<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1996
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------------
AMERICAN SCIENCE AND ENGINEERING, INC.
--------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS 04-2440991
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification. No.)
829 MIDDLESEX TURNPIKE, BILLERICA, MA 01821
-------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
---------------
AMERICAN SCIENCE AND ENGINEERING, INC.
401(K) AND PROFIT SHARING PLAN
------------------------------
(Full Title of Plan)
JEFFREY A. BERNFELD
AMERICAN SCIENCE AND ENGINEERING, INC.
829 MIDDLESEX TURNPIKE
BILLERICA, MASSACHUSETTS 01821
------------------------------
(Name and Address of Agent for Service)
(508) 262-8700
------------------------------
(Telephone Number, Including Area Code, of Agent for Service)
---------------
<TABLE>
CALCULATION OF REGISTRATION FEE
=======================================================================================================
<CAPTION>
Proposed
Amount Maximum Proposed
Title of Securities to be Offering Price Maximum Aggregate Amount of
to be Registered Registered Per Share (1) Offering Price Registration Fee
- --------------------------- ---------- -------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, $.66 2/3 par value 50,000(2) $14.375 (3) $718,750 (3) $247.84
=======================================================================================================
=======================================================================================================
<FN>
(1) Estimated solely for the purpose of determining the registration fee pursuant to Rule 457 under
the Securities Act of 1933, as amended.
(2) Such presently indeterminable number of additional shares of Common Stock are also registered
hereunder as may be issued in the event of a merger, consolidation, reorganization, recapitalization,
stock dividend, stock split or other similar change in Common Stock.
(3) Based upon the average high and low prices for the Registrant's Common Stock, $.66 2/3 par
value (the "Common Stock"), on September 25, 1996 as reported by the American Stock Exchange.
</TABLE>
Total Number of Pages ______ Exhibit Index at Page 8
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents are hereby incorporated by reference into this
Registration Statement:
(a) The Registrant's latest Annual Report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or either (i) the latest prospectus filed pursuant to
Rule 424(b) under the Securities Act of 1933, as amended (the
"Securities Act"), that contains audited financial statements for the
Registrant's latest fiscal year for which such statements have been
filed or (ii) the Registrant's effective Registration Statement on
Form 10 filed under the Exchange Act containing audited financial
statements for the Registrant's latest fiscal year;
(b) All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by
the Registrant's documents referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A (File No. 1-06549)
filed under the Exchange Act with the Securities and Exchange
Commission.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
-------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
The validity of the shares of Common Stock to be issued under the American
Science and Engineering, Inc. 401(k) and Profit Sharing Plan has been passed
upon for the Registrant by Brown, Rudnick, Freed & Gesmer, One Financial Center,
Boston, Massachusetts 02111.
-2-
<PAGE> 3
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Section 67 of Chapter 156B of the Massachusetts General Laws permits the
indemnification of directors and officers to the extent authorized by the
Articles of Organization or By-Laws of a corporation or by a vote of the
stockholders. Except as otherwise provided by the Articles of Organization or
By-Laws, indemnification of persons who are not directors of a corporation may
be provided to the extent authorized by the directors. No indemnification may be
provided for any person with respect to any matter as to which he shall have
been adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation.
Article VI of the Registrant's By-Laws provides in substance that the
Registrant shall indemnify any person who was or is a party or was threatened to
be made a party to any threatened, pending or completed action or suit, by
reason of the fact that he is or was serving as a director or officer of the
Registrant or is or was serving at the request of the Registrant as a director,
trustee or officer of another corporation or entity, against expenses actually
incurred by such person in connection with any civil action, suit or proceeding
to which such person may be made a party, or by which such person shall be
threatened, by reason of any alleged act or failure to act in his present or
former capacity as a director or officer of the Registrant or as a director,
trustee or officer of such affiliated corporation or entity, provided, however,
that no person has the right to indemnification in relation to any matter as to
which such person shall have been finally adjudged in any legal proceeding not
to have acted in good faith and the reasonable belief that his action was in the
best interest of the Registrant. In the event of any settlement of any action,
suit or proceeding, the right to indemnification is limited to matters as to
which the Registrant is advised by counsel that such settlement is reasonable
and that such person has acted in good faith and the reasonable belief that his
action was in the best interest of the Registrant. The right of indemnification
contained in the Registrant's By-Laws is non-exclusive and is in addition to any
other rights such person may have.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the Registrant's By-Laws, or otherwise, the Registrant has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Item 7. Exemption From Registration Claimed.
-----------------------------------
Not Applicable.
-3-
<PAGE> 4
Item 8. Exhibits.
--------
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Restated Articles of Organization of the Registrant, as amended by
Articles of Amendment dated October 29, 1976, Articles of
Amendment dated May 17, 1976, and Articles of Amendment dated
March 28, 1973 (filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-3 (Registration No. 333-09151)
and incorporated herein by reference).
4.2 By-Laws of the Registrant, as amended (filed as Exhibit 2(a)(iii)
to the Registrant's Registration Statement on Form S-7
(Registration No. 2-56452) (the "Form S-7"), and incorporated
herein by reference).
4.3 Specimen Certificate of Common Stock (filed as Exhibit 2(a)(i) to
the Form S-7, and incorporated herein by reference).
4.4 Common Stock Purchase Warrant, dated July 18, 1995, issued in the
name of Grayson & Associates (filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-3) (Registration No.
33-61903) (the "Form S-3"), and incorporated herein by reference).
4.5 Subscription Agreement, dated July 8, 1995, between the Registrant
and Samuel International Investors, L.D.C. (filed as Exhibit 4.7
to the Form S-3, and incorporated herein by reference).
4.6 Common Stock Purchase Warrant, in the form issued to certain of
the Registrant's lenders, with schedule of lenders, exercise
prices and share amounts attached (filed as Exhibit 4.8 to the
Registrant's Form S-3, and incorporated herein by reference).
5 Legal Opinion of Brown, Rudnick, Freed & Gesmer
23.1 Consent of Brown, Rudnick, Freed & Gesmer (contained in its
opinion filed as Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney.
99 American Science and Engineering, Inc. 401(k) and Profit Sharing
Plan.
-4-
<PAGE> 5
Item 9. Undertakings.
------------
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
-5-
<PAGE> 6
C. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security-holders that is incorporated by
reference in the prospectus and furnished pursuant to, and meeting the
requirements of, Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under "Item 6 ---
Indemnification of Directors and Officers" above, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
-6-
<PAGE> 7
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Billerica, Commonwealth of Massachusetts, on
September 26, 1996.
American Science and Engineering, Inc.
/s/ Ralph S. Sheridan
--------------------------
By: Ralph S. Sheridan, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Capacity Date
- ---- -------- ----
/s/Ralph S. Sheridan President and Director September 26, 1996
- -------------------------- (Principal Executive
Ralph S. Sheridan Officer)
/s/Lee C. Steele Vice President and September 26, 1996
- -------------------------- Treasurer (Principal
Lee C. Steele Financial Officer)
/s/Herman Feshbach Director September 26, 1996
- --------------------------
Herman Feshbach
/s/Al Gladen Director September 26, 1996
- --------------------------
Al Gladen
/s/Hamilton W. Helmer Director September 26, 1996
- --------------------------
Hamilton W. Helmer
/s/Donald J. McCarren Director September 26, 1996
- --------------------------
Donald J. McCarren
/s/William E. Odom Director September 26, 1996
- --------------------------
William E. Odom
-7-
<PAGE> 8
EXHIBIT INDEX
Exhibit Description of Exhibit Page
- ------- ---------------------- ----
4.1 Restated Articles of Organization of the Registrant, as
amended by Articles of Amendment dated October 29, 1976,
Articles of Amendment dated May 17, 1976, and Articles of
Amendment dated March 28, 1973 (filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3
(Registration No. 333-09151) and incorporated herein by
reference). *
4.2 By-Laws of the Registrant, as amended (filed as Exhibit
2(a)(iii) to the Registrant's Registration Statement on Form
S-7 (Registration No. 2-56452) (the "Form S-7"), and
incorporated herein by reference). *
4.3 Specimen Certificate of Common Stock (filed as Exhibit
2(a)(i) to the Form S-7, and incorporated herein by
reference). *
4.4 Common Stock Purchase Warrant, dated July 18, 1995, issued
in the name of Grayson & Associates (filed as Exhibit 4.6 to
the Registrant's Registration Statement on Form S-3)
(Registration No. 33-61903) (the "Form S-3"), and
incorporated herein by reference). *
4.5 Subscription Agreement, dated July 8, 1995, between the
Registrant and Samuel International Investors, L.D.C. (filed
as Exhibit 4.7 to the Form S-3, and incorporated herein by
reference). *
4.6 Common Stock Purchase Warrant, in the form issued to certain
of the Registrant's lenders, with schedule of lenders,
exercise prices and share amounts attached (filed as Exhibit
4.8 to the Registrant's Form S-3, and incorporated herein by
reference). *
5 Opinion of Brown, Rudnick, Freed & Gesmer
23.1 Consent of Brown, Rudnick, Freed & Gesmer (contained in its
opinion filed as Exhibit 5)
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney.
99 American Science and Engineering, Inc. 401(k) and Profit
Sharing Plan.
- ----------------------------------
* Incorporated by reference and not filed herewith.
-8-
<PAGE> 1
EXHIBIT 5
October 1, 1996
American Science and Engineering, Inc.
829 Middlesex Turnpike
Billerica, MA 01821
Re: American Science and Engineering, Inc.
Registration Statement on Form S-8
----------------------------------
Gentlemen:
We are counsel for American Science and Engineering, Inc. (the "Company").
We have been asked to deliver this opinion in connection with the preparation
and filing with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"), of a Registration Statement on Form S-8 (the
"Registration Statement") relating to 50,000 shares of the Company's Common
Stock, $.66 2/3 par value (the "Shares"). This opinion letter, together with
Schedule A attached hereto (the "Opinion Letter"), is being rendered in
connection with the filing of the Registration Statement.
The 50,000 Shares covered by the Registration Statement are issuable under
the Company's 401(k) and Profit Sharing Plan (the "Plan").
In connection with this Opinion Letter, we have examined and are familiar
with originals or copies, certified or otherwise identified to our satisfaction,
of the following documents (collectively, the "Documents"):
1. a certificate from the Secretary of State of the Commonwealth of
Massachusetts as of a recent date as to the legal existence and good standing of
the Company;
2. a copy of the Restated Articles of Organization of the Company, as
amended to date, and a certificate of the Clerk that there have been no further
amendments thereto;
3. a copy of the By-laws of the Company, as amended to date, certified by
the Clerk of the Company as presently being in effect;
4. votes of the Board of Directors of the Company relating to the approval
of the Plan, certified by the Clerk of the Company;
5. the Plan;
<PAGE> 2
October 1, 1996
Page 2
6. a letter from the Company's transfer agent as to the issued and
outstanding Shares; and
7. the Registration Statement.
We have assumed, for the purposes of our opinions herein, that any
conditions to the issuance of the Shares under the Plan have been or will be
satisfied in full.
We have, without independent investigation, relied upon the representations
and warranties of the various parties as to matters of objective fact contained
in the Documents.
In addition, this Firm, in rendering legal opinions, customarily makes
certain assumptions which are described in Schedule A hereto. In the course of
our representation of the Company in connection with the preparation of the
Registration Statement, nothing has come to our attention which causes us to
believe reliance upon any of these assumptions is inappropriate, and, with your
concurrence, the opinions hereafter expressed are based upon those assumptions.
The Enumerated Party referred to in Schedule A is the Company.
We have not made any independent review or investigation of orders,
judgments, rules or other regulations or decrees by which the Company or any of
its property may be bound, nor have we made any independent investigation as to
the existence of actions, suits, investigations or proceedings, if any, pending
or threatened against the Company.
With your concurrence, our opinion hereafter expressed is based solely upon
(1) our review of the Documents, (2) discussions with those of our attorneys who
have devoted substantive attention to the preparation of the Registration
Statement, and (3) such review of published sources of law as we have deemed
necessary.
Our opinions contained herein are limited to the laws of The Commonwealth
of Massachusetts and the Federal law of the United States of America.
We express no legal opinion upon any matter other than those explicitly
addressed below, and our express opinion therein contained shall not be
interpreted to be an implied opinion upon any other matter.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized and, when issued in accordance with the terms
and conditions of the Plan, the Shares will be validly issued, fully paid, and
non-assessable.
<PAGE> 3
October 1, 1996
Page 3
We hereby consent to the reference to this firm in the Registration
Statement and to the filing of this opinion as Exhibit (5)(a) to the
Registration Statement.
Very truly yours,
BROWN, RUDNICK, FREED & GESMER
By: Brown, Rudnick, Freed &
Gesmer, P.C., a Partner
By: /s/ Steven R. London
-----------------------------
Steven R. London, a Member
SRL/DHM/JGN
<PAGE> 4
SCHEDULE A
BROWN, RUDNICK, FREED & GESMER
STANDARD ASSUMPTIONS
--------------------
In rendering legal opinions, Brown, Rudnick, Freed & Gesmer makes certain
customary assumptions described below:
1. Each natural person executing any of the Documents has sufficient legal
capacity to enter into such Documents.
2. Each Document is accurate, complete and authentic, each original is
authentic, each copy conforms to an authentic original and all signatures
are genuine.
3. All official public records are accurate, complete and properly indexed and
filed.
4. There has not been any mutual mistake of fact or misunderstanding, fraud,
duress, or undue influence by or among any of the parties to the Documents.
5. The conduct of the parties to the Documents has complied in the past and
will comply in the future with any requirement of good faith, fair dealing
and conscionability.
6. The Enumerated Party will obtain all permits and governmental approvals
required in the future and take all actions similarly required relevant to
its performance of its obligations under the Documents.
7. All parties to or bound by the Documents will act in accordance with, and
will refrain from taking any action that is forbidden by, the terms and
conditions of the Documents.
8. There are no agreements or understandings among the parties to or bound by
the Documents, and there is no usage of trade or course of prior dealing
among such parties, that would define, modify, waive, or qualify the terms
of any of the Documents.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-8 for the American
Science and Engineering, Inc. 401(k) and Profit Sharing Plan to be filed
October 2, 1996, of our reports dated June 5, 1996 included in American Science
and Engineering, Inc.'s Annual Report on Form 10-K for the year ended March 29,
1996 and to all references to our Firm included in this registration statement.
Arthur Andersen LLP
Boston, Massachusetts
September 26, 1996
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ralph S. Sheridan, Lee C. Steele, and Jeffrey
Bernfeld, and each of them, his/her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him/her and in his/her
name, place and stead, in any and all capacities to sign any or all amendments,
including post-effective amendments, to the Form S-8 Registration Statement to
which this instrument is attached and to file such amendments, including
post-effective amendments, with all exhibits thereto and other documents in
connection therewith, with the Commission, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorney-in-fact
and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
Name Capacity Date
- ---- -------- ----
/s/Ralph S. Sheridan President and Director September 26, 1996
- ------------------------ (Principal Executive
Ralph S. Sheridan Officer)
/s/Lee C. Steele Vice President and September 26, 1996
- ------------------------ Treasurer (Principal
Lee C. Steele Financial Officer)
/s/Herman Feshbach Director September 26, 1996
- ------------------------
Herman Feshbach
/s/Al Gladen Director September 26, 1996
- ------------------------
Al Gladen
/s/Hamilton W. Helmer Director September 26, 1996
- ------------------------
Hamilton W. Helmer
/s/Donald J. McCarren Director September 26, 1996
- ------------------------
Donald J. McCarren
/s/William E. Odom Director September 26, 1996
- ------------------------
William E. Odom
<PAGE> 1
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.
* * * * *
1. Employer Information. The Employer adopting this Plan is:
A. Employer Name: American Science and Engineering, Inc.
------------- --------------------------------------
B. Employer Identification Number: 04-2240991
------------------------------ ----------
C. Employer Address: 829 Middlesex Turnpike
---------------- ----------------------
Billerica, MA 01821
--------------------
D. SIC Code: 3844
-------- ----
E. Employer Contact: Name: Lee C. Steele
---------------- -------------
Title: Vice President, Chief Financial Officer
---------------------------------------
Phone #: (508) 262-8700
--------------
F. Fiscal Year: April 1 through March 31
----------- ------- --------
(month/day) (month/day)
G. Type of Entity (check one):
--------------
/X/ Corporation / / Partnership / / Subchapter S Corporation
/ / Sole proprietorship / / Other
H. Plan Name: American Science and Engineering, Inc. 401(k) and Profit
--------- --------------------------------------------------------
Sharing Plan
------------
I. Plan Number: 001 (complete)
-----------
-1-
<PAGE> 2
2. Plan Information.
A. PLAN YEAR. Check one:
/X/ (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.
B. EFFECTIVE DATE OF ADOPTION OF PLAN.
(1) Are you adopting this Plan to replace an existing plan?
/X/ (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)April 1, 1988
-------------
(Original Effective Date of the Plan you are Replacing)
(b)the date as of which the replacement plan is adopted
----------------------------------------------------
(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)
2
<PAGE> 3
C. IDENTIFYING HIGHLY COMPENSATED EMPLOYEES. Check either (1) or (2).
/X/ (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?
/X/ (a) Yes / / (b) No
/ / (2) The Plan will use the simplified method under Plan Section
2.58(b) for identifying Highly Compensated Employees.
3. 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 will cover all employees who
have met the age and service requirements with the following
exclusions:
/X/ (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):
-----
-----
3
<PAGE> 4
B. AGE REQUIREMENT (check and complete (1) or (2)):
/ / (1) No minimum age required for participation
/X/ (2) Employees must reach age 21 (not over 21) to participate
C. Service Requirements.
--------------------
(1) ELECTIVE DEFERRALS. To become eligible, an employee must
complete (choose one):
/X/ (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
(2) EMPLOYER MATCHING CONTRIBUTIONS. To become eligible, an employee
must complete (choose one):
/X/ (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.
4
<PAGE> 5
(3) PROFIT SHARING CONTRIBUTIONS. To become eligible, an employee
must complete (choose one):
/X/ (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.
(4) 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)):
/X/ (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).
(5) 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:
/X/ (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)
5
<PAGE> 6
(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)
-----
(6) 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):
/X/ (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)
(7) 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).
/X/ (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).
/X/ (c) Other: JANUARY 1, JULY 1, AUGUST 1,AND OCTOBER 1 (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.)
6
<PAGE> 7
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.
4. Contributions.
-------------
A. 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.
(1) A Participant may make Elective Deferrals for each year in an
amount not to exceed (check one):
/X/ (a) 15% of his Earnings
/ / (b) ___% of his Earnings not to exceed $ ___(specify a
dollar amount)
/ / (c) $____(specify a dollar amount)
(2) 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)
/X/ (a) No.
/ / (b) Yes. The minimum Elective Deferral will be ___% of the
Participant's Earnings.
(3) A Participant may begin to make Elective Deferrals, or change the
amount of his Elective Deferrals, as of the following dates
(check one):
/X/ (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:____________
7
<PAGE> 8
(4) 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)?
/X/ (a) Yes / / (b) No
B. EMPLOYER MATCHING CONTRIBUTIONS. (Plan Section 5.8). Complete this
part B only if you will make Employer Matching Contributions under the
Plan.
(1) 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:
/X/ (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).
8
<PAGE> 9
/ / (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).
(2) 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:
9
<PAGE> 10
/X/ (b) Be credited with 1(Choose 1, 501 or 1000) 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?
/X/ (a) Yes / / (b) No
C. PROFIT SHARING CONTRIBUTIONS. (Plan Sections 4.1 and 4.2)
(1) PROFIT LIMITATION. Will Profit Sharing Contributions to the Plan
be limited to the current and accumulated profits of your
Business? Check one:
/ / (a) Yes /X/ (b) No
(2) AMOUNT. The Employer will contribute to the Plan for each Plan
Year (check one):
/X/ (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)
(3) Allocations to Participants
---------------------------
(a) ALLOCATION TO PARTICIPANTS. Profit Sharing Contributions
will be allocated:
/X/ (i) Pro rata (percentage based on compensation)
/ / (ii) Uniform Dollar amount
/ / (iii) Integrated With Social Security (complete (b) and
(c) below)
10
<PAGE> 11
(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.
(4) 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).
/X/ (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)):
/X/ (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), and (d), or any combination of (b), (c), and (d).
11
<PAGE> 12
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.
D. PARTICIPANT CONTRIBUTIONS (PLAN SECTION 4.6). Will your Plan allow
Participants to make after-tax contributions?
/ / (1) Yes /X/ (2) No
E. QUALIFIED MATCHING CONTRIBUTIONS (PLAN SECTION 2.61). Skip this part E
if you will not make Qualified Matching Contributions.
(1) Qualified Matching Contributions will be made with respect to
(check one):
/ / (a) Elective Deferrals made by all Qualified Participants
/X/ (b) Elective Deferrals made only by Qualified Participants
who are not Highly Compensated Participants
(2) The amount of Qualified Matching Contributions made with respect
to a Participant will be:
/X/ (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
$_____.
12
<PAGE> 13
F. 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
/X/ (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
/X/ (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
G. Forfeitures
-----------
(1) EMPLOYER MATCHING CONTRIBUTIONS. Forfeitures of Employer Matching
Contributions will be used as follows (check and complete (a) or
(b)):
/X/ (a) Applied to reduce the following contributions required
of the Employer (check (i) and/or (ii)):
/X/ (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
/X/ (b) Reallocated as additional Profit Sharing Contributions
13
<PAGE> 14
5. 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.
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 one):
/ / (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 an increased (specify contribution or
benefit) _____ in its (specify defined contribution or defined
benefit) _____ plan as permitted under Plan Section 14.4.
6. 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:
A. 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:
14
<PAGE> 15
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: _____
7. Compensation (Plan Section 2.8).
-------------------------------
A. Amount.
------
(1) 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.
/X/ (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 $______
15
<PAGE> 16
(2) 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.
/X/ (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.
B. 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.
/X/ (2) the date the Participant enters the Plan.
16
<PAGE> 17
8. Distributions and Withdrawals.
------------------------------
A. Retirement Distributions.
-------------------------
(1) NORMAL RETIREMENT AGE (PLAN SECTION 7.1). Normal retirement age
will be the later of 65 (not over age 65) or _____ (not more
than 5) years of participation in the Plan.
(2) EARLY RETIREMENT (PLAN SECTION 7.1). Select one:
/ / (a) No early retirement will be permitted.
/X/ (b) Early retirement will be permitted at age 55.
/ / (c) Early retirement will be permitted at age ___ with at
least _____ Years of Service.
(3) 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 /X/ (b) No
B. HARDSHIP DISTRIBUTIONS (PLAN SECTION 12.2). Will your Plan permit
hardship distributions?
/ / (1) No
/X/ (2) Yes. Indicate below from which Accounts hardship
withdrawals will be permitted (check all that apply):
/X/ (a) Elective Deferral Account
/X/ (b) Rollover Account
/ / (c) Employer Matching Account
/ / (d) Employer Contribution Account (i.e. Profit
Sharing Contributions)
C. 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 /X/ (2) No
17
<PAGE> 18
D. 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 /X/ (2) No
E. LOANS (PLAN SECTION 12.5). Will your Plan permit loans to employees
from the vested portion for their Accounts?
/X/ (1) Yes / / (2) No
F. 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?
/X/ (1) Yes / / (2) No
9. Vesting (Plan Article 8).
------------------------
A. Time of Vesting (select (1) or (2) below and complete vesting
-------------------------------------------------------------
schedule).
---------
/X/ (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:
/X/ (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
18
<PAGE> 19
/ / (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
19
<PAGE> 20
(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 /X/ (ii) No
B. Service for Vesting (select (1) or (2)).
---------------------------------------
/X/ (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
C. 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
/X/ (2) 1 Hours of Service (under 1,000)
Hours of Service for vesting will be credited according to the method
selected under 3.C(6).
D. 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):
/X/ (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.
20
<PAGE> 21
10. 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,
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.
B. 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.
/X/ (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)
21
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C. CHANGES. Investment instructions may be changed (check one):
/X/ (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)
D. 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:
/X/ (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.
(2) TENDERING. Employer stock will be tendered as follows:
/X/ (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.
11. Administration.
--------------
A. 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):
/X/ This person: The Employer's Vice President Finance and Chief
Financial Officer, currently Lee C. Steele or his successor
/ / A committee composed of these people:
22
<PAGE> 23
B. 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:
Putnam Fiduciary Trust Company
------------------------------
(Name)
Putnam Retail 401(k) B-2-B
--------------------------
859 Willard St.
---------------
Quincy, MA 02269-9110
---------------------
(Address)
12. 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
23
<PAGE> 24
* * * * *
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 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
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:
Putnam Money Market Fund Putnam Income Fund
------------------------ ------------------
Putnam Asset Allocation: Putnam Growth and Income Fund II
----------------------- --------------------------------
Balanced Portfolio
------------------
Putnam OTC Emerging Growth Fund Putnam Overseas Growth Fund
------------------------------- ---------------------------
Putnam Vista Fund
-----------------
The following investment option shall be the default option: PUTNAM ASSET
ALLOCATION:BALANCED PORTFOLIO
(select the default option from among the investment options listed above).
Employer signature(s) to adopt Plan: Date of signature:
/c/ Lee C. Steele July 17, 1996
------------------------------------------- -------------------
------------------------------------------- -------------------
Please print name(s) of authorized person(s) signing above:
Lee C. Steele, Vice President and Chief Financial Officer
- ---------------------------------------------------------
- ------------------------------------------------------------------
A new Plan must be signed by the last day of the Plan Year in which the Plan is
to be effective.
24
<PAGE> 25
* * * * *
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: /c/ Dale A. Bearden
------------------------------------
25
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* * * * *
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: /c/ Dale A. Bearden
---------------------------------
26
<PAGE> 27
PUTNAM BASIC PLAN DOCUMENT #07
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C>
ARTICLE 1. INTRODUCTION........................................................... 1
ARTICLE 2. DEFINITIONS............................................................ 1
2.1. Account...................................................................... 1
2.2. Affiliated Employer.......................................................... 1
2.3. Authorized Leave of Absence.................................................. 1
2.4. Base Contribution Percentage................................................. 2
2.5. Beneficiary.................................................................. 2
2.6. CODA......................................................................... 2
2.7. Code......................................................................... 2
2.8. Compensation................................................................. 2
2.9. Date of Employment........................................................... 2
2.10. Deductible Employee Contribution Account.................................... 2
2.11. Disabled.................................................................... 2
2.12. Earned Income............................................................... 2
2.13. Earnings.................................................................... 3
2.14. Effective Date.............................................................. 3
2.15. Eligibility Period.......................................................... 3
2.16. Employee.................................................................... 3
2.17. Employer.................................................................... 4
2.18. Employer Contribution Account............................................... 4
2.19. Employer Stock.............................................................. 4
2.20. ERISA....................................................................... 4
2.21. Excess Earnings............................................................. 4
2.22. Forfeiture.................................................................. 4
2.23. Hour of Service............................................................. 4
2.24. Integration Level........................................................... 5
2.25. Investment Company.......................................................... 5
2.26. Investment Company Shares................................................... 5
2.27. Investment Products......................................................... 5
2.28. Leased Employee............................................................. 5
2.29. One-Year Eligibility Break.................................................. 6
2.30. One-Year Vesting Break...................................................... 6
2.31. Owner-Employee.............................................................. 6
2.32. Participant................................................................. 6
2.33. Participant Contribution.................................................... 6
2.34. Participant Contribution Account............................................ 6
2.35. Plan........................................................................ 6
2.36. Plan Administrator.......................................................... 7
</TABLE>
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<TABLE>
<S> <C>
2.37. Plan Agreement.............................................................. 7
2.38. Plan Year................................................................... 7
2.39. Profit Sharing Contribution................................................. 7
2.40. Putnam...................................................................... 7
2.41. Qualified Domestic Relations Order.......................................... 7
2.42. Qualified Participant....................................................... 7
2.43. Recordkeeper................................................................ 7
2.44. Retirement.................................................................. 7
2.45. Rollover Account............................................................ 7
2.46. Self-Employed Individual.................................................... 7
2.47. Shareholder-Employee........................................................ 7
2.48. Social Security Wage Base................................................... 8
2.49. Trust and Trust Fund........................................................ 8
2.50. Trustee..................................................................... 8
2.51. Valuation Date.............................................................. 8
2.52. Year of Service............................................................. 8
2.53. Deferral Agreement.......................................................... 8
2.54. Elective Deferral........................................................... 8
2.55. Elective Deferral Account................................................... 9
2.56. Employer Matching Account................................................... 9
2.57. Employer Matching Contribution.............................................. 9
2.58. Highly Compensated Employee................................................. 9
2.59. Non-Highly Compensated Employee.............................................11
2.60. Qualified Matching Account..................................................11
2.61. Qualified Matching Contribution.............................................11
2.62. Qualified Nonelective Contribution..........................................11
2.63. Qualified Nonelective Contribution Account..................................11
ARTICLE 3. PARTICIPATION..........................................................11
3.1. Initial Participation........................................................11
3.2. Special Participation Rule...................................................12
3.3. Resumed Participation........................................................12
3.4. Benefits for Owner-Employees.................................................12
3.5. Changes in Classification....................................................13
ARTICLE 4. CONTRIBUTIONS..........................................................13
4.1. Provisions Applicable to All Plans...........................................13
4.2. Provisions Applicable Only to Profit Sharing Plans...........................14
4.3. Provisions Applicable Only to Money Purchase Pension Plans...................17
4.4. Forfeitures..................................................................19
4.5. Rollover Contributions.......................................................19
4.6. Participant Contributions....................................................19
4.7. No Deductible Employee Contributions.........................................19
ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA)...............19
</TABLE>
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<TABLE>
<S> <C>
5.1. Applicability; Allocations...................................................19
5.2. CODA Participation...........................................................19
5.3. Annual Limit on Elective Deferrals...........................................20
5.4. Distribution of Certain Elective Deferrals...................................20
5.5. Satisfaction of ADP and ACP Tests............................................21
5.6. Actual Deferral Percentage Test Limit........................................21
5.7. Distribution of Excess Contributions.........................................23
5.8. Matching Contributions.......................................................24
5.9. Recharacterization of Excess Contributions...................................24
5.10. Average Contribution Percentage Test Limit and Aggregate Limit..............24
5.11. Distribution of Excess Aggregate Contributions..............................26
5.12. Qualified Nonelective Contributions; Qualified Matching Contributions.......27
5.13. Restriction on Distributions................................................27
5.14. Forfeitures of Employer Matching Contributions..............................28
5.15. Special Effective Dates.....................................................28
ARTICLE 6. LIMITATIONS ON ALLOCATIONS.............................................28
6.1. No Additional Plan...........................................................28
6.2. Additional Master or Prototype Plan..........................................29
6.3. Additional Non-Master or Non-Prototype Plan..................................30
6.4. Additional Defined Benefit Plan..............................................30
6.5. Definitions..................................................................31
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS...............................34
7.1. Retirement...................................................................34
7.2. Death........................................................................34
7.3. Other Termination of Employment..............................................35
ARTICLE 8. VESTING................................................................35
8.1. Vested Balance...............................................................35
8.2. Vesting of Accounts of Returned Former Employees.............................35
8.3. Forfeiture of Non-Vested Amounts.............................................36
8.4. Special Rule in the Event of a Withdrawal....................................37
8.5. Vesting Election.............................................................37
ARTICLE 9. PAYMENT OF BENEFITS....................................................37
9.1. Distribution of Accounts.....................................................37
9.2. Restriction on Immediate Distributions.......................................38
9.3. Optional Forms of Distribution...............................................39
9.4. Distribution Procedure.......................................................39
9.5. Lost Distributee.............................................................40
9.6. Direct Rollovers.............................................................40
9.7. Distributions Required by a Qualified Domestic Relations Order...............40
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS...............................41
10.1. Applicability...............................................................41
10.2. Qualified Joint and Survivor Annuity........................................41
10.3. Qualified Preretirement Survivor Annuity....................................42
10.4. Definitions.................................................................42
10.5. Notice Requirements.........................................................43
10.6. Transitional Rules..........................................................44
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS.....................................45
11.1. General Rules...............................................................45
11.2. Required Beginning Date.....................................................45
11.3. Limits on Distribution Periods..............................................46
11.4. Determination of Amount to Be Distributed Each Year.........................47
11.5. Death Distribution Provisions...............................................48
11.6. Transitional Rule...........................................................49
ARTICLE 12. WITHDRAWALS AND LOANS.................................................50
12.1. Withdrawals from Participant Contribution Accounts..........................50
12.2. Withdrawals on Account of Hardship..........................................50
12.3. Withdrawals After Reaching Age 59 1/2.......................................51
12.4. Other Withdrawals...........................................................51
12.5. Loans.......................................................................52
12.6. Procedure; Amount Available.................................................53
12.7. Protected Benefits..........................................................53
12.8. Restrictions Concerning Transferred Assets..................................53
ARTICLE 13. TRUST FUND AND INVESTMENTS............................................54
13.1. Establishment of Trust Fund.................................................54
13.2. Management of Trust Fund....................................................54
13.3. Investment Instructions.....................................................55
13.4. Valuation of the Trust Fund.................................................56
13.5. Distributions on Investment Company Shares..................................56
13.6. Registration and Voting of Investment Company Shares........................57
13.7. Investment Manager..........................................................57
13.8. Employer Stock..............................................................57
13.9. Insurance Contracts.........................................................59
13.10. Registration and Voting of Non-Putnam Investment Company Shares............60
ARTICLE 14. TOP-HEAVY PLANS.......................................................60
14.1. Superseding Effect..........................................................60
14.2. Definitions.................................................................60
14.3. Minimum Allocation..........................................................62
14.4. Adjustment of Fractions.....................................................63
14.5. Minimum Vesting Schedules...................................................63
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 15. ADMINISTRATION OF THE PLAN............................................64
15.1. Plan Administrator..........................................................64
15.2. Claims Procedure............................................................64
15.3. Employer's Responsibilities.................................................65
15.4. Recordkeeper................................................................65
15.5. Prototype Plan..............................................................65
ARTICLE 16. TRUSTEE...............................................................66
16.1. Powers and Duties of the Trustee............................................66
16.2. Limitation of Responsibilities..............................................67
16.3. Fees and Expenses...........................................................67
16.4. Reliance on Employer........................................................67
16.5. Action Without Instructions.................................................68
16.6. Advice of Counsel...........................................................68
16.7. Accounts....................................................................68
16.8. Access to Records...........................................................68
16.9. Successors..................................................................68
16.10. Persons Dealing with Trustee...............................................69
16.11. Resignation and Removal; Procedure.........................................69
16.12. Action of Trustee Following Resignation or Removal.........................69
16.13. Effect of Resignation or Removal...........................................69
16.14. Fiscal Year of Trust.......................................................69
16.15. Limitation of Liability....................................................69
16.16. Indemnification............................................................69
ARTICLE 17. AMENDMENT.............................................................70
17.1. General.....................................................................70
17.2. Delegation of Amendment Power...............................................71
ARTICLE 18. TERMINATION OF THE PLAN AND TRUST.....................................71
18.1. General.....................................................................71
18.2. Events of Termination.......................................................71
18.3. Effect of Termination.......................................................72
18.4. Approval of Plan............................................................72
ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS...................72
19.1. General.....................................................................72
19.2. Amounts Transferred.........................................................72
19.3. Merger or Consolidation.....................................................72
ARTICLE 20. MISCELLANEOUS.........................................................73
20.1. Notice of Plan..............................................................73
20.2. No Employment Rights........................................................73
20.3. Distributions Exclusively From Plan.........................................73
</TABLE>
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<TABLE>
<S> <C>
20.4. No Alienation...............................................................73
20.5. Provision of Information....................................................73
20.6. No Prohibited Transactions..................................................73
20.7. Governing Law...............................................................73
20.8. Gender......................................................................73
</TABLE>
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PUTNAM BASIC PLAN DOCUMENT #07
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 #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 2. 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.
2.1. 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.
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.
1
<PAGE> 34
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 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.)
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 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.
2.12. 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)
2
<PAGE> 35
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, 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.
3
<PAGE> 36
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 (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.
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.
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(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 OneYear 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. INTEGRATION LEVEL means the Earnings amount selected by the Employer
in the Plan Agreement.
2.25. 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.
2.26. INVESTMENT COMPANY SHARES means shares issued by an Investment
Company.
2.27. 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.
2.28. 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
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<PAGE> 38
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.
2.29. 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.
2.30. 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.
2.31. 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.
2.32. 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.
2.33. PARTICIPANT CONTRIBUTION means an after-tax contribution made by a
Participant in accordance with Section 4.6.
2.34. 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.
2.35. 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.
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2.36. PLAN ADMINISTRATOR means the Employer or its appointee pursuant to
Section 15.1.
2.37. 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.
2.38. 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.
2.39. PROFIT SHARING CONTRIBUTION means a contribution made for the benefit
of a Participant by the Employer pursuant to Section 4.2(a).
2.40. 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.
2.41. 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.
2.42. 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.
2.43. 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.
2.44. RETIREMENT means ceasing to be an Employee in accordance with Section
7.1.
2.45. ROLLOVER ACCOUNT means an account established for an Employee who
makes a rollover contribution to the Plan pursuant to Section 4.5.
2.46. 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.
2.47. 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
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<PAGE> 40
Code) more than 5% of the outstanding stock of the Employer. The Plan
administrator shall be responsible for identifying Shareholder-Employees to the
Recordkeeper.
2.48. 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.
2.49. TRUST AND TRUST FUND mean the trust fund established under Section
13.1.
2.50. TRUSTEE means the person, or the entity with trustee powers, named in
the Plan Agreement as trustee, and any successor thereto.
2.51. 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.
2.52. 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:
(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):
2.53. DEFERRAL AGREEMENT means an Employee's agreement to make one or more
Elective Deferrals in accordance with Section 5.2.
2.54. 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.
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2.55. 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.
2.56. 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.
2.57. 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.
2.58. 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 2.58(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.
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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 5.10, 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.
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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.
2.59. NON-HIGHLY COMPENSATED EMPLOYEE means an Employee who is not a Highly
Compensated Employee.
2.60. 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.
2.61. 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.
2.62. 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.
2.63. 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,
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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, (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
(c) 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
(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.
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.
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 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.
3.4. 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
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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 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
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<PAGE> 46
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) Limitations on Allocations. All allocations shall be subject to
the limitations in Article 6.
(d) 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.
(e) 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.
4.2. Provisions Applicable Only to Profit Sharing Plans.
---------------------------------------------------
(a) 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.
(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.
(c) 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:
14
<PAGE> 47
(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 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:
(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.
<TABLE>
(E) The Top-Heavy Maximum Disparity Percentage shall be the
lesser of (i) 2.7% or (ii) the applicable percentage from the
following table:
<CAPTION>
If the Plan's Integration Level is The applicable percentage is:
more than: But not more than:
<S> <C> <C>
$0 The greater of $10,000 or 20% of the 2.7%
Social Security Wage Base
The greater of $10,000 or 20% of the 80% of the Social Security Wage Base 1.3%
Social Security Wage Base
</TABLE>
15
<PAGE> 48
<TABLE>
<S> <C> <C>
80% of the Social Security Wage Base Less than the Social Security Wage 2.4%
Base
</TABLE>
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 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:
(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.
<TABLE>
(C) The Maximum Disparity Percentage shall be the lesser of
(i) 5.7% or (ii) the applicable percentage from the following
table:
<CAPTION>
If the Plan's Integration level is The applicable percentage is:
more than: But not more than:
<S> <C> <C>
$0 The greater of $10,000 or 20% of the 5.7%
Social Security Wage Base
The greater of $10,000 or 20% of the 80% of the Social Security Wage Base 4.3%
Social Security Wage Base
80% of the Social Security Wage Base Less than the Social Security Wage 5.4%
Base
</TABLE>
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
16
<PAGE> 49
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.
(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.
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.
(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. 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).
17
<PAGE> 50
(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 14.
(4) 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.
<TABLE>
(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:
<CAPTION>
If the Plan's Integration level is The applicable percentage is:
more than: But not more than:
<S> <C> <C>
$0 The greater of $10,000 or 20% of the 5.7%
Social Security Wage Base 80% of the
Social Security Wage Base
The greater of $10,000 or 20% of the 80% of the Social Security Wage Base 4.3%
Social Security Wage Base
80% of the Social Security Wage Base Less than the Social Security Wage 5.4%
Base
</TABLE>
If the Plan's Integration Level is equal to the Social Security Wage Base,
the Money Purchase Maximum Disparity Percentage is 5.7%.
(e) 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.
(f) 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
18
<PAGE> 51
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. 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.
4.5. 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.
4.6. 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.
4.7. 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 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA)
5.1. 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.
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
19
<PAGE> 52
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 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.
(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 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.
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.
20
<PAGE> 53
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 5.10. 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:
(a) By the distribution of Excess Contributions in accordance with
Section 5.7, or the distribution of Excess Aggregate Contributions in
accordance with Section 5.11, or both; or
(b) By recharacterization of Excess Contributions in accordance with
Section 5.9; 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 Section 5.12.
5.6. 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 (or,
provided that the Employer applies this method to all Employees for a Plan
21
<PAGE> 54
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.
(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 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.
22
<PAGE> 55
(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.
23
<PAGE> 56
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. 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.
5.9. 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.
5.10. 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:
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(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 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
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.
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(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
5.10 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.
(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, 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.
(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.
5.11. 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
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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 5.4, and then determining Excess Contributions
pursuant to Section 5.7.
5.12. 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.
5.13. 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:
(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;
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<PAGE> 60
(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
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.
5.14. 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.
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 5.10 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
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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
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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, 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
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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 postretirement 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
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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
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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. For this purpose, 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
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(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.
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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.
(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
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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 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.
(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(e).
(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.
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(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, 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.
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
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"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
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<PAGE> 71
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. 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;
(b) A series of installments over a period certain that meets the
requirements of Article 11;
(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; or
(d) 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.
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.
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<PAGE> 72
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(e). A Forfeiture
occurring under this Section 9.5 shall be reallocated as though it were an
Employer contribution.
9.6. 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:
(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.
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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.
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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
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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 (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
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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
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<PAGE> 77
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:
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(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.
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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.
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"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.
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<PAGE> 81
(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
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<PAGE> 82
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 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 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.
(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);
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(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 withdrawal 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 withdrawals available to him from
all plans maintained by the Affiliated Employers;
(2) 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;
(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. 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. 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.
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12.5. 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 12.5.
(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.
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(h) 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.
(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.
12.6. 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.
12.7. 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.
12.8. 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
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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(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.
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
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service agreement executed by the Employer and Putnam pursuant to the
establishment of the Plan.
13.3. 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
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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.
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.
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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 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 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.
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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
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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
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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. 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 14. TOP-HEAVY PLANS
14.1. 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.
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 (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.
(b) Top-Heavy: The Plan is Top-Heavy for any Plan Year 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.
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(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
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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 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
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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. 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.
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, 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:
(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
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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 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.
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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 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.
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
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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;
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(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
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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
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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 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.
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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.
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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
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 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.
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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 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.
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 3.5 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.
19.2. 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.
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
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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 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.
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