first month and the seventh
month in a Plan Year
(semiannually).
_____ (c) Other:
_____________________________________
___ (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: %__________________________
Mortality Table:
__________________________
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)
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.
_____ (3) Other (Describe. An
Employer may elect to make investment
decisions with respect to a specified portion
of a specific type of contribution to the
Plan.):
_______________________________________
_____________________________________________
____
_____________________________________________
____
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:
_______________________________________________________
___
Name
_______________________________________________________
___
Address
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:
________________________ __________________________
________________________
________________________ __________________________
________________________
________________________ __________________________
________________________
The following investment option shall be the default option:
___________________________________
(select the default option from among the investment options
listed above).
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
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, 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)
_________________________________________________________________
___________________
Address of Trustee
Person for Putnam to Contact: ________________________________
Telephone:
_______________
* * * * *
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:
___________________________________________
Title: __________________ Phone #:
_______________
Fiscal Year: __________ through __________
(month/day) (month/day)
Type of Entity (check one):
_____ Corporation _____ Partnership _____
Subchapter S Corporation
_____ Sole proprietorship _____ Other
_______________________
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:
(a)
______________________________________________________________
Original Effective Date of the Plan
you are Replacing
(b)
______________________________________________________________
Effective Date of this Replacement
Plan
(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).
_____
(iii) The first day of the
first month and the seventh
month in a Plan Year
(semiannually).
_____ (c) Other:
_____________________________________
___ (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: %__________________________
Mortality Table:
__________________________
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):
(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)
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.
_____ (3) Other (Describe. An
Employer may elect to make investment
decisions with respect to a specified portion
of a specific type of contribution to the
Plan.):
_______________________________________
_____________________________________________
____
_____________________________________________
____
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:
_______________________________________________________
___
Name
_______________________________________________________
___
Address
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:
________________________ __________________________
________________________
________________________ __________________________
________________________
________________________ __________________________
________________________
The following investment option shall be the default option:
___________________________________
(select the default option from among the investment options
listed above).
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
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, 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)
_________________________________________________________________
___________________
Address of Trustee
Person for Putnam to Contact: ________________________________
Telephone:
_______________
* * * * *
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 FUNDS TRUST
CLASS A
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class A shares of the portfolio
series
(each a "Fund" and collectively the "Funds") of Putnam Funds
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"), the
principal
underwriter of the Trust's shares. During the effective
term of
this Plan, the Trust may make payments to PMF upon the terms
and
conditions hereinafter set forth:
SECTION 1. The Trust may make payments to PMF, in the
form
of fees or reimbursements, to compensate PMF for services
provided and expenses incurred by it for purposes of
promoting
the sale of Class A shares of the Funds, reducing
redemptions of
shares, or maintaining or improving services provided to
shareholders by PMF and investment dealers. The amount of
such
payments and the purposes for which they are made shall be
determined by the Qualified Trustees (as defined below).
Payments under this Plan shall not exceed in any fiscal year
the
annual rate of 0.35% of the average net asset value of the
Class
A shares of each Fund, as determined at the close of each
business day during the year. A majority of the Qualified
Trustees may, at any time and 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 with respect
to
a Fund until:
(a) it has been approved by a vote of a majority
of
the outstanding Class A shares of the Fund;
(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 Fund has received the proceeds of the
initial
public offering of its Class A shares.
SECTION 3. This Plan shall continue in effect with
respect
to a Fund 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 with
respect to a Fund by vote of a majority of the Qualified
Trustees, or by vote of a majority of the outstanding Class
A
shares of the Fund.
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 with
respect
to a Fund 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 A shares of the Fund,
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 with respect
to a
Fund permitted pursuant to Section 1 hereof without the
approval
of a majority of the outstanding Class A shares of the Fund,
and
all material amendments to this Plan with respect to a Fund
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 A shares of the Fund" means the
affirmative
vote, at a duly called and held meeting of Class A
shareholders
of the relevant Fund, (i) of the holders of 67% or more of
the
Class A shares of such Fund present (in person or by proxy)
and
entitled to vote at such meeting, if the holders of more
than 50%
of the outstanding Class A shares of such Fund 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 A shares
of
such Fund 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 relevant
Fund.
Executed as of June 7, 1996.
PUTNAM MUTUAL FUNDS CORP. PUTNAM FUNDS TRUST
By: /s/ William N. Shiebler By: /s/ Charles E. Porter
----------------------- ---------------------
- ---
William N. Shiebler Charles E. Porter
President Executive Vice
President
PUTNAM FUNDS TRUST
CLASS B
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class B shares of the portfolio
series
(each a "Fund" and collectively the "Funds") of Putnam Funds
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 B
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
B shares of the Funds, 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 Class B shares, which may include, without
limitation, the payment by PMF to investment dealers of
commissions on the sale of Class B shares, as set forth in
the
then current Prospectus or Statement of Additional
Information of
the Trust, and the payment of a service fee of up to 0.25%
of
such net asset value for the purposes 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 with
respect to
a Fund until:
(a) it has been approved by a vote of a majority
of
the outstanding Class B shares of the Fund;
(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 Fund has received the proceeds of the
initial
public offering of its Class B shares.
SECTION 3. This Plan shall continue in effect with
respect
to a Fund 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 with respect to
a
Fund at any time by vote of a majority of the Qualified
Trustees
or by vote of the majority of the outstanding Class B shares
of
the Fund.
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 with
respect
to a Fund 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 B shares of the Fund, 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 with respect
to a
Fund permitted pursuant to Section 1 hereof without the
approval
of a majority of the outstanding Class B shares of the Fund
and
all material amendments to this Plan with respect to a Fund
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 B shares of the Fund" means the
affirmative
vote, at a duly called and held meeting of Class B
shareholders
of the relevant Fund, (i) of the holders of 67% or more of
the
Class B shares of the Fund present (in person or by proxy)
and
entitled to vote at such meeting, if the holders of more
than 50%
of the outstanding Class B shares of such Fund 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 B shares
of
such Fund 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 relevant
Fund.
Executed as of June 7, 1996.
PUTNAM MUTUAL FUNDS CORP. PUTNAM FUNDS TRUST
By: /s/ William N. Shiebler By: /s/ Charles E.
Porter
----------------------- --------------------
- ----
William N. Shiebler Charles E. Porter
President Executive Vice
President
PUTNAM FUNDS TRUST
CLASS M
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class M shares of the portfolio
series
(each a "Fund" and collectively the "Funds") of Putnam Funds
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 Funds, 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 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 with respect
to
a Fund until:
(a) it has been approved by a vote of a majority of
the
outstanding Class M shares of the Fund;
(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 Fund has received the proceeds of the initial
public offering of its Class M shares.
SECTION 3. This Plan shall continue in effect with
respect
to a Fund 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 with respect to
a
Fund 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 Fund.
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 with
respect to
a Fund 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 Fund, 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 with respect
to a
Fund permitted pursuant to Section 1 hereof without the
approval
of a majority of the outstanding Class M shares of the Fund
and
all material amendments to this Plan with respect to a Fund
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 Fund" means the
affirmative
vote, at a duly called and held meeting of Class M
shareholders
of the relevant Fund, (i) of the holders of 67% or more of
the
Class M shares of such Fund 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 such Fund 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
such Fund 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 relevant
Fund.
Executed as of June 7, 1996.
PUTNAM MUTUAL FUNDS CORP. PUTNAM FUNDS TRUST
By: /s/ William N. Shiebler By: /s/ Charles E. Porter
----------------------- -----------------------
- -
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 (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
--------------------------
- ----
--------------------------
- ----
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
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 (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
