As filed with the Securities and Exchange Commission on
August 1, 1997
Registration No.
33-49583
811-7061
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 5
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and
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
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ACT OF 1940
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Amendment No. 6
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(Check appropriate box or boxes)
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PUTNAM CAPITAL APPRECIATION FUND
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code
(617) 292-1000
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<PAGE>
It is proposed that this filing will become effective
(check appropriate box)
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/ / immediately upon filing pursuant to paragraph (b)
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/ / on (date) pursuant to paragraph (b)
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/ / 60 days after filing pursuant to paragraph (a)(1)
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/ X / on September 30, 1997 pursuant to paragraph
(a)(1)
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/ / 75 days after filing pursuant to paragraph (a)(2)
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/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
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If appropriate, check the following box:
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/ / this post-effective amendment designates a new
- - ---- effective date for a previously filed post-effective
amendment.
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JOHN R. VERANI, Vice President
PUTNAM CAPITAL APPRECIATION FUND
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
The Registrant has registered an indefinite number or
amount
of securities under the Securities Act of 1933 pursuant to Rule
24f-2. A Notice on Form 24f-2 for the fiscal year
ended May 31, 1997 was filed on July 30, 1997 .
<PAGE>
PUTNAM CAPITAL APPRECIATION FUND
CROSS REFERENCE SHEET
(as required by Rule 481(a))
Part A
N-1A Item No. Location
1. Cover Page....................... Cover page
2. Synopsis......................... Expenses summary
3. Condensed Financial Information.. Financial highlights;
How performance is shown
4. General Description of Registrant. Objective; How the fund
pursues its objective;
Organization and history
5. Management of the Fund........... Expenses summary; How
the fund is managed;
About Putnam
Investments, Inc.
5A. Management's Discussion
of Fund Performance............. (Contained in the annual
report of the
Registrant)
6. Capital Stock and Other
Securities....................... Cover page; Organization
and history; How the
fund makes distributions
to shareholders; tax
information
7. Purchase of Securities Being
Offered.......................... How to buy shares;
Distribution plans; How
to sell shares; How to
exchange shares; How the
fund values its shares
8. Redemption or Repurchase......... How to buy shares; How
to sell shares; How to
exchange shares;
Organization and history
9. Pending Legal Proceedings........ Not applicable
<PAGE>
Part B
N-1A Item No. Location
10. Cover Page....................... Cover page
11. Table of Contents................ Cover page
12. General Information and History.. Organization and history
(Part A)
13. Investment Objectives and
Policies......................... How the fund pursues its
objective (Part A);
Investment restrictions;
Miscellaneous investment
practices
14. Management of the Registrant..... Management (Trustees;
Trustees fees;
Officers); Additional
officers
15. Control Persons and Principal
Holders of Securities............ Management (Trustees;
Officers); Charges and
expenses (Share
ownership)
16. Investment Advisory and Other
Services......................... Organization and history
(Part A); Management
(Trustees; Officers; The
management contract;
Principal underwriter;
Investor servicing agent
and custodian); Charges
and expenses;
Distribution plans;
Independent accountants
and financial statements
17. Brokerage Allocation............. Management (Portfolio
transactions); Charges
and expenses
<PAGE>
18. Capital Stock and Other
Securities....................... Organization and history
(Part A); How the fund
makes distributions to
shareholders; tax
information (Part A);
Suspension of redemptions
19. Purchase, Redemption and Pricing
of Securities Being Offered...... How to buy shares (Part
A); How to sell shares
(Part A); How to exchange
shares (Part A); How to
buy shares; Determination
of net asset value;
Suspension of redemptions
20. Tax Status....................... How the fund makes
distributions to
shareholders; tax
information (Part A);
Taxes
21. Underwriters..................... Management (Principal
underwriter); Charges and
expenses
22. Calculation of Performance Data.. How performance is shown
(Part A); Investment
performance; Standard
performance measures
23. Financial Statements............. Independent accountants
and financial statements
Part C
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.
<PAGE>
PROSPECTUS
SEPTEMBER 30,
1997
Putnam Capital Appreciation Fund
Class A, B and M shares
INVESTMENT STRATEGY: GROWTH
This prospectus explains concisely what you should know before
investing in Putnam Capital Appreciation Fund (the "fund").
Please read it carefully and keep it for future reference. You
can find more detailed information in the September 30,
1997 statement of additional information (the "SAI"), as
amended from time to time. For a free copy of the SAI or other
information, call Putnam Investor Services at 1-800-225-1581. The
SAI has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated into this
prospectus by reference. The Commission maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated
by reference into this prospectus and the SAI, and other
information regarding registrants that file electronically with
the Commission.
The fund may close to new investments from time to time if deemed
appropriate by Putnam Investment Management, Inc., the fund's
investment manager ("Putnam Management"), due to unavailability
of portfolio investments suitable for the fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
BOSTON * LONDON * TOKYO
<PAGE>
ABOUT THE FUND
Expenses summary
.................................................................
This section describes the sales charges, management fees, and
annual operating expenses that apply to various classes
of the fund's shares. Use it to help you estimate the
impact of transaction costs and recurring expenses on your
investment over time.
Financial highlights
.................................................................
Study this table to see, among other things, how the fund
performed each year for the past 10 years or since it began
investment operations if it has been in operation for less than
10 years.
Objective
.................................................................
Read this section to make sure the fund's objective is consistent
with your own.
How the fund pursues its objective
.................................................................
This section explains in detail how the fund seeks its investment
objective.
How performance is shown
.................................................................
This section describes and defines the measures used to assess
fund performance. All data are based on past investment results
and do not predict future performance.
How the fund is managed
.................................................................
Consult this section for information about the fund's management,
allocation of its expenses, and how it purchases and
sells securities .
Organization and history
.................................................................
In this section, you will learn when the fund was introduced, how
it is organized, how it may offer shares, and who its Trustees
are.
<PAGE>
ABOUT YOUR INVESTMENT
Alternative sales arrangements
.................................................................
Read this section for descriptions of the classes of shares this
prospectus offers and for points you should consider when making
your choice.
How to buy shares
.................................................................
This section describes the ways you may purchase shares and tells
you the minimum amounts required to open various types of
accounts. It explains how sales charges are determined and how
you may become eligible for reduced sales charges .
Distribution plans
.................................................................
This section tells you what distribution fees are charged against
each class of shares.
How to sell shares
.................................................................
In this section you can learn how to sell fund shares,
either directly to the fund or through an investment
dealer.
How to exchange shares
.................................................................
Find out in this section how you may exchange fund shares for
shares of other Putnam funds. The section also explains how
exchanges can be made without sales charges and the conditions
under which sales charges may be required.
How the fund values its shares
.................................................................
This section explains how the fund determines the value of its
shares.
How the fund makes distributions to shareholders; tax information
.................................................................
This section describes the various options you have in choosing
how to receive fund dividends. It also discusses the tax status
of the payments and counsels you to seek specific advice about
your own situation.
ABOUT PUTNAM INVESTMENTS, INC.
.................................................................
Read this section to learn more about the companies that provide
marketing, investment management, and shareholder account
services to Putnam funds and their shareholders.
<PAGE>
About the fund
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing.
The following table summarizes your maximum transaction costs
from investing in the fund and expenses based on the most recent
fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment over specified
periods.
Class A Class B Class M
shares shares shares
Shareholder transaction
expenses
Maximum sales charge
imposed on purchases
(as a percentage of
offering price) 5.75% NONE* 3.50%*
Deferred sales charge 5.0% in the first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
Annual fund operating expenses
(as a percentage of average net assets)
Total fund
Management 12b-1 Other operating
fees fees expenses expenses
--------- ----- -------- --------
Class A .63% .25% .32% 1.20%
Class B .63% 1.00% .32% 1.95%
Class M .63% .75% .32% 1.70%
The table is provided to help you understand the expenses of
investing and your share of fund operating expenses. The
expenses shown in the table do not reflect the application of
credits that reduce fund expenses.
<PAGE>
Examples
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and, except as indicated, redemption at
the end of each period:
1 3 5 10
year years years years
Class A $69 $93 $120 $195
Class B $70 $91 $125 $208
***
Class B (no redemption) $20 $61 $105 $208
***
Class M $52 $87 $124 $229
The examples do not represent past or future expense levels.
Actual expenses may be greater or less than those shown. Federal
regulations require the examples to assume a 5% annual return,
but actual annual return varies.
* The higher 12b-1 fees borne by class B and class M
shares may cause long-term shareholders to pay more
than the economic equivalent of the maximum permitted
front-end sales charge on class A shares.
** A deferred sales charge of up to 1.00% is assessed on
certain redemptions of class A shares that were
purchased without an initial sales charge. See "How to
buy shares -- Class A shares."
*** Reflects conversion of class B shares to class A shares
(which pay lower ongoing expenses) approximately eight
years after purchase. See "Alternative sales
arrangements."
FINANCIAL HIGHLIGHTS
The following table presents per share financial information for
class A, B and M shares. This information has been audited and
reported on by the independent accountants. The "Report of
independent accountants" and financial statements included in the
fund's annual report to shareholders for the 1997 fiscal
year are incorporated by reference into this prospectus. The
fund's annual report, which contains additional unaudited
performance information, is available without charge upon
request.
<PAGE>
Financial highlights
(For a share outstanding throughout the period)
<PAGE>
CLASS A
For the period
Aug. 5, 1993+
Per-share Year ended May 31
to May 31
operating performance 1997 1996 1995
1994
Net asset value,
beginning of period $16.33 $12.24 $10.74
$8.53
Investment operations
Net investment income .13(d) .14
.06(e).07(d)(e)
Net realized and unrealized
gain on investments 3.48 4.37 1.59
2.27
Total from investment operations 3.61 4.51 1.65
2.34
Less Distributions:
From net investment income (.10) (.13) (.03)
(.04)
From net realized gain
on investments (1.08) (.29) (.10)
(.09)
In excess of realized gain on
investments -- -- (.02)
--
Total distributions (1.18) (.42) (.15)
(.13)
Net asset value,
end of period $18.76 $16.33 $12.24
$10.74
<PAGE>
Ratios and supplemental data
Total investment return at
net asset value (%)(a) 22.91 37.57 15.61
27.58*
Net assets, end of period
(in thousands) $525,804 $173,321 $103,555
$3,062
Ratio of expenses to average
net assets (%)(b) 1.20 1.29 1.13(e)
.78(e)*
Ratio of net investment income
to average net assets (%) .79 1.05 1.89(e)
.73(e)*
Portfolio turnover (%) 38.35 76.68 15.32
102.99*
Average commission
rate paid (c) $0.0473
+ Commencement of operations
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods
ended on or after May 31, 1996 includes amounts paid
through expense offset arrangements. Prior periods exclude these
amounts.
(c) Average commission rate paid on security trades is required
for fiscal periods beginning on or after September 1,
1995.
(d) Per share net investment income has been determined on the
basis of the weighted average number of shares
outstanding during the period.
(e) Reflects an expense limitation in effect during the period.
As a result of these limitations, expenses of the fund
for the period ended May 31, 1994 reflect a reduction of $0.11
per share. For the period ended May 31, 1995 the
reduction was less than $0.01 per share for both class A and
class B. <PAGE>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
For the
period
Nov.
2, 1994+
Per-share Year ended May 31to
May 31
operating performance 1997 1996 1995
Net asset value,
beginning of period $16.24 $12.19 $11.08
Investment operations
Net investment income -(d) .04 .06(e)
Net realized and unrealized
gain on investments 3.45 4.35 1.20
Total from investment operations 3.45 4.39 1.26
Less Distributions:
From net investment income (.02) (.05) (.03)
From net realized gain
on investments (1.08) (.29) (.10)
In excess of realized gain on
investments -- -- (.02)
Total distributions (1.10) (.34) (.15)
Net asset value,
end of period $18.59 $16.24 $12.19
<PAGE>
Ratios and supplemental data
Total investment return at
net asset value (%)(a) 21.95 36.62 11.55*
Net assets, end of period
(in thousands) $543,015 $153,905 $89,962
Ratio of expenses to average
net assets (%)(b) 1.95 2.05 1.12(e)*
Ratio of net investment income
to average net assets (%) .03 .30 .65(e)*
Portfolio turnover (%) 38.35 76.68 15.32
Average commission
rate paid (c) $0.0473
+ Commencement of operations
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods
ended on or after May 31, 1996 includes amounts paid
through expense offset arrangements. Prior periods exclude these
amounts.
(c) Average commission rate paid on security trades is required
for fiscal periods beginning on or after September 1,
1995.
(d) Per share net investment income has been determined on the
basis of the weighted average number of shares
outstanding during the period.
(e) Reflects an expense limitation in effect during the period.
As a result of these limitations, expenses of the fund
for the period ended May 31, 1994 reflect a reduction of $0.11
per share. For the period ended May 31, 1995 the
reduction was less than $0.01 per share for both class A and
class B. <PAGE>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
For the period
Jan. 22, 1996+
Per-share Year ended May 31 to May 31
operating performance 1997 1996
Net asset value,
beginning of period $16.29 $13.84
Investment operations
Net investment income .04(d) .02(d)
Net realized and unrealized
gain on investments 3.46 2.43
Total from investment operations 3.50 2.45
Less Distributions:
From net investment income (.09) --
From net realized gain
on investments (1.08) --
In excess of realized gain on
investments -- --
Total distributions (1.17) --
Net asset value,
end of period $18.62 $16.29
<PAGE>
Ratios and supplemental data
Total investment return at
net asset value (%)(a) 22.28 17.70*
Net assets, end of period
(in thousands) $34,763 $2,025
Ratio of expenses to average
net assets (%)(b) 1.70 .66*
Ratio of net investment income
to average net assets (%) .23 .16*
Portfolio turnover (%) 38.35 76.68
Average commission
rate paid (c) $0.0473
+ Commencement of operations
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods
ended on or after May 31, 1996 includes amounts paid
through expense offset arrangements. Prior periods exclude these
amounts.
(c) Average commission rate paid on security trades is required
for fiscal periods beginning on or after September 1,
1995.
(d) Per share net investment income has been determined on the
basis of the weighted average number of shares
outstanding during the period.
<PAGE>
OBJECTIVE
Putnam Capital Appreciation Fund seeks capital appreciation.
Current income is only an incidental consideration in selecting
investments for the fund. The fund is not intended to be a
complete investment program, and there is no assurance it will
achieve its objective.
HOW THE FUND PURSUES ITS OBJECTIVE
Basic investment strategy
Under normal market conditions, the fund invests at least 65% of
its total assets in common stocks that offer potential for
capital appreciation. In selecting such securities for the fund,
Putnam Management will consider, among other things, an issuer's
financial strength, competitive position and projected future
earnings and dividends. Although common stocks will normally be
the fund's principal investments, the fund may also purchase
convertible bonds, convertible preferred stocks, preferred stocks
and debt securities if Putnam Management believes they would help
achieve the fund's objective. The fund may also hold a portion
of its assets in cash or money market instruments.
The fund will not limit its investments to any particular type of
company. It may invest in companies, large or small, whose
earnings Putnam Management believes are in a relatively
strong growth trend, or in companies in which significant further
growth is not anticipated but whose securities Putnam
Management believes are undervalued. It may invest in small
and relatively less well- known companies (i.e., companies with
equity market capitalizations of less than $1 billion). Smaller
companies may present greater opportunities for capital
appreciation, but may also involve greater risks. They may have
limited product lines, markets or financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume. As a result, the prices
of these securities may fluctuate more than prices of securities
of larger, more established companies.
At times Putnam Management may judge that conditions in the
securities markets make pursuing the fund's basic investment
strategy inconsistent with the best interests of its
shareholders. At such times, Putnam Management may temporarily
use alternative strategies, primarily designed to reduce
fluctuations in the value of fund assets.
In implementing these defensive strategies, the fund
may invest without limit primarily in debt securities,
preferred stocks, U.S. government and agency obligations, cash or
money market instruments, or in any other securities
Putnam Management considers consistent with such defensive
strategies.
It is impossible to predict when, or for how long,
these alternative strategies would be used .
Foreign investments
The fund may invest in securities of foreign issuers
that are not actively traded in U.S. markets.
These foreign investments involve certain special risks
described below.
Foreign securities are normally denominated and traded in
foreign currencies . As a result, the value of the fund's
foreign investments and the value of its shares may be
affected favorably or unfavorably by changes in currency
exchange rates relative to the U.S. dollar. The
fund may engage in a variety of foreign currency exchange
transactions in connection with its foreign investments,
including transactions involving futures contracts, forward
contracts and options.
Investments in foreign securities may subject the fund to
other risks as well. For example, there may be less
information publicly available about a foreign issuer than
about a U.S. issuer, and foreign issuers are not generally
subject to accounting, auditing and financial reporting standards
and practices comparable to those in the United States. The
securities of some foreign issuers are less liquid
and at times more volatile than securities of comparable U.S.
issuers. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such
as delay in payment or delivery of securities or in the
recovery of the fund's assets held abroad) and expenses
not present in the settlement of investments in U.S. markets.
In addition, the fund's investments in foreign securities may be
subject to the risk of nationalization or expropriation of
assets, imposition of currency exchange controls or restrictions
on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments
which could affect the value of the fund's investments in certain
foreign countries. Dividends or interest on, or proceeds from
the sale of, foreign securities may be subject to foreign
withholding taxes, and special U.S. tax considerations may apply.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
fund's ability to invest in securities of certain issuers
organized under the laws of those foreign countries.
The risks described above are typically increased in connection
with investments in less developed and developing nations, which
are sometimes referred to as "emerging markets." For example,
political and economic structures in these countries may be in
their infancy and developing rapidly, causing instability. High
rates of inflation or currency devaluations may adversely affect
the economies and securities markets of such countries.
Investments in emerging markets may be considered speculative.
The fund expects that its investments in foreign securities
generally will not exceed 20% of its total assets, although the
fund's investments in foreign securities may exceed this
amount from time to time. Certain of the foregoing risks
may also apply to some extent to securities of U.S. issuers that
are denominated in foreign currencies or that are
traded in foreign markets, or to securities of U.S. issuers
having significant foreign operations.
For more information about foreign securities and the risks
associated with investment in such securities, see
the SAI.
Portfolio turnover
The length of time the fund has held a particular security is not
generally a consideration in investment decisions. A change in
the securities held by the fund is known as "portfolio turnover."
As a result of the fund's investment policies, under certain
market conditions its portfolio turnover rate may be higher than
that of other mutual funds.
Portfolio turnover generally involves some expense, including
brokerage commissions or dealer markups and other transaction
costs in connection with the sale of securities and
reinvestment in other securities. These transactions may result
in realization of taxable capital gains. Portfolio turnover
rates are shown in the section "Financial highlights."
Futures and options
The fund may buy and sell stock index futures contracts. An
"index future" is a contract to buy or sell units of a particular
stock index at an agreed price on a specified future date.
Depending on the change in value of the index between the time
the fund enters into and terminates an index future transaction,
the fund realizes a gain or loss. In addition to or as an
alternative to purchasing or selling index futures, the fund may
buy and sell call and put options on index futures or stock
indexes. The fund may engage in index futures and options
transactions for hedging purposes and for nonhedging purposes,
such as to adjust its exposure to relevant markets or as a
substitute for direct investment.
The use of index futures and related options involves certain
special risks. Futures and options transactions involve costs
and may result in losses.
Certain risks arise from the possibility of imperfect
correlations among movements in the prices of financial futures
and options purchased or sold by the fund, of the underlying
stock index , or securities and, in the case of hedging
transactions, of the securities that are the subject of the
hedge. The successful use of the strategies described above
further depends on Putnam Management's ability to forecast market
movements correctly.
Other risks arise from the potential inability to close out index
futures or options positions. There can be no assurance that a
liquid secondary market will exist for any index future or option
at any particular time. The fund's ability to terminate
option positions established in the over-the-counter market may
be more limited than for exchange-traded options and may
also involve the risk that securities dealers participating in
such transactions would fail to meet their obligations to
the fund . Certain provisions of the Internal Revenue Code
and certain regulatory requirements may limit the use of index
futures and options transactions.
For a more detailed explanation of index futures and
options transactions, including the risks associated with them,
see the SAI.
Risk factors
The values of fixed-income securities fluctuate in
response to changes in interest rates. A decrease in
interest rates will generally result in an increase in the value
of fund assets. Conversely, during periods of rising
interest rates, the value of fund assets will generally
decline. The magnitude of these fluctuations generally is
greater for securities with longer maturities. However, the
yields on such securities are also generally higher. In
addition, the values of fixed-income securities
are affected by changes in general economic and business
conditions affecting the specific industries of their issuers.
Changes by nationally recognized rating agencies in their ratings
of a fixed-income security and changes in the ability of
an issuer to make payments of interest and principal may also
affect the value of these investments. Changes in the value of
portfolio securities generally will not affect income
derived from these securities , but will affect the fund's
net asset value.
Investors should carefully consider their ability to assume the
risks of owning shares of a mutual fund that invests in lower-
rated securities before making an investment.
The lower ratings of certain securities held by the
fund reflect a greater possibility that adverse changes in
the financial condition of the issuer or in general
economic conditions, or both, or an unanticipated rise in
interest rates, may impair the ability of the issuer to
make payments of interest and principal.
The inability (or perceived inability) of issuers to make
timely payments of interest and principal would likely make
the values of securities held by the fund more
volatile and could limit the fund's ability to sell its
securities at prices approximating the values placed on
such securities . In the absence of a liquid trading
market for its portfolio securities, the fund at times may be
unable to establish the fair value of such securities.
The rating assigned to a security by a rating agency does not
reflect an assessment of the volatility of the security's market
value or of the liquidity of an investment in the security.
Putnam Management seeks to minimize the risks of investing in
lower-rated securities through careful investment analysis.
When the fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent
on Putnam Management's ability than would be the case if the fund
were investing in securities in the higher rating categories.
For additional information regarding the risks
associated with investing in securities in the lower
rating categories , see the SAI.
Other investment practices
The fund may also engage in the following investment practices,
each of which involves certain special risks. The SAI contains
more detailed information about these practices, including
limitations designed to reduce these risks.
Options. The fund may seek to increase its current return by
writing covered call and put options on securities it owns or in
which it may invest. The fund receives a premium from writing a
call or put option, which increases the return if the option
expires unexercised or is closed out at a net profit.
When the fund writes a call option, it gives up the opportunity
to profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, it
takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price
of the security. The fund may terminate an option that it has
written prior to its expiration by entering into a closing
purchase transaction in which it purchases an option having the
same terms as the option written.
The fund may also buy and sell put and call options, including
combinations of put and call options on the same underlying
security. The aggregate value of the securities underlying the
options may not exceed 25% of fund assets. The use of these
strategies may be limited by applicable law.
Securities loans, repurchase agreements and forward commitments.
The fund may lend portfolio securities amounting to not more than
25% of its assets to broker dealers and may enter into repurchase
agreements on up to 25% of its assets. These transactions must
be fully collateralized at all times. The fund may also purchase
securities for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of
the securities declines prior to the settlement date. These
transactions involve some risk if the other party should
default on its obligation and the fund is delayed or prevented
from recovering the collateral or completing the transaction.
Diversification
The fund is a "diversified" investment company under the
Investment Company Act of 1940. This means that with
respect to 75% of its total assets, the fund may not invest more
than 5% of its total assets in the securities of any one issuer
(except U.S. government securities). The remaining 25% of its
total assets is not subject to this restriction. To the extent
the fund invests a significant portion of its assets in the
securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer's
securities declines.
Derivatives
Certain of the instruments in which the fund may invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying asset, such as a security or an index. Further
information about these instruments and the risks involved
in their use is included elsewhere in this prospectus and in the
SAI.
Limiting investment risk
Specific investment restrictions help to limit investment risks
for the fund's shareholders. These restrictions prohibit the
fund , with respect to 75% of its total assets, from
acquiring more than 10% of the voting securities of any one
issuer . * They also prohibit the fund from
investing more than:
(a) (with respect to 75% of its total assets) 5% of its total
assets in securities of any one issuer (other than the U.S.
government);*
(b) 25% of its total assets in any one industry (securities of
the U.S. government , its agencies or instrumentalities
are not considered to represent any industry);* or
(c) 15% of its net assets in any combination of securities
that are not readily marketable, securities restricted as
to resale (excluding securities determined by the Trustees (or
the person designated by the Trustees to make such
determinations) to be readily marketable), or in
repurchase agreements maturing in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. Except as otherwise noted,
all percentage limitations described in this prospectus and the
SAI will apply at the time an investment is made and will
not be considered violated unless an excess or deficiency occurs
or exists immediately after and as a result of such
investments . Except for investment policies designated as
fundamental in this prospectus or the SAI, the investment
policies described in this prospectus and in the SAI are not
fundamental policies. The Trustees may change any non-
fundamental investment policy without shareholder approval. As a
matter of policy, the Trustees would not materially change the
fund's investment objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
Fund advertisements may, from time to time, include performance
information. "Total return" for the one-, five- and ten-year
periods (or for the life of a class, if shorter) through the most
recent calendar quarter represents the average annual compounded
rate of return on an investment of $1,000 in the fund invested at
the maximum public offering price (in the case of class A and
class M shares) or reflecting the deduction of any applicable
contingent deferred sales charge (in the case of class B shares).
Total return may also be presented for other periods or based on
investment at reduced sales charge levels. Any quotation of
investment performance not reflecting the maximum initial sales
charge or contingent deferred sales charge would be reduced if
the sales charge were used.
All data are based on past investment results and do not predict
future performance. Investment performance, which will vary, is
based on many factors, including market conditions, portfolio
composition, fund operating expenses and the class of
shares the investor purchases. Investment performance also often
reflects the risks associated with the fund's investment
objective and policies. These factors should be considered when
comparing the fund's investment results with those of other
mutual funds and other investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. Fund performance may be
compared to that of various indexes. See the SAI.
HOW THE FUND IS MANAGED
The Trustees are responsible for generally overseeing the conduct
of fund business. Subject to such policies as the Trustees may
determine, Putnam Management furnishes a continuing investment
program for the fund and makes investment decisions on its
behalf. Subject to the control of the Trustees, Putnam
Management also manages the fund's other affairs and business.
The fund pays Putnam Management a quarterly fee for these
services based on average net assets. See "Expenses
summary" and the SAI.
The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the fund's
portfolio since the years stated below:
Business experience
Year (at least 5 years)
---- -------------------
Gerald S. Zukowski 1993 Employed as an investment
Senior Vice President professional by Putnam
Management since 1989.
Anthony C. Santosus 1996 Employed as an investment
Vice President professional by Putnam
Management since 1985.
The fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its distribution plans (which are in turn allocated to the
relevant class of shares). The fund also reimburses Putnam
Management for the compensation and related expenses of certain
fund officers and their staff who provide administrative
services. The total reimbursement is determined annually by the
Trustees.
Putnam Management places all orders for purchases and sales of
fund securities. In selecting broker - dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of fund shares (and, if permitted by law, shares of
the other Putnam funds) as a factor in the selection of broker
dealers.
ORGANIZATION AND HISTORY
Putnam Capital Appreciation Fund is a Massachusetts business
trust organized on May 4, 1993. A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is
on file with the Secretary of State of The Commonwealth of
Massachusetts.
The fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest. The Trustees may, without shareholder
approval, create two or more series of shares representing
separate investment portfolios. Any such series of shares may be
divided without shareholder approval into two or more classes of
shares having such preferences and special or relative rights and
privileges as the Trustees determine. The fund's shares are not
currently divided into series. Only class A, B and M shares are
offered by this prospectus. The fund may also offer other
classes of shares with different sales charges and expenses.
Because of these different sales charges and expenses, the
investment performance of the classes will vary. For more
information, including your eligibility to purchase any other
class of shares, contact your investment dealer or Putnam Mutual
Funds (at 1-800-225-1581).
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
fund were liquidated, would receive the net assets of the fund.
The fund may suspend the sale of shares at any time and may
refuse any order to purchase shares. Although the fund is not
required to hold annual meetings of its shareholders,
shareholders holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
If you own fewer shares than the minimum set by the Trustees
(presently 20 shares), the fund may choose to redeem your shares.
You will receive at least 30 days' written notice before the fund
redeems your shares, and you may purchase additional shares at
any time to avoid a redemption. The fund may also redeem shares
if you own shares above a maximum amount set by the Trustees.
There is presently no maximum, but the Trustees may , at
any time, establish one, which could apply to both present
and future shareholders.
The fund's Trustees: George Putnam,* Chairman. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; William F. Pounds, Vice
Chairman. Professor of Management, Alfred P. Sloan School of
Management, Massachusetts Institute of Technology; Jameson Adkins
Baxter, President, Baxter Associates, Inc.; Hans H. Estin, Vice
Chairman, North American Management Corp.; John A. Hill, Chairman
and Managing Director, First Reserve Corporation; Ronald J.
Jackson, Former Chairman, President and Chief Executive Officer
of Fisher-Price, Inc., Director of Safety 1st, Inc., Trustee of
Salem Hospital and the Peabody Essex Museum; Elizabeth T.
Kennan, President Emeritus and Professor, Mount Holyoke College;
Lawrence J. Lasser,* Vice President of the Putnam funds.
President, Chief Executive Officer and Director of Putnam
Investments, Inc. and Putnam Management. Director, Marsh &
McLennan Companies, Inc.; Robert E. Patterson, Executive Vice
President and Director of Acquisitions, Cabot Partners Limited
Partnership; Donald S. Perkins,* Director of various
corporations, including Cummins Engine Company, Lucent
Technologies, Inc., Springs Industries, Inc. and Time Warner
Inc.; George Putnam, III,* President, New Generation Research,
Inc. ; A.J.C. Smith,* Chairman and Chief Executive Officer,
Marsh & McLennan Companies, Inc.; and W. Nicholas Thorndike,
Director of various corporations and charitable organizations,
including Data General Corporation, Bradley Real Estate, Inc. and
Providence Journal Co. Also, Trustee of Massachusetts General
Hospital and Eastern Utilities Associates. The Trustees are also
Trustees of the other Putnam funds. Those marked with an
asterisk (*) are or may be deemed to be "interested persons" of
the fund, Putnam Management or Putnam Mutual Funds.
About Your Investment
ALTERNATIVE SALES ARRANGEMENTS
Class A shares. If you purchase class A shares , you
will generally pay a sales charge at the time of
purchase and, as a result, will not have to
pay any charges when you redeem the shares. If you
purchase class A shares at net asset value , you may have
to pay a contingent deferred sales charge ("CDSC") when
you redeem the shares . Certain purchases of class A shares
qualify for reduced sales charges. Class A shares pay
lower 12b-1 fees than class B and class M shares. See
"How to buy shares -- Class A shares" and "Distribution plans."
Class B shares. If you purchase class B shares , you
will not pay an initial sales charge, but you may have
to pay a CDSC if you redeem the shares within six
years . Class B shares also pay a higher 12b-1 fee
than class A and class M shares. Class B shares automatically
convert into class A shares, based on relative net asset value,
approximately eight years after purchase. For more information
about the conversion of class B shares, including
information about how shares acquired through reinvestment of
distributions are treated and certain circumstances under
which class B shares may not convert into class A
shares, see the SAI . Class B shares provide an investor the
benefit of putting all of the investor's dollars to work from the
time the investment is made. Until conversion, class B shares
will have a higher expense ratio and pay lower dividends than
class A and class M shares because of the higher 12b-1 fee. See
"How to buy shares -- Class B shares" and "Distribution plans."
Class M shares. If you purchase class M shares , you
will generally pay a sales charge at the time of purchase
that is lower than the sales charge you would pay for
class A shares. Certain purchases of class M shares qualify for
reduced sales charges. Class M shares pay 12b-1
fees that are lower than class B shares but higher
than class A shares. You will not have to pay any charges
when you redeem class M shares, but class M shares will not
convert into any other class of shares. See "How to buy shares -
- - - Class M shares" and "Distribution plans."
Which class is best for you? Which class of shares
provides the most suitable investment for you
depends on a number of factors, including the amount you
intend to invest and how long you intend to hold the shares. If
your intended purchase qualifies for reduced sales
charges , you might consider class A or class M shares.
If you prefer not to pay a sales charge at the
time of purchase, you might consider class B shares. Orders
for class B shares for $250,000 or more will be treated as orders
for class A shares or declined. For more information about these
sales arrangements, consult your investment dealer or Putnam
Investor Services. Shares may only be exchanged for shares of
the same class of another Putnam fund. See "How to exchange
shares."
HOW TO BUY SHARES
You can open a fund account with as little as $500 and make
additional investments at any time with as little as $50. You
can buy fund shares three ways - through most investment dealers,
through Putnam Mutual Funds (at 1-800-225-1581), or through a
systematic investment plan. If you do not have a dealer, Putnam
Mutual Funds can refer you to one.
Buying shares through Putnam Mutual Funds. Complete an order
form and write a check for the amount you wish to invest, payable
to the fund. Return the completed form and check to Putnam
Mutual Funds, which will act as your agent in purchasing shares
.
Buying shares through systematic investing. You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking or savings account. Application forms
are available from your investment dealer or through Putnam
Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.
Class A shares
The public offering price of class A shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The sales
charge is allocated between your investment dealer and Putnam
Mutual Funds as shown in the following table, except when Putnam
Mutual Funds, in its discretion, allocates the entire amount to
your investment dealer.
Sales charge Amount of
as a percentage of: sales charge
------------------- reallowed to
Net dealers as a
Amount of transaction amount Offering percentage of
at offering price ($) invested price offering price
- - -----------------------------------------------------------------
Under 50,000 6.10% 5.75% 5.00%
50,000 but under 100,000 4.71 4.50 3.75
100,000 but under 250,000 3.63 3.50 2.75
250,000 but under 500,000 2.56 2.50 2.00
500,000 but under 1,000,000 2.04 2.00 1.75
--------------------------------------------------------------
- - ---
No initial sales charge applies to purchases
of class A shares of
$1
million or more or to purchases by
employer-sponsored retirement plans that have at
least 200 eligible employees. However, a CDSC of 1.00% or
0.50% is imposed on redemptions of these shares
within the first or second year , respectively, after
purchase , unless the dealer of record waived its
commission with Putnam Mutual Funds' approval , or
unless the purchaser is a class A qualified benefit plan (a
retirement plan for which Putnam Fiduciary Trust Company or its
affiliates provide recordkeeping or other services in connection
with the purchase of class A
shares).
Class A qualified benefit plans may also purchase class A shares
with no initial sales charge. However, except as stated below, a
CDSC of 0.75% of the total amount redeemed (1.00% in the case of
plans for which Putnam Mutual Funds and its affiliates do
not act as trustee or recordkeeper) is imposed on redemptions of
these shares if, within two years of a plan's initial purchase of
class A shares, it redeems 90% or more of its cumulative
purchases. Thereafter, such a plan is no longer liable for any
CDSC. The two-year CDSC applicable to Class A qualified benefit
plans for which Putnam Mutual Funds or its
affiliates serve as trustee or recordkeeper ("full service
plans") is 0.50% of the total amount redeemed for
full service plans that initially invest at least
$5 million but less than $10 million in Putnam funds
and other investments managed by Putnam Management or its
affiliates ("Putnam Assets"), and is 0.25% of the total amount
redeemed for full service plans that initially invest at
least $10 million but less than $20 million in Putnam Assets.
Class A qualified benefit plans that initially invest at least
$20 million in Putnam Assets, or whose dealer or record has, with
Putnam Mutual Funds' approval, waived its commission or agreed to
refund its commission to Putnam Mutual Funds in the event
a CDSC would otherwise be applicable, are not subject to any
CDSC.
A class A qualified benefit plan participating in a
"multi-fund" program approved by Putnam Mutual Funds may
include amounts invested in other mutual funds participating in
such program for purposes of determining whether the plan may
purchase class A shares at net asset value. These investments
will also be included for purposes of the discount privileges and
programs described elsewhere in this prospectus and in the
SAI.
As described in the SAI, Putnam Mutual Funds pays the dealer of
record a commission of up to 1% on sales to class A qualified
benefit plans. Putnam Mutual Funds pays dealers of record
commissions on sales of class A shares of $1 million or more and
sales of class A shares to employer-sponsored retirement plans
that have at least 200 eligible employees and that are not class
A qualified benefit plans based on an investor's cumulative
purchases during the one-year period beginning with the date of
the initial purchase at net asset value. Each subsequent one-
year measuring period for these purposes will begin with the
first net asset value purchase following the end of the prior
period. Such commissions are paid at the rate of 1.00% of the
first $3 million of shares purchased, 0.50% of the next $47
million and 0.25% thereafter.
Class B shares
Class B shares are sold without an initial sales charge, although
a CDSC will be imposed if you redeem shares within a specified
period after purchase, as shown in the table below.
Year 1 2 3 4 5 6 7+
- - ----------------------------------------------------------- --
Charge 5% 4% 3% 3% 2% 1% 0%
Putnam Mutual Funds pays a sales commission equal to 4.00% of
the amount invested to dealers who sell class B shares. These
commissions are not paid on exchanges from other Putnam funds or
on sales to investors exempt from the CDSC.
Class M shares
The public offering price of class M shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The sales
charge is allocated between your investment dealer and Putnam
Mutual Funds as shown in the following table, except when Putnam
Mutual Funds, at its discretion, allocates the entire amount to
your investment dealer.
Sales charge Amount of
as a percentage of: sales charge
------------------- reallowed to
Net dealers as a
Amount of transaction amount Offering percentage of
at offering price ($) invested price offering price
- - -----------------------------------------------------------------
Under 50,000 3.63% 3.50% 3.00%
50,000 but under 100,000 2.56 2.50 2.00
100,000 but under 250,000 1.52 1.50 1.00
250,000 but under 500,000 1.01 1.00 1.00
500,000 and above NONE NONE NONE
Sales charges will not apply to class M shares purchased with
redemption proceeds received within the prior 90 days from non-
Putnam mutual funds on which the investor paid a front-end or
a contingent deferred sales charge. Class M
qualified benefit plans (retirement plans for which Putnam
Fiduciary Trust Company, or its affiliates, provide recordkeeping
or other services in connection with the purchase of class M
shares) and members of qualified groups may also purchase
class M shares without a sales charge.
General
You may be eligible to buy fund shares at reduced sales charges
or to sell fund shares without a CDSC .
Consult your investment dealer or Putnam Mutual Funds for details
about Putnam's combined purchase privilege, cumulative quantity
discount, statement of intention, group sales plan, employer-
sponsored retirement plans and other plans.
Descriptions are also included in the order form and in the SAI.
The fund may sell class A, class B and class M shares
at net asset value without an initial sales charge or a
CDSC to current and retired Trustees (and their families),
current and retired employees (and their families) of Putnam
Management and affiliates, registered representatives and other
employees (and their families) of broker - dealers having
sales agreements with Putnam Mutual Funds, employees (and their
families) of financial institutions having sales agreements with
Putnam Mutual Funds (or otherwise having an arrangement with a
broker - dealer or financial institution with respect to
sales of fund shares), financial institution trust departments
investing an aggregate of $1 million or more in Putnam funds,
clients of certain administrators of tax - qualified plans,
tax - qualified plans when proceeds from repayments of loans
to participants are invested (or reinvested) in Putnam funds,
"wrap accounts" for the benefit of clients of broker-dealers,
financial institutions or financial planners adhering to certain
standards established by Putnam Mutual Funds , and
investors meeting certain requirements who sold shares of certain
Putnam closed - end funds pursuant to a tender offer by the
closed - end fund.
In addition, the fund may sell shares at net asset
value without an initial sales charge or a CDSC in connection
with the acquisition by the fund of assets of an investment
company or personal holding company. The CDSC will be
waived on redemptions of shares arising out of the death or post-
purchase disability of a shareholder or settlor of a living trust
account, and on redemptions in connection with certain
withdrawals from IRA or other retirement plans. Up to 12% of the
value of shares subject to a systematic withdrawal plan may also
be redeemed each year without a CDSC. The SAI contains
additional information about purchasing shares at reduced sales
charges.
In determining whether a CDSC is payable on any redemption,
shares not subject to any charge will be redeemed first, followed
by shares held longest during the CDSC period. Any CDSC will be
based on the lower of the shares' cost and net asset value. For
this purpose, the amount of any increase in a share's value above
its initial purchase price is not regarded as a share exempt from
the CDSC. Thus, when you redeem a share that has appreciated in
value during the CDSC period, a CDSC is assessed on its initial
purchase price. Shares acquired by reinvestment of distributions
may be redeemed without a CDSC at any time. For information on
how sales charges are calculated if you exchange your shares, see
"How to exchange shares." Putnam Mutual Funds receives the
entire amount of any CDSC you pay. See the SAI for more
information about the CDSC.
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
fund shares at net asset value.
If you are considering redeeming shares or transferring
shares to another person shortly after purchase, you should pay
for those shares with a certified check to avoid any delay in
redemption or transfer. Otherwise, payment may be delayed
until the purchase price of those shares has been collected or,
if you redeem by telephone, until 15 calendar days after the
purchase date. To eliminate the need for safekeeping,
certificates will not be issued for your shares unless you
request them.
Putnam Mutual Funds will from time to time, at its expense,
provide additional promotional incentives or payments to dealers
that sell shares of the Putnam funds. These incentives or
payments may include payments for travel expenses, including
lodging, incurred in connection with trips taken by invited
registered representatives and their guests to locations within
and outside the United States for meetings or seminars of a
business nature. In some instances, these incentives or payments
may be offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
<PAGE>
DISTRIBUTION PLANS
The fund has adopted distribution plans to compensate
Putnam Mutual Funds for services provided and expenses incurred
by it as principal underwriter of fund shares, including the
payments to dealers mentioned below. The plans provide for
payments by the fund to Putnam Mutual Funds at the annual
rates (expressed as a percentage of average net assets
) of up to 0.35% on class A shares and 1.00% on class B
and class M shares. The Trustees currently limit payments
on class A, class B and class M shares to 0.25%, 1.00% and
0.75% of average net assets, respectively.
Putnam Mutual Funds compensates qualifying dealers
(including , for this purpose, certain financial
institutions) for sales of shares and the
maintenance of shareholder accounts.
Putnam Mutual Funds makes quarterly payments to dealers
at the annual rate of up to 0.25% of the average net asset
value of class A shares for which such dealers are
designated as the dealer of record , except that payments to
dealers for shares held by class A qualified benefit plans are
made at reduced rates, as described in the SAI. No payments are
made during the first year after purchase on
shares purchased at net asset value by shareholders investing $1
million or more or by employer-sponsored retirement plans
that have at least 200 eligible employees or that are
class A qualified benefit plans, unless the shareholder has
made arrangements with Putnam Mutual Funds and the dealer of
record has waived the sales commission.
Putnam Mutual Funds makes quarterly payments to
dealers at the annual rates of 0.25% and 0.65% of
the average net asset value of class B and class M
shares, respectively, for which such dealers are
designated as the dealer of record.
Putnam Mutual Funds may suspend or modify its
payments to dealers. The payments are also subject to
the continuation of the relevant distribution plan, the terms of
service agreements between dealers and Putnam Mutual Funds, and
any applicable limits imposed by the National Association of
Securities Dealers, Inc.
HOW TO SELL SHARES
You can sell your shares to the fund any day the New York Stock
Exchange is open, either directly to the fund or through your
investment dealer. The fund will only redeem shares for which it
has received payment.
Selling shares directly to your fund. Send a signed letter of
instruction or stock power form to Putnam Investor Services,
along with any certificates that represent shares you want to
sell. The price you will receive is the next net asset value
calculated after the fund receives your request in proper form
less any applicable CDSC. In order to receive that day's net
asset value, Putnam Investor Services must receive your request
before the close of regular trading on the New York Stock
Exchange.
If you sell shares having a net asset value of $100,000 or more,
the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. See the SAI for more
information about where to obtain a signature guarantee. Stock
power forms are available from your investment dealer, Putnam
Investor Services and many commercial banks.
If you want your redemption proceeds sent to an address other
than your address as it appears on Putnam's records, a signature
guarantee is required. Putnam Investor Services usually requires
additional documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
Your fund generally sends you payment for your shares the
business day after your request is received. Under unusual
circumstances, the fund may suspend redemptions, or postpone
payment for more than seven days, as permitted by federal
securities law.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $100,000 unless you have notified
Putnam Investor Services of an address change within the
preceding 15 days. Unless you indicate otherwise on the
account application, Putnam Investor Services will be authorized
to act upon redemption and transfer instructions received by
telephone from you , or any person claiming to act as
your representative, who can provide Putnam Investor
Services with your account registration and address as it
appears on Putnam Investor Services' records.
Putnam Investor Services will employ these and other reasonable
procedures to confirm that instructions communicated by telephone
are genuine; if it fails to employ reasonable procedures, Putnam
Investor Services may be liable for any losses due to
unauthorized or fraudulent instructions. For information,
consult Putnam Investor Services.
During periods of unusual market changes and shareholder
activity, you may experience delays in contacting Putnam Investor
Services by telephone. In this event, you may wish to submit a
written redemption request, as described above, or contact your
investment dealer, as described below. The Telephone Redemption
Privilege is not available if you were issued certificates for
shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your investment dealer. Your dealer must
receive your request before the close of regular trading on the
New York Stock Exchange to receive that day's net asset value.
Your dealer will be responsible for furnishing all necessary
documentation to Putnam Investor Services, and may charge you for
its services.
<PAGE>
HOW TO EXCHANGE SHARES
You can exchange your shares for shares of the same class of
certain other Putnam funds at net asset value . Not all
Putnam funds offer all classes of shares. If you exchange shares
subject to a CDSC, the transaction will not be subject to the
CDSC. However, when you redeem the shares acquired through the
exchange, the redemption may be subject to the CDSC, depending
upon when you originally purchased the shares. The CDSC will be
computed using the schedule of any fund into or from which you
have exchanged your shares that would result in your paying the
highest CDSC applicable to your class of shares. For purposes
of computing the CDSC, the length of time you have owned your
shares will be measured from the date of original purchase and
will not be affected by any exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services. The
form is available from Putnam Investor Services. For federal
income tax purposes, an exchange is treated as a sale of shares
and generally results in a capital gain or loss. A Telephone
Exchange Privilege is currently available for amounts up to
$500,000. Putnam Investor Services' procedures for telephonic
transactions are described above under "How to sell shares." The
Telephone Exchange Privilege is not available if you were issued
certificates for shares that remain outstanding. Ask your
investment dealer or Putnam Investor Services for prospectuses of
other Putnam funds. Shares of certain Putnam funds are not
available to residents of all states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the Trustees
believe doing so would be in the best interests of your fund, the
fund reserves the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges or reject any
exchange. Consult Putnam Investor Services before requesting an
exchange. See the SAI to find out more about the exchange
privilege.
HOW THE FUND VALUES ITS SHARES
The fund calculates the net asset value of a share of each class
by dividing the total value of its assets, less liabilities, by
the number of its shares outstanding. Shares are valued as of
the close of regular trading on the New York Stock Exchange each
day the Exchange is open.
Portfolio securities for which market quotations are readily
available are valued at market value. Short-term investments
that will mature in 60 days or less are valued at amortized cost,
which approximates market value. All other securities and assets
are valued at their fair value following procedures approved by
the Trustees.
Securities quoted in foreign currencies are translated into U.S.
dollars at current exchange rates or at such other rates as the
Trustees may determine in computing net asset value. As a result,
fluctuations in the value of such currencies in relation to the
U.S. dollar may affect the fund's net asset value
even though there has not been any change in the values
of its portfolio securities as quoted in such foreign
currencies.
HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION
The fund distributes any net investment income and any net
realized capital gains at least annually. Distributions from net
investment income, if any, are expected to be small.
Distributions from capital gains are made after applying
any available capital loss carryovers. Distributions paid on
class A shares will generally be greater than those paid on class
B and class M shares because expenses attributable to class B and
class M shares will generally be higher.
You can choose from three distribution options:
- - - Reinvest all distributions in additional shares without a
sales charge;
- - - Receive distributions from net investment income in cash
while reinvesting capital gains distributions in additional
shares without a sales charge; or
- - - Receive all distributions in cash.
You can change your distribution option by notifying Putnam
Investor Services in writing. If you do not select an option
when you open your account, all distributions will be reinvested.
All distributions not paid in cash will be reinvested in shares
of the class on which the distributions are paid. You will
receive a statement confirming reinvestment of distributions in
additional fund shares (or in shares of other Putnam funds
for Dividend Plus accounts) promptly following the quarter in
which reinvestment occurs.
If a check representing a fund distribution is not cashed within
a
specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the
distribution . If Putnam Investor Services does not
receive your election, the distribution will be reinvested in the
fund. Similarly, if correspondence sent by the fund or Putnam
Investor Services is returned as "undeliverable," fund
distributions will automatically be reinvested in the fund or in
another Putnam fund.
The fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements
necessary for it to be relieved of federal taxes on income and
gains it distributes to shareholders. The fund will distribute
substantially all of its ordinary income and capital gain net
income on a current basis.
Fund distributions will be taxable to you as ordinary
income, except that any distributions of net long-term capital
gains will be taxable as such, regardless of how long you have
held the shares. Distributions will be taxable as described
above
whether received in cash or in shares through the reinvestment of
distributions.
Early in each calendar year Putnam Investor Services will
notify you of the amount and tax status of distributions paid to
you for the preceding year.
The foregoing is a summary of certain federal income tax
consequences of investing in the fund. You should consult your
tax adviser to determine the precise effect of an investment in
the fund on your particular tax situation (including possible
liability for state and local taxes).
About Putnam Investments, Inc.
Putnam Management has been managing mutual funds since 1937.
Putnam Mutual Funds is the principal underwriter of the fund and
of other Putnam funds. Putnam Fiduciary Trust Company is the
custodian of the fund. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is the investor servicing and
transfer agent for the fund.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., which is
wholly owned by Marsh & McLennan Companies, Inc., a
publicly-owned
holding company whose principal businesses are international
insurance and reinsurance brokerage, employee benefit consulting
and investment management.
<PAGE>
PUTNAM CAPITAL APPRECIATION FUND
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
PUTNAM CAPITAL APPRECIATION FUND
One Post Office Square, Boston, MA 02109
Class A shares
INVESTMENT STRATEGY: GROWTH
PROSPECTUS - SEPTEMBER 30,
1997
This prospectus explains concisely what you should know before
investing in class A shares of Putnam Capital Appreciation Fund
(the "fund") which are offered without a sales charge through
eligible employer-sponsored retirement plans. Please
read
it carefully and keep it for future reference. You can find more
detailed information about the fund in the September 30,
1997 statement of additional information (the "SAI"), as
amended from time to time. For a free copy of the SAI or other
information, including a prospectus regarding class A shares for
other investors, call Putnam Investor Services at 1-800-752-9894.
The SAI has been filed with the Securities and Exchange
Commission
(the "Commission") and is incorporated into this
prospectus
by reference. The Commission maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated
by reference into this prospectus and the SAI, and other
information regarding registrants that file electronically with
the Commission.
The fund may close to new investments from time to time if deemed
appropriate by Putnam Investment Management, Inc., the fund's
investment manager ("Putnam Management"), due to unavailability
of
portfolio investments suitable for the fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PUTNAMINVESTMENTS
Putnam Defined
Contribution Plans
<PAGE>
ABOUT THE FUND
Expenses summary.....................................
Financial highlights.................................
Objective............................................
How the fund pursues its objective...................
How performance is shown.............................
How the fund is managed..............................
Organization and history.............................
ABOUT YOUR INVESTMENT
How to buy shares....................................
Distribution plan....................................
How to sell shares...................................
How to exchange shares...............................
How the fund values its shares.......................
How the fund makes distributions to shareholders;
tax information.................................
ABOUT PUTNAM INVESTMENTS, INC........................
<PAGE>
About the Fund
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing.
The following table summarizes expenses attributable to class A
shares based on the fund's most recent fiscal year. The example
shows the cumulative expenses attributable to a hypothetical
$1,000 investment in class A shares over specified
periods.
Annual fund operating expenses
(as a percentage of average net assets)
Management fees
.63%
12b-1 fees
.25%
Other expenses
.32%
Total fund operating expenses
1.20%
The table is provided to help you understand the expenses of
investing in the fund and your share of fund operating
expenses . The expenses shown in the table do not reflect
the application of credits that reduce fund expenses.
Example
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
year years years years
$12 $38 $66 $145
The example does not represent past or future expense levels, and
actual expenses may be greater or less than those shown. Federal
regulations require the example to assume a 5% annual return, but
actual annual return varies. The example does not reflect any
charges or expenses related to your employer's plan.
FINANCIAL HIGHLIGHTS
The following table presents per share financial information for
class A shares. This information has been derived from the
fund's
financial statements, which have been audited and reported on by
the independent accountants. The "Report of independent
accountants" and financial statements included in the fund's
annual report to shareholders for the 1997 fiscal year are
incorporated by reference into this prospectus. The fund's
annual
report, which contains additional unaudited performance
information, is available without charge upon request.
Financial highlights
(For a share outstanding throughout the period)
CLASS A
For the period
Aug. 5, 1993+
Per-share Year ended May 31
to May 31
operating performance 1997 1996 1995
1994
Net asset value,
beginning of period $16.33 $12.24 $10.74
$8.53
Investment operations
Net investment income .13(d) .14
.06(e).07(d)(e)
Net realized and unrealized
gain on investments 3.48 4.37 1.59
2.27
Total from investment operations 3.61 4.51 1.65
2.34
Less Distributions:
From net investment income (.10) (.13) (.03)
(.04)
From net realized gain
on investments (1.08) (.29) (.10)
(.09)
In excess of realized gain on
investments -- -- (.02)
--
Total distributions (1.18) (.42) (.15)
(.13)
Net asset value,
end of period $18.76 $16.33 $12.24
$10.74
<PAGE>
Ratios and supplemental data
Total investment return at
net asset value (%)(a) 22.91 37.57 15.61
27.58*
Net assets, end of period
(in thousands) $525,804 $173,321 $103,555
$3,062
Ratio of expenses to average
net assets (%)(b) 1.20 1.29 1.13(e)
.78(e)*
Ratio of net investment income
to average net assets (%) .79 1.05 1.89(e)
.73(e)*
Portfolio turnover (%) 38.35 76.68 15.32
102.99*
Average commission
rate paid (c) $0.0473
+ Commencement of operations
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods
ended on or after May 31, 1996 includes amounts paid
through expense offset arrangements. Prior periods exclude these
amounts.
(c) Average commission rate paid on security trades is required
for fiscal periods beginning on or after September 1,
1995.
(d) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding
during the period.
(e) Reflects an expense limitation in effect during the period.
As a result of these limitations, expenses of the fund
for the period ended May 31, 1994 reflect a reduction of $0.11
per share. For the period ended May 31, 1995 the
reduction was less than $0.01 per share for both class A and
class B. <PAGE>
OBJECTIVE
Putnam Capital Appreciation Fund seeks capital appreciation.
Current income is only an incidental consideration in selecting
investments for the fund. The fund is not intended to be a
complete investment program, and there is no assurance it will
achieve its objective.
HOW THE FUND PURSUES ITS OBJECTIVE
Basic investment strategy
Under normal market conditions, the fund invests at least 65% of
its total assets in common stocks that offer potential for
capital
appreciation. In selecting such securities for the fund, Putnam
Management will consider, among other things, an issuer's
financial strength, competitive position and projected future
earnings and dividends. Although common stocks will normally be
the fund's principal investments, the fund may also purchase
convertible bonds, convertible preferred stocks, preferred stocks
and debt securities if Putnam Management believes they would help
achieve the fund's objective. The fund may also hold a portion
of
its assets in cash or money market instruments.
The fund will not limit its investments to any particular type of
company. It may invest in companies, large or small, whose
earnings Putnam Management believes are in a relatively
strong growth trend, or in companies in which significant further
growth is not anticipated but whose securities Putnam
Management believes are undervalued. It may invest in small
and relatively less well- known companies (i.e., companies with
equity market capitalizations of less than $1 billion). Smaller
companies may present greater opportunities for capital
appreciation, but may also involve greater risks. They may have
limited product lines, markets or financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume. As a result, the prices
of
these securities may fluctuate more than prices of securities of
larger, more established companies.
At times Putnam Management may judge that conditions in the
securities markets make pursuing the fund's basic investment
strategy inconsistent with the best interests of its
shareholders.
At such times, Putnam Management may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the
value
of the fund's assets. In implementing these defensive
strategies, the fund may invest without limit in debt
securities, preferred stocks, U.S. government and agency
obligations, cash or money market instruments, or in other
securities Putnam Management considers consistent with such
defensive strategies. It is impossible to predict when, or for
how long, the fund will use these alternative strategies.
Foreign investments
The fund may invest in securities of foreign issuers
that are not actively traded in U.S. markets.
These foreign investments involve certain special risks
described below.
Foreign securities are normally denominated and traded in
foreign currencies . As a result, the value of the fund's
foreign investments and the value of its shares may be
affected favorably or unfavorably by changes in currency
exchange rates relative to the U.S. dollar. The
fund may engage in a variety of foreign currency exchange
transactions in connection with its foreign investments,
including
transactions involving futures contracts, forward contracts and
options.
Investments in foreign securities may subject the fund to
other
risks as well. For example, there may be less information
publicly available about a foreign issuer than about a U.S.
issuer, and foreign issuers are not generally subject to
accounting, auditing and financial reporting standards and
practices comparable to those in the United States. The
securities of some foreign issuers are less liquid
and at times more volatile than securities of comparable U.S.
issuers. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such
as delay in payment or delivery of securities or in the
recovery of the fund's assets held abroad) and expenses
not
present in the settlement of investments in U.S. markets.
In addition, the fund's investments in foreign securities may be
subject to the risk of nationalization or expropriation of
assets,
imposition of currency exchange controls or restrictions on the
repatriation of foreign currency, confiscatory taxation,
political
or financial instability and diplomatic developments which could
affect the value of the fund's investments in certain foreign
countries. Dividends or interest on, or proceeds from the sale
of, foreign securities may be subject to foreign withholding
taxes, and special U.S. tax considerations may apply.
Legal remedies available to investors in certain foreign
countries
may be more limited than those available with respect to
investments in the United States or in other foreign countries.
The laws of some foreign countries may limit the fund's ability
to
invest in securities of certain issuers organized under the laws
of those foreign countries.
The risks described above are typically increased in connection
with investments in less developed and developing nations, which
are sometimes referred to as "emerging markets." For example,
political and economic structures in these countries may be in
their infancy and developing rapidly, causing instability. High
rates of inflation or currency devaluations may adversely affect
the economies and securities markets of such countries.
Investments in emerging markets may be considered speculative.
The fund expects that its investments in foreign securities
generally will not exceed 20% of its total assets, although the
fund's investments in foreign securities may exceed this
amount from time to time. Certain of the foregoing risks
may also apply to some extent to securities of U.S. issuers that
are denominated in foreign currencies or that are
traded in foreign markets, or to securities of U.S. issuers
having
significant foreign operations.
For more information about foreign securities and the risks
associated with investment in such securities, see
the SAI.
Portfolio turnover
The length of time the fund has held a particular security is not
generally a consideration in investment decisions. A change in
the securities held by the fund is known as "portfolio turnover."
As a result of the fund's investment policies, under certain
market conditions its portfolio turnover rate may be higher than
that of other mutual funds.
Portfolio turnover generally involves some expense, including
brokerage commissions or dealer markups and other transaction
costs in connection with the sale of securities and
reinvestment in other securities. These transactions may result
in realization of taxable capital gains. Portfolio turnover
rates
are shown in the section "Financial highlights."
Futures and options
The fund may buy and sell stock index futures contracts. An
"index future" is a contract to buy or sell units of a particular
stock index at an agreed price on a specified future date.
Depending on the change in value of the index between the time
the
fund enters into and terminates an index future transaction, the
fund realizes a gain or loss. In addition to or as an
alternative
to purchasing or selling index futures, the fund may buy and sell
call and put options on index futures or stock indexes. The fund
may engage in index futures and options transactions for hedging
purposes and for nonhedging purposes, such as to adjust its
exposure to relevant markets or as a substitute for direct
investment.
The use of index futures and related options involves certain
special risks. Futures and options transactions involve costs
and
may result in losses.
Certain risks arise from the possibility of imperfect
correlations
among movements in the prices of financial futures and options
purchased or sold by the fund, of the underlying stock index ,
or securities and, in the case of hedging transactions, of
the
securities that are the subject of the
hedge. The successful use of the strategies described above
further depends on Putnam Management's ability to forecast market
movements correctly.
Other risks arise from the potential inability to close out index
futures or options positions. There can be no assurance that a
liquid secondary market will exist for any index future or option
at any particular time. The fund's ability to terminate
option
positions established in the over-the-counter market may be more
limited than for exchange-traded options and may also
involve the risk that securities dealers participating in
such
transactions would fail to meet their obligations to the
fund . Certain provisions of the Internal Revenue Code and
certain regulatory requirements may limit the use of index
futures
and options transactions.
For a more detailed explanation of index futures and
options transactions, including the risks associated with them,
see the SAI.
Risk factors
The values of fixed-income securities fluctuate
in
response to changes in interest rates. A decrease in
interest rates will generally result in an increase in the value
of fund assets. Conversely, during periods of rising
interest rates, the value of fund assets will generally
decline. The magnitude of these fluctuations generally is
greater for securities with longer maturities. However, the
yields on such securities are also generally higher. In
addition,
the values of fixed-income securities are affected
by changes in general economic and business conditions affecting
the specific industries of their issuers.
Changes by nationally recognized rating agencies in their ratings
of a fixed-income security and changes in the ability of
an
issuer to make payments of interest and principal may also affect
the value of these investments. Changes in the value of
portfolio securities generally will not affect income
derived from these securities , but will affect the fund's
net asset value.
<PAGE>
Investors should carefully consider their ability to assume the
risks of owning shares of a mutual fund that invests in lower-
rated securities before making an investment.
The lower ratings of certain securities held by the
fund reflect a greater possibility that adverse changes in
the
financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates,
may impair the ability of the issuer to make payments of
interest and principal.
The inability (or perceived inability) of issuers to make
timely payments of interest and principal would likely make
the values of securities held by the fund more
volatile and could limit the fund's ability to sell its
securities at prices approximating the values placed on
such securities . In the absence of a liquid trading
market
for its portfolio securities, the fund at times may be unable to
establish the fair value of such securities.
The rating assigned to a security by a rating agency does not
reflect an assessment of the volatility of the security's market
value or of the liquidity of an investment in the security.
Putnam Management seeks to minimize the risks of investing in
lower-rated securities through careful investment analysis.
When the fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent
on Putnam Management's ability than would be the case if the fund
were investing in securities in the higher rating categories.
For additional information regarding the risks
associated with investing in securities in the lower
rating categories , see the SAI.
Other investment practices
The fund may also engage in the following investment practices,
each of which involves certain special risks. The SAI contains
more detailed information about these practices, including
limitations designed to reduce these risks.
Options. The fund may seek to increase its current return by
writing covered call and put options on securities it owns or in
which it may invest. The fund receives a premium from writing a
call or put option, which increases the return if the option
expires unexercised or is closed out at a net profit.
When the fund writes a call option, it gives up the opportunity
to
profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, it
takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price
of the security. The fund may terminate an option that it has
written prior to its expiration by entering into a closing
purchase transaction in which it purchases an option having the
same terms as the option written.
The fund may also buy and sell put and call options, including
combinations of put and call options on the same underlying
security. The aggregate value of the securities underlying the
options may not exceed 25% of fund assets. The use of these
strategies may be limited by applicable law.
Securities loans, repurchase agreements and forward commitments.
The fund may lend portfolio securities amounting to not more than
25% of its assets to broker dealers and may enter into
repurchase agreements on up to 25% of its assets. These
transactions must be fully collateralized at all times. The fund
may also purchase securities for future delivery, which may
increase its overall investment exposure and involves a risk of
loss if the value of the securities declines prior to the
settlement date. These transactions involve some risk if
the other party should default on its obligation and the fund is
delayed or prevented from recovering the collateral or completing
the transaction.
Diversification
The fund is a "diversified" investment company under the
Investment Company Act of 1940. This means that with
respect to 75% of its total assets, the fund may not invest more
than 5% of its total assets in the securities of any one issuer
(except U.S. government securities). The remaining 25% of its
total assets is not subject to this restriction. To the extent
the fund invests a significant portion of its assets in the
securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer's
securities declines.
Derivatives
Certain of the instruments in which the fund may invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying
asset, such as a security or an index. Further information about
these instruments and the risks involved in their use is
included elsewhere in this prospectus and in the SAI.
Limiting investment risk
Specific investment restrictions help to limit investment risks
for the fund's shareholders. These restrictions prohibit the
fund , with respect to 75% of its total assets, from
acquiring more than 10% of the voting securities of any one
issuer . * They also prohibit the fund from
investing
more than:
(a) (with respect to 75% of its total assets) 5% of its total
assets in securities of any one issuer (other than the U.S.
government);*
(b) 25% of its total assets in any one industry (securities of
the U.S. government , its agencies or instrumentalities
are
not considered to represent any industry);* or
(c) 15% of its net assets in any combination of securities
that are not readily marketable, securities restricted as
to resale (excluding securities determined by the Trustees (or
the
person designated by the Trustees to make such determinations) to
be readily marketable), or in repurchase agreements
maturing in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. Except as otherwise noted,
all percentage limitations described in this prospectus and the
SAI will apply at the time an investment is made and will
not be considered violated unless an excess or deficiency occurs
or exists immediately after and as a result of such
investments . Except for investment policies designated as
fundamental in this prospectus or the SAI, the investment
policies
described in this prospectus and in the SAI are not fundamental
policies. The Trustees may change any non-fundamental investment
policy without shareholder approval. As a matter of policy, the
Trustees would not materially change the fund's investment
objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
Fund advertisements may, from time to time , include
performance information. "Total return" for the one-, five- and
ten-year periods through the most recent calendar quarter
represents the average annual compounded rate of return on an
investment of $1,000 in the fund invested at the maximum public
offering price. Total return may also be presented for other
periods or based on investment at reduced sales charge levels.
Any quotation of investment performance not reflecting the
maximum
initial sales charge would be reduced if the sales charge were
used.
All data are based on past investment results and do not predict
future performance. Investment performance, which will vary, is
based on many factors, including market conditions, portfolio
composition, fund operating expenses and the class of
shares the investor purchases. Investment performance also often
reflects the risks associated with the fund's investment
objective
and policies. These factors should be considered when comparing
the fund's investment results with those of other mutual funds
and
other investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. Fund performance may
be
compared to that of various indexes. See the SAI. Because
shares
sold through eligible employer-sponsored retirement plans
are sold without a sales charge, quotations of investment
performance reflecting the deduction of a sales charge will be
lower than the actual investment performance , over the same
period, of shares purchased through such plans.
HOW THE FUND IS MANAGED
The Trustees are responsible for generally overseeing the conduct
of fund business. Subject to such policies as the Trustees may
determine, Putnam Management furnishes a continuing investment
program for the fund and makes investment decisions on its
behalf.
Subject to the control of the Trustees, Putnam Management also
manages the fund's other affairs and business.
The fund pays Putnam Management a quarterly fee for these
services
based on average net assets. See "Expenses summary" and
the SAI.
The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the fund's
portfolio since the years stated below:
Business experience
Year (at least 5 years)
---- -------------------
Gerald S. Zukowski 1993 Employed as an investment
Senior Vice President professional by Putnam
Management since 1989.
Anthony C. Santosus 1996 Employed as an investment
Vice President professional by Putnam
Management since 1985.
The fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its distribution plans (which are in turn allocated to the
relevant class of shares). The fund also reimburses Putnam
Management for the compensation and related expenses of certain
fund officers and their staff who provide administrative
services.
The total reimbursement is determined annually by the Trustees.
Putnam Management places all orders for purchases and sales of
fund securities. In selecting broker - dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of fund shares (and, if permitted by law, shares of
the other Putnam funds) as a factor in the selection of
broker -
dealers.
ORGANIZATION AND HISTORY
Putnam Capital Appreciation Fund is a Massachusetts business
trust
organized on May 4, 1993. A copy of the Agreement and
Declaration
of Trust, which is governed by Massachusetts law, is on file with
the Secretary of State of The Commonwealth of Massachusetts.
The fund is an open - end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest. The Trustees may, without shareholder
approval, create two or more series of shares representing
separate investment portfolios. Any such series of shares may be
divided without shareholder approval into two or more classes of
shares having such preferences and special or relative rights and
privileges as the Trustees determine. The fund's shares are not
currently divided into series. Only the fund's class A shares
are
offered by this prospectus. The fund also offers other
classes of shares with different sales charges and expenses.
Because of these different sales charges and expenses, the
investment performance of the classes will vary. For more
information, including your eligibility to purchase any other
class of shares, contact your investment dealer or Putnam Mutual
Funds (at 1-800-225-1581).
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
fund were liquidated, would receive the net assets of the fund.
The fund may suspend the sale of shares at any time and may
refuse
any order to purchase shares. Although the fund is not required
to hold annual meetings of its shareholders, shareholders holding
at least 10% of the outstanding shares entitled to vote have the
right to call a meeting to elect or remove Trustees, or to take
other actions as provided in the Agreement and Declaration of
Trust.
If you own fewer shares than the minimum set by the Trustees
(presently 20 shares), the fund may choose to redeem your shares.
You will receive at least 30 days' written notice before the fund
redeems your shares, and you may purchase additional shares at
any
time to avoid a redemption. The fund may also redeem shares if
you own shares above a maximum amount set by the Trustees. There
is presently no maximum, but the Trustees may establish one at
any
time, which could apply to both present and future shareholders.
The fund's Trustees: George Putnam,* Chairman. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; William F. Pounds, Vice
Chairman. Professor of Management, Alfred P. Sloan School of
Management, Massachusetts Institute of Technology; Jameson Adkins
Baxter, President, Baxter Associates, Inc.; Hans H. Estin, Vice
Chairman, North American Management Corp.; John A. Hill, Chairman
and Managing Director, First Reserve Corporation; Ronald J.
Jackson, Former Chairman, President and Chief Executive Officer
of
Fisher-Price, Inc., Director of Safety 1st, Inc., Trustee of
Salem
Hospital and the Peabody Essex Museum; Elizabeth T.
Kennan, President Emeritus and Professor, Mount Holyoke College;
Lawrence J. Lasser,* Vice President of the Putnam funds.
President, Chief Executive Officer and Director of Putnam
Investments, Inc. and Putnam Management. Director, Marsh &
McLennan Companies, Inc.; Robert E. Patterson, Executive Vice
President and Director of Acquisitions, Cabot Partners Limited
Partnership; Donald S. Perkins,* Director of various
corporations,
including Cummins Engine Company, Lucent Technologies, Inc.,
Springs Industries, Inc. and Time Warner Inc.; George Putnam,
III,* President, New Generation Research, Inc. ; A.J.C.
Smith,* Chairman and Chief Executive Officer, Marsh & McLennan
Companies, Inc.; and W. Nicholas Thorndike, Director of various
corporations and charitable organizations, including Data General
Corporation, Bradley Real Estate, Inc. and Providence Journal Co.
Also, Trustee of Massachusetts General Hospital and Eastern
Utilities Associates. The Trustees are also Trustees of the
other
Putnam funds. Those marked with an asterisk (*) are or may be
deemed to be "interested persons" of the fund, Putnam Management
or Putnam Mutual Funds.
About Your Investment
HOW TO BUY SHARES
All orders to purchase shares must be made through your
employer's
retirement plan. For more information about how to
purchase shares of the fund through your employer's plan or
limitations on the amount that may be purchased, please consult
your employer. Shares are sold to eligible employer-sponsored
retirement plans at the net asset value per share next
determined after receipt of an order by Putnam Mutual Funds.
Orders must be received by Putnam Mutual Funds before the close
of
regular trading on the New York Stock Exchange in order to
receive
that day's net asset value. A class A qualified
benefit
plan (an employer-sponsored
retirement plan for which
Putnam Fiduciary Trust Company or its affiliates provide
recordkeeping or other services in connection with the purchase
of
class A shares) is eligible to purchase fund shares at net
asset value pursuant to this prospectus if it
initially invests at least $20 million in Putnam funds and
other investments managed by Putnam Management or its
affiliates
or if
its dealer of record has, with Putnam Mutual
Fund's approval, waived its commission or agreed to refund its
commission to Putnam Mutual Funds in the event the plan redeems
90% or more of its cumulative purchases within two years of its
initial purchase. An employer-sponsored retirement plan ,
other than a class A qualified benefit plan, is eligible to
purchase fund shares at net asset value pursuant to this
prospectus if its investment in class A shares is at least $1
million , or it has at least 200 eligible employees, and
the
dealer of record waives its commission with the consent of Putnam
Mutual Funds. Employer-sponsored retirement plans
participating in a "multi-fund" program approved by Putnam Mutual
Funds may include amounts invested in other mutual funds
participating in such program for purposes of determining whether
the plan may purchase class A shares at net asset value.
Employer-sponsored plans may make additional investments
of
any amount at any time. To eliminate the need for safekeeping,
the fund will not issue certificates for your shares.
As described in the SAI , Putnam Mutual Funds pays the
dealer of record a commission of up to 1% on sales to class A
qualified benefit plans . Putnam Mutual Funds will from time
to time, at its expense, provide additional promotional
incentives
or payments to dealers that sell shares of the Putnam funds.
These incentives or payments may include payments for travel
expenses, including lodging, incurred in connection with trips
taken by invited registered representatives and their guests to
locations within and outside the United States for meetings or
seminars of a business nature. In some instances, these
incentives or payments may be offered only to certain dealers who
have sold or may sell significant amounts of shares. Certain
dealers may not sell all classes of shares.
DISTRIBUTION PLAN
The fund has adopted a distribution plan to compensate Putnam
Mutual Funds for services provided and expenses incurred by it as
principal underwriter of fund shares, including the payments to
dealers mentioned below. The plan provides for payments by
the fund to Putnam Mutual Funds at the annual rate (expressed
as a percentage of average net assets ) of up to 0.35%
on class A shares. The Trustees currently limit payments
under the plan to the annual rate of 0.25% .
Putnam Mutual Funds compensates qualifying dealers
(including , for this purpose, certain financial
institutions) for sales of shares and the
maintenance of shareholder accounts at the annual rate of up to
0.25% of the average net asset value of class A shares for
which such dealers are designated as the dealer of record.
The payments to dealers for shares held by class A qualified
benefit plans are made at reduced rates, as described in the SAI.
No payments are made during the first year after
purchase on shares purchased at net asset value by
shareholders investing $1 million or more , by employer-
sponsored retirement plans that have at least 200
eligible employees or by class A qualified benefit plans,
unless
the shareholder has made arrangements with Putnam Mutual
Funds
and the dealer of record has waived the sales commission.
Putnam Mutual Funds may suspend or modify its
payments to dealers. The payments are also subject to
the
continuation of the distribution plan, the terms of service
agreements between dealers and Putnam Mutual Funds, and any
applicable limits imposed by the National Association of
Securities Dealers, Inc.
HOW TO SELL SHARES
Subject to any restrictions imposed by your employer's plan, you
can sell your shares through the plan to the fund any day the New
York Stock Exchange is open. For more information about how to
sell shares of the fund through your employer's plan, including
any charges that may be imposed by the plan, please consult with
your employer.
Your plan administrator must send a signed letter of
instruction to Putnam Investor Services. The price you will
receive is the next net asset value calculated after the fund
receives the request in proper form. All requests must be
received by the fund prior to the close of regular trading on
the New York Stock Exchange in order to receive that day's net
asset value. If your plan sells shares having a net asset
value of $100,000 or more, the signatures of registered owners
or their legal representatives must be guaranteed by a bank,
broker-dealer or certain other financial institutions. See the
SAI for more information about where to obtain a signature
guarantee.
The fund generally provides payment for redeemed shares the
business day after the request is received. Under unusual
circumstances, the fund may suspend redemptions, or postpone
payment for more than seven days, as permitted by federal
securities law. The fund will only redeem shares for which it
has received payment.
HOW TO EXCHANGE SHARES
Subject to any restrictions contained in your plan, you can
exchange your shares for shares of other Putnam funds available
through your employer's plan at net asset value.
Contact your plan administrator or Putnam Investor Services for
more information on how to exchange your shares or how to
obtain prospectuses of other Putnam funds in which you may
invest.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity
and in other circumstances where Putnam Management or the
Trustees believe doing so would be in the best interests of
your fund, the fund reserves the right to revise or
terminate the exchange privilege, limit the amount or number of
exchanges or reject any exchange. Consult Putnam
Investor Services before requesting an exchange. See the SAI
to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The fund calculates the net asset value of a share of each
class by dividing the total value of its assets, less
liabilities, by the number of its shares outstanding. Shares
are valued as of the close of regular trading on the New York
Stock Exchange each day the Exchange is open.
Portfolio securities for which market quotations are readily
available are valued at market value. Short-term investments
that will mature in 60 days or less are valued at amortized
cost, which approximates market value. All other securities
and assets are valued at their fair value following procedures
approved by the Trustees.
Securities quoted in foreign currencies are translated into
U.S. dollars at current exchange rates or at such other rates
as the Trustees may determine in computing net asset value. As
a result, fluctuations in the value of such currencies in
relation to the U.S. dollar may affect the fund's
net asset value even though there has not been any
change in the values of its portfolio securities as
quoted in such foreign currencies.
HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS;
TAX INFORMATION
The fund distributes any net investment income and any net
realized capital gains at least annually. Distributions from
net investment income, if any, are expected to be small.
Distributions from capital gains are made after
applying any available capital loss carryovers.
The terms of your employer's plan will govern how your
employer's plan may receive distributions from the fund.
Generally, periodic distributions from the fund to your
employer's plan are reinvested in additional fund
shares, although your employer's plan may permit you to
receive fund distributions from net investment income in cash
while reinvesting capital gains distributions in additional
shares or to receive all fund distributions in cash. If another
option is not selected, all distributions will be reinvested in
additional fund shares.
The fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements necessary for it to be relieved of federal taxes
on income and gains it distributes to shareholders. The fund
will distribute substantially all of its ordinary income and
capital gain net income on a current basis. Generally, fund
distributions are taxable as ordinary income, except that any
distributions of net long - term capital gains will be
taxed as such regardless of how long you have held your shares.
However, distributions by the fund to employer - sponsored
retirement plans that qualify for tax - exempt
treatment under federal income tax laws will not be taxable.
Special tax rules apply to investments through such plans. You
should consult your tax adviser to determine the suitability of
the fund as an investment through such a plan and the tax
treatment of distributions (including distributions of amounts
attributable to an investment in the fund) from such a plan.
The foregoing is a summary of certain federal income tax
consequences of investing in the fund. You should consult your
tax adviser to determine the precise effect of an investment in
the fund on your particular tax situation (including possible
liability for state and local taxes).
ABOUT PUTNAM INVESTMENTS, INC.
Putnam Management has been managing mutual funds since 1937.
Putnam Mutual Funds is the principal underwriter of the fund
and of other Putnam funds. Putnam Defined Contribution Plans
is a division of Putnam Mutual Funds. Putnam Fiduciary Trust
Company is the custodian of the fund. Putnam Investor
Services, a division of Putnam Fiduciary Trust Company, is the
investor servicing and transfer agent for the fund.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary
Trust Company are located at One Post Office Square, Boston,
Massachusetts 02109 and are subsidiaries of Putnam Investments,
Inc., which is wholly owned by Marsh & McLennan Companies,
Inc., a publicly-owned holding company whose principal
businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment
management.
<PAGE>
PUTNAM CAPITAL APPRECIATION FUND
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
PUTNAM CAPITAL APPRECIATION FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
September 30,
1997
This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by the prospectus of
the fund dated September 30, 1997 , as revised from time
to time. This SAI contains information which may be useful to
investors but which is not included in the prospectus. If the
fund has more than one form of current prospectus, each
reference to the prospectus in this SAI shall include all of
the fund's prospectuses, unless otherwise noted. The SAI
should be read together with the applicable prospectus.
Investors may obtain a free copy of the applicable prospectus
from Putnam Investor Services, Mailing address: P.O. Box
41203, Providence, RI 02940-1203.
Part I of this SAI contains specific information about the
fund. Part II includes information about the fund and the
other Putnam funds.
<PAGE>
Table of Contents
PART I
SECURITIES RATINGS . . . . . . . . . . . . . . . . . . . . . . .
. . . .I-3
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . .
I- 8
CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . .
I- 9
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . .
.I- 15
ADDITIONAL OFFICERS. . . . . . . . . . . . . . . . . . . . . .
.I- 15
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . .
.I- 16
Part II
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . .
. . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .II-29
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .
II- 34
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . .
. . .II-44
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . .
II- 45
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . .
II- 57
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . .
II- 58
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . .
II- 64
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . .
II- 64
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . .
II- 64
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . .
II- 65
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . .
II- 66
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .
II- 71
<PAGE>
SAI
PART I
SECURITIES RATINGS
The following rating services describe rated securities as
follows:
Moody's Investors Service, Inc.
Bonds
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat
larger than the Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations , (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of
bonds , and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment
standing.
Standard & Poor's
Bonds
AAA -- Debt rated `AAA' has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA -- Debt rated `AA' has a very strong capacity to pay
interest and repay principal and differs from the higher rated
issues only in small degree.
A -- Debt rated `A' has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB -- Debt rated `BBB' is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated
categories.
BB-B-CCC-CC-C -- Debt rated `BB',`B',`CCC',`CC' and`C' is
regarded, on balance, as predominantly speculative with respect
to capacity to pay interest and repay principal in accordance
with the terms of the obligation. `BB' indicates the lowest
degree of speculation and `C' the highest. While such debt will
likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to
adverse conditions.
BB -- Debt rated `BB' has less near-term vulnerability to
default than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal
payments. The `BB' rating category is also used for debt
subordinated to senior debt that is assigned an actual or
implied `BBB-' rating.
B -- Debt rated `B' has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The `B' rating category is also
used for debt subordinated to senior debt that is assigned an
actual or implied `BB' or `BB-' rating.
CCC -- Debt rated `CCC' has a currently identifiable
vulnerability to default, and is dependent upon favorable
business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay
principal. The `CCC' rating category is also used for debt
subordinated to senior debt that is assigned an actual or
implied `B' or `B-' rating.
CC -- The rating `CC' typically is applied to debt subordinated
to senior debt that is assigned an actual or implied `CCC'
rating.
C -- The rating `C' typically is applied to debt subordinated
to senior debt which is assigned an actual or implied `CCC-'
debt rating. The `C' rating may be used to cover a situation
where a bankruptcy petition has been filed, but debt
service payments are continued.
D -- Bonds rated `D' are in payment default. The `D' rating
category is used when interest payments or principal payments
are not made on the date due even if the applicable grace
period has not expired, unless S&P believes that such payments
will be made during such grace period. The `D' rating also
will be used on the filing of a bankruptcy petition if debt
service payments are jeopardized.
Duff & Phelps Corporation
Long-Term Debt
AAA -- Highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA+, AA, AA- -- High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A+, A, A- -- Protection factors are average but adequate.
However, risk factors are more variable and greater in periods
of economic stress.
BBB+, BBB, BBB- -- Below-average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.
BB+, BB, BB- -- Below investment grade but deemed likely to
meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions
or company fortunes. Overall quality may move up or down
frequently within this category.
B+, B, B- -- Below investment grade and possessing risk that
obligations will not be met when due. Financial protection
factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC -- Well below investment-grade securities. Considerable
uncertainty exists as to timely payment of principal, interest
or preferred dividends. Protection factors are narrow and risk
can be substantial with unfavorable economic/industry
conditions, and/or with unfavorable company developments.
DD -- Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
Fitch Investors Service, Inc.
AAA -- Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally
strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA -- Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong as
bonds rated AAA.
A -- Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more
vulnerable
to adverse changes in economic conditions and circumstances
than bonds with higher ratings.
BBB -- Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.
BB -- Bonds considered to be speculative. The obligor's
ability to pay interest and repay principal may be affected
over time by adverse economic changes. However, business and
financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B -- Bonds are considered highly speculative. Bonds in this
class are lightly protected as to the obligor's ability to pay
interest over the life of the issue and repay principal when
due.
CCC -- Bonds have certain characteristics which, with passing
of time, could lead to the possibility of default on either
principal or interest payments.
CC -- Bonds are minimally protected. Default in payment of
interest and/or principal seems probable.
C -- Bonds are in actual or imminent default in payment of
interest or principal.
DDD -- Bonds are in default and in arrears in interest and/or
principal payments. Such bonds are extremely speculative and
should be valued only on the basis of their value in
liquidation or reorganization of the obligor.
<PAGE>
INVESTMENT RESTRICTIONS
As fundamental investment restrictions, which may not be
changed without a vote of a majority of the outstanding voting
securities, the fund may not and will not:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is
made, and then only from banks as a temporary measure to
facilitate the meeting of redemption requests (not for
leverage) which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or
emergency purposes. Such borrowings will be repaid before any
additional investments are purchased.
(2) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter
under certain federal securities laws.
(3) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities
which are secured by interests in real estate, and securities
which represent interests in real estate, and it may acquire
and dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
(4) Purchase or sell commodities or commodity contracts, except
that the fund may purchase and sell financial futures contracts
and options and may enter into foreign exchange contracts and
other financial transactions not involving physical
commodities.
(5) Make loans, except by purchase of debt obligations in
which the fund may invest consistent with its investment
policies, by entering into repurchase agreements, or by lending
its portfolio securities.
(6) With respect to 75% of its total assets, invest in
securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the fund (taken at current
value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations
issued or guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities.
(7) With respect to 75% of its total assets, acquire more than
10% of the outstanding voting securities of any issuer.
(8) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a result
of such purchase, more than 25% of the fund's total assets
would be invested in any one industry.
(9) Issue any class of securities which is senior to the
fund's shares of beneficial interest, except for permitted
borrowings.
Although certain of the fund's fundamental
investment restrictions permit it to borrow money to
a limited extent, the fund does not currently intend to do so
and did not do so last year.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of the fund
means the affirmative vote of the lesser of (1) more than 50%
of the outstanding fund shares, or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding
fund shares are represented at the meeting in person or by
proxy.
It is contrary to the fund's present policy, which may be
changed without shareholder approval, to:
(1) Invest in (a) securities which are not readily
marketable, (b) securities restricted as to resale (excluding
securities determined by the Trustees of the fund (or the
person designated by the Trustees of the fund to make such
determinations) to be readily marketable), and (c) repurchase
agreements maturing in more than seven days, if, as a result,
more than 15% of the fund's net assets (taken at current value)
would be invested in securities described in (a), (b) and (c)
above.
---------------------------------
All percentage limitations on investments (other than
pursuant to the non-fundamental restriction) will apply at
the time of the making of an investment and shall not be
considered violated unless an excess or deficiency occurs or
exists immediately after and as a result of such investment.
---------------------------------
CHARGES AND EXPENSES
Management fees
Under a Management Contract dated September 20, 1996, the fund
pays a quarterly fee to Putnam Management based on the average
net assets of the fund, as determined at the close of each
business day during the quarter, at the annual rate of 0.65% of
the first $500 million of the fund's average net assets ,
0.55% of the next $500 million, 0.50% of the next $500 million,
0.45% of the next $5 billion, 0.425% of the next $5 billion,
0.405% of the next $5 billion, 0.39% of the next $5 billion and
0.38% of any excess thereafter. For the past three fiscal
years, pursuant to the management contract and a
management contract in effect prior to September 20, 1996,
under which the management fee payable to Putnam Management was
paid at the rate of 0.65% of the first $500 million of the
fund's average net assets, 0.55% of the next $500 million,
0.50% of the next $500 million and 0.45% of any amount over
$1.5 billion, the fund incurred the following fees:
Reflecting a
reduction in the
following amounts
Fiscal Management pursuant to an
year fee paid expense limitation
1997 $3,625,121 $0
1996 $1,578,601 $0
1995 $395,267 $15,154
Brokerage commissions
The following table shows brokerage commissions paid during the
fiscal periods indicated:
Fiscal Brokerage
year commissions
1997 $1,082,338
1996 $440,112
1995 $1,240,375
The following table shows transactions placed with brokers and
dealers during the most recent fiscal year to recognize
research, statistical and quotation services received by
Putnam Management and its affiliates:
Dollar value Percent of
of these total Amount of
transactions transactions commissions
$352,519,031 40.13% $651,796
<PAGE>
Administrative expense reimbursement
The fund reimbursed Putnam Management for
administrative services during fiscal 1997, including
compensation of certain fund officers
and contributions to the Putnam Investments, Inc. Profit
Sharing Retirement Plan for their benefit , as follows :
Portion of total
reimbursement for
Total compensation and
reimbursement contributions
$10,936 $9,631
Trustee fees
Each Trustee receives a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of other
Putnam funds. The Trustees periodically review their fees to
assure that such fees continue to be appropriate in light of
their responsibilities as well as in relation to fees paid to
trustees of other mutual fund complexes. The Trustees meet
monthly over a two-day period, except in August. The
Compensation Committee, which consists solely of Trustees not
affiliated with Putnam Management and is responsible for
recommending Trustee compensation, estimates that Committee and
Trustee meeting time together with the appropriate preparation
requires the equivalent of at least three business days per
Trustee meeting. The following table shows the year each
Trustee was first elected a Trustee of the Putnam funds, the
fees paid to each Trustee by the fund for fiscal 1997
and the fees paid to each Trustee by all of the Putnam funds
during calendar year 1996 :
COMPENSATION TABLE
Pension or
Estimated Total
Aggregate retirement annual
benefits compensation
compensation benefits
accrued from all from all
from the as part of
Putnam funds Putnam
Trustees/Year fund(1) fund expenses(2) upon
retirement(3) funds(4)
Jameson A. Baxter/1994 (5) $1,101 $227
$85,646 $172,291
Hans H. Estin/1972 1,081 739
85,646 171,291
John A. Hill/1985 (5) 1,087 276
85,646 170,791
Ronald J. Jackson/1996 (5)(6) 1,092 39
85,646 94,807
Elizabeth T. Kennan/1992 1,088 478
85,646 171,291
Lawrence J. Lasser/1992 1,087 358
85,646 169,791
Robert E. Patterson/1984 1,118 221
85,646 182,291
Donald S. Perkins/1982 1,101 804
85,646 170,291
William F. Pounds/1971 (7) 1,181 759
98,146 197,291
George Putnam/1957 1,101 848
85,646 171,291
George Putnam, III/1984 1,101 146
85,646171,291
A.J.C. Smith/1986 1,068 495
85,646 169,791
W. Nicholas Thorndike/1992 1,112 687
85,646 181,291
(1) Includes an annual retainer and an attendance fee
for each meeting attended.
(2) The Trustees approved a Retirement Plan for Trustees of
the Putnam funds on October 1,
1996. Prior to that date, voluntary retirement benefits
were paid to certain retired
Trustees.
(3) Assumes that each Trustee retires at the normal retirement
date. Estimated benefits
for each Trustee are based on Trustee fee rates in effect
during calendar 1996.
(4) As of December 31,
1996, there were 96
funds in the Putnam family.
(5) Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan.
(6) Elected as a Trustee in May
1996.
(7) Includes additional
compensation for service as Vice
Chairman of the Putnam
funds.
<PAGE>
Under a Retirement Plan for Trustees of the Putnam
funds (the "Plan"), each Trustee who retires with at
least five years of service as a Trustee of the
funds is entitled to receive an annual retirement
benefit
equal to one-half of the average annual compensation
paid
to such Trustee for the last three years of service prior
to retirement. This retirement benefit is payable during
a
Trustee's lifetime, beginning the year following
retirement ,
for a number of years equal to such Trustee's years of service.
A
death benefit is also available under the Plan which
assures
that the Trustee and his or her beneficiaries will receive
benefit
payments for the lesser of an aggregate period of (i) ten years
or
(ii) such Trustee's total years of service.
The Plan Administrator (a committee comprised of Trustees that
are
not "interested persons" of the fund, as defined in the
Investment
Company Act of 1940) may terminate or amend the Plan at any
time, but no termination or amendment will result in a
reduction
in the amount of benefits (i) currently being paid to a Trustee
at
the time of such termination or amendment, or (ii) to which a
current Trustee would have been entitled had he or she retired
immediately prior to such termination or amendment.
For additional information concerning the Trustees, see
"Management"
in Part II of this SAI.
Share ownership
At June 30, 1997 , the officers and Trustees of the fund as
a
group owned less than 1% of the outstanding shares of each class
of
the fund, and, to the knowledge of the fund no person
owned
of record or beneficially 5% or more of any class of
shares of the fund.
Distribution fees
During fiscal 1997 , the fund paid the following 12b-1 fees
to
Putnam Mutual Funds:
Class A Class B Class M
$724,515 $2,742,862 $97,788
<PAGE>
Class A sales charges and contingent deferred sales charges
Putnam Mutual Funds received sales charges with respect to class
A
shares in the following amounts during the periods indicated:
Sales charges
retained by Putnam Contingent
Total Mutual Funds deferred
front-end after sales
Fiscal year sales charges dealer concessions charges
1997 $6,626,067 $1,037,343 $8,123
1996 $1,219,479 $187,303 $153
1995 $2,327,320 $331,537 $0
Class B contingent deferred sales charges
Putnam Mutual Funds received contingent deferred sales charges
upon
redemptions of class B shares in the following amounts during the
periods indicated:
Contingent deferred
Fiscal year sales charges
1997 $284,898
1996 $199,759
1995 $32,760
Class M sales charges
Putnam Mutual Funds received sales charges with respect to class
M
shares in the following amounts during the periods
indicated :
Sales charges
retained by Putnam
Mutual Funds
Total after
Fiscal year sales charges dealer concessions
1997 $370,023 $61,234
Investor servicing and custody fees and expenses
During the 1997 fiscal year, the fund incurred
$1,277,296 in fees and out-of-pocket expenses for investor
servicing and custody services provided by Putnam Fiduciary Trust
Company.
<PAGE>
INVESTMENT PERFORMANCE
Standard performance measures
(for periods ended May 31 , 1997)
Class A Class B Class M
Inception date: 8/5/93 11/2/94 1/22/96
Average annual total return
1 year 15.82% 16.95% 18.01%
Life of fund 25.07% 25.66% 25.20%
Returns for class A and class M shares reflect the
deduction of the current maximum initial sales
charges of 5.75% for class A shares and 3.50% for class
M
shares.
Returns for class B shares reflect the deduction of
the
applicable contingent deferred sales charge ("CDSC") , which is
5%
in the first year, declining to 1% in the sixth, and is
eliminated
thereafter.
Returns shown for class B and class M shares for periods prior to
their inception are derived from the historical performance of
class
A shares, adjusted to reflect both the deduction of the initial
sales charge or CDSC, if any, currently applicable to each class
and, in the case of class B and class M shares, the higher
operating
expenses applicable to such shares.
Returns shown for class A shares have not been adjusted to
reflect
payments under the class A distribution plan prior to its
implementation. All returns assume reinvestment of distributions
at
net asset value and represent past performance; they do not
guarantee future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may
be
worth more or less than their original cost .
See "Standard performance measures" in Part II of this SAI
for
information on how performance is calculated.
ADDITIONAL OFFICERS
In addition to the persons listed as fund officers
in
Part II of this SAI, each of the following persons is also a Vice
President of the fund and certain of the other
Putnam
funds , the total number of which is noted parenthetically .
Officers of Putnam Management hold the same offices in Putnam
Management's parent company, Putnam Investments, Inc.
Officer Name (Age) (Number of funds)
Ian C. Ferguson (39) (56 funds). Senior Managing
Director . Prior to April, 1996, Mr. Ferguson was CEO
at
Hong Kong Shanghai Banking Corporation .
John J. Morgan, Jr. (56) (11 funds). Managing Director of
Putnam Management. Managing Director of Putnam Fiduciary Trust
Company.
Gerald S. Zukowski (62) (1 fund). Senior Vice President
of
Putnam Management.
Anthony C. Santosus (38) (2 funds). Vice President of Putnam
Management.
Brett C. Browchuk (34) (53 funds). Managing
Director
of Putnam Management. Prior to April, 1994, Mr. Browchuk was
Managing Director at Fidelity Investments.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts 02109 , are the fund's independent
accountants,
providing audit services, tax return review and other tax
consulting
services and assistance and consultation in connection with the
review of various Securities and Exchange Commission filings.
The
Report of Independent Accountants, financial highlights and
financial statements included in the fund's Annual Report for the
fiscal year ended May 31, 1997 , filed electronically on
July
28, 1997 (File No. 811-7061), are incorporated by
reference
into this SAI. The financial highlights included in the
prospectus
and incorporated by reference into this SAI and the financial
statements incorporated by reference into the prospectus and this
SAI have been so included and incorporated in reliance upon the
report of the independent accountants, given on their authority
as
experts in auditing and accounting.
<PAGE>
6
Putnam
High Yield
Total
Return
Fund
Portfolio
of
investment
s owned
April 30,
1997
(Unaudited
)
Corporate Bonds and Notes (60.1%) (a)
PRINCIPAL VALUE
AMOUNT
Advertising (0.3%)
$ Lamar Advertising Co. sr. sub. notes 9 5/8s, 2006 $
50,000 49,860
Aerospace and Defense
(0.1%)
15,000 L-3 Communications Corp. 144A sr. sub. notes 10 15,450
3/8s, 2007
10,000 Tracor, Inc. 144A sr. sub. notes 8 1/2s, 2007 9,800
Agriculture (1.8%) 25,250
299,734 Premium Standard Farms, Inc. sr. secd. notes 11s, 319,217
2003 (PIK)
Apparel (0.1%)
25,000 GFSI, Inc. 144A sr. sub. notes 9 5/8s, 2007 24,750
Automotive (2.4%)
200,000 A.P.S Inc. company guaranty 11 7/8s, 2006 200,000
25,000 CSK Auto, Inc. 144A sr. sub. notes 11s, 2006 25,625
75,000 Exide Corp. sr. notes 10s, 2005 75,938
50,000 Harvard Industries Inc. sr. notes 11 1/8s, 2005 22,500
80,000 Hawk Corp. sr. notes 10 1/4s, 2003 80,600
15,000 Key Plastics Corp. 144A sr. sub. notes 10 1/4s, 15,150
2007
419,813
Broadcasting
(4.0%)
50,000 Capstar Broadcasting 144A sr. disc. notes stepped- 27,875
coupon zero % (12 3/4s, 2/1/02), 2009 (STP)
150,000 Comcast UK Cable, Ltd. deb. stepped-coupon zero % 103,500
(11.2s, 11/15/00), 2007(Bermuda) (STP)
272,000 Grupo Televisa S.A. sr. disc. notes stepped-coupon 173,400
zero % (13 1/4s, 5/15/01), 2008(Mexico) (STP)
150,000 Marcus Cable Co. (L.P.) sr. sub. disc. notes 124,125
stepped-coupon zero % (13 1/2s, 8/1/99), 2004 (STP)
10,000 RBS Participacoes S.A. 144A company guaranty 11s, 10,098
2007(Brazil)
25,000 SFX Broadcasting, Inc. sr. sub. notes Ser. B, 10 26,188
3/4s, 2006
15,000 Spanish Broadcasting Systems 144A sr. notes 11s, 15,075
2004
125,000 Sullivan Broadcasting sr. sub. notes 10 1/4s, 2005 125,000
10,000 TCI Satellite Entertainment 144A sr. sub. notes 10 9,500
7/8s, 2007
50,000 TV Azteca Sa De Cv 144A sr. notes 10 1/2s, 49,188
2007(Mexico)
50,000 Young Broadcasting Inc. company guaranty Ser. B, 47,250
9s, 2006
711,199
Building and Construction
(3.0%)
100,000 Consumers International 144A sr. notes 10 1/4s, 103,000
2005
5,000 Continental Homes Holding Corp. sr. notes 10s, 2006 4,925
75,000 Nortek, Inc. sr. sub. notes 9 7/8s, 2004 74,250
125,000 Presley Cos. sr. notes 12 1/2s, 2001 120,938
100,000 Scotsman Group, Inc. sr. secd. notes 9 1/2s, 2000 105,000
50,000 Terex Corp. sr. notes Ser. B, 13 1/4s, 2002 54,938
75,000 Triangle Pacific Corp. sr. notes 10 1/2s, 2003 78,750
541,801
Cable Television (1.5%)
60,000 Adelphia Communications Corp. 144A sr. notes 9 56,700
7/8s, 2007
50,000 Cablevision Systems Corp. sr. sub. notes 9 1/4s, 48,750
2005
125,000 Diamond Cable Communication Co. sr. disc. notes 86,563
stepped-coupon zero % (11 3/4s, 12/15/00),
2005(United Kingdom) (STP)
115,000 Diamond Cable Communications Co. 144A sr. disc. 68,425
notes stepped-coupon zero % (10 3/4s, 2/15/02),
2007 (STP)
260,438
Chemicals (0.8%)
25,000 Harris Chemical Corp. sr. sub. notes 10 3/4s, 2003 24,750
120,000 NL Industries, Inc. sr. notes stepped-coupon zero % 110,850
(13s, 10/15/98), 2005 (STP)
135,600
Connecticut (0.4%)
50,000 Mohegan Tribal Gaming sr. secd. notes Ser. B, 13 65,500
1/2s, 2002
Consumer Products (0.4%)
100,000 Revlon Worldwide Corp. 144A sr. disc. notes zero %, 65,500
2001
Consumer Services (2.6%)
25,000 Affinity Group Holdings 144A sr. notes 11s, 2007 25,625
20,000 AMC Entertainment, Inc. 144A sr. sub. notes 9 1/2s, 19,800
2009
50,000 Coinmach Corp. sr. notes Ser. B, 11 3/4s, 2005 55,000
26,375 Falcon Holdings Group, Inc. sr. sub. notes 11s, 22,946
2003 (PIK)
125,000 FRD Acquisition Co. sr. notes Ser. B, 12 1/2s, 2004 129,375
10,000 Hollinger International Publishing, Inc. company 9,875
guaranty 8 5/8s, 2005
200,000 Sun International Hotels Ltd. 144A sr. sub. notes 197,500
9s, 2007
460,121
Electronics and Electrical Equipment
(1.0%)
20,000 Fairchild Semiconductor Corp. 144A sr. sub. notes 17,666
11.74s, 2008
165,000 Fairchild Semiconductor Corp. 144A sr. sub. notes 166,650
10 1/8s, 2007
184,316
Entertainment (1.2%)
50,000 Panda Global Energy Co. 144A sr. notes 12 1/2s, 47,500
2004
Food (0.3%)
50,000 Cinemark USA, Inc. sr. sub. notes 9 5/8s, 2008 49,000
45,000 Cobb Theatres LLC company guaranty 10 5/8s, 2003 46,575
50,000 Premier Parks, Inc. sr. notes 9 3/4s, 2007 50,625
75,000 Trump A.C. 1st mtge. 11 1/4s, 2006 72,938
219,138
Food and Beverage (0.9%)
50,000 Mafco, Inc. sr. sub. notes 11 7/8s, 2002 53,125
Forest Products (0.3%)
5,000 Del Monte Corp. 144A sr. sub. notes 12 1/4s, 2007 5,150
150,000 Doane Products Co. sr. notes 10 5/8s, 2006 156,000
161,150
Health Care (2.1%)
50,000 Gaylord Container Corp. sr. sub. disc. deb. 12 53,750
3/4s, 2005 (STP)
Insurance and Finance
(3.5%)
10,000 IMED Corp. sr. sub. notes 9 3/4s, 2006 10,000
150,000 Integrated Health Services sr. sub. notes 10 3/4s, 160,500
2004
150,000 Paracelsus Healthcare sr. sub. notes 10s, 2006 141,750
55,000 Tenet Healthcare Corp. sr. sub. notes 8 5/8s, 2007 54,725
366,975
Insurance and Finance (3.5%)
225,000 Aames Financial Corp. sr. notes 9 1/8s, 2003 209,250
10,000 Dime Capital Trust I bank guaranty Ser. A, 9.33s, 10,000
2027
150,000 First Nationwide Holdings sr. sub. notes 9 1/8s, 150,000
2003
125,000 Imperial Credit Industries, Inc. 144A sr. notes 9 115,000
7/8s, 2007
25,000 Provident Capital Trust company guaranty 8.6s, 2026 24,125
50,000 PRT Funding Corp. sr. notes 11 5/8s, 2004 36,000
50,000 Reliance Group Holdings, Inc. sr. sub. deb. 9 3/4s, 51,375
2003
10,000 Sovereign Capital Trust 144A company guaranty 9s, 9,750
2027
10,000 Webster Capital Trust I 144A bonds 9.36s, 2027 10,206
615,706
Medical Supplies and Devices
(0.4%)
75,000 Wright Medical Technology, Inc. sr. secd. notes 75,750
Ser. B, 10 3/4s, 2000
Metals and Mining (1.7%)
10,000 Acindar Industria Argentina de Aceros S.A. bonds 11 10,150
1/4s, 2004(Argentina)
10,000 Altos Hornos De Mexico 144A bonds 11 7/8s, 10,125
2004(Mexico)
15,000 Continental Global Group 144A sr. notes Ser. A, 15,450
11s, 2007
10,000 Echo Bay Mines jr. sub. deb. 11s, 2027(Canada) 9,850
50,000 Maxxam Group Holdings sr. nores Ser. B, 12s, 2003 50,500
150,000 Royal Oak Mines, Inc. company guaranty Ser. B, 11s, 150,750
2006(Canada)
50,000 Weirton Steel Co. sr. notes 11 3/8s, 2004 50,500
297,325
Oil and Gas
(6.1%)
125,000 Cliffs Drilling Co. company guaranty Ser. B, 10 129,688
1/4s, 2003
100,000 Falcon Drilling Co., Inc. sr. notes Ser. B, 9 3/4s, 102,000
2001
50,000 Flores & Rucks, Inc. sr. notes 13 1/2s, 2004 58,125
50,000 Flores & Rucks, Inc. sr. sub. notes 9 3/4s, 2006 51,750
5,000 Forcenergy, Inc. 144A sr. sub. notes 8 1/2s, 2007 4,750
50,000 KCS Energy, Inc. company guaranty Ser. B, 11s, 2003 53,250
50,000 Parker Drilling Corp. sr. notes Ser. B, 9 3/4s, 51,375
2006
25,000 Transamerican Refining 144A 15s, 1998 25,000
600,000 Transamerican Refining Corp. var. rate 1st mtge. 556,500
zero % (18.5s 2/15/98), 2002 (STP)
50,000 TransTexas Gas Corp. sr. secd. notes 11 1/2s, 2002 55,625
1,088,06
3
Packaging and Containers
(0.5%)
15,000 Innova S De R.L. 144A sr. notes 12 7/8s, 14,775
2007(Mexico)
75,000 Ivex Packaging Corp. sr. sub. notes 12 1/2s, 2002 81,469
96,244
Paper and Forest Products
(1.0%)
50,000 Buckeye Cellulose Corp. sr. sub. notes 9 1/4s, 2008 51,000
50,000 Florida Coast Paper LLC 1st mtge. Ser. B, 12 3/4s, 48,000
2003
50,000 Repap New Brunswick sr. notes 10 5/8s, 2005(Canada) 47,000
25,000 Riverwood International Corp. company guaranty 10 23,500
1/4s, 2006
169,500
Publishing (0%)
5,000 Sun Media Corp. 144A sr. sub. notes 9 1/2s, 4,825
2007(Canada)
Real Estate (0.1%)
20,000 Prime Hospitality Corp. 144A sr. sub. notes 9 3/4s, 20,400
2007
Recreation (3.3%)
50,000 Alliance Gaming Corp. 12 7/8s, 2003 53,938
150,000 Argosy Gaming Co. 1st mtge. 13 1/4s, 2004 134,250
100,000 Colorado Gaming & Entertainment Co. sr. notes 12s, 99,000
2003 (PIK)
150,000 Hollywood Casino Corp. sr. notes 12 3/4s, 2003 153,750
150,000 Lady Luck Gaming 1st mtge. 11 7/8s, 2001 150,000
590,938
Retail (1.6%)
100,000 Eagle Food Centers. Inc. sr. notes 8 5/8s, 2000 97,000
50,000 Loehmanns, Inc. sr. notes 11 7/8s, 2003 52,000
10,000 Quality Food Centers, Inc. 144A sr. sub. notes 9,850
8.7s, 2007
125,000 Supermercados Norte 144A bonds 10 7/8s, 2004 125,000
(Argentina)
10,000 William Carter Co. 144A sr. sub. notes 12s, 2008 10,200
294,050
Telecommunications
(10.3%)
125,000 Arch Communications Group sr. disc. notes stepped- 56,875
coupon zero % (10 7/8s, 3/15/01), 2008 (STP)
50,000 Brooks Fiber Properties, Inc. sr. disc. notes 32,750
stepped-coupon zero % (10 7/8s, 3/1/01), 2006 (STP)
225,000 Cencall Communications Corp. sr. disc. notes 166,500
stepped-coupon
zero % (10 1/8s, 1/15/99), 2004 (STP)
75,000 Centennial Cellular Corp. sr. notes 10 1/8s, 2005 75,656
25,000 Charter Communications International, Inc. sr. 25,813
notes Ser. B, 11 1/4s, 2006
10,000 Consorcio Ecuatoriano 144A notes 14s, 2002 10,100
(Ecuador)
150,000 Dobson Communications Corp. 144A sr. notes 11 3/4s, 144,000
2007
25,000 Frontiervision Operating Partners L.P. sr. sub. 25,063
notes 11s, 2006
150,000 GST Telecommunications, Inc. company guaranty 93,000
stepped-coupon zero % (13 7/8s, 15/15/00), 2005
(STP)
25,000 Hyperion Telecommunication Corp. sr. disc. notes 12,750
stepped-coupon Ser. B, zero % (13s, 4/15/01), 2003
(STP)
275,000 Intelcom Group (USA), Inc. company guaranty stepped- 163,625
coupon zero % (12 1/2s, 5/1/01), 2006 (STP)
100,000 Intermedia Communications, Inc. sr. disc. notes 64,500
stepped-coupon zero % (12 1/2s, 5/15/01), 2006
(STP)
150,000 International Cabletel, Inc. sr. notes stepped- 98,250
coupon Ser. B, zero % (11 1/2s, 2/01/01), 2006
(STP)
40,000 International Cabletel, Inc. 144A sr. notes 10s, 39,100
2007
85,000 McLeod, Inc. 144A sr. disc. notes stepped-coupon 48,663
zero % (10 1/2s, 3/1/02), 2007 (STP)
50,000 MFS Communications sr. disc. notes stepped-coupon 37,927
zero % (8 7/8s, 1/1/01), 2006 (STP)
275,000 Millicom International Cellular S.A. sr. disc. 192,500
notes stepped-coupon zero % (13 1/2s, 6/1/01),
2006(Luxembourg) (STP)
100,000 Mobile Telecommunications Tech. sr. notes 13 1/2s, 99,000
2002
50,000 NEXTEL Communications, Inc. sr. disc. notes stepped- 36,375
coupon zero % (9 3/4s, 2/15/99), 2004 (STP)
150,000 Omnipoint Corp. sr. notes 11 5/8s, 2006 117,000
25,000 Omnipoint Corp. sr. notes Ser. A, 11 5/8s, 2006 19,500
50,000 Paging Network, Inc. sr. sub. notes 10s, 2008 44,500
75,000 Pricellular Wireless Corp. sr. disc. notes stepped- 77,250
coupon Ser. B, zero % (14s, 11/15/97), 2001 (STP)
50,000 Rogers Cantel, Inc. deb. 9 3/8s, 2008(Canada) 51,375
125,000 Teleport Communications Group Inc. sr. disc. notes 85,938
stepped-coupon zero % (11 1/8s, 7/1/01), 2007 (STP)
15,000 Winstar Equipment Corp. 144A company guaranty 12 14,363
1/2s, 2004
1,832,37
3
Textiles (1.2%)
50,000 Foamex (L.P.) Capital Corp. sr. disc. notes stepped- 44,000
coupon
Ser. B, zero % (14s, 7/1/99), 2004 (STP)
60,000 Glenoit Corp. 144A sr. sub. notes 11s, 2007 60,600
100,000 Polysindo International Finance company guaranty 11 105,000
3/8s, 2006(Indonesia)
209,600
Transportation
(1.0%)
50,000 Atlantic Express, Inc. 144A company guaranty 10 51,250
3/4s, 2004
125,000 Eletson Holdings, Inc. 1st pfd. mtge. notes 9 1/4s, 122,500
2003(Greece)
173,750
Utilities (5.9%)
325,000 AES China Generating Co. sr. notes 10 1/8s, 333,531
2006(China)
300,000 Calpine Corp. sr. notes 10 1/2s, 2006 320,250
50,000 Cleveland Electric Illuminating Co. 1st mtge. Ser. 51,365
17-A, 9 3/8s, 2017
100,000 Cleveland Electric Illuminating Co. 1st mtge. Ser. 106,996
B, 9 1/2s, 2005
150,000 Cleveland Electric Illuminating Co. 1st mtge. Ser. 153,933
E, 9s, 2023
50,000 Niagara Mohawk Power Corp. mtge. 9 1/2s, 2000 51,793
25,000 Toledo Edison Co. med. term notes 9.22s, 2021 25,570
1,043,43
8
Total Corporate Bonds and Notes (cost $10,903,400) 10,676,96
5
Brady Bonds (11.0%)
(a)
PRINCIPAL VALUE
AMOUNT
$ 567,450 Argentina (Republic of) deb. 6.75s, 2005 $
520,635
135,000 Argentina (Republic of) FRN Ser. L-GP, 5 1/4s, 2023 87,919
35,000 Bulgaria (Republic of) deb. Ser. PDI, 6.5625s, 2011 21,919
451,621 Brazil (Republic of) FRB 8s, 2014 (POR) 342,667
87,000 Ecuador (Government of) bonds 6.4375s, 2025 58,073
90,000 Poland (Government of) bonds 6.9375s, 2024 87,413
560,000 United Mexican States deb. Ser. A, 6 1/4s, 2019 406,700
250,000 United Mexican States FRB Ser. D, 6.35156s, 2019 221,406
238,095 Venezuela (Government of)deb. Ser. B, 6.75s, 2007 213,095
Total Brady Bonds (cost $1,973,487)
1,959,82
7
Convertible Bonds and Notes (7.6%)
(a)
PRINCIPAL VALUE
AMOUNT
Automotive (0.2%)
$ Magna International cv. sub. deb. 5s, 2002 $
23,000 25,013
Basic Industrial Products
(0%)
7,000 Cooper Industries, Inc. cv. sub. 7.05s, 2015 7,770
Broadcasting (0.2%)
22,000 International Cabletel Inc. 144A cv. deb. 7 1/4s, 21,148
2005
48,000 Jacor Communications, Inc. cv. sr. notes zero %, 22,320
2011
43,468
Business Equipment and Services
(0.6%)
100,000 Corporate Express, Inc. cv. notes 4 1/2s, 2000 84,250
28,000 U.S. Office Products Co. 144A cv. sub. notes 5 23,485
1/2s, 2003
107,735
Cellular Broadcasting (0.2%)
55,000 Comcast Corp. cv. notes 1 1/8s, 2007 28,050
Chemicals (0.1%)
9,000 Hercules, Inc. cv. deb. 8s, 2010 23,929
Computer Services and Software
(0.1%)
25,000 Intevac, Inc. 144A cv. sub. notes 6 1/2s, 2004 21,125
Computers (0.3%)
25,000 Safeguard Scientifics, Inc. 144A cv. sub. notes 6s,
2006 22,719
28,000 Softkey International, Inc. 144A cv. sr. notes 5 20,825
1/2s, 2000
20,000 Synoptics Communications Inc. 144A cv. sub. deb. 5 17,475
1/4s, 2003
61,019
Conglomerates
(0.3%)
18,000 Hexcel Corp. cv. sub. notes 7s, 2003
23,490
20,000 Thermo Electron Corp. 144A cv. subordinated 4 1/4s, 21,575
2003
45,065
Consumer Non Durables
(0.3%)
74,000 Coleman Worldwide Corp. cv. sr. sec. notes Liquid
Yeild Option Note ( LYON) zero %, 2013 22,385
24,000 Standard Commercial Corp. cv. sub. deb. 7 1/4s, 21,660
2007 (NON)
44,045
Consumer Services (0.5%)
60,000 Boston Chicken, Inc. cv. notes LYON zero %, 2015
14,775
20,000 Boston Chicken, Inc. cv. sub. deb. 7 3/4s, 2004 21,650
55,000 Hollinger, Inc. cv. LYON zero %, 2013 20,075
22,000 Pharmaceutical Marketing Services Inc. 144A cv. 18,040
deb. 6 1/4s, 2003
16,000 Protection One, Inc. cv. sr. sub. notes 6 3/4s, 15,220
2003
89,760
Electronics and Electrical Equipment
(1.4%)
9,000 Diagnostic Retrieval Systems cv. sr. sub. deb. 9s,
2003 11,070
29,000 HMT Technology Corp. 144A cv. sub. notes 5 3/4s, 23,345
2004
29,000 Integrated Device Technology, Inc. cv. sub. notes 5 24,469
1/2s, 2002
30,000 Motorola, Inc. cv. sub. deb. LYON zero %, 2013 22,275
14,000 Plasma & Materials Technologies, Inc. 144A cv. notes 9,520
7 1/8s, 2001
27,000 S3, Inc. 144A cv. sub. notes 5 3/4s, 2003 22,343
20,000 SCI Systems, Inc. cv. sub. notes 5s, 2006 27,525
10,000 Texas Instruments cv. sub. deb. 2 3/4s, 2002 21,538
20,000 Thermo Instrument Systems, Inc. 144A cv. deb. 4 18,750
1/2s, 2003
23,000 Thermo Optek Corp. 144A cv. bonds 5s, 2000 23,230
21,000 Thermo Quest Corp. cv. co. guaranty 5s, 2000 21,000
20,000 Xilinx, Inc. 144A cv. sub. notes 5 1/4s, 2002 22,900
247,96
5
Environmental Control (0.1%)
12,000 USA Waste Services, Inc. cv. sub. notes 4s, 2002
11,850
14,000 WMX Technologies, Inc. cv. sub. notes 2s, 2005 12,110
23,960
Health Care (0.9%)
50,000 Alza Corp. cv. sub. LYON zero %, 2014
21,938
30,000 NovaCare, Inc. cv. sub. deb. 5 1/2s, 2000 27,188
30,000 PhyMatrix, Inc. cv. sub. deb. 6 3/4s, 2003 24,525
20,000 Renal Treatment Centers, Inc. cv. sub. notes 5 5/8s, 18,100
2006
18,000 Rotech Medical Corp. cv. sub. deb. 5 1/4s, 2003 15,390
22,000 U.S. Diagnostic Laboratories, Inc. 144A cv. sub. 21,120
deb. 9s, 2003
23,000 Vivra, Inc. 144A cv. sub. notes 5s, 2001 21,936
150,19
7
Hospital Management and Medical Services
(0.1%)
19,000 Integrated Health Services, Inc. cv. sub. deb. 6s, 20,235
2003
Insurance and Finance (0.5%)
24,000 Berkshire Hathaway, Inc. cv. sr. notes 1s, 2001
23,010
22,000 Mitsubishi Bank Ltd. International Finance cv. trust 22,358
guaranteed notes 3s, 2002(Bermuda)
17,000 Pioneer Financial Services, Inc. cv. sub. notes 6 24,544
1/2s, 2003
40,000 USF&G Corp. cv. sub. notes zero %, 2009 26,200
96,112
Medical Supplies and Devices
(0.1%)
25,000 Uromed Corp. 144A cv. sub. notes 6s, 2003 15,031
Metals and Mining
(0.1%)
20,000 Quanex Corp. cv. sub. deb. 6.88s, 2007 20,300
Oil and Gas (0.3%)
21,000 Lomak Petroleum, Inc. 144A cv. sub. deb. 6s, 2007 23,730
3,000 Pride Petroleum Services, Inc. cv. sub. deb. 6 4,361
1/4s, 2006
16,000 Swift Energy Co. cv. sub. notes 6 1/4s, 2006 14,840
42,931
Paper and Forest Products (0.1%)
24,000 Stone Container Corp. cv. sr. sub. notes 8 7/8s, 25,500
2000
Pharmaceuticals (0.2%)
16,000 North American Vaccine, Inc. 144A cv. sub. notes 6 15,420
1/2s, 2003
40,000 Roche Holdings, Inc. 144A cv. unsub. LYON zero %, 18,400
2010(Switzerland)
33,820
Pharmaceuticals and Biotechnology
(0.1%)
23,000 Nabi, Inc. cv. sub. notes 6 1/2s, 2003 18,113
4,000 North American Vaccine, Inc. 144A cv. sub. notes 6 3,855
1/2s, 2003
21,968
Recreation (0.4%)
100,000 Argosy Gaming cv. sub. notes 12s, 2001 71,000
Retail (0.5%)
20,000 Home Depot, Inc. cv. sub. notes 3 1/4s, 2001 20,425
26,000 Michaels Stores, Inc. cv. sub. notes 6 3/4s, 2003 22,653
20,000 Pier 1 Imports, Inc. cv. sub. notes 5 3/4s, 2003 24,325
25,000 Rite Aid Corp. cv. deb. zero %, 2006 18,375
85,778
Telecommunications
(0%)
10,000 MIDCOM Communications, Inc. 144A cv. sub. deb. 8 8,300
1/4s, 2003
Total Convertible Bonds and Notes (cost $1,428,901) 1,360,07
6
Preferred Stocks (4.3%) (a)
NUMBER OF VALUE
SHARES
518 Alliance Gaming Corp. Ser. B, $15.00 pfd. (PIK)
51,800
1,159 American Radio Systems Corp. 144A $11.375 pfd. 114,451
1,798 Cablevision Systems Corp. Ser. M, $11.125 dep. shs. 165,416
pfd.(PIK)
400 California Federal Bancorp Inc. Ser. A, $2.281 pfd. 10,000
1,070 Chancellor Radio Broadcasting 144A $12.00 pfd. 105,930
1,500 Chevy Chase Capital Corp. Ser. A, $10.375 pfd. 72,750
127 Granite Broadcasting Corp. 144A 12.75% pfd. (PIK) 115,888
25 ICG Holdings, Inc. 14.00% (Canada) 24,125
5 Intermedia Communications, Inc. 144A 13.50% pfd. 48,375
20 NTL Inc. 144A 13.00% pfd. (PIK) 19,400
800 Public Service Co. of New Hampshire $10.60 1st 18,000
mtge. pfd.
20 Spanish Broadcasting Systems 144A 14.25% pfd. 17,600
(PIK)
Total Preferred Stocks (cost $795,863) 763,735
Convertible Preferred Stocks
(3.6%) (a)
NUMBER OF VALUE
SHARES
Automotive (0.1%)
170 Ford Motor Co. Ser. A, $4.20 dep. shs. cv. pfd.
19,040
Banks (0.1%)
230 Sovereign Bancorp Inc. $3.13 cv. pfd. 17,020
Basic Industrial Products (0.1%)
170 Case Corp. $4.50 cv. pfd. ($4.50) 22,823
Broadcasting
(0.2%)
342 Chancellor Broadcasting Corp. 144A $3.50 cv. pfd. 18,212
360 SFX Broadcasting, Inc. Ser. D, $3.25 cv. pfd. 16,200
34,412
Building and Construction
(0.1%)
227 Greenfield Capital Trust $3.00 cv. pfd. 9,307
Business Equipment and Services
(0.1%)
150 Ikon Office Solutions Inc. Ser. BB, $5.04 cv. pfd. 10,200
Computer Services and Software
(0.1%)
240 Vanstar Corp. 144A $3.375 cv. pfd. 7,350
407 Wang Laboratories, Inc. Ser. B, $3.25 cv. pfd. 18,519
25,869
Consumer Non Durables (0.1%)
340 Corning Deleware(L.P.) $3.00 cv. pfd. 25,840
Consumer Services (0.1%)
220 Service Corp. $3.125 cv. pfd. 25,218
Food and Beverages (0.1%)
276 Chiquita Brands International, Inc. Ser. B, $3.75 16,146
cv. pfd.
Insurance and Finance
(1.1%)
285 Ahmanson (H.F.) & Co. $3.00 cv. pfd. 22,515
251 American Bankers Insurance Group, Inc. Ser. B, 15,782
$3.125 cv. pfd.
575 American General Delaware Corp. $3.00 cv. pfd. 33,566
160 Devon Financing Trust $3.25 cv. pfd. 10,200
452 Finova Finance Trust $2.75 cv. pfd. 24,069
700 Matewan Bancshares, Inc. Ser. A, $3.75 cv. pfd. 16,975
385 Penncorp Financial Group, Inc. 144A $3.50 cv.pfd. 22,426
120 Roosevelt Financial Group $3.25 cv. pfd. 10,230
340 St. Paul Capital LLC $3.00 cv. pfd. 20,910
400 Timet Capital Trust I 144A $3.3125 cv. pfd. 18,800
195,473
Metals and Mining (0.2%)
285 Amax Gold, Inc. Ser. B, $3.75 cv. pfd. 14,784
950 Freeport-McMoRan Copper Co., Inc. $1.25 cv. pfd. 25,650
($1.75)
40,434
Oil and Gas (0.6%)
360 Neuvo Energy Ser. A, $2.875 cv. pfd. 16,425
435 Occidental Petroleum Corp. 144A $3.875 cv. pfd. 23,816
360 Tejas Gas Corp. $2.65 cv. pfd. 19,260
380 Tosco Financing Trust 144A $2.875 cv. pfd. 20,995
500 Unocal Capital Trust $3.125 cv. pfd. 28,125
108,621
Real Estate (0.1%)
430 Insignia Financial Group, Inc. 144A $3.25 cv. pfd. 19,135
Retail (0.3%)
350 Ann Taylor Finance Trust $4.25 cv. pfd. 23,713
465 Kmart Financing I $3.875 cv. pfd. 26,796
50,509
Telecommunications (0.2%)
600 Airtouch Communications, Inc. Ser. C, $2.125 cv. 27,300
pfd.
Total Convertible Preferred Stocks (cost $660,470) 647,347
Foreign Government Bonds and Notes (1.3%)
(a)
PRINCIPAL VALUE
AMOUNT
Bank of Foreign Economic Affairs of Russia
USD (Vnesheconombank) principal loan 144A 8s, 2020 $
305,000 (NON)(WIS)(PIK) 178,806
USD Morocco (Government of) bonds Ser. A, 6.375s, 2009 35,150
40,000
ZAR South Africa (Republic of) bonds Ser. 153, 13s, 9,980
50,000 2010
Total Foreign Government Bonds and Notes (cost 223,936
$219,478)
Common Stocks (0.2%) (a)
NUMBER OF VALUE
UNITS
15 Advanced Radio Telecommunications units 14s, 2007
15,900
5 Anvil Holdings 144A units 13s, 2009 (PIK) 4,925
200 Colt Telecommunications Group PLC units stepped- 117,000
coupon zero % (12s, 12/15/01), 2006(United Kingdom)
(STP)
25 Esat Holdings Ltd. 144A units stepped-coupon zero % 14,000
(12 1/2s, 2/1/02), 2007(Ireland) (STP)
110 Globalstar L.P. Capital units 11 3/8s, 2004 108,900
20 McCaw International Ltd. 144A units stepped-coupon 9,800
zero % (13s, 4/15/02), 2007 (STP)
50 Nextlink Communications 144A pfd. units zero % 2,350
(.14s,), 2009 (PIK)(STP)
50,000 Winstar Communications, Inc. 144A sr. disc. notes 26,000
stepped-coupon zero % (14s, 10/15/00), 2005 (STP)
Total Units (cost $331,486) 298,875
Common Stocks (0.2%) (a)
NUMBER OF VALUE
SHARES
27,272 Capstar Broadcasting Partners (NON)
29,999
316 Catellus Development Corp. (NON) 4,661
Total Common Stocks (cost $34,711) 34,660
Warrants (0%) (a)
NUMBER OF VALUE
WARRANTS
Expiration
Date
25 Hyperion Telecommunications 144A 750
4/15/01
20 Spanish Broadcasting Systems 144A 2,200
6/30/99
Total Warrants (cost $2,700) 2,950
Short-Term Investments (8.0%) (a)
PRINCIPAL VALUE
AMOUNT
MXP Mexican Treasury Bill zero %, April 2, 1998 $
57,529 59,760
Interest in $473,073,000 joint repurchase agreement
1,367,000 dated April 30, 1997 with Merrill Lynch
due May 1, 1997 with respect to various U.S.
Treasury obligations -- maturity value of
$1,367,205
for an effective yeild of 5.40%.
1,367,20
5
Total Short-Term Investments (cost $1,426,965) 1,426,96
5
total Investments (cost $17,777,461) (b) 17,395,33
6
FOOTNOTES
NOTES
(a) Percentages indicated are based
on net assets of $17,762,038.
(b) The aggregate identified cost on
a tax basis is
$17,777,461, resulting in gross
unrealized appreciation and
depreciation of $130,645 and
$512,770, respectively,
or net unrealized depreciation
of $382,125.
(NON) Non-income-producing security.
(STP) The interest or dividend rate
and date shown parenthetically
represent the new interest or
dividend rate to be paid and the
date the fund will begin
receiving interest or dividend
income at this rate.
(PIK) Income may be received in cash
or additional securities at the
discretion of the issuer.
(WIS) When-issued securities (Note 1).
The coupon rate will be LIBOR
plus 13/16.
(BRA) Brady bonds are foreign bonds
collateralized by the U.S.
Government.
The rates are floating and are
the current rates at April 30,
1997.
144A after the name of a
security represents a security
purchased in a transaction
exempt from registration under
Rule 144A of the Securities Act
of 1933. These securities may be
resold only in transactions
exempt from registration,
normally to qualified
institutional buyers.
The accompanying notes are an
integral part of these financial
statements.
Putnam High Yield Total Return
Statement of assets and liabilities
April 30,1997 (Unaudited)
Assets
Investments in securities, at value
(identified cost $17,777,461) (Note 1) $17,395,33
6
Cash 107,295
Dividends, interest and other receivables 291,423
Receivable for shares of the fund sold 445,849
Receivable for securities sold 253,143
Receivable from Manager (Note 2) 33,864
Unamortized organization expenses (Note 1) 80,672
Total assets 18,607,582
Liabilities
Payable for securities purchased 693,696
Payable for investor servicing and custodian fees 9,942
(Note 2)
Payable for compensation of Trustees (Note 2) 4,000
Payable for administrative services (Note 2) 1,333
Payable for distribution fees (Note 2) 8,228
Payable for organization expenses (Note 1) 80,943
Other accrued expenses 45,893
Total liabilities 844,035
Net assets $17,763,54
7
Represented by
Paid-in capital (Notes 1 and 4) $18,071,79
5
Undistributed net investment income (Note 1) 111,334
Accumulated net realized loss on investments (37,457)
(Note 1)
Net unrealized depreciation of investments (382,125)
Total - Representing net assets applicable to
capital shares outstanding $17,763,54
7
Computation of net asset value and offering price
Net asset value and redemption price per class A
share
($7,816,161 divided by 936,769 shares) $8.34
Offering price per class A share (100/95.25 of $8.76
$8.34)*
Net asset value and offering price per class B
share
($8,901,350 divided by 1,068,486 shares)** $8.33
Net asset value and redemption price per class M
share
($1,044,527 divided by 125,260 shares) $8.34
Offering price per class M share (100/96.75 of $8.62
$8.34)*
* On single sales of less than $50,000. On sales
of $50,000 or more and on group
sales the offering price is reduced.
** Redemption price per share is equal to net
asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of
these financial statements.
Putnam High Yield Total Return
Statement of operations
Period January 2, 1997 (commencement of
operations) to
April 30,1997 (Unaudited)
Investment income:
Interest $233,411
Dividends 18,004
Total investment income 251,415
Expenses:
Compensation of Manager (Note 2) 23,481
Investor servicing and custodian fees (Note 2) 19,408
Compensation of Trustees (Note 2) 4,000
Administrative services (Note 2) 1,333
Distribution fees -- Class A (Note 2) 3,185
Distribution fees -- Class B (Note 2) 15,015
Distribution fees -- Class M (Note 2) 775
Amortization of organization expenses (Note 1) 271
Reports to shareholders 6,333
Registration fees 5,456
Auditing 22,867
Legal 2,667
Postage 7,336
Other 1,703
Fees waived by Manager (Note 2) (57,345)
Total expenses 56,485
Expense reduction (Note 2) (13,079)
Net expenses 43,406
Net investment income 208,009
Net realized loss on investments (Notes 1 and 3) (37,457)
Net unrealized depreciation of investments during (382,125
the period )
Net loss on investments (419,582)
Net decrease in net assets resulting from $(211,57
operations 3)
The accompanying notes are an integral part of these financial
statements.
Putnam High Yield Total Return
Statement of changes in net assets For the
period
January 2,
1997
(commencement
of
operation) to
April 30,
1997*
Decrease in net assets
Operations:
Net investment income $208,009
Net realized loss on investments (37,457)
Net unrealized depreciation of investments (382,125)
Net decrease in assets resulting from operations (211,573)
Distributions to shareholders:
From net investment income
Class A (46,942)
Class B (44,326)
Class M (5,407)
Increase from capital share transactions (Note 4) 18,068,795
Total increase in net assets 17,760,547
Net Assets
Beginning of period 3,000
End of period (including undistributed net investment
income $17,763,54
of $109,825) 7
*Unaudited
The accompanying notes are an integral part of
these financial statements.
Putnam High Yield Total Return Fund
Financial highlights
(For a share outstanding throughout the period)
CLASS A
For the period
January 2, 1997+
Per share to April 30
operating performance (unaudited)
----------------
1997
----------------
Net asset value, beginning of period $8.50
Investment operations:
Net investment income .20(c)
Net realized and unrealized loss on investments (.29)
Total from investment operations (.09)
Less distributions:
From net investment income (.07)
Net realized gain on investments --
Total distributions (.07)
Net asset value, end of period $8.34
Total investment return at net asset value (%)(a) (1.10)*
Net assets, end of period (in thousands) $7,817
Ratio of expenses to average net assets (%)(b) .50*
Ratio of net investment income to average
net assets (%) 2.41*
Portfolio turnover (%) 38.59*
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not
reflect the effect of sales charges.
(b) The ratio of expenses to average net assets include amounts paid through
brokerage service and expense offset arrangements. (Note 2)
(c) Per share net investment loss has been determined on the basis
of weighted average number of shares outstanding during the
period.
Putnam High Yield Total Return Fund
Financial highlights
(For a share outstanding throughout the period)
CLASS B
For the period
January 2, 1997+
Per share to April 30
operating performance (unaudited)
----------------
1997
----------------
Net asset value, beginning of period
$8.50
Investment operations:
Net investment income .18(c)
Net realized and unrealized loss on investments (.29)
Total from investment operations (.11)
Less distributions:
From net investment income (.06)
Net realized gain on investments --
Total distributions (.06)
Net asset value, end of period $8.33
Total investment return at net asset value (%)(a) (1.35)*
Net assets, end of period (in thousands) $8,902
Ratio of expenses to average net assets (%)(b) .75*
Ratio of net investment income to average
net assets (%) 2.21*
Portfolio turnover (%) 38.59*
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not
reflect the effect of sales charges.
(b) The ratio of expenses to average net assets include amounts paid through
brokerage service and expense offset arrangements. (Note 2)
(c) Per share net investment loss has been determined on the basis
of weighted average number of shares outstanding during the
period.
Putnam High Yield Total Return Fund
Financial highlights
(For a share outstanding throughout the period)
CLASS M
For the period
January 2, 1997+
Per share to April 30
operating performance (unaudited)
----------------
1997
----------------
Net asset value, beginning of period $8.50
Investment operations:
Net investment income .19(c)
Net realized and unrealized loss on investments (.29)
Total from investment operations (.10)
Less distributions:
From net investment income (.06)
Net realized gain on investments --
Total distributions (.06)
Net asset value, end of period $8.34
Total investment return at net asset value (%)(a) (1.15)*
Net assets, end of period (in thousands) $1,045
Ratio of expenses to average net assets (%)(b) .58*
Ratio of net investment income to average
net assets (%) 2.39*
Portfolio turnover (%) 38.59*
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not
reflect the effect of sales charges.
(b) The ratio of expenses to average net assets include amounts paid through
brokerage service and expense offset arrangements. (Note 2)
(c) Per share net investment loss has been determined on the basis
of weighted average number of shares outstanding during the
period.
Putnam High Yield Total Return Fund
Notes to
financial statements
April 30, 1997 (Unaudited)
Note 1
Significant
accounting
policies
Putnam High Yield Total Return Fund (the "fund") is registered
under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The fund
seeks total return through high current income and capital
appreciation by investing primarily in high-yielding, lower-rated
fixed-income securities.
The fund offers class A, class B and class M shares. Class A
shares are sold with a maximum front-end sales charge of 4.75%.
Class B shares, which convert to class A shares after
approximately eight years, do not pay a front-end sales charge,
but pay a higher ongoing distribution fee than class A shares,
and are subject to a contingent deferred sales charge, if those
shares are redeemed within six years of purchase. Class M shares
are sold with a maximum front-end sales charge of 3.25% and pay
an ongoing distribution fee that is lower than class B shares and
higher than class A shares.
Expenses of the fund are borne pro-rata by the holders of each
class of shares, except that each class bears expenses unique to
that class (including the distribution fees applicable to such
class). Each class votes as a class only with respect to its own
distribution plan or other matters on which a class vote is
required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of the
fund, if the fund were liquidated. In addition, the Trustees
declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its
financial statements. The preparation of financial statements is
in conformity with generally accepted accounting principles and
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities. Actual results
could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined
using the last reported sale price, or, if no sales are reported
_ as in the case of some securities traded over-the-counter _ the
last reported bid price. Securities quoted in foreign currencies
are translated into U.S. dollars at the current exchange rate.
Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost, which approximates market
value, and other investments are stated at fair value following
procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued
by the Securities and Exchange Commission, the fund may transfer
uninvested cash balances into a joint trading account along with
the cash of other registered investment companies and certain
other accounts managed by Putnam Investment Management, Inc.
("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. . These balances may be
invested in one or more repurchase agreements and/or short-term
money market instruments.
C) Repurchase agreements The fund, or any joint trading account,
through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price,
including accrued interest. Putnam Management is responsible for
determining that the value of these underlying securities is at
all times at least equal to the resale price, including accrued
interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order
to buy or sell is executed).
Interest income is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the
fund is informed of the ex-dividend date. Discounts on zero
coupon bonds, stepped-coupon bonds and payment in kind bonds are
accreted according to the effective yield method.
Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the trade date;
interest income is accrued based on the terms of the security.
Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform
under the contract.
E) Federal taxes It is the policy of the fund to distribute all
of its taxable income within the prescribed time and otherwise
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. It is also the
intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal
Revenue Code of 1986, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on
income and capital gains.
F) Distributions to shareholders Distributions to shareholders
from net investment income are recorded by the fund on the ex-
dividend date. Capital gain distributions, if any, are recorded
on the ex-dividend date and paid at least annually. The amount
and character of income and gains to be distributed are
determined in accordance with income tax regulations which may
differ from generally accepted accounting principles.
Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
G) Unamortized organization expenses Expenses incurred by the
fund in connection with its organization, its registration with
the Securities and Exchange Commission and with various states
and the initial public offering of its shares were $80,943. These
expenses are being amortized on projected net asset levels over
a five-year period.
Note 2
Management fee,
administrative services,
and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net
assets of the fund. Such fee is based on the following annual
rates: 0.80% of the first $500 million of the average net assets,
0.70% of the next $500 million, 0.65% of the next $500 million,
0.60% of the next $5 billion, 0.575% of the next $5 billion,
0.555% of the next $5 billion, 0.54% of the next $5 billion,
0.53% of any amount over $21.5 billion.
Putnam Management has agreed to limit its compensation (and, to
the extent necessary, bear other expenses) through June 30, 1997,
to the extent that expenses of the fund (exclusive of brokerage,
interest, taxes, deferred organizational and extraordinary
expense, credits from Putnam Fiduciary Trust Company (PFTC), a
wholly-owned subsidiary of Putnam Investments, Inc. and payments
under the Trust's distribution plan) would exceed an annual rate
of 1.25% of the fund's average net assets.
The fund reimburses Putnam Management for the compensation and
related expenses of certain officers of the fund and their staff
who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the
Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of
Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam
Investor Services, a division of PFTC.
For the period ended April 30, 1997, fund expenses were reduced
by $13,079 under expense offset arrangements with PFTC and
brokerage service arrangements. Investor servicing and custodian
fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an
income producing asset if it had not entered into such
arrangements.
Trustees of the fund receive an annual Trustees fee of $650 and
an additional fee for each Trustee's meeting attended. Trustees
who are not interested persons of Putnam Management and who serve
on committees of the Trustees receive additional fees for
attendance at certain committee meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which
allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred
fees remain in the fund and are invested in certain Putnam funds
until distribution in accordance with the Plan.
The Fund has adopted an unfunded noncontributory defined benefit
pension plan covering all Trustees of the Fund who have served as
Trustee for at least five years. Benefits under the plan are
equal to 50% of the Trustee's average total retainer and meeting
fees for the three years preceding retirement. Pension expense
for the fund is included in Trustee fees in the Statement of
operations for the period ended April 30, 1997. Accrued pension
liability is included in Payable for compensation of Trustees in
the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with
respect to its class A, class B and class M shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940. The purpose
of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-
owned subsidiary of Putnam Investments Inc., for services
provided and expenses incurred by it in distributing shares of
the fund. The Plans provide for payments by the fund to Putnam
Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00%
of the average net assets attributable to class A, class B and
class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.25%, 0.25% and .050% of the
average net assets attributable to class A, class B and class M
shares respectively.
Note 3
Purchase and sales of securities
During the period ended April 30, 1997, purchases and sales of
investment securities other than U.S. government obligations and
short-term investments aggregated $20,253,306 and $3,911,133,
respectively. There were no purchases and sales of U.S.
government obligations. In determining the net gain or loss on
securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At April 30, 1997, there was an unlimited number of shares of
beneficial interest authorized.
For the period January 2,
1997
(commencement of
operations) to
April 30
1997
Class A Shares Amount
Shares sold 980,136 $8,308,988
Shares issued in connection with 4,596 38,222
reinvestment of distributions
984,732 8,347,210
Shares repurchased (48,081) (406,686)
Net increase 936,651 $7,940,524
For the period January 2,
1997
(commencement of
operations) to
April 30
1997
Class B Shares Amount
Shares sold 1,153,33 $9,781,816
4
Shares issued in connection with 4,514 37,505
reinvestment of distributions
1,157,84 9,819,321
8
Shares repurchased (89,480) (749,928)
Net increase 1,068,36 $9,069,393
8
For the period January 2,
1997
(commencement of
operations) to
April 30
1997
Class M Shares Amount
Shares sold 126,277 $1,068,346
Shares issued in connection with 513 4,266
reinvestment of distributions
126,790 1,072,612
Shares repurchased (1,648) (13,734)
Net increase 125,142 $1,058,878
Note 5
Initial capitalization and offering of shares
The fund was established as a Massachusetts business trust on
January 22, 1996. During the period January 22, 1996 to January
2, 1997, the fund had no operations other than those related to
organizational matters, including the initial capital
contribution of $1,000, $1,000 and $1,000 for class A, class B
and class M, respectively, and $80,943 of initial organizational
expenses, and the issuance of 118 shares for each class to Putnam
Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments, Inc.
PUTNAM CAPITAL APPRECIATION FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Index to Financial Statements and Supporting
Schedules:
(1) Financial Statements:
Statements of assets and liabilities --
May
31, 1997 (a).
Statement of operations -- year ended May
31, 1997 (a).
Statement of changes in net assets --
years ended May 31, 1997 and
May 31, 1996 (a).
Financial highlights (a) (b).
Notes to financial statements (a).
(2) Supporting Schedules:
Schedule I -- Portfolio of investments
owned -- May 31, 1997(a) .
Schedules II through IX omitted because the
required matter is not present.
- - -------------------
(a) Incorporated by reference into Parts A
and B.
(b) Included in Part A.
(b) Exhibits:
1. Agreement and Declaration of Trust dated
May 4, 1993 -- Incorporated by reference to
Registrant's Initial Registration
Statement.
2. By-Laws -- Incorporated by reference to
Registrant's Initial Registration
Statement.
3. Not applicable.
4a . Portions of Agreement and
Declaration of Trust Relating to
Shareholders' Rights --
Incorporated by reference to Pre-
Effective Amendment No. 1 to the
Registrant's Registration
Statement.
4b . Portions of By-Laws Relating to
Shareholders' Rights --
Incorporated by reference to Pre-
Effective Amendment No. 1 to the
Registrant's Registration
Statement.
5. Management Contract dated September 20,
1996 -- Incorporated by reference to
Post-Effective Amendment No. 3 to the
Registant's Registration Statement.
6a. Distributor's Contract dated May 6, 1994 --
Incorporated by reference to Post-Effective
Amendment No. 2 to the Registrant's
Registration Statement.
6b. Form of Specimen Dealer Sales Contract --
Incorporated by reference to Pre-Effective
Amendment No. 1 to the Registrant's
Registration Statement.
6c. Form of Specimen Financial Institution
Sales Contract - Incorporated by reference
to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement.
7. Trustee Retirement Plan dated October 4,
1996 -- Exhibit 1.
8. Custodian Agreement with Putnam Fiduciary
Trust Company dated May 3, 1991, as amended
July 13, 1992 -- Incorporated by reference
to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement.
9. Investor Servicing Agreement dated June 3,
1991 with Putnam Fiduciary Trust Company --
Incorporated by reference to Pre-Effective
Amendment No. 1 to the Registrant's
Registration Statement.
10. Opinion of Ropes & Gray, including consent
--Incorporated by reference to Pre-
Effective Amendment No. 1 to the
Registrant's Registration Statement.
11. Not applicable.
12. Not applicable.
13. Investment Letter from Putnam Investments,
Inc. to the Registrant -- Incorporated by
reference to Pre-Effective Amendment No. 1
to the Registrant's Registration Statement.
14a. Not applicable
14b Form of Prototype Individual
Retirement Account Plan -- Incorporated by
reference to Post-Effective Amendment No.
3 to the Registrant's
Registration Statement.
14c . Form of Prototype Basic Plan
Documents and related Plan
Agreements -- Exhibit 2.
15a. Class A Distribution Plan and Agreement
dated May 7, 1993, as amended September 9,
1994 --Incorporated by reference to Post-
Effective Amendment No. 2 to the
Registrant's Registration Statement.
15b. Class B Distribution Plan and Agreement
dated September 9, 1994 -- Incorporated by
reference to Post-Effective Amendment No. 2
to the Registrant's Registration Statement.
15c. Class M Distribution Plan and Agreement --
Incorporated by reference to Post-Effective
Amendment No. 3 to the Registrant's
Registration Statement.
15d. Form of Specimen Dealer Service Agreement -
- Exhibit 3.
15e. Form of Specimen Financial Institution
Service Agreement -- Exhibit 4 .
16. Schedules for computation of performance
quotations -- Exhibit 5 .
17a. Financial Data Schedule for class A shares
--Exhibit 6 .
17b. Financial Data Schedule for class B shares
--Exhibit 7 .
17c. Financial Data Schedule for class M shares
--Exhibit 8 .
18. Rule 18f-3 Plan -- Incorporated by
reference to Post-Effective Amendment No. 3
to the Registrant's Registration Statement.
Item 25. Persons Controlled by or under Common Control with
Registrant
None
Item 26. Number of Holders of Securities
As of May 31, 1997 the number of record
holders of each class of securities of the Registrant
was as follows:
Number of record holders
------------------------------------
Class A Class B Class M
------- ------- -------
48,898 55,164 3,133
<PAGE>
Item 27. Indemnification
The information required by this item is incorporated
herein by reference from the Registrant's initial
Registration Statement on Form N-1A under the Investment
Company Act of 1940 (File No. 33-49583).
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrant's Clerk, Beverly Marcus;
Registrant's investment adviser, Putnam Investment Management,
Inc.; Registrant's principal underwriter, Putnam Mutual Funds
Corp.; Registrant's custodian, Putnam Fiduciary Trust Company
("PFTC"); and Registrant's transfer and dividend disbursing
agent, Putnam Investor Services, a division of PFTC. The
address of the Clerk, investment adviser, principal
underwriter, custodian and transfer and dividend disbursing
agent is One Post Office Square, Boston, Massachusetts 02109.
Item 31. Management Services
None.
Item 32. Undertakings
(a) The Registrant undertakes to furnish to each
person to whom a prospectus of the Registrant is delivered a
copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
(b) Registrant hereby undertakes, if requested to do
so by the holders of at least 10% of its outstanding shares, to
call a meeting of shareholders for the purposes of voting upon
the question of removal of a Trustee or Trustees and to assist
in communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
Prospectuses and Statement of Additional Information
constituting parts of Post-Effective Amendment No. 5 to
the Registration Statement of Putnam Capital Appreciation Fund
on Form N-1A (File No. 33-49583) of our report dated
July 9, 1997 , on our audit of the financial statements
and financial highlights of the Fund , which report is
included in the Annual Report for Putnam Capital Appreciation
Fund for the year ended May 31, 1997 , which is
incorporated by reference in the Registration Statement.
We also consent to the references to our firm under
the caption "Independent Accountants and Financial Statements"
in the Statement of Additional Information and under the
heading "Financial highlights" in such
Prospectuses .
COOPERS & LYBRAND
L.L.P.
Boston, Massachusetts
July 30, 1997
--------------------------
NOTICE
A copy of the Agreement and Declaration of Trust of
Putnam Capital Appreciation Fund is on file with the Secretary
of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of
the Registrant by an officer of the Registrant as an officer
and not individually and the obligations of or arising out of
this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon
the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant
has duly caused this Amendment to its Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, and The Commonwealth of
Massachusetts, on the 1st day of August, 1997 .
Putnam Capital Appreciation Fund
By: Gordon H. Silver, Vice
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement of Putnam Capital
Appreciation Fund has been signed below by the following
persons in the capacities and on the dates indicated:
Signature Title
George Putnam President and Chairman of
the Board; Principal
Executive Officer; Trustee
John D. Hughes Senior Vice President;
Treasurer and Principal
Financial Officer
Paul G. Bucuvalas Assistant Treasurer and
Principal Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Ronald J. Jackson Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
William F. Pounds Trustee
George Putnam, III Trustee
A.J.C. Smith Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver,
as Attorney-in-Fact
August 1, 1997
EXHIBIT INDEX
1. Trustee Retirement Plan dated October 4, 1996
2. Form of Prototype Basic Plan Documents and related Plan
Agreements
3. Form of Specimen Dealer Service Agreement
4. Form of Specimen Financial Institution Service Agreement
5. Schedules for computation of performance quotations
6. Financial Data Schedule for class A shares
7. Financial Data Schedule for class B shares
8. Financial Data Schedule for class M shares
RETIREMENT PLAN
FOR THE
TRUSTEES OF THE PUTNAM FUNDS
1. General; effective date. This Retirement Plan For The
Trustees Of The Putnam Funds is intended to provide, on the terms
and conditions specified below, cash retirement benefits to
certain individuals who have served as trustees ("Trustees") of
the Funds. Except as provided at Section 12 below, the Plan is
effective with respect to retirements occurring on or after
January 1, 1996.
2. Statement of Purpose. The purpose of this Plan is to
assist the Funds in attracting and retaining highly qualified
individuals to serve as Trustees of the Putnam Funds by providing
a form of deferred compensation which is competitive with
compensation practices of other major investment company
complexes as well as those of major business corporations and
which recognizes the benefits to the Funds and of having Trustees
with many years of experience with the affairs of the Funds.
3. Defined terms. When used in the Plan, the following
terms shall have the meanings set forth in this Section:
- "Administrator": such committee, consisting solely of
Trustees who are not "interested persons" of the Funds
within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940, as may be designated
from time to time by the Trustees to administer the
Plan.
- "Service": active service as a Trustee for one or more
of the Funds, including service prior to the Effective
Date. For purposes of this definition, service for an
entity that was a Fund at the time of such service
shall not be disregarded merely because the entity
later ceases to be a Fund. A Participant who dies
prior to retirement or who retires by reason of total
and permanent disability (as determined by the
Administrator) shall be deemed to have served at least
one hundred twenty (120) months of Service regardless
of his or her actual period of service.
- "Effective Date": the date specified in the second
sentence of Section 1.
- "Final Average Remuneration": the quotient obtained by
dividing (i) a Participant's total retainer and meeting
fees paid to the individual by the Funds for the last
thirty-six (36) months of the individual's service as a
Trustee, by (ii) three.
<PAGE>
- "Fund": any of the Putnam Funds, other than any such
Fund that has either (i) elected by vote of a majority
of its Trustees who are not "interested persons" of the
Fund (as defined above) not to participate in the Plan,
or (ii) terminated its participation in the Plan in
accordance with Section 14(c).
- "Participant": a Trustee with at least sixty (60)
months of Service.
- "Plan": the Retirement Plan For The Trustees Of The
Putnam Funds set forth herein, as the same may from
time to time be amended and in effect.
- "Retirement": ceasing to be an active Trustee
(regardless of whether service to one or more Funds
continues in a capacity other than as a Trustee) for
any reason other than (i) termination for cause as
determined by the Administrator, or (ii) death. The
terms "retire," "retires" and "retired" shall be
similarly construed.
- "Trustee": a trustee of any of the Funds.
4. Eligibility for retirement benefit. Each Participant
shall receive the normal retirement benefit specified in Section
5 below commencing in the calendar year next following the date
of retirement.
5. Form and amount of retirement benefit. The retirement
benefit payable to a Participant shall be an annual cash payment
equal to fifty percent (50%) of the Participant's Final Average
Remuneration. Such retirement benefit shall be paid on January
15 of each calendar year commencing with the year specified in
Section 4 above and continuing for the lesser of (i) a number of
years equal to the Participant's years of Service (rounded to the
nearest whole year) or (ii) the lifetime of the Participant.
6. Death benefit. The only death benefits payable under
the Plan shall be those described in this Section:
(a) If a Participant dies after retirement but before
ten (10) annual retirement benefit payments have been made,
the Participant's designated beneficiary shall be entitled
to receive an annual death benefit, in the same amount,
payable on January 15 of each year for the lesser of (i) the
remainder, if any, of the period specified in clause (i) of
Section 5 above or (ii) the remainder of such 10-year
period.
<PAGE>
(b) If a Participant dies before retirement, there
shall be paid to his or her designated beneficiary an annual
death benefit equal in amount to the annual retirement
benefit specified in Section 5 above. The death benefit
described in this paragraph (b) shall be paid on January 15
of each year commencing in the calendar year next following
the Participant's death for a number of years equal to the
lesser of (i) the period specified in clause (i) of Section
5 above or (ii) ten (10) years.
(c) The Administrator in its discretion may commute any
death benefit under this Section to an immediate lump sum
payment or may otherwise accelerate such payments, in each
case applying such reasonable discount rates as it deems
appropriate.
7. Designation of beneficiary. For purposes of Section 6
above, a Participant's designated beneficiary shall be such
person or persons, including a trust, as the Participant shall
have designated in writing on a form acceptable to and delivered
to the Administrator. In the absence of an effective beneficiary
designation governing the payment of any portion of the death
benefit described in Section 6 above, payment of such portion
shall be made to the Participant's estate, which shall be deemed
to be the Participant's designated beneficiary for all purposes
hereunder. If the person designated as the beneficiary to
receive any portion of the death benefit should die prior to
completion of payments to such beneficiary without the
Participant having made effective provision (by a designation
delivered to the Administrator as hereinabove prescribed) for a
successor or contingent beneficiary, payment of such portion or
the remainder thereof shall be made to the decedent beneficiary's
estate.
8. Agreement not to compete, etc. Eligibility for and
payment of benefits under the Plan is conditioned on agreement by
the Participant (i) to refrain from engaging in any business
activity in competition with the Funds, and (ii) not to disclose
any proprietary or otherwise confidential information pertaining
to the Funds. Any breach by an active or retired Trustee of the
agreement or conditions specified in the preceding sentence shall
be grounds for termination or reduction by the Administrator of
benefits under the Plan.
9. Nature of rights. Nothing in the Plan shall be
construed as requiring the Funds, or any of them, to set aside or
to segregate any assets of any kind to meet any of its
obligations hereunder or otherwise to fund the Plan. The rights
of persons claiming benefits under the Plan shall be no greater
than those of general unsecured creditors of a Fund, and no such
person shall have any right in or to any specific assets of any
Fund. All rights to benefits under the Plan shall be construed
and interpreted consistent with the continued qualification of
each Fund as a registered investment company under the Investment
Company Act of 1940, as amended.
10. Rights non-assignable. No Participant, beneficiary or
other person shall have any right to assign, pledge, encumber, or
otherwise alienate or transfer any right to receive benefits or
payments hereunder or any other interest under the Plan, in whole
or in part, and any attempt by any such person to effectuate such
an assignment, pledge, encumbrance, or other alienation or
transfer shall be null and void.
11. No rights to continuation of status. Nothing in the
Plan shall be construed as giving any individual a right to
continue to serve as a Trustee of the Funds, or any of them, or
to receive any particular level of remuneration for any such
service.
12. Application of Plan to certain persons. This Plan
supersedes in its entirety the voluntary retirement program
heretofore maintained by the Funds and any benefits previously
authorized under such program but not yet paid for periods
commencing on or after January 1, 1996. Reference is made to
those former Trustees listed on Schedule A hereto who retired
prior to the effective date of this Plan and who are currently
receiving benefits under such voluntary retirement program. In
addition, reference is made to a current Trustee listed on
Schedule B hereto who previously received certain retirement
benefits under such voluntary retirement program following such
Trustee's initial retirement from the Funds. Each person listed
on Schedules A or B shall be entitled to a retirement benefit in
the amount and payable in accordance with the terms of the Plan
except that, to the extent inconsistent with the generally
applicable provisions of the Plan, the specific provisions of
Schedule A and B shall control.
13. Payment of benefits. Benefits shall be paid by the
Funds, in cash, upon direction by the Administrator. The
Administrator shall allocate the obligation to make payments with
respect to a Trustee under the Plan for any calendar year among
the Funds in proportion to their respective cumulative
liabilities accrued with respect to such Trustee's participation
in the Plan for financial reporting purposes or on such other
reasonable basis as the Administrator may determine.
14. Amendment and termination.
(a) AMENDMENT. The Plan may be amended at any time by the
Administrator. No amendment shall reduce the benefits or future
benefits of any Trustee who has retired, and in the case of a
participant who is still an active Trustee no amendment shall
reduce the amount such Trustee would have been entitled to
receive if he or she had ceased to serve as a Trustee immediately
prior to such amendment.
(b) TERMINATION OF THE PLAN AS A WHOLE. The Plan as a
whole may be terminated by the Administrator. Upon termination
of the plan as a whole, benefits in pay status shall continue to
be paid. Any Participant not yet in pay status shall continue to
be entitled to a benefit equal to the benefit to which he or she
would have been entitled had retirement as a Trustee occurred
immediately prior to such Plan termination. Notwithstanding the
foregoing, in its discretion the Administrator may commute and
pay as a single lump sum payment any benefits remaining payable
upon termination of the Plan as a whole, and in determining such
lump sum amounts the Administrator may apply such reasonable
discount factors and mortality assumptions as it determines in
its discretion.
(c) TERMINATION BY INDIVIDUAL FUND. A Fund may terminate
its participation in the Plan at any time by vote of a majority
of its Trustees who are not "interested persons" of the Fund (as
defined under "Administrator" in Section 3 above), provided that
upon any such termination such Fund shall remain liable for its
allocable share of the benefits to which Participants would have
been entitled is the Plan as a whole had been terminated as of
the date of such individual termination, as determined by the
Administrator in its sole discretion.
As Adopted October 4, 1996
Putnam
Retirement
Plans:
Basic Plan
Document
Putnam Standard Profit
Sharing Plan - "Keogh"
Putnam Standard Profit
Sharing and 401 (k) Plan
Putnam Standard Money
Purchase Pension Plan - "Keogh"
Putnam Variable Profit Sharing
and 401 (k) Plan
Putnam Variable Money
Purchase Pension Plan
Boston London Tokyo
<PAGE>
Contents I. Putnam Basic Plan Document
Article I: Introduction 2
Article II: Definitions 2
Article III: Participation 6
Article IV: Contributions 7
Article V: Cash or Deferred Arrangement
under Section 401(k) (CODA) 9
Article VI: Limitations on Allocations 15
Article VII: Eligibility for Distribution of Benefits 17
Article VIII: Vesting 18
Article IX: Payment of Benefits 19
Article X: Joint and Survivor Annuity
Requirements 20
Article XI: Minimum Distribution Requirements 22
Article XII: Withdrawals and Loans 25
Article XIII: Trust Fund and Investments 26
Article XIV: Insurance Policies 27
Article XV: Top-Heavy Plans 28
Article XVI: Administration of the Plan 30
Article XVII: Trustee and Insurance Trustee 31
Article XVIII: Amendment 33
Article XIX: Termination of Plan and Trust 34
Article XX: Transfers from Other Qualified
Plans; Mergers 35
Article XXI: Miscellaneous 35
II. IRS Opinion Letters
The Putnam Standard Profit sharing and
401(k) Plan Opinion Letter 38
The Putnam Standard Money Purchase
Pension Plan Opinion Letter 39
The Putnam Variable Profit Sharing and
401 (k) Plan Opinion Letter 40
Putnam Variable Money Purchase Pension
Plan Opinion Letter 41
<PAGE>
I. Putnam Basic Plan Document
Article I: Introduction 2
Article II: Definitions 2
Article III: Participation 6
Article IV: Contributions 7
Article V: Cash or Deferred Arrangement
under Section 401 (k) (CODA) 9
Article VI: Limitations on Allocations 15
Article VII: Eligibility for Distribution of Benefits 17
Article VIII: Vesting 18
Article IX: Payment of Benefits 19
Article X: Joint and Survivor Annuity
Requirements 20
Article XI: Minimum Distribution Requirements 22
Article XII: Withdrawals and Loans 25
Article XIII: Trust Fund and Investments 26
Article XIV: Insurance Policies 27
Article XV: Top-Heavy Plans 28
Article XVI: Administration of the Plan 30
Article XVII: Trustee and Insurance Trustee 31
Article XVIII: Amendment 33
Article XIX: Termination of Plan and Trust 34
Article XX: Transfers from Other Qualified
Plans; Mergers 35
Article XXI: Miscellaneous 35
<PAGE>
The Putnam Basic Plan Document
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, for the purpose of providing a retirement fund for the
benefit of Participants and Beneficiaries.
ARTICLE II:
Definitions
The terms defined in Sections 2.1 through 2.50 appear generally
throughout the document. Sections 2.51 through 2.63 and Article
V contain definitions of terms used only in a CODA or in a
Variable Plan which permits nondeductible Participant
Contributions pursuant to Section 5.9 and Section 10.4 contains
additional definitions related to distributions from the Plan.
Articles VI and XI 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, and if the Plan contains
a CODA, the accounts maintained for the Participant pursuant to
Article V.
2.2 Affiliated Employer, for purposes of the Plan other than
Article VI, 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.
<PAGE>
In a Variable Plan, in addition to the Employer, any Affiliated
Employer may adopt the Plan for the benefit of its Employees by
executing a Plan Agreement.
For purposes of Article VI only, the definitions in paragraphs
(a) and (b) of this Section 2.2 shall be modified by adding at
the conclusion of the parenthetical phrase in each such paragraph
the words "as modified by Section 415(h) of the Code."
2.3 Authorized Leave of Absence means a leave of absence from
employment granted in writing by an Affiliated Employer.
Authorized Leave of Absence shall be granted on account of
military service for any period during which an Employee's right
to re-employment is guaranteed by law, and for such other reasons
and periods as an Affiliated Employer shall consider proper,
provided that Employees in similar situations shall be similarly
treated.
2.4 Base Contribution Percentage means the percentage so
specified in the Plan Agreement.
2.5 Beneficiary means a person entitled to receive benefits under
the Plan upon the death of a Participant, in accordance with
Section 7.2 and Articles 10 and 11.
2.6 CODA means a cash or deferred arrangement that meets the
requirements of Section 401(k) of the Code, adopted as part of a
profit sharing plan.
2.7 Code means the Internal Revenue Code of 1986, as amended.
2.8 Compensation means all of an Employee's compensation
determined in accordance with the definition elected by the
Employer in the Plan Agreement. For purposes of that election,
"Form W-2 earnings" means "wages" as defined in Section 3401(a)
of the Code in connection with income tax withholding at the
source, and all other compensation paid to the Employee by the
Employer in the course of its trade or business, for which the
Employer is required to furnish the Employee with a written
statement under sections 6041(d), 6051(a)(3), and 6052 of the
Code, determined without regard to exclusions based on the nature
or location of the employment or the services performed (such as
the exception for agricultural labor in section 3401(a)(2) of the
Code).
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.
<PAGE>
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 such items,
and reduced by (i) contributions by the Employer to qualified
plans, to the extent deductible under Section 404 of the Code,
and (ii) the deduction allowed to the Employer under Section
164(f) of the Code for taxable years beginning after December 31,
1989.
2.13 Earnings, effective for all Plan Years beginning after
December 31, 1988, means the first $200,000 (as adjusted by the
Secretary of the Treasury at the same time and in the same manner
as under Section 415(d) of the Code) of the sum of the
Compensation and the Earned Income received by an Employee during
a 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 adjusted $200,000
limitation is exceeded, then (except for purposes of determining
the portion of compensation up to the Integration Level), the
limitation shall be prorated among the affected individuals in
proportion to each such individual's compensation as determined
under this section prior to the application of this limitation.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual compensation of each Employee taken into account under
the Plan shall not exceed the OBRA '93 annual compensation limit.
The OBRA '93 annual compensation limit is $150,000, as adjusted
by the Commissioner for increases in the cost of living in
accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in
such calendar year. if a determination period consists of fewer
than 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which
is 12.
For plan years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit set
forth in this provision.
If compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the
current Plan Year, the compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit for
that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
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 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; provided that if the Employer has elected in
the Plan Agreement to establish a number less than 1,000 as the
requisite for crediting an Eligibility Period, 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.
2.16 Employee means a common law Employee of an Affiliated
Employer; in the case of an Affiliated Employer which is a sole
proprietorship, the sole proprietor thereof; in the case of an
Affiliated Employer which is a partnership, a partner thereof;
and a Leased Employee of an Affiliated Employer. The term
"Employee" includes an individual on Authorized Leave of Absence,
a Self-employed Individual and an Owner-Employee.
2.17 Employer means the Employer named in the Plan Agreement and
any successor to all or the major portion of its assets or
business which assumes the obligations of the Employer under the
Plan Agreement.
<PAGE>
2.18 Employer Contribution Account means an account maintained on
the books of the Plan on behalf of a Participant, in which are
recorded the amounts allocated for his benefit from contributions
by the Employer (other than contributions pursuant to Article 5),
Forfeitures by former Participants (if the Plan provides for
reallocation of Forfeitures), amounts reapplied under Section
6.1(d), and the income, expenses, gains and losses incurred
thereon.
2.19 ERISA means the Employee Retirement Income Security Act of
1974, as amended.
2.20 Excess Earnings means a Participant's Earnings in excess of
the Integration Level of the Plan.
2.21 Forfeiture means a nonvested amount forfeited by a former
Participant in a Variable Plan, pursuant to Section 8.3; or an
amount forfeited by a former Participant or Beneficiary who
cannot be located, pursuant to Section 9.5; or a Qualified
Matching Contribution or Employer Matching Contribution forfeited
pursuant to Section 5.8.
2.22 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 in
not an Authorized Leave of Absence. Hours under this paragraph
shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations, which are incorporated
herein by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Affiliated
Employer. The same Hours of Service shall not be credited under
both paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c); and no more than 501 Hours of Service
shall be credited under this paragraph (c) with respect to
payments of back pay, to the extent that such pay is agreed to or
awarded for a period of time described in paragraph (b) during
which the Employee did not perform or would not have performed
any duties. These hours shall be credited to the Employee for
the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement or payment is made.
(d) Each hour during an Authorized leave of Absence. Such hours
shall be credited at the rate of a customary full work week for
an Employee.
(e) Solely for purposes of determining whether a One-Year Vesting
Break or a One-Year Eligibility Break has occurred, each hour
which otherwise would have been credited to an Employee but for
an absence from work by reason of: the pregnancy of the Employee,
the birth of a child of the Employee, the placement of a child
with the Employee in connection with the adoption of the child by
the Employee, or caring for a child for a period beginning
immediately after its birth or placement. If the Plan
Administrator cannot determine the fours 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.
2.23 Insurance Trustee means the person named in the Plan
Agreement as Insurance Trustee, and any successor thereto.
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 Financial Services, Inc., or its
affiliate acts a principal underwriter, or for which The Putnam
Management Company, 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, fro
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 accepted in writing by Putnam for
availability under the Plan. The term "Investment Products" does
not include any Policy selected pursuant to Article XIV.
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 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 percent 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 percent
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(a)(8), Section 402(h) or Section
403(b) of the Code), (2) immediate participation, and (3) full
and immediate vesting.
2.29 One-Year Eligibility Break means an 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 an Eligibility Period, that number
shall be substituted for 500.
2.30 One-Year Vesting Break means a Plan Year during which an
individual is not credited with more than 500 Hours of Service;
provided, however, that in the case of an Employee in a seasonal
industry, there shall be substituted for the 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 percent of either the capital or profits interest of an
Affiliated Employer that is a partnership.
2.32 Participant means each Employee who has met the requirements
for participation in Article III.
2.33 Participant Contribution Account means an account maintained
on the books of the plan, in which are recorded non deductible
contributions by a Participant in accordance with Section 4.2(e)
or a similar provision in effect under the Plan or a predecessor
plan for periods before the first Plan Year beginning after
December 31, 1986, and any income, expenses, gains or losses
incurred thereon.
2.34 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 as set forth
herein, together with any and all amendments and supplements
thereto.
2.35 Plan Administrator means the Employer or its appointee
pursuant to Section 16.1.
2.36 Plan Agreement means the separate agreement entered into
between the Employer and the Trustee (and the Insurance Trustee,
if any) and accepted by Putnam, under which the Employer adopts
the Plan and selects among its optional provisions.
2.37 Plan Year means the period of 12 consecutive months
specified by the Employer in the Plan Agreement; provided that if
the Effective Date is not the first day of the Employer's taxable
year, the initial Plan Year shall begin on the Effective Date and
end on the last day of the Employer's taxable year.
2.38 Policy means an ordinary life insurance, term insurance,
retirement income or endowment policy or an individual or group
annuity contract issued by a life insurance company in connection
with the Plan, or an interest therein. An ordinary life
insurance policy within the meaning of this definition provides
non-decreasing death benefits and non-increasing premiums.
2.39 Putnam means Putnam Financial Services, Inc., or a company
affiliated with it which Putnam Financial Services, Inc. has
designated as its agent to perform specified actions or
procedures in connection with the prototype Plan.
2.40 Qualified Participant means (i) in a Standard Plan, any
Participant who is an active Employee on the last day of the Plan
Year in question or who is credited with more than 500 Hours of
Service during the Plan Year in question or whose Retirement or
death occurred during the Plan Year in question; and (ii) in a
Variable Plan, any Participant who meets the requirements
specified by the Employer in the Plan Agreement. If the Plan is
not adopted to replace an existing plan, this Section 2.40 is
effective on the Effective Date. If the Plan replaces an
existing plan, this Section 2.40 is effective on the first day of
the first Plan Year that begins after December 31, 1988, or if
later, on the Effective Date, and the provision of the existing
plan that this Section 2.40 replaces shall continue to apply
until that time.
2.41 Recordkeeper means the person or entity designated by the
Employer in the Plan Agreement to perform the duties described in
Section 16.4, and any successor thereto.
2.42 Retirement means ceasing to be an Employee in accordance
with Section 7.1.
2.43 Rollover Account means an account established for an
Employee who makes a rollover contribution to the Plan pursuant
to Section 4.5.
2.44 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.
2.45 Shareholder-Employee means any officer or Employee of an
electing small business corporation, within the meaning of
Section 1362 of the Code, who on any day during a taxable year of
the Employer owns (or is considered as owning under Section
318(a)(1) of the Code) more than 5% of the outstanding stock of
the Employer.
2.46 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.
2.47 Standard Plan means a Plan adopted by execution of a Putnam
Standard Profit Sharing Plan Agreement #001 (including such a
Plan with a CODA) or a Putnam Standard Money Purchase Pension
Plan Agreement #002.
2.48 Trust and Trust Fund means the trust fund established under
Section 13.1.
<PAGE>
2.49 Trustee means the person, or the entity with trustee powers,
named in the Plan Agreement as trustee, and any successor
thereto.
2.50 Valuation Date means (i) for a Standard Plan, each business
day, and (ii) for a Variable Plan, the last day of each Plan
Year, and such other dates as the Employer may designate by
written agreement with the Recordkeeper.
2.51 Variable Plan means a Plan adopted by execution of a Putnam
Variable Profit Sharing Plan Agreement #003 or a Putnam Variable
Money Purchase Pension Plan Agreement #004.
2.52 Year of Service means a Plan Year 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.
(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).
The following definitions apply only to cash or deferred
arrangements under Section 401(k)(CODA) and to Variable Plans
which permits nondeductible Participant contributions pursuant to
Section 5.9:
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.
<PAGE>
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 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 defined in Section 401(m)(4) of the Code.
2.57 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.
2.58 Highly Compensated Employee means any highly compensated
active Employee or highly compensated former Employee, as defined
in this Section 2.58. For this purpose, 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 Variable 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.
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 percent of
the dollar limitation in effect under Section 415(b)(1)(A) of the
Code. The term also includes (i) 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 (ii) Employees who
are 5 percent 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 year or a 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 percent 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 percent 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 percent owner or top-ten highly
compensated Employee. For purposes of this Section 2.58, family
members include the spouse, lineal ascendants and descendants of
the Employee or former 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.
2.59 Non-Highly Compensated Employee means an Employee who is not
a Highly Compensated Employee.
2.60 Qualified Matching Contribution means a contribution made by
the Employer that: (i) is allocated in proportion to a
Participant's Elective Deferrals or Participant Contributions, as
specified 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.
2.61 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.
2.62 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 no 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.
<PAGE>
ARTICLE III:
Participation
3.1 Initial Participation. An Employee shall become a
Participant in the Plan as of the first day of the month in which
he first satisfies the age and service requirements specified by
the Employer in the Plan Agreement, or as of the Effective Date,
whichever is later; provided, however, that:
(a) If the Plan is adopted as an amendment of a predecessor plan
of the Employer, every Employee who was participating under the
predecessor plan when it was so amended shall become a
Participant in the Plan as of the Effective Date, whether or not
he has satisfied the age and service requirements specified in
the Plan Agreement; and
(b) Unless the Employer specifies otherwise in the Plan
Agreement, any individual who is (i) a nonresident alien
receiving no earned income from an Affiliated Employer which
constitutes income from sources within the United States, or (ii)
included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
representatives if retirement benefits were the subject of good
faith bargaining (unless the collective bargaining agreement
specifically provides for coverage by the Plan or involves as an
employee representative an organization more than one-half of
whose members are Employees who are owners, officers or
executives of the Employer) shall not participate in the Plan;
and
(c) If the Plan is a Variable Plan and is not adopted as an
amendment of a predecessor plan of the Employer, all Employees on
the Effective Date shall become Participants on the Effective
Date; if the Employer so elects in the Plan Agreement; and
(d) If the Plan is a Variable Plan, (i) only Employees in the
eligible classes specified by the Employer in the Plan Agreement
shall participate in the Plan; and (ii) eligible Employees will
begin participation on the entry date specified in the Plan
Agreement.
Notwithstanding paragraphs (c) and (d), the Plan must comply with
the coverage and participation rules of Sections 410(b) and
401(a)(26) of the Code and the regulations thereunder.
3.2 Special Participation Rule. With respect to a Standard Plan,
or a Variable Plan in which the Employer has specified full and
immediate vesting in the Plan Agreement, and 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.
<PAGE>
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
become an Employee, if (i) his Employer Contribution Account of
Employer Matching Account had become partially or fully vested
before he incurred a One-Year Vesting Break, or (ii) he incurred
fewer than five consecutive One-Year Eligibility Breaks. In any
other case, when he again becomes an Employee he shall be treated
as a new Employee under Section 3.1.
3.4 Changes in Classification (Variable Plans Only). If a
Participant in a Variable Plan 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 b e credited with Eligibility Periods 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 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.
3.5 Benefits for Owner-Employees. If the Plan provides
contributions or benefits for one or more Owner-Employees who
control both the trade or business with respect to which the Plan
is established and one or more other trades or businesses, the
Plan and plans established with respect to such other trades or
businesses must, when looked at as a single plan, satisfy
Sections 401(a) and (d) of the Code with respect to the Employees
of this and all such other trades or businesses. If the Plan
provides contributions or benefits for one or more Owner
Employees who control one or more other trades or businesses, the
Employees of each such other trade or business must be included
in a plan which satisfies Sections 401(a) and (d) of the Code and
which provides contributions and benefits not less favorable
than those provided for such Owner-Employees under the Plan. If
an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which he does not control and
such individual controls a trade or business, then the
contributions or benefits of the Employees under the plan of the
trade or business which he does control must be as favorable as
those provided for him under the most favorable plan of the trade
or business which he does not control. For purposes of this
Section 3.5, 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 percent 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-Employees are considered to control
within the meaning of the preceding sentence.
ARTICLE IV:
Contributions
4.1 Provisions Applicable to All Plans.
(a) Payment and Crediting of Employer Contributions. the
Employer shall pay to the order of the Trustee the aggregate
contribution to the Trust Fund (other than the premium payments
on any Policy) for each Plan Year. Each contribution shall be
accompanied by written instructions from the Employer, in the
manner prescribed by Putnam. Neither the Trustee nor Putnam
shall be under any duty to inquire into the correctness of the
amount or the timing of any contribution, or to collect any
amount if the Employer fails to make a contribution as provided
in the Plan.
(b) Responsibility for Premium Payments. Contributions to be
applied to the payment of the premiums on any Policy shall be
paid by the Employer directly to the insurer in cash. In
determining the amount of any premium due under any Policy with
respect to any Participant, the Employer and the Insurance
Trustee may rely conclusively upon information furnished by the
provider of the Policy. For purposes of Sections 4.2(a), 4.3(a)
and Article 5, all Employer contributions used to pay premiums on
Policies shall be treated as contributions made to the
appropriate Participant's Employer contribution Account. If the
Employer omits any premium payment or makes any mistake
concerning a premium payment, neither the Employer nor the
Insurance Trustee shall have any liability in excess of the
premium to be paid.
(c) Time for Payment. The aggregate of all contributions with
respect to a Plan Year shall be transferred in accordance with
paragraphs (a) and (b) no later than the due date (including
extensions) for filing the Employer's federal income tax return
for that Plan Year.
(d) Limitations on Allocations. All allocations shall be subject
to the limitations in Article 6.
(e) Establishments 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: Deductible Employee
Contribution Account, Employer Contribution Account, Participant
Contribution Account, and rollover Account; and in a Plan with a
CODA, Elective Deferral Account, Qualified Nonelective Account,
Qualified Matching Account and Employer Matching Account. The
maintenance of such accounts shall be only for recordkeeping
purposes, and the assets of separate accounts shall not be
required to be segregated for purposes of investment.
(f) Restoration of Accounts (Variable Plans Only).
Notwithstanding any other provision of the Pan, 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 or
whether the contribution is currently deductible by the Employer
under Section 404 of the Code. Forfeitures shall be considered
available for allocation pursuant to Sections 4.2, 4.3, and 5.8
in a Plan Year only after all necessary restoration of Accounts
has been accomplished.
4.2 Provisions Applicable Only to Profit Sharing Plans.
(a) Amount of Annual Contribution. The Employer will contribute
for each Plan Year an amount determined accordance with the
formula specified by the Employer in the Plan Agreement, less any
amount reapplied for the Plan Year under Section 6.1(d), not to
exceed the amount deductible under Section 404 of the Code. In a
Variable Plan, if the Employer so elects in the Plan Agreement,
the amount of Forfeitures occurring a Plan Year shall be applied
to reduce the Employer's contribution by a like amount, and such
Forfeitures shall be treated as a portion of the Employer
contribution for purposes of paragraphs (b) and (c).
(b) Allocation of Contributions: General Rule. As of the last
day of each Plan Year, the Employer's contribution (and any
amounts reapplied under Section 6.1(d) for the Plan Year shall be
allocated among the Employer Contribution Accounts of Qualified
Participants in proportion to their Earnings. This general rule
does not apply to a Plan that is integrated with Social Security
or to allocations in a CODA.
(c) Plans Integrated with Social Security. If the Employer
elects in the Plan Agreement an allocation formula integrated
with Social Security, Employer contributions (and any amounts
reapplied under Section 6.1(d)) shall be allocated as of the last
day of the Plan Year, as follows:
(1) Top-Heavy Integration Formula. If the Plan is required to
provide a minimum allocation for the Plan Year pursuant to the
Top-Heavy Plan rules of Article 15, or if the Employer has
specified in the Plan Agreement that this paragraph (1) will
apply whether or not the Plan is Top-Heavy, then:
(a) First, among the Employer Contribution Accounts of all
Qualified Participants, in the ratio that each Qualified
Participant's Earnings bears to all Qualified Participants'
Earnings. The total amount allocated in this manner shall be
equal to 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 ration
that each Qualified Participant's Excess Earnings bears to all
Qualified Participants' Excess Earnings (or, if less, the entire
amount remaining to be allocated).
(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.
(d) Finally, any mount remaining shall be allocated among he
Employer Contribution Accounts of all Qualified Participants in
the ratio that each Qualified Participant's Earnings bears to all
Qualified Participants' Earnings.
(e) The Top-Heavy Maximum Disparity Percentage shall be the
lesser of (i) 2.7% or (ii) the applicable percentage from Table A
on page 9.
If the Plan's Integration Level is equal to the Social Security
Wage Base, the Top-Heavy Maximum Disparity Percentage is 2.7%.
(2) Non-Top-Heavy Integration Formula. If the Plan is not
required to provide a minimum allocation for the Plan Year
pursuant to the Top-Heavy Plan rules of Article 15, and the
Employer has not specified in the Plan Agreement that paragraph
(1) will apply whether or not the Plan is Top-Heavy, then:
(a) An amount equal to (i) the Maximum Disparity Percentage
determined under subparagraph (2)(C) multiplied by the sum of all
Qualified Participants' Earnings and Excess Earnings, or (ii) if
less, the entire amount to be allocated, shall be allocated among
the Employer contribution Amounts 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.
(b) Any amount remaining after the allocation in paragraph (2)(A)
shall be allocated among the Employer contribution Accounts of
all Qualified Participants in the ratio that each Qualified
Participant's Earnings bears to all Qualified Participants'
Earnings.
(c) the Maximum Disparity percentage shall be the lesser of (i)
5.7% or (ii) the applicable percentage from Table B on page 9.
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.
(d) Allocation of Forfeitures. Forfeitures shall be allocated
among the Employer Contribution Amounts of all Qualified
Participants in accordance with paragraph (b) or (c), whichever
applies to Employer contributions. Forfeitures may b allocated
pursuant to paragraphs (c)(1)(B), (c)(1)(C) and (c)(2)(A) only to
the extent that the limitation described therein has not been
fully utilized by the allocation of Employer contributions and
amounts reapplied under Section 6.1(d).
(e) Participant Contributions. Except in the case of a Variable
Plan in which the Employer has provided in the Plan Agreement for
nondeductible Participant contributions, the Plan will accept no
such contributions for any Plan Year beginning after the Plan
Year in which the Employer adopts this Plan. Nevertheless, a
Participant Contribution Account shall be maintained in any Plan
which accepted nondeductible Participant contributions for any
Plan Year beginning after December 31, 1986, and such
contributions, together with any matching contributions (as
defined in Section 401(m)(4) of the Code), shall be limited so as
to meet the nondiscrimination test of Section 401(m) of the Code.
Rules applicable to Participant contributions to a Variable Plan
in Plan Years beginning after the adoption of this Plan are set
froth in Section 5.9. All Participant Contribution Accounts will
be fully vested at all times.
4.3 Provisions Applicable Only to Money Purchase Pension Plans.
(a) Amount of Annual Contributions. The Employer will contribute
for each Plan Year an amount described in paragraph (b) or (c)
below, whichever is applicable, less any amounts reapplied for
the Plan Year under Section 6.1(d), not to exceed the amount
deductible under Section 404(c) of the Code. In a Variable Plan,
if the Employer so elects in the Plan Agreement, the amount of
Forfeitures occurring in a Plan year shall be applied to reduce
the Employer's contribution by a like amount, and such
Forfeitures shall be treated as a portion of the Employer
contribution for purposes of paragraphs (b) and (c).
(b) Allocation of Contributions: General Rule. The Employer
shall contribute an amount equal to the product of the Earnings
of all Qualified Participants and the Base Contribution
Percentage, and the contribution shall be allocated as of the
last day of the Plan Year among the Employer Contribution
Accounts of all Qualified Participants in the ratio that the
Earnings of each Qualified Participant bears to the Earnings of
all Qualified Participants. This general rule does not apply to
a plan that is integrated with Social Security.
(c) Plans Integrated with Social Security. If the Employer has
elected in the Plan Agreement to integrate the Plan with Social
Security, the Employer shall contribute an amount equal to the
sum of the following amounts, and the contribution shall be
allocated as of the last day of the Plan Year as follows:
(1) To the Employer Contribution Account of each Qualified
Participant, an amount equal to the product of the Base
Contribution Percentage and his Earnings, and
(2) To the Employer Contribution Account of each Qualified
Participant who has Excess Earnings, the product of his Excess
Earnings, and the lesser of (i) the Base Contribution Percentage
or (ii) the Money Purchase Maximum Disparity Percentage
determined under paragraph (d).
(3) The Base Contribution Percentage shall be no less than three
percent in either of the following circumstances: (i) any Plan
Year of a Standard Plan for which the Plan Agreement does not
specify that the Employer will perform annual Top-Heavy testing,,
or (ii) any Plan Year in which the plan is required to provide a
minimum allocation for the Plan Year pursuant to the Top-Heavy
Plan rules of Article 15.
(d) The Money Purchase Maximum Disparity Percentage is equal to
the lesser of (i) 5.7% or (ii) the applicable percentage from
Table C on this page.
If the Plan's Integration level is equal to the Social Security
Wage Base, the Money Purchase Maximum Disparity Percentage is
5.7%.
(e) In this Section 4.3, Earnings means Earnings as defined in
Section 2.13.
(f) Separate Allocation of Forfeitures. If the Employer has not
elected in the Plan Agreement to use Forfeitures to reduce the
amount of its contributions, Forfeitures shall be allocated among
the Employer Contribution Accounts of all Qualified Participants
in proportion to their earnings.
4.4 Paired Plans. An Employer may adopt as paired pans Putnam
Standard Profit Sharing Plan (Plan Agreement #001) and Putnam
Standard Money Purchase Pension Plan (Plan Agreement #002). Only
one of the two paired plans may be integrated with Social
Security. In any Plan Year in which Putnam Standard paired plans
are top-heavy, each non-key employee who is eligible to
participate in both plans will have allocated to his Account in
the Putnam Standard Money Purchase Pension Plan a minimum
contribution that meets the requirements of Section 12.3.
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 No Deductible Employee contributions. The Plan Administrator
shall not accept deductible employee contributions for a taxable
year beginning after December 31, 1986. In the event that the
Plan is adopted as an amendment of a plan which previously
accepted such contributions for any Participant, the Employer
will establish and maintain (or cause to be established and
maintained) a separate account in which shall be recorded the
amount of such contributions and the income, expenses, gains and
losses incurred thereon. Such an account shall be nonforfeitable
at all times and shall in no event be used to pay premiums on any
life insurance policy. Subject to Article 10, Joint and Survivor
Annuity Requirements, the Participant may withdraw any part of
such an account at any time upon written request to the Plan
Administrator.
Table A
If the Plan s Integration Level is more than:
$0
The greater of $10,000 or 20% of the Social Security Wage Base
80% of the Social Security Wage Base
But not more than:
The greater of $10,000 or 20% of the social Security Wage Base
80% of the social Security Wage Base
Less than the Social Security Wage Base
The applicable percentage is:
2.7%
1.3%
2.4%
Table B
If the Plan s Integration Level is more than:
$0
The greater of $10,000 or 20% of the Social Security Wage Base
80% of the Social Security Wage Base
But not more than:
The greater of $10,000 or 20% of the social Security Wage Base
80% of the social Security Wage Base
Less than the Social Security Wage Base
The applicable percentage is:
5.7%
4.3%
5.4%
Table C
If the Plan s Integration Level is more than:
$0
The greater of $10,000 or 20% of the Social Security Wage Base
80% of the Social Security Wage Base
But not more than:
The greater of $10,000 or 20% of the social Security Wage Base
80% of the social Security Wage Base
Less than the Social Security Wage Base
The applicable percentage is:
5.7%
4.3%
5.4%
ARTICLE V:
Cash or Deferred Arrangement under Section 401(k)(CODA)
5.1 Applicability; Allocations. this Article 5 applies to any
profit sharing plan for which the Employer has elected in the
Plan Agreement to include a CODA. The Employer may specify in
the Plan Agreement that contributions will be made to the Plan
only under the CODA, or that contributions may be made under
Section 4.2 as well as under the CODA. Allocations to
Participants' Accounts of contributions made pursuant to this
Article 5 shall be made as soon as administratively feasible
after their receipt by the Trustee, but in any case no later than
as of the last day of the Plan Year for which the contributions
were made.
5.2 CODA Participation. Each Employee who has met the
eligibility requirements of Article 3 may make Elective Deferrals
to the Plan by completing and returning to the Plan Administrator
a Deferral Agreement form which provides that the Participant's
cash compensation from the Employer will be reduced by the amount
indicated in the Deferral Agreement, and that the Employer will
contribute an equivalent amount to the Trust on behalf of the
Participant.. The following rules will govern Elective
Deferrals:
(a) Subject to the limits specified in the Plan Agreement and set
forth in Section 5.3, a Deferral Agreement may apply to any
amount or percentage of either or both of the Earnings payable to
a Participant in each regular payroll period of the Employer, or
one or more bonuses payable to a Participant from time to time as
specified by the Employer.
<PAGE>
(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 competing
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, 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 401(h)(1)(B) of the
Code, any plan described under Section 501(c)(18) of the Code,
and any Employer contributions made on behalf of the Participant
for the purchase of an annuity contract under Section 403(b) of
the Code pursuant to a salary reduction agreement. The amount of
Elective Deferrals of a Participant who receives a hardship
distribution pursuant to Section 5.14 shall be reduced, for the
taxable year next following the distribution, by the amount of
Elective Deferrals made in the taxable year of the hardship
distribution.
5.4 Distribution of Excess Elective Deferrals. "Excess Elective
Deferrals" means those Elective Deferrals described in Section
5.3 that are incredible in a Participant's gross income under
Section 402(g) of the Code, to the extent that the Participant's
aggregate elective deferrals for a taxable year exceed the dollar
limitation under that Code Section. Excess Elective Deferrals
shall be treated as Annual Additions under the Plan, whether or
not they are distributed under this Section 5.4 . A Participant
may designate to the Plan any Excess Elective Deferrals made
during his taxable year by notifying the Employer on or before
the following March 15 of the amount of the Excess Elective
Deferrals to be so designated. A Participant who has Excess
Elective Deferrals for a taxable year, taking into account only
his Elective Deferrals under the Plan and any other plans of the
Affiliated Employers, shall be deemed to have designated the
entire amount of such Excess Elective Deferrals.
Notwithstanding any other provision of the Plan, Excess Elective
Deferrals, plus any income and minus any loss allocable thereto,
shall be distributed no later than April 15 to any Participant to
whose Account Excess Elective Deferrals were 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 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 5.11. the
Employer may cause the Plan to satisfy the ADP or ACP test or
both test for a Plan Year by any of the following methods or by
any combination of them:
(a) By the distribution of Excess Contributions in accordance
with Section 5.7, or the distribution of Excess Aggregate
Contributions in accordance with Section 5.12, or both;
(b) In a Variable Plan that permits all Participants to make
Participant Contributions, by recharacterization of Excess
Contributions in accordance with Section 5.10; or
(c) If the Employer has so elected in the Plan Agreement, by
making Qualified Nonelective Contributions or Qualified Matching
Contributions or both, in accordance with the Plan Agreement and
this Section 5.5.
5.6 Actual Deferral Percentage Test Limit. The 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 Participant who are Highly Compensated Employees
for the Plan Year shall not exceed the ADP for Participants who
are Non-Highly Compensated Employees for the same plan Year
multiplied by 2.0, provided that the ADP for Participants who are
Highly compensated Employees does not exceed the ADP for
Participants who are Non-Highly Compensated employees by more
than two percentage points.
The following special rules shall apply to the computation of the
ADP:
(c) Actual Deferral Percentage means, for a specified group of
Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in the group) of (1)
the amount of Employer contributions actually paid over to the
Trust on behalf of the Participant for the Plan Year to (2) the
Participant s Earnings for the Plan Year (or, provided that the
Employer applies this method to all Employees for a Plan Year the
Participant s Earnings for that portion of the Plan Year during
which he was eligible to participant in the Plan). Employer
contributions on behalf of any Participant shall include: (i) his
Elective Deferrals, including Excess Elective Deferrals, but
excluding Elective Deferrals that are taken into account in the
Average contribution Percentage test described in Section 5.11
(provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals), and excluding Elective
Deferrals returned to a Participant to reduce an Excess Amount as
defined in Section 6.5(f); and (ii) if the Employer has elected
to make Qualified Nonelective Contributions, such amount of
Qualified Nonelective Contributions, if any, as shall be
necessary to enable the Plan to satisfy the ADP test; and (iii)
if the Employer has elected to make Qualified Matching
Contributions, such amount of Qualified Matching Contributions,
if any, as shall be necessary to enable the Plan to satisfy the
ADP. 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 requirement 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 requirement s of such sections of the Code only
if aggregated with the Plan, then this Section 5.6 shall be
applied by determining the ACP 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.
(f) For purposes of determining the ADP of a Participant who is a
5-percent owner or one of the ten most highly-paid Highly
Compensated Employees, the Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching Contributions, or
both, if these are treated as Elective Deferrals for purposes of
the ADP test) and the Compensation for the Plan Year of his
Family Members (as defined in section 414(q)(6) of the Code).
Family Members of such Highly Compensated Employees shall be
disregarded as separate employees in determining the ADP both for
Participants who are Non-Highly Compensated Employees and for
Participants who are Highly Compensated Employees.
(g) For purposes of the ADP test, Elective Deferrals , Qualified
Nonelective Contributions and Qualified Matching Contributions
must be made before the last day of the 12 moth 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 and 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; provided, however,
that in the case of a Variable Plan in which the Employer has
elected in the Plan agreement to re characterize Excess
contributions pursuant to Section 5.10, distribution shall be
made pursuant to this Section 5.7 to the extent that excess
contributions are not so recharacterized. If such excess amounts
are distributed more than two an one-half months after the last
day of the Plan Year in which the excess amounts arose, an excise
tax equal to ten percent 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
Participants who are subject to the family member aggregation
rules of Section 414(q)(6) of the Code in the manner prescribed
by the regulations under that Section. Excess Contributions
(including any amounts recharacterized in accordance with Section
5.10) shall be treated as Annual Additions under the Plan.
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 faction, the numerator of which is the Participant s Excess
Contributions for the year and the denominator of which 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 such
Plan Year.
Excess Contributions shall be distributed from the Participant's
Elective Deferral Account and Qualified Matching Account (if
applicable) in proportion to the Participant's Elective Deferrals
and Qualified Matching Contributions (to the extent used in the
ADP test) for the Plan Year. Excess Contributions shall be
distributed from the Participant's Qualified Nonelective Account
only to the extent that such Excess Contributions exceed the
balance in the Participant's Elective Deferral Account and
Qualified Matching Account.
5.8 Matching Contributions. If so specified in the Plan
Agreement, the Employer will make Matching Contributions to the
Plan in accordance with the Plan Agreement, but no Matching
Contribution shall be made with respect to an Elective Deferral
that is returned to a Participant because it represents an Excess
Elective Deferral, an Excess Contribution or an Excess Amount (as
defined in Section 6.5(f)); or with respect to a Participant
contribution that is returned to a Participant because it
represents an 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
become a Forfeiture as of the end of the Plan Year of which it
was contributed, notwithstanding any other provision of the Plan.
(a)Employer Matching Contribution (Variable Plans Only).
Matching Contributions will be allocated among the employer
Matching Accounts of Participants in proportion to their
Elective Deferrals or their Participant Contributions, as
specified by the Employer in the Plan Agreement. Employer
Matching Accounts shall become vested According to the vesting
schedule specified in the Plan Agreement, but regardless of that
schedule shall be fully vested upon the Participant s Retirement
(or, if earlier, his fulfillment of he 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, an in accordance with Section 19.3.
Forfeitures of Employer Matching Contributions, other than Excess
Aggregate Contributions, shall be made in accordance with Section
8.3. Forfeitures of Employer Matching Accounts for a Plan Year
shall be applied to reduce the total Employer Matching
Contribution for the Plan Year, or allocated among the Employer
Matching Accounts of Participants in addition to the Employer
Matching Contribution for the Plan Year, as elected by the
Employer in the Plan Agreement.
(b) Qualified Matching Contributions. Qualified Matching
Contributions will be allocated among the Qualified Matching
contribution Accounts of Participant as specified by the Employer
in the Plan Agreement. In a Standard Plan, a Qualified Matching
Contribution forfeited pursuant to the first sentence of this
Section 5.8 will be applied to reduce the aggregate Matching
Contributions otherwise required of the Employer.
5.9 Participant Contributions (Variable Plans Only). If so
specified in the Plan Agreement for a Variable Plan, a
Participant may make nondeductible Participant contributions to
the Plan in accordance with the Plan Agreement and subject to the
terms and conditions of this Article 5. Participant
Contributions will be allocated to the Participant Contributions
Account of the contributing Participant. All Participant
Contribution Accounts will be fully vested at all times.
5.10 Recharacterization of Excess Contributions (Variable Plans
Only). Provided that the Plan Agreement permits all Participants
to make Participant Contributions, the Employer may treat a
Participant's Excess Contributions to a Variable Plan as an
amount distributed to the Participant and then contributed by the
Participant to the Plan as a Participant Contribution.
Recharacterized amounts will remain nonforfeitable and subject to
the same distribution requirements as Elective Deferrals.
Amounts may not be recharacterized by a highly compensated
Employee to the extent that a recharacterized amount in
combination with other Participant contributions made by that
Employee would exceed any stated limit under the Plan on
Participant Contributions. Recharacterization must occur no
later than two and one-half months after the last day of the Plan
Year in which the Excess contributions arose, and is deemed to
occur no earlier than the date the last Highly Compensated
employee is informed in writing by the Employer of the amount
recharacterized and the consequences thereof. Recharacterized
amounts will be taxable to the Participant for his tax year in
which the Participant would have received them in cash.
5.11 Average Contribution Percentage Test Limit and Aggregate
Limit. the Average Contribution Percentage (hereinafter "ACP")
for Participants who are High Compensated Employees for each Plan
year and the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year must satisfy one of the
following tests:
(a) The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants who
are Non-Highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants who
are Non-Highly Compensated Employees for the same Plan year
multiplied by two(2), provided that the ACP for Participants who
are Highly compensated Employees does not exceed the ACP for
Participants who are Non-Highly Compensated Employees by more
than two percentage points.
The following rules shall apply to the computation of the ACP:
(c) Average Contribution Percentage means the average of the
Contribution Percentages of the Eligible Participants in a group.
(d) Contribution Percentage means the ratio (expressed as a
percentage) of a Participant's Contribution Percentage Amounts to
the Participant's Earnings for the Plan Year (or, provided that
the Employer applies this method to all Employees for a Plan
Year, the Participant's Earnings for that portion of the Plan
Year during which he was eligible to participate in the Plan).
(e) Contribution Percentage Amounts means the sum of the
Participant Contributions, Employer Matching Contributions, and
Qualified Matching Contributions (to the extent not taken into
account for purposes of the ADP test) made under the Plan on
behalf of the Participant for the Plan Year. such Contribution
Percentage Amounts shall include Forfeitures of Excess Aggregate
Contributions or Employer Matching Contributions allocated to the
Participant's Account, taken into account in the year in which
the allocation is made. If the Employer has elected in the Plan
Agreement to make Qualified Nonelective Contributions, such
amount of Qualified Nonelective Contributions, if any, as shall
be necessary to enable the Plan to satisfy the ACP test shall be
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. If a Participant Contribution is required as a
condition of participation in the Plan, any Employee who would be
a Participant in the Plan if he made such a contribution shall be
treated as an Eligible Participant on behalf of whom no
Participant Contributions are made.
(g) Aggregate Limit means the sum of (i) 125 percent 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
of the CODA, and (ii) the lesser of 200 percent of, or two plus,
the lesser of the ADP or ACP.
(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 test s
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 Amounts is reduced shall be treated as an
Excess Aggregate contribution. In determining the Aggregate
Limit, the ADP and ACP of Highly Compensated Employees are
determined after any corrections required to meet the ADP and ACP
tests. The Aggregate Limit will be considered satisfied if both
the ADP and ACP of the Highly compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP of the Non-Highly
Compensated Employees.
(i) For purposes of this section, the Contribution Percentage for
any Participant who is a Highly Compensated Employee and who is
eligible to have Contribution Percentage Amounts allocated to his
account under two or more plans described in Section 401(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.
(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 five-percent owner or one of the ten most
highly-paid Highly Compensated Employers, the Contribution
Percentage Amounts and Compensation of the Participant shall
include the Contribution Percentage Amounts and Compensation for
the Plan Year of Family Members (as defined in Section 414(q)(6)
of the Code). Family Members of such Highly Compensated
Employees shall be disregarded as separate employees in
determining the Contribution Percentage both for Participants who
are Non-Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
(l) For purposes of the ACP test, Participant Contributions are
considered to have been made in the Plan Year in which they were
contributed to the Trust. Matching Contributions and Qualified
Nonelective Contributions will be considered made for a Plan Year
if made no later than the end of the 12-month period beginning on
the day after the close of the Plan Year.
(m) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions, or
both, used in the ACP test.
(n) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
5.12 Distribution of Excess Aggregate Contributions.
Notwithstanding any other provision of the Plan, Excess 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 Play Year. Excess
Aggregate Contributions shall be allocated to Participants whoa
re subject to the family member aggregation rules of Section
414(q)(6) of the Code in the manner prescribed by the
regulations. If excess amounts attributable to Excess Aggregate
Contributions are distributed more than two and on-half months
after the last day of the Plan Year in which such excess amounts
arose, an excise tax equal to ten percent of the excess amount
will be imposed on the Employer maintaining the Plan. j Excess
Aggregate Contributions shall be treated as Annual Additions
under the Plan.
The income or loss allocable to Excess Aggregate Contributions is
the income or loss allocable to the Participant's Participant
Contribution Account, Employer Matching Contribution Account (if
any, and if all amounts therein are not used in the ADP test),
and, if applicable, Qualified Nonelective Account and Elective
Deferral Account for the Plan Year, multiplied by a fraction, the
numerator of which is the Participant's Excess Aggregate
Contributions for the year and the denominator of which is the
Participant's account balance(s) attributable to Contribution
Percentage Amounts without regard to any income or loss occurring
during the Plan Year.
Forfeitures of Excess Aggregate Contributions shall either be
reallocated to the accounts of Non-Highly Compensated Employees
or applied to reduce Employer contributions, as elected by the
Employer in the Plan Agreement.
Excess Aggregate Contributions shall be forfeited if forfeitable,
or distributed on a prorata basis form 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 mad on behalf of Highly Compensated Employees for
the Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the
ACP test (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 detraining Excess
Elective Deferrals pursuant to Section 5.4, and then determining
Excess Contributions pursuant to Section 5.7.
5.13 Restriction on Distributions. No distribution may be made
from a Participant's Elective Deferral Account, Qualified
Nonelective Account or Qualified Matching Account until the
occurrence of one of the following events:
(a) The Participant's Disability, death or termination of
employment with the Affiliated Employer;
(b) Termination of the Plan without the establishment of another
defined contribution plan;
(c) If the Plan is a profit sharing plan, the Participant's
attainment of age 591/2 (if the Employer has elected in the Plan
Agreement t permit such distributions); or
<PAGE>
(d) In the case of an Employer that is a corporation, the
disposition by the Employer to an unrelated entity of (i)
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of the
Employer, if the Employer continues to maintain the Plan after
the disposition, but only with respect to Employees who continue
employment with the entity acquiring such assets; or (ii) the
Employer's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code), if the Employer continues to
maintain the Plan after the disposition, but only with respect to
Employees who continue employment with such subsidiary.
In addition, if the Employer has elected in the Plan Agreement to
permit such distributions, a distribution may be made from a
Participant's Elective Deferral Account in the event of his
financial hardship as described in Section 5.14. All
distributions upon any of the events listed above are subject to
the conditions of Article 10, Joint and Survivor Annuity
Requirements.
5.14 Hardship Distributions. If the Employer has so elected in
the Plan Agreement, upon a Participant's written request the
Employer may permit a distribution from his Elective Deferral
Account (and, in a Variable Plan, from his Employer Matching
Account). The terms and conditions of Section 12.2 and the
special vesting rule contained in Section 8.4 shall apply to
hardship distributions from an Employer Contribution Account or
and Employer Matching Account. The further terms of this Section
5.14 shall apply to hardship distributions from an Elective
Deferral Account. No hardship distribution shall be made from a
Qualified Nonelective Account or Qualified Matching Account.
(a) The maximum amount that may be distributed on account of
hardship from an Elective Deferral Account after December 31,
1988, shall not exceed the sum of (1) the amount credited to the
Account as of December 31, 1988, and (2) the aggregate amount of
the Elective Deferrals made by the Participant after December 31,
1988, and before the hardship distribution.
(b) Hardship distributions shall be permitted only on account of
the following financial needs:
(1) Expenses for medical care described in section 213(d) of the
Code for the Participant, his spouse, children, and dependents,
or necessary for these persons to obtain such care;
(2) Purchase of the principal residence of the Participant
(excluding regular mortgage payments);
(3) Payment of tuition and related educational fees for the
upcoming 12 months of postsecondary education for the
Participant, his spouse, children, or dependents; or
(4) Payments necessary to prevent the Participant's eviction
from, or the foreclosure of a mortgage on, his principal
residence.
(c) Hardship distributions shall be subject to the spousal
consent requirements contained in Sections 401(a)(11) and 417 of
the Code, to the same extent that those requirements apply to a
Participant pursuant to Section 10.1.
(d) A hardship distribution will be made to a Participant only
upon satisfaction of the following conditions:
(1) The Participant has obtained all nontaxable loans and all
distributions other than hardship distributions available to him
form all plans maintained by the Affiliated Employers;
(2) The hardship distribution does not exceed the amount of the
Participant's financial need as described in paragraph (b) plus
any amounts necessary to pay federal, state, and local income
taxes and penalties reasonably anticipated to result from the
distribution;
(3) All plans maintained by the Affiliated Employers provide that
the Participant's Elective Deferrals and Participant
contributions will be suspended for a period of 12 months
following his receipt of a hardship distribution; and
(4) All plans maintained by the Affiliated Employers provide that
the amount of Elective Deferrals that the Participant may make in
his taxable year immediately following the year of a hardship
distribution will not exceed the applicable limit under Section
402(g) of the Code for the taxable year, reduced by the amount of
Elective Deferrals made by the Participant in the taxable year of
the hardship distribution.
5.15 Special Effective Dates. If the Plan is adopted as an
amendment of an existing plan, the provisions of Sections 5.3 and
Section 5.7 through 5.11 are effective as of the first day of the
first Plan Year beginning after December 31, 1986.
ARTICLE VI:
Limitations on Allocations
6.1 No Additional Plan. If the Participant doe 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(1)(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 which may be credited to the
Participant's accounts for any Limitation Year will to 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 Account
would cause the Annual Additions for the Limitation Year to
exceed the Maximum Annual Additions, the amount contributed or
allocated will be reduced so that the Annual Additions for the
Limitation Year will equal the Maximum Annual Additions.
(b) Before determining a Participant's actual Section 415
compensation for a Limitation Year, the Employer may determine
the Maximum Annual Additions for the Participant on the basis of
a reasonable estimation of the Participant's Section 415
Compensation for the Limitation Year, uniformly determined for
all Participants similarly situated.
(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Annual Additions for the Limitation
Year will be determined on the basis of the Participant's actual
Section 415 compensation for the Limitation Year.
(d) If pursuant to paragraph 6.1(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 nondeductible voluntary 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 and Annual Addition as defined in Section 6.5(a),
maintained by an Affiliated Employer during any Limitation Year:
(a) the annual Additions which may be credited to a Participant's
Accounts under this Plan for any such Limitation Year will not
exceed the Maximum Annual Additions reduced by the Annual
Additions credited to a Participant's accounts under the other
plans and welfare benefit funds for the same Limitation year. If
the annual Additions with respect to the Participant under other
defined contribution plans and welfare benefit funds maintained
by an Affiliated Employer are less than the Maximum Annual
Additions, an the Employer contribution that would otherwise be
contributed or allocated to the Participant's Accounts under this
Plan would cause the Annual Additions for the Limitation year to
exceed this limitation, the amount contributed or allocated will
be reduced so that the Annual Additions under all such plans an
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 fund 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 b
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 as a result of a reasonable error
in determining the amount of Elective Deferrals that may be made
by a Participant, 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 the is 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 will not exceed 1.0
in any Limitation Year. The Annual Additions which may be
credited to the Participant's Accounts under this Plan for any
Limitation Year will be limited in accordance with the Plan
Agreement.
6.5 Definitions
(a) Annual Additions means the sum of the following amounts
credited to a Participant's Accounts for the Limitation Year:
(1) Employer contributions;
(2) For any Limitation Year beginning after December 31, 1986,
after-tax Employee 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 past-retirement medical benefits allocated to
the separate account of a key Employee, as defined in Section
419(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 person,
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 earning"; 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 o the basis of a
percentage of profits, commissions on insurance premiums, tips,
and bonuses), 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 t 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 non-qualified stock
option, or when restricted stock (or property) held by the
Participant either becomes freely transferable or is not 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) toward the purchase of an annuity described
in Section 403(b) of the Code (whether or not the amounts 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 includible in gross income 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 al the defined benefit plans (whether or not terminated)
maintained by the Affiliated Employers, and the denominator of
which is the lesser of 125 percent of the dollar limitation in
effect for the Limitation Year under Sections 415(b) and (d) of
the Code, or 140 percent 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 percent 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 Faction 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(1)(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 plans was maintained by any Affiliated employer).
The Maximum Annual Additions in any Plan Year is the lesser of
125 percent of the dollar limitation determined under Section
415(b) and (d) of the Code in effect under Section 415(c)(1)(A)
of the Code, or 35 percent 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 the 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 by computed as of
the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of
the Plan after May, 5, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or after
January 1, 1987. The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to
treat 100% of nondeductible Employee contributions as Annual
Additions.
(f) Excess Amount means, with respect to any Participant, the
amount by which Annual Additions exceed the Maximum Annual
Additions.
(g) Highest Average Compensation means the average compensation
for the three consecutive Years of Service with the Employer that
produces the highest average. A Year of Service with the
Employer is the period of 12 consecutive months specified as the
Limitation Year in the Plan Agreement.
(h) Limitation Year means the period of 12 consecutive months
specified in the Plan Agreement. All qualified plans maintained
by the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different period of 12
consecutive months, the new Limitation year must begin on a date
within the Limitation Year in which the amendment is made.
(i) Master or Prototype Plan means a plan the form of which is
the subject of a favorable opinion letter from the Internal
Revenue Service.
(j) Maximum Annual Additions, which is the maximum annual
addition that my 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 percent 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 (1)(1) or Section 419A(d)(2) of
the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different period of 12
consecutive months, the Maximum Annual Additions will not exceed
the Defined contribution Dollar Limitation multiplied by the
following fraction:
number of months in the short Limitation Year
12
(k) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if
such benefit is expressed in a form other than a straight life
annuity or Qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of the plan
assuming:
(1) the Participant will continue employment until normal
retirement age under the Plan (or current age, if later), and
(2) The Participant's Section 415 Compensation for the current
Limitation year and all other relevant factors used to determine
benefits under the plan will remain constant for al future
Limitation Years.
ARTICLE VII:
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) in a
Variable Plan, fulfilled the requirement for early retirement (if
any) specified in the Plan Agreement, or (iii) become Disabled,
will constitute his Retirement. In a Variable Plan, 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. In a Variable Plan, 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 (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 bee complete, his Beneficiary will be entitled to
distribution of benefits in accordance with Article 9. In a
Variable Plan, 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 complete 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 in a profit sharing plan may designate a
Beneficiary other an 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 change 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
relinquish the consent to a specific beneficiary. the marriage
of a Participant shall nullify any designation of a beneficiary
previously executed by the Participant. If it is established to
the satisfaction of the Plan Administrator that the Participant
has no spouse or that the spouse cannot be located, the
requirement of spousal consent shall not apply. Any spousal
consent, or establishment that spousal consent cannot be
obtained, shall apply only to the particular spouse involved.
7.3 Other Termination of Employment. A Participant whose
employment terminates for any reason other than his Retirement or
death will be entitled to distribution, in accordance with
Article 9, of benefits equal to the amount of the vested balance
of his Accounts as determined under Article 8.
ARTICLE VIII:
Vesting
8.1 Vested Balance. The vested balance of a Participant's
Accounts will be determined as follows:
(a) General Rule. A Participant's Deductible Employee
Contribution Account, Participant Contribution Account and
Rollover Account, and in a Standard Plan, all of his Accounts,
shall be fully vested at all times. The vested portion of his
Employer Contribution Account in a Variable plan shall be equal
to the percentage that corresponds, in the vesting schedule
specified in the Plan Agreement (or, if the Plan has become
top-heavy, the vesting schedule determined under Section 15.5),
to the number of Years of Service credited to the Participant as
of the end of the Plan Year 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
in a Variable Plan shall be equal to the percentage that
corresponds, in the vesting schedule specified in the Plan
Agreement (or, if the Plan has become top-heavy, the vesting
schedule determined under Section 15.5), to the number of Years
of Service credited to the Participant as of the end of the Plan
Year in which his employment terminates.
(c) Retirement. In a Variable Plan, 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 earning 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 (Variable
Plans Only). 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 competed one Year of Service
following his return to employment.
(b) If the Participant incurred five or more consecutive One-Year
Vesting Breaks, the:
(1) No Year of Service competed after his return to employment
will be taken into account in determining the vested portion of
his Accounts as of any time before he incurred the first One-Year
Vesting Break;
(2) Years of Service completed before he incurred the first
One-Year Vesting Break will not be taken into account in
determining the vested portion of his Accounts as of any time
after his return to employment (i) unless some portion of his
Employer Contribution Account or Employer Matching Account had
become vested before he incurred the first One-Year Vesting
break, and (ii) until he has completed one Year of Service
following his return to employment; and
(3) Separate sub-accounts will be maintained for the
Participant's pre-break and post-break Employer Contribution
Account and Employer Matching Account, until both sub-accounts
become fully vested. Both sub-accounts will share in the
earnings and losses of the Trust Fund.
8.3 Forfeiture of Non-Vested Amounts (Variable Plans Only). The
portion of a former Employee's Accounts that has not become
vested under Section 8.1 shall become a Forfeiture in accordance
wit the following rules, and shall be reallocated in accordance
with Section 4.2 or 4.3 or Article 5 (whichever applies) no later
than the end of the Plan Year in which it becomes a Forfeiture.
(a) If Distribution Is Made. If any or all of the vested portion
of a Participant's Accounts is distributed in accordance with
Section 9.1 or 9.2 before the Participant incurs five consecutive
One-Year Vesting Breaks, the nonvested portion of his Accounts
shall become a Forfeiture in the Plan Year in which the
distribution occurs. For purposes of the Section 8.3, if the
value of the vested portion of a Participant's Accounts is zero,
he shall be deemed to have received a distribution of the entire
vested balance of his Accounts on the day his employment
terminates. If the Participant elects to have distributed less
than the entire vested portion of his Employer contribution
Account or Employer Matching Accounts, the part of the nonvested
portion that will become a Forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the
amount of the distribution and the denominator of which is the
total value of the entire vested portion of such Accounts.
(b) Right of Payment. 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 tot he
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 5 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 the last
day of the Plan Year in which repayment is made, to the extent
thereof; and to the extent that Forfeitures are not available or
are insufficient to restore the balance, from contributions made
by the Employer pursuant to Section 4.1(f).
(c) If No Distribution Is Made. If no distribution (or deemed
distribution) is made to a Participant before he incurs five
consecutive One-year Vesting Breaks, the nonvested portion of his
Accounts shall become a Forfeiture in 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 earning s and losses of
the Trust Fund pursuant tot Section 13.4 in the same manner as
the Accounts of active Participants.
(e) Accumulated Deductible Contribution. 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)(BB) of the Code.
8.4 Special Rule in the Event of a Withdrawal (Variable Plans
Only). If a withdrawal pursuant to Section 12.2 or 12.3 is made
from a participant's Employer contribution Account or Employer
Matching Account before the Account is fully vested, and the
Participant may increase the vested percentage in the Account,
then a separate account will be established at the time of the
withdrawal, and at any relevant time after the withdrawal the
vested portion of the separate account will be equal to the
amount "X" determined by the following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested
percentage at the relevant time, AB is the account balance at the
relevant time, and D is the amount of the withdrawal.
8.5 Vesting Election. If the Plan is amended to change any
vesting schedule, or is amended in any way that directly or
indirectly affects he computation of a Participant's vested
percentage, or is deemed amended by an automatic change to a
top-heavy vesting schedule pursuant to Article 15, each
Participant who has competed not less than three Years of Service
may elect, within a reasonable period after the adoption of the
amendment or change, in a writing files 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 Hours 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 IX:
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 wit the Affiliated Employers
terminates.
A Beneficiary who is the surviving spouse of a Participant may
elect to have distribution of benefits begin within the 90-day
period following the Participant's death.
For purposes of this Section 9.1, the failure of a Participant
(and his spouse, if spousal consent is required pursuant to
Article 10) to consent to a Distribution while a benefit is
"immediately distributable" within the meaning of Section 9.2
shall be considered an election to defer commencement of payment.
In a Variable Plan, 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 a distribution is one to which sections 401(a)(11) and 417
of the Internal Revenue Code do not apply, such distribution may
commence less than 30 days after the notice required under
section 1.411(a)-11(c) of the Income Tax Regulations 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), a Participant';s
account balance may be distributed to the Participant or
transferred to another defined contribution plan (other than an
Employee stock ownership plan as defined in Section 4975(e)(7) of
the Code) maintained by an Affiliated Employer, without the
Participant's consent. For purposes of determining the
applicability of the foregoing consent requirements to
distributions made before the first day of the first Plan Year
beginning after December 31, 1988, the Participant's vested
account balance shall not include amounts attributable to
accumulated deductible employee contributions within the meaning
of section 72(o)(5)(B) of the Code.
9.3 Optional Forms of Distribution. If at the time a Participant
first becomes entitled t 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 rule of
Article 10 concerning joint and survivor annuities, a Participant
or Beneficiary may elect to receive benefits in any of the
following optional forms:
(a) A lump sum payment in cash or in kind or in a combination of
both;
(b) A series of installments over a period certain that meets the
requirements of Article 11; or
(c) A nontransferable annuity contract, purchased for 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
in a Profit Sharing Plan only if the Employer has so elected in
the Plan Agreement.
(d) In the event that the Plan is adopted as an amendment to an
existing plan, each optional form of distribute available under
the existing plan shall be made available under the Plan through
the purchase of an appropriate annuity contract in accordance
with paragraph (c).
9.4 Distribution Procedure. The Trustee shall make or commence
distributions to or for the benefit of Participants only on
receipt of a written order from the Employer 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 written
order. The Trustee shall be fully protected in acting upon the
written directions of the Employer in making benefit
distributions, and shall have not duty to determine the rights or
benefits of any person under the Plan or to inquire in to 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 written instructions as to the assets to
be converted to cash for the purposes of making payment.
9.5 Lost Distributee. In the event that the Plan Administrator
is unable with reasonable effort to locate a person entitled to
distribution under the Plan, the Accounts distributable to such a
person shall become a Forfeiture at the end of the third Plan
Year after the Plan Administrator's efforts to locate such person
began; provided, however, that the amount of the Forfeiture shall
be restored in the event that such person thereafter submits a
claim for benefits under the Plan. such restoration will be
made, first, from the Amman of Forfeitures available for
reallocation as of the last day of the Plan Year in which the
claim is made, to the extent thereof; and to the extent that
Forfeitures are not available or are insufficient to restore the
balance, from contributions made by the Employer pursuant to
Section 4.1(f). In a Standard Plan, a Forfeiture occurring under
this Section 9.5 shall be reallocated as though it were an
Employer contribution.
9.6 Direct Rollovers. This Section 9.6 applies to distributions
made on or after January 1, 1993. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may
elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. For purposes
of this Section 9.6, the following definitions shall apply:
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible
rollover distribution does not include any distribution that is
on e of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's Designated
Beneficiary, or for a specified period of 10 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 410(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, as defined in section 414(p) of the
Code, 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.
ARTICLE X:
Joint and Survivor Annuity Requirements
10.1 Applicability.
(a) Generally. The provisions of Sections 10.2 thorough 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 Profit Sharing Plans. The provisions
of Sections 10.2 through 10.5 shall not apply to a Participant in
a profit sharing plan 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 not 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 requirement 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 mad 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 Staring 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
life annuity. In either case, the Participant may elect to have
such an annuity distributed upon his attainment of the Earliest
Retirement Age under the Plan.
10.3 Qualified Preretirement Survivor Annuity. Unless an
optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, the Vested Account
Balance of a Participant who dies before the Annuity Staring 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(p0 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 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 change d
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 souse 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 o f 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
anytime before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
provision shall be valid unless the Participant has received
notice as provided in Section 10.5.
(d) Qualified Joint and Survivor Annuity means an immediate
annuity for the life of a Participant, with a survivor annuity
for the life of the spouse which is not less than 50 percent and
not more than 100 percent 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 percent.
(e) Annuity Starting Date means he 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 rollover), 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.
10.5 Notice Requirements. In the case of a Qualified Joint and
Survivor annuity, no less than 30 days and no more than 90 days
before a Participant's Annuity Starting Date the Plan
Administrator shall provide to him a written explanation of (i)
the terms and conditions of a Qualified and Joint 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
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
(ii) is the end of the two-year period beginning one year before
the date the applicable event occurs, and ending one year after
that date. In the case of a Participant who separates from
service before the Plan Year in which he reaches age 35, notice
shall be provided within the two-year period beginning one year
before the separation and ending one year after the separation .
If such a Participant thereafter returns to employment with the
Employer, the applicable period for the Participant shall be
redetermined.
10.6 Transitional Rules.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by
the preceding sections of this Article 10, must be given the
opportunity to elect to have those sections apply if the
Participant is credited with at least one Hour of Service under
the Plan or a predecessor plan in a Plan Year beginning on or
after January 1, 1976, and the Participant had at least ten years
of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under
the Plan or a predecessor plan on or after September 2, 1974, and
who is not otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given the
opportunity to have his benefits paid in accordance with
paragraph (d) of this section 10.6.
(c0 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, an 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:
(i) begins to receive payments under the Plan on or after normal
retirement age; or
(ii) dies on or after normal retirement age while still working
for the Employer; or
(iii) begins to receive payments on or after the qualified early
retirement age; or
(iv) separates from service on or after attaining normal
retirement age (or the qualified early retirement age) and after
satisfying the eligibility requirement 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 they Participant
has elected otherwise during the election period, which must
begin at least six months before the Participant attains
qualified early retirement age and end not more than 90 days
before the commencement of benefits. Any election hereunder will
be in writing and may be changed by the Participant at any time.
(2) Election of early survivor annuity. A participant who is
employed after attaining the qualified early retirement age will
be given the opportunity to elect during the election period to
have a survivor annuity payable on death. If the Participant
elects the survivor annuity, payments under such annuity must not
be less than the payments which would have been made to the
spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his death. Any
election under this provision will be in writing and may be
changed by the Participant at any time. The election period
begins o 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 not beginning before the Participant
reaches normal retirement age, or the date the Participant begins
participation.
ARTICLE XI:
Minimum Distribution Requirements
11.1 General Rules. Subject to Article 10, Joint and Survivor
Annuity Requirements, the requirements of this Article 11 shall
apply to any distribution of a Participant's interest and will
take precedence over any inconsistent provisions of the Plan.
Unless otherwise specified, the provisions of this Article 11
apply to calendar years beginning after December 31, 1984. All
distributions required under this Article 11 shall be determined
and made in accordance with the Income Tax Regulations issued
under Section 401(a)(9) of the Code (including proposed
regulations, until the adoption of final regulations), including
the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
11.2 Required Beginning Date. The entire interest of a
Participant must be distributed, or begin to be distributed, no
later than the Participant's required beginning date, determined
as follows.
(a) General Rule. The required beginning date of a Participant
is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2.
(b) Transitional Rules. The required beginning date of a
Participant who attains age 70 /2 before January 1, 1988, shall
be determined in accordance with (1) or (2) below:
(1) Non-5-percent Owners. The required beginning date of a
Participant who is not a 5-percent 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-percent Owners. The required beginning date of a
Participant who is a 5-percent owner during any year beginning
after December 31, 1979, is the first day of April following the
later of:
(i) the calendar year in which the Participant attains age 70
1/2, or
(ii) the earlier of the calendar year with or within which ends
the Plan Year in which the Participant becomes a 5-percent owner,
or the calendar year in which the Participant retires.
The required beginning date of a Participant who is not a
5-percent 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-percent Owners. A Participant is treated as a
5-percent owner for purposes of this Section 11.2 if he is a
5-percent 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 nay 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-percent owner under this Section 11.2, they must
continue, even if the Participant ceases to be a 5-percent owner
in a subsequent year.
11.3 Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions not made in a single
sum may be made only over one or a combination of the following
periods:
(a) the life of the Participant,
(b) the life of the Participant and his Designated beneficiary,
(c) a period certain not extending beyond the Life Expectancy of
the Participant, or
(d) a period certain not extending beyond the Joint and Last
survivor Expectancy of the Participant and his Designated
Beneficiary.
Designated Beneficiary means the individual who is designated as
the Beneficiary under the Plan in accordance with Section
401(a)(9) of the Code and the regulations issued thereunder
(including proposed regulations, until the adoption of final
regulations) and Section 7.2.
Distribution Calendar Year means a calendar year for which a
minimum distribution is required under Section 401(a)(9) of the
Code and this Section 11.3. For distributions beginning before
the Participant's death, the first Distribution Calendar Year is
the calendar year immediately preceding the calendar year which
contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to Section 11.5.
Life Expectancy and Joint and Last Survivor Expectancy are
computed by use of the expected return multiples in Tables V and
VI of Section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Participant (or his spouse, in the case
of distributions described in Section 11.5(b)) by the time
distributions are required to begin, Life Expectancies shall be
recalculated annually. Any such election shall be irrevocable as
to the Participant (or spouse) and shall apply to all subsequent
years. The Life Expectancy of a nonspouse beneficiary may not be
recalculated.
11.4 Determination of Amount To Be Distributed Each Year. If the
Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply
on or after the required beginning date. Paragraphs (a) through
(d) apply to distributions in forms other than the purchase of an
annuity contract.
(a) If a Participant's Benefit is to be distributed over (1) a
period not extending beyond the Life Expectancy of the
Participant or the Joint Life and Last Survivor Expectancy of the
Participant and his Designated Beneficiary, or (2) a period not
extending beyond the Life Expectancy of the Designated
Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first
Distribution Calendar Year, must at least equal the quotient
obtained by dividing the Participant's Benefit by the Applicable
Life Expectancy.
(b) For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the Designated Beneficiary, the
method of distribution selected must assure that at least 50
percent 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, the Applicable Life Expectancy shall be the Life
Expectancy as so recalculated. the applicable calendar year
shall be the first Distribution Calendar Year, an if Life
Expectancy is being recalculated such succeeding calendar year.
If annuity payments commence in accordance with Section 11.4(e)
before the required beginning date, the applicable calendar year
is the year such payments commence. If distribution is in the
form of an immediate annuity purchased after the Participant's
death with the Participant's remaining interest in the Plan, the
applicable calendar year is the year of purchase.
Participant's Benefit means the account balance as of the last
valuation date in the calendar year immediately preceding the
Distribution Calendar Year (valuation calendar year), increased
by the amount of any contributions or Forfeitures allocated to
the account balance as of date 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 Distribute 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 hall be treated as if it
had been made in the immediately preceding Distribute Calendar
Year.
1.5 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' 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 he extent that an election is made to receive
distributions in accordance with (1) or (2) below:
(1) If any portion of he Participant's interest is payable to a
Designated Beneficiary, distributions may be mad 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 this 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 to 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 souse begin ,
the provisions of paragraph (b), with the exception of
subparagraph (2) therein, shall be applied as if the surviving
spouse were the Participant.
(d) For purposes of this Section 11.5, any amount paid to a child
of the Participant will be treated as if it had been paid to the
surviving spouse of the Participant if the amount becomes payable
to the surviving spouse when the child reaches the age of
majority.
(e) For the purposes of this Section 11.5, distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if paragraph (c) above
is applicable the date distribution is required to begin to the
surviving spouse pursuant to paragraph(b) above). If
distribution in the form of an annuity contract described in
Section 11.4(e) irrevocably commences to the Participant before
the required beginning date, the date distribution is considered
to begin is the date distribution actually commences.
11.6 Transitional Rule. Notwithstanding the other requirements
of this Article 11, and subject to the requirements of Article
10, Joint and Survivor Annuity Requirement, distribution on
behalf of any Participant, including a 5-percent owner, may be
made in accordance with al 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 of, 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 as 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 distributor will
commence, the period over which distributions will be made, an
din 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 distribute under which
the distribution is being made if the method of distribution was
specified in writing and the distribution satisfies the
requirements in paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and the
regulations thereunder. If a designation is revoked after the
date distributions are required to begin, the Trust must
distribute by the end of the calendar year following the calendar
year in which the revocation occurs the total amount not yet
distributed which would have been required to have been
distributed to satisfy Section 401(a)(9) of the Code and the
regulations thereunder, but for the designation described in
paragraphs (b) through (e). For calendar years beginning after
December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any
changes in the designation generally will be considered to be a
revocation of the designation, but the mere substitution or
addition of another beneficiary (one not name in the designation)
under the designation will not be considered to be a revocation
of the designation, so long as the substation or addition does
not alter the peered 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&AJ-2 and Q&AJ-3 of Section 1.401(a)(9)-1 of the
Proposed Income Tax Regulations.
ARTICLE XII:
Withdrawals and Loans
12.1 Withdrawals from Participant Contribution Accounts. Subject
to the requirements of Article 10, a Participant may upon written
notice to the Employer withdraw any amount from his Participant
Contribution Account. A withdrawn amount may not be repaid to
the Plan. No forfeiture will occur solely as a result of an
Employee's withdrawal of Participant contributions.
12.2 Withdrawals on Account of Hardship (Profit Sharing Plans
Only). If the employer has so elected in the Plan Agreement for
a profit sharing plan, upon a Participant's written request the
Plan Administrator may permit a withdrawal fro the vested portion
of the Participant's Accounts on account of the Participant's
financial hardship, which must be demonstrated to the
satisfaction of the Plan Administrator. In considering such
requests, the Plan Administrator shall apply uniform standards
that do not discriminate in favor of Highly Compensated
Employees. In a Standard Plan with a Code, if hardship
withdrawals are permitted from both the Employer Contribution
Account and the Elective Deferral Account, they shall be made
first from a participant's Employer Contribution Account and
thereafter from a Participant's Elective Deferral Account,
subject to the additional requirements set forth in Section 5.14.
In a Standard Plan, the requirements of Section 5.14(b), (c),
(d)(1) and (d)(2) shall also apply to hardship distributions from
a Participant's Employer contribution Account. In a Variable
Plan with a CODA, if hardship withdrawals are permitted from more
than one of the Elective Deferral Account, Employer Matching
Account, and Employer contribution Account , they shall be made
first from a Participant's Employer contribution Account, and
thereafter from the Employer Matching Account, and finally from
the Elective Deferral Account, subject to the additional
requirement of Section 5.14. A withdrawn amount may not be
repaid to the Plan.
12.3 Withdrawals after Reaching Age 59 1/2 (Profit Sharing Plans
Only). 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 withdraw during his employment any amount not
exceeding the vested balance of his Accounts. A withdrawn amount
may not be repaid to the Plan.
12.4 Loans (Variable Plans Only). 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:
(a) The Plan Administrator shall administer the loan program
subject to the terms and conditions of this Section 12.4 and to
such reasonable additional rules and regulations as the Plan
Administrator may establish for the orderly operation of the
program.
(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.
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 reasonable equivalent basis. Loans shall not be made available
to highly compensated Employees (as defined in Section 414(q) of
the Code) in amount greater than the amount made available to
other employees (relative to the borrower s Account balance).
(d) Loans must be adequately secured by assignment of fifty
percent (50%) of the Participant s entire right, title, and
interest in and to the Trust fund, evidenced by the Participant s
collateral promissory not for the amount of the loan payable to
the order of the Trustee.
(e) Loans must bear a reasonable interest rate comparable tot he
rate charged by commercial lenders in the geographical area for
similar loans. The Plan Administrator shall not discriminate
among Participants in the matter of interest rates, but loans may
bear different interest rates if, in the opinion of the Plan
Administrator, the difference in rates is justified by conditions
that would customarily be taken into account by a commercial
lender in the Employer s geographical area.
(f) The period for repayment for any loan shall not exceed five
years, except in the case of a loan used to acquire a dwelling
unit which within a reasonable time is to be used as the
principal residence of the Participant, in which case the
repayment period shall not exceed ten years. The terms of a loan
shall require that it be repaid in level payments of principal
and interest not less frequently then quarterly throughout the
repayment period, except that alternative arrangements for
repayment may apply in the event that the borrower is on unpaid
leave of absence for a period not to exceed one year.
(g) To the extent that t 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 u se of the Account as security
for a loan. The spouse s consent must be obtained no earlier
than the beginning of the 90-day period that ends on the date on
which the loan is to be so secured, and obtained in accordance
with the requirements of Section 10.4(c) for a Qualified
Election. Any such consent shall thereafter be binding on the
consenting spouse and any subsequent spouse of the Participant.
a new consent shall be required for use of the Account as
security for any extension, renewal, renegotiation or revision of
the original loan.
(h) If valid spousal consent has been obtained in accordance with
Section 12.4(g), then notwithstanding any other provision of the
Plan the portions 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 fist 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.
(k) No loan to any Participant or Beneficiary can be made tot he
extend 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.
(l) Loans shall be considered investments directed by a
Participant pursuant to Section 13.3. The amount loaned shall be
charged solely against the Accounts of the Participant, and
repaid amounts and interest shall be credited solely thereto.
12.5 Procedure; Amount Available.
Withdrawals and loans shall be made subject to the terms and
condition 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.
ARTICLE XIII:
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 Participant 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 may be
returned to the Employer within one (1) year of the date of
payment.
(b) contributions that are conditioned on their deductibility
under the Code may be returned to the Employer 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 may be returned to the
Employer within one (1) year after such qualification is denied
by determination of the Internal Revenue Service, but only if an
application for determination of such qualification is made
within the time prescribed by law for filing the Employer s
federal income tax return for its taxable year in which the Plan
is adopted, or such later date as the Secretary of the Treasury
may prescribe, and
(d) amounts held in a suspense account may be returned to the
Employer on termination of the Plan, to the extent that they may
not then be allocated to any Participant s Account in accordance
with Article 6.
All Employer contributions under the Plan other than those made
pursuant to Section 4.1(f) are hereby expressly conditioned on
the initial qualification of the Plan and their deductibility
under the Code.
13.2 Management of Trust Fund. Except to the extent of any
investment in Policies pursuant to Article 14, the assets of the
Trust Fund shall be held in trust by the Trustee and accounted
for in accordance with this Article 13, and shall be invested in
accordance with Section 13.3 in the Investment Products specified
by the Employer in the Plan Agreement and from time to time
thereafter in writing. 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 matter would use in the
conduct of an enterprise of like character and with like aims.
The Employer shall cause the available Investment Products 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.
13.3 Investment Instructions. Except as Article 14 may apply,
all amounts held in the Trust Fund under the Plan shall be
invested in Investment Products. If the Employer has elected in
the Plan Agreement to make investment decisions for the Plan,
investment instructions as to the Employer Contribution Accounts,
Employer Matching Accounts, Qualified Matching Accounts, and
Qualified Nonelective Contribution Accounts shall be the
fiduciary responsibility of the Employer, and each of such
Accounts shall have a pro rata interest in all assets of the
Trust (other than life insurance policies under Article 14) to
which the Employer s instructions apply. If the Employer has not
elected to make investment decisions for the Plan, then assets of
the Trust shall be invested solely in accordance with the
instructions of the Participant w to whose Accounts they are
allocable, as delivered by the Employer to Putnam in accordance
with its service agreement with the Employer, if any.
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, if any, 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 any Valuation Date. To the extent the
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 (cc) of ERISA and
Title 29 of the Code of Federal Regulations section 2550.404c-1.
In such case, the Employer shall be responsible for providing the
Participant 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, not 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.
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 thus selected, 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 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 contributions shall be invested until
clear instructions are received in the default option set forth
in the service agreement between the Employer an Putnam or if no
such option is so set forth, in Putnam Daily Dividend Trust.
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 amount 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 o 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 elections of the shareholder in
additional share or in cash or other property, the Trustee will
elect to receive such dividends or distributions in additional
Investment Company Shares.
13.6 Registration and Voting of Investment Company Shares. All
Investment Company Shares shall be registered in the name of the
Trustee or its nominee. Subject to any requirements of applicable
law, the Trustee will transmit to Participants in a Standard
Plan, and to the Employer in a Variable Plan, copies of any
notices of shareholders meetings, proxies and proxy-soliciting
material, 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 fro such Participants or Employer, as the
case may be, with respect to matters to be voted upon by the
shareholders of the Investment Company. Such directions must be
in writing on a form approved by the Trustee, signed by the
addressee and delivered to the Trustee within the time prescribed
by it. The Trustee will not vote Investment Company Shares as to
which it receives no written directions.
13.7 Investment Manager (Variable Plans Only). The Employer,
with the consent of Putnam, may appoint an investment manager, as
defined in Section 3(38) of the Employee Retirement Income
Security Act of 1974, with respect to all or a portion of the
assets of the Trust Fund. The Trustee shall have no liability in
connection with any action or nonaction pursuant to directions of
such an investment manager.
ARTICLE XIV:
Insurance Policies
14.1 Purchase of Insurance Products. At the time of
establishment of the Plan, the Employer shall purchase for each
Participant such Policy or Policies, if any, as a Participant
shall request and annually thereafter such additional Policies as
a Participant shall request, subject to the limitations of
Section 14.2. All Policies shall have the same day and month of
issue, insofar as reasonably possible. The premiums on all
Policies shall be paid at the same intervals (for example,
annually, semi-annually, quarterly or monthly) but the interval
may be changed with respect to all Policies from time to time.
14.2 Limitation on Premiums. the premiums paid for Policies in
respect of any Participants shall be limited so that premiums
paid on any ordinary insurance Policies (that is, Policies with
both nonincreasing premiums and nondecreasing death benefits) on
the life of the Participant shall be 49 percent or less of the
Employer s total contributions for the Participant (and
Forfeitures allocated and amounts reapplied to his Employer
Contribution Account), and premiums paid on term insurance
Policies on the life of the Participant shall be less than 25
percent of such amount; provided that if both ordinary life
insurance Policies and term Policies are purchased for any
Participant, the total premiums on term Policies plus one-half
the premiums on ordinary life Policies shall be less than 25
percent of such amount. If at any time the total premiums to be
paid by the Employer for a Participant shall equal or exceed the
above limitations, then the life insurance coverage of that
Participant shall be reduced so that the total premiums shall not
equal or exceed the limitations. The required reduction shall be
made by changing all or a portion of the life insurance on the
Participant to paid-up life insurance or by canceling all or a
portion of any term life insurance.
14.3 Policy Options. At the election of the Participant covered
hereunder, a Policy may contain a waiver of premium disability
benefit provision or a provision for additional indemnity in the
event of accidental death, or both, if available on the type of
Policy selected and if permitted by the insurer.
14.4 Insurability. If any Participant who has elected that a
Policy be purchased is found by the insurer not to be insurable
at standard rates, the Employer shall, if permitted by the rules
of the insurer, purchase a similar Policy which provides a lesser
death benefit and which can be purchased for the same premium.
14.5 Dividends on Policies. Dividends payable on any Policy
shall be applied tot he purchase of additional benefits under the
Policy unless the Participant requests that they be applied in
reduction of premiums.
14.6 Trustee of Policy. The Insurance Trustee shall apply for an
be the owner of each Policy purchased under the terms of the
Plan. Each Policy must provide that proceeds will be payable to
the Insurance Trustee; however, the Insurance Trustee shall be
required t pay over all such proceeds to the Participant s
Designated Beneficiary in accordance with the distribution
provisions of the Plan including, without limitation, Section
10.3. Under no circumstances shall the Trust retain any part of
the proceeds. In the event of any conflict between the terms of
the Plan and the terms of any Policy purchased hereunder, the
Plan provisions shall control.
14.7 Obligations with Respect to Policies. Except as may be
otherwise provided in any conditional or dinging receipt issued
by an insurer, there shall be no coverage and no death benefit
payable under any Policy to be purchased from such insurer until
such Policy shall have been delivered and the premium therefor
shall have been paid. The Employer and the Insurance Trustee
shall not have any responsibility as to the effectiveness of any
Policy purchased from an insurer, nor shall either of them have
any liability or obligation to pay any amount to any Participant
or his beneficiary by reason of any failure or refusal by the
insurer to make such payment.
14.8 Distribution of Proceeds on Participant s Death. In the
event of the death of a Participant before the conversion
provided for in Section 14.9, there shall be payable to the
beneficiary named in any Policy on his life the benefits provided
by the terms of such Policy.
14.9 conversion of Policies. Except as provided in Section 19.3,
if any Policies of a Participant ( other than retirement income,
endowment or annuity Policies) are held for his benefit at the
time distribution is to commence, the Policies may be converted
by the Insurance Trustee into cash, paid to the Trustee, credited
to the Employer contribution Account of the Participant, invested
in accordance whit the written instructions of the Employer ( and
if no such instructions have been given or if such instructions
are not clear, invested in Investment Company Shares in the same
proportion as the most recent contributions to the Participant s
Accounts) and distributed pursuant to Article 9, subject to the
terms and conditions of Article 10. Retirement income, endowment
or annuity Policies will be distributed directly to the
Participant at the time distribution is to commence.
14.10 Conflict with Policies. In the event of any conflict
between the terms of the Plan and the terms of any Policies
hereunder, the Plan provisions shall control.
14.11 Insurance Loans to Owner-Employees. If an Owner-Employee
or Shareholder-Employee receives, either directly or indirectly,
any amount from an Insurer as a loan under a Policy, the amount
so received shall be considered a distribution under the Plan.
Any assignment or pledge (or agreement to assign or pledge) by an
Owner-Employee or Shareholder-Employee of any interest in the
Plan shall be considered a distributions of such interest.
ARTICLE XV:
Top-Heavy Plans
15.1 Superseding Effect. For any Plan Year beginning after
December 31, 1983, in which Plan is determined to be a Top-Heavy
Plan under Section 15.2(b), the provisions of this Article 15
will supersede any conflicting provisions in the Plan or the Plan
Agreement. These provisions will be deemed applicable to a
Standard Plan at all times, unless the Employer has affirmatively
elected in the Plan Agreement to perform top-heavy testing
annually.
15.2 Definitions. For purposes of this Article 13, the terms
below shall be defined as follows:
(a) key Employee means any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was: (1) an officer of the Employer having
annual compensation greater than 50 percent of the amount in
effect under Section 415(b)(1)(A) of the Code; (2) an owner (or
considered an owner under Section 318 of the Code) of one of the
ten largest interests in the Employer having annual compensation
of more than $150,000. Annual compensation means compensation as
defined in Section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee s gross income
under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code. The determination period is the Plan Year
containing the Determination Date, and the four preceding Plan
Years. The determination of who is a key Employee will be made
in accordance with Section 416(i)(1) of the code and the
Regulations thereunder.
(b) Top-Heavy: The Plan is Top-Heavy for a Plan Year beginning
after December 31, 1983, if any of the following conditions
exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60 percent and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(2) If this Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the group of plans exceeds 60 percent.
(3) If his 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 percent.
(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
the 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 balance 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 an
denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the 5-year period
ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value of account
balances and the Present Value of accrued benefits will be
determined as of the most recent Valuation Date that falls within
or ends with the 12-month period ending on the Determination
Date; except as provided in Section 416 of the Code and the
regulations thereunder for the first and second Plan Years of a
defined benefit plan. The account balances and accrued benefits
of a Participant(a) who is a 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 whit
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 in any defined benefit plan
maintained by the Employer and set forth in the Plan Agreement.
15.3 Minimum Allocation.
(a) Except as otherwise provided in paragraphs (c) and (d) below,
the Employer contributions and Forfeitures allocated on behalf of
any Participant who is not a Key Employee shall not be less than
the lesser of three percent of such Participant s Earnings, or in
the case here the Employer has not 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 first $200,000 of the Key Employee s
Earnings, allocated on behalf of any Key Employee for that year.
The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made
even though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would have
received a lesser allocation of the Employer s contributions and
Forfeitures for the Plan Year because of (1) the Participant s
failure to be credited with at least 1,000 Hours of Service, or
(2) the Participant s failure to make mandatory Employee
contributions to the Plan, or (3) the Participant s receiving
Earnings less than a stated amount. Neither Elective Deferrals,
Employer Matching Contributions nor Qualified Matching
Contributions for non-key employees shall be taken into account
for purpose of satisfying the requirement of this Section
15.3(a).
(b) For purposes of computing the minimum allocation. Earnings
will mean Earnings as defined in Section 2.13 of the Plan.
(c) The provision in paragraph (a) above shall not apply to any
Participant who was to employed by the Employer on the last day
of the Plan Year.
(d) The provision in paragraph (a) above shall not apply to any
Participant to the extent he is covered under any other plan or
plans of the Employer, and the Employer has provided in the Plan
Agreement that the minimum allocation requirement applicable to
Top-Heavy Plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extend required to be
nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Sections 411(a)(3)(B) or (D) of the Code.
15.4 Earnings Limitation. For any Plan Year in which the Plan is
Top-Heavy, only the first $200,000 (or such larger amount as may
be prescribed by the Secretary of the Treasury or his delegate)
of a Participant s annual Earnings shall be taken into account
for purposes of determining Employer contributions under the
Plan.
15.5 Minimum Vesting Schedules (Variable Plans Only). For any
Plan Year in which this Plan is Top-Heavy and 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 the Tree Year Cliff, Five Year
Graded or Six Year Graded schedule, then the schedule selected in
the Plan Agreement shall continue to apply for any Plan Year to
which this Section 15.5 applies.
(b) If the Employer has selected in the Plan Agreement as the
Plans regular vesting schedule the Five Year Cliff schedule,
then the Three Year Cliff schedule shall apply in any Plan Year
to which this Section 15.5 applies.
(c) If the Employer has selected in the Plan Agreement as the
Plan s regular vesting schedule the Seven Year Graded schedule,
then the Six Year Graded schedule shall apply in any Plan Year to
which this Section 15.5 applies.
(d) If the Employer has selected in the Plan Agreement as the
Plan s regular vesting schedule a schedule other than those
described in paragraphs (a), (b) and (c), then the schedule
specified by the Employer in the Plan Agreement for this purpose
shall apply in any Plan Year to which this Section 15.5 applies.
The minimum vesting schedule applies to all benefits within the
meaning of Section 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits
accrued before the effective date of Section 416 of the Code and
benefits accrued before the Plan became Top-Heavy. Further, to
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 of any Employee who does not have an Hour of Service
after the Plan has initially become Top-Heavy will be determined
without regard to this Section 15.5.
15.6 Adjustment of Fractions. For any Plan Year in which the
Plan is Top-Heavy, the Defined Benefit Fraction and the Defined
Contribution Fraction in Article 6 shall each be computed using
100 percent of the dollar limitations specified in Sections
415(b)(1)(A) and 415(c)(1)(A) instead of 125 percent. In a
Variable Plan, the foregoing requirement shall not apply if the
Top-Heavy Ratio does not exceed 90 percent and the Employer has
elected in the Plan Agreement to provide increased minimum
allocations or benefits satisfying Section 416(h)(2) of the Code.
ARTICLE XVI:
Administration of the Plan
16.1 Plan Administrator. The Plan shall be administered by the
Employer, as Plan Administrator and Named Fiduciary within the
meaning of ERISA, under rules of uniform application; provided,
however, that the Plan Administrator s duties and
responsibilities may be delegated to a person appointed by the
Employer or a committee established 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 he operations of the Plan in
accordance with its terms. The Pan Administrator shall have
discretionary authority to determine all questions arising out of
the administration, interpretation and application of the Plan,
all of which determinations shall be conclusive and binding on
all persons. The Plan Administrator in carrying out its
responsibilities under the Plan , may rely upon the written
opinions of its counsel and on certificates of physicians.
Subject to the provisions of the Plan and applicable law, the
Plan Administrator shall have no liability to any person as a
result of any action taken or omitted hereunder by the Plan
Administrator.
16.2 Claims Procedure. Claims for participation in or
distribution 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 t all Participants and
other persons as required by law. If any claim so made is denied
in whole or in part, the claimant shall be furnished promptly by
the Plan Administrator with a written notice:
(a) setting forth the reason for the denial,
(b) making reference to pertinent Plan provisions.
(c) describing any additional material or information from the
claimant which is necessary and why, and
(d) explaining the claim review procedure set forth herein.
Within 60 days after denial of any claim for participation or
distribution under the Plan, the claimant may request in writing
a review of the denial by the Plan Administrator. Any claimant
seeking review hereunder shall be entitled to examine all
pertinent documents and to submit issues and comments in writing.
The Plan Administrator shall render a decision on review
hereunder; provided, that if the Plan Administrator determines
that a hearing would be appropriate, its decision on review shall
be rendered within 120 days after receipt of the request for
review. The decision on review shall be in writing and shall
state the reason for the decision, referring to the Plan
provisions upon which it is based.
16.3 Employer s Responsibilities. The Employer shall be
responsible for:
(a) Keeping record of employment and other matters containing all
relevant data pertaining to any person affected hereby and his
eligibility to participate, allocations to his Accounts, and his
other rights under the Plan;
(b) Periodic, timely filing of all statements, reports and
returns required to be filed by ERISA;
(c) Timely preparation and distribution of disclosure materials
required by ERISA;
(d) Providing notice to interested parties as required by Section
7476 of the Code;
(e) Retention of records for periods required by law; and
(f) Seeing that all persons required to be bonded on account of
handling assets of the Plan are bonded.
16.4 Recordkeeper. The Recordkeeper is hereby designated as
agent of the Employer under the Plan to perform directly or
through agents certain ministerial duties in connection with the
Plan, in particular:
(a) To keep and regularly furnish to the Employer a detailed
statement of each Participant s Accounts, showing contributions
thereto by the Employer and the Participant, Investment Products
purchased therewith, earnings thereon and Investment Products
purchased therewith, and each redemption or distribution made for
any reason, including fees or benefits; and
(b) To the extent agreed between the Employer and the
Recordkeeper, to prepare for the Employer or to assist the
Employer to prepare such returns, reports or forms as the
Employer shall be required to furnish to Participants and
Beneficiaries or other interested persons and to the Internal
Revenue Service or the Department of Labor;
all as may be more fully set forth in a service agreement
executed by the Employer and the Recordkeeper. If the Employer
does not appoint another person or entity as Recordkeeper, the
Employer itself shall be the Recordkeeper.
16.5 Prototype Plan. Putnam is the sponsor of the Putnam Basic
Plan Document, a prototype plan approved as to form by the
Internal Revenue Service. Provided that an Employer s adoption
of the Plan is made known to and accepted by Putnam in accordance
with the Plan Agreement, Putnam will inform the Employer of
amendments to the prototype plan and provide such other services
in connection with the Plan as may be agreed between Putnam and
the Employer. Putnam may impose for its services as sponsor of
the prototype plan such fees as it may establish from time to
time in a fee schedule addressed to the Employer. Such fees
shall, unless paid by the Employer, be paid from the Trust Fund,
and shall in that case be charged pro rata against the Accounts
of all Participants. The Trustee is expressly authorized to
cause Investment Products to be sold or redeemed for the purpose
of paying such fees.
ARTICLE XVII:
Trustee and Insurance Trustee
17.1 Powers and Duties of the Trustee. The Trustee shall have
the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
(a) To invest all or a part of the Trust Fund in Investment
Products in accordance with the investment instructions delivered
by the Employer pursuant to Section 13.3, without restriction to
investments authorized for fiduciaries, including without
limitation any common, collective or commingled trust fund
maintained by the Trustee (or any other such fund, acceptable to
Putnam and the Trustee, that qualifies for exemption from federal
income tax pursuant to Revenue Ruling 81-100). Any investment
in, and any terms and conditions of, any such common, collective
or commingled trust fund available only to employee trusts which
meet the requirements of the Code, or corresponding provisions of
subsequent income tax laws of the United States, shall constitute
an integral part of this Agreement;
(b) If this is a Variable Plan and 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 trust 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 the written direction of or through the Employer, to
vote in person or by proxy (in accordance with Section 13.6 and,
in the case of stock of the Employer, at the direction of the
Employer) with respect to all securities that are part of the
Trust Fund;
(h) To consult and employ any suitable agent to act on behalf of
the Trustee and to contract for legal, accounting, clerical and
other services deemed necessary by the Trustee to manage and
administer the Trust Fund according to the terms of the Plan;
(i) Upon the written direction of the Employer, to make loans
from the Trust Fund to Participants in amounts and on terms
approved by the Plan Administrator in accordance with the
provisions of the Plan; provided that the Employer shall have the
sole responsibility for computing and collecting all loan
repayments required to be made under the Plan; and
(j) To pay from the Trust Fund all taxes imposed or levied with
respect to the Trust Fund or any part thereof under existing or
future laws, and to contest the validity or amount of any tax
assessment, claim or demand respecting the Trust Fund or nay part
thereof.
17.2 Limitation of Responsibilities. Except as may otherwise be
required under applicable law, neither the Trustee nor the
Insurance Trustee nor any of their respective agents shall have
any responsibility for:
(a) Determining the correctness of the amount of any contribution
for the sole collection or payment of contributions, which shall
be the sole responsibility of the Employer;
(b) Loss or breach caused by any Participant s exercise of
control over his Accounts, which shall be the sole responsibility
of the Participant;
(c) Loss or breach caused by the Employer s exercise of control
over Accounts pursuant to Section 13.3, which shall be the sole
responsibility of the Employer;
(d) Sums paid to an insurer or the validity of any Policy or the
accuracy of information provided by an insurer, which shall be
the sole responsibility of the insurer;
(e) Performance of any other responsibilities not specifically
allocated to them under the Plan.
17.3 Fees and Expenses. The Trustee s fees for performing its
duties hereunder shall be such reasonable amounts as shall be
established by the Trustee from time to time in a fee schedule
addressed to the Employer. Such fees, any taxes of any kind
which may be levied or assessed upon or in respect of the Trust
Fund and any and all expenses reasonably incurred by the Trustee
shall, unless paid by the Employer, be paid from the Trust Fund
and shall, unless allocable to the Accounts of specific
Participants, be charged pro rata against the Accounts of all
Participants. The Trustee is expressly authorized to cause
Investment Products to be sold or redeemed for the purpose of
paying such amounts. Charges and expenses incurred in connection
with a specific Investment Product, unless allocable to the
Accounts of specific Participants, shall be charged pro rata
against the Accounts of all Participants for whose benefit
amounts have been invested in the specific Investment Product.
17.4 Reliance on Employer. The Trustee and its agents (and the
Insurance Trustee, if any) shall rely upon any decision of the
Employer, or of any person authorized by the Employer, purporting
to be made pursuant to he 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 to 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 instruction received
from the Employer as to the person or persons authorized to act
for the Employer hereunder, and to sign on behalf of the Employer
any directions or instructions, until receipt from the Employer
of written notice that such authority has been revoked.
17.5 Action Without Instructions. If the Trustee receives no
instructions from the Employer in response to communications sent
by registered or certified mail to the Employer at its last known
address as shown on the books of the Trustee, then the Trustee
may make such determinations with respect to administrative
matters arising under the Plan as it considers reasonable,
notwithstanding any prior instructions or directions given by or
on behalf of the Employer, but subject to any instruction or
direction given by or on behalf of the Participants. To the
extent permitted by applicable law, any determination so made
will be binding on all persons having or claiming any interest
under the Plan or Trust, and the Trustee will incur no obligation
or responsibility for any such determination made in good faith
or for any action taken pursuant thereto. I making any such
determination the Trustee may require that it be furnished with
such relevant documents as it reasonably considers necessary.
17.6 Advice of Counsel. The Trustee and the Insurance Trustee
may each consult with legal counsel (who may, but need not be,
counsel for the Employer) concerning any questions which may
arise with respect to their respective rights and duties under
the Plan, and the opinion of such counsel shall be full and
complete protection to the extent permitted by applicable law in
the respect of any action taken or omitted by the Trustee or the
Insurance Trustee, as the case may be, hereunder in accordance
with the opinion of such counsel.
17.7 Accounts. The Trustee shall keep full accounts of all
receipts and disbursement which pertain to investments in
Investment Products, and the Trustee and the Insurance Trustee
shall each keep accounts of such other transactions as it is
required to perform hereunder. Within a reasonable time
following the close of each Plan Year, or upon its removal or
resignation or upon termination of the Trust and at such other
times as may be appropriate, each shall render to the Employer
and any other persons as may be required by law an account of its
administration of the Plan and Trust during the period since the
last previous such accounting, including such information as may
be required by law. The written approval of any account by the
Employer and all other persons to whom an account is rendered
shall be final and binding as to all matters and transactions
stated or shown therein, upon the Employer and Participants and
all persons who then are or thereafter become interested in the
Trust. The failure of the Employer or any other person to whom
an account is rendered to notify the party rendering the account
within 60 days after the receipt of any account of his or its
objection to the account shall be the equivalent of written
approval. If the Employer or any other person to whom an account
is rendered files any objections within such 60-day period with
respect to any matters or transactions stated or shown in the
account and the Employer or such other person and the party
rendering the account 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 t the account to
commence legal proceedings. Nothing herein contained shall be
construed so as to deprive the Trustee or the Insurance Trustee
of the right to have a judicial settlement of its accounts. In
any proceeding for a judicial settlement of any account or for
instructions, the only necessary parties shall be the Trustee,
the Insurance Trustee, the Employer and persons to whom an
account is required by law to be rendered.
17.8 Access to Records. The Trustee and the Insurance Trustee
shall give access to their respective records with respect to the
Plan at reasonable times and on reasonable notice to any persona
required by law to have access to such records.
17.9 successors. any corporation into which the Trustee may
merge or with which it may consolidate or any corporation
resulting from any such merger or consolidation shall be the
successor of the Trustee without the execution or filing of any
additional instrument or the performance of any further act.
17.10 Persons Dealing With Trustee or Insurance Trustee. No
person dealing with the Trustee or the Insurance Trustee shall be
bound to see to the application of any money or property paid or
delivered to such party or to inquire into the validity or
propriety of any transactions.
17.11 Resignation and Removal; Procedure. The Trustee or the
Insurance trustee may resign at any time by giving 60 days
written notice to the Employer and to Putnam. The Employer may
remove the Trustee or the Insurance Trustee at any time by giving
60 days written notice to the party removed and to Putnam. In
any case of resignation or removal hereunder, the period of
notice may be reduced to such shorter period as is satisfactory
to the Trustee, the Insurance Trustee and the Employer.
Notwithstanding anything to the contrary herein, any resignation
hereunder shall take effect at the time notice hereof is given if
the Employer may no longer participate in the prototype Plan and
is deemed to have an individually designed plan at the time
notice is given.
17.12 Action of Trustee Following Resignation or Removal. When
the resignation or removal of the Trustee becomes effective, the
Trustee shall perform all acts necessary to transfer the Trust
Fund to its successor. However, the Trustee may reserve such
portion of the Trust Fund as it may reasonably determine to be
necessary for payment of its fees and any taxes and expenses, and
any balance of such reserve remaining after payment of such fees,
taxes and expenses shall be paid over to its successor. The
Trustee shall have no responsibility for acts or omissions
occurring after its resignation becomes effective.
17.13 Action of Insurance Trustee Following Resignation or
Removal. when the Insurance Trustee s resignation or removal
becomes effective, the Insurance Trustee shall perform all acts
necessary to transfer ownership of the Policies to its successor.
If no successor has accepted appointment, the Policies shall be
held and owned by the Employer acting as Insurance Trustee until
a successor is appointed.
17.14 Effect of Resignation or Removal. Resignation or removal
of the Trustee or the Insurance Trustee shall to terminate the
Trust. In the event of any vacancy in the position of Trustee
(or, in a Plan having amounts invested in Policies, the position
of Insurance Trustee), whether the vacancy occurs because of the
resignation or removal of the Trustee (or the Insurance Trustee)
the Employer shall appoint a successor to fill the vacant
position. If the Employer does not appoint such a successor who
accepts appointment by the later of 60 days after notice of
resignation or removal is given or by such later date as the
Trustee or the Insurance Trustee, as the case may be, and
Employer may agree in writing to postpone the effective date of
the Trustee or the Insurance Trustee s resignation or removal,
the Trustee or Insurance Trustee may apply t a court of competent
jurisdiction for such appointment of cause the Trust to be
terminated, effective as of the date specified by the Trustee or
Insurance Trustee, as the case may be, in writing delivered to
the Employer. Each successor trustee so appointed and accepting
a trusteeship hereunder shall have all of the rights and powers
and all of the duties and obligations of the original Trustee or
Insurance Trustee, as the case may be, under the provisions
hereof, but shall have no responsibility for acts or omissions
before he becomes a Trustee or Insurance Trustee.
17.15 Fiscal Year of Trust. The fiscal year of the Trust will
coincide with the Plan Year.
17.16 Limitation of Liability. Except as may otherwise be
required by law and other provisions of the Plan, no fiduciary of
the Plan, within the meaning of Section 3(21) of ERISA, shall be
liable for any losses incurred with respect to the management of
this 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
the Plan.
17.17 Indemnification. Subject to the limitations of applicable
law, the Employer agrees to indemnify and hold harmless (i) all
fiduciaries, within the meaning of ERISA Sections 3(21) and 404,
and (ii) Putnam, for all liability occasioned by any act, of such
party or omission to act, in good faith and without gross
negligence, and for all expenses incurred by any such party in
determining its duty or liability under ERISA with respect to any
questions arising under the Plan.
ARTICLE XVIII:
Amendment
18.1 General. The Employer reserves the power at any time or
times to amend the provisions of the Plan and the Plan Agreement
to any extent and in any manner that it may deem advisable. If,
however, the Employer makes any amendment (including an amendment
occasioned by a waiver of the minimum funding requirement under
Section 412 (d) of the Code) other than
(a) a change in an election made in the Plan Agreement,
(b) amendments stated in the Plan Agreement which allow the Plan
to satisfy Section 415 and to avoid duplication of minimums
under Section 416 of the Code because of the required aggregation
of multiple plans, or
(c) model amendments published by the Internal Revenue Service
which specifically provide that their adoption will not cause the
Plan to be treated a 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 person 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 Participant s Account balance may be reduced to the
extent permitted under Section 412(c)(80 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 electing an optional form of
benefit with respect to amount attributable to contributions made
performed before the adoption of the amendment; or
(3) To amend the Plan so as to decrease the portion of a
Participant s Account balance that has become vested, as compared
to the portion that was vested, under the terms of the Plan
without regard to the amendment, as of the later of the date the
amendment is adopted or the date it becomes effective.
(4) To amend the Plan in such a manner as would increase the
duties or liabilities of the Trustee or the Recordkeeper unless
the Trustee or the Recordkeeper consents thereto in writing.
18.2 Delegation of Amendment Power. The Employer and all
sponsoring organizations of the Putnam Basic Plan Document
delegate to Putnam Financial Services, Inc., 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 he purpose of adopting amendments which are certified to
Putnam Financial Services, Inc., 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 Financial Services, Inc., 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
Financial Services, Inc., or such successor has a similar power
of amendment. If a sponsoring organization does not adopt any
amendment mad by Putnam Financial Services, Inc., such sponsoring
organization shall cease to participate in this prototype Plan
and will be considered to have an individually designed plan.
ARTICLE XIX:
Termination of the Plan and Trust
19.1 General. The Employer has established the Plan and the
Trust with the bona fide intention and expectation that
contributions will be continued indefinitely, but the Employer
shall have not obligation or liability whatsoever to maintain the
Plan for any given length of time and may discontinue
contributions under the Plan or terminate the Plan at any time by
written notice delivered to the Trustee and Insurance Trustee,
without any liability whatsoever for any such discontinuance or
termination.
19.2 Events of Termination. The Plan will terminate upon the
happening of any of the following events:
(a) Death of the Employer, if a sole proprietor, or dissolution
or termination of the Employer, unless within 60 days thereafter
provision is made by the successor to the business with respect
to which the Plan was established for the continuation of the
Plan, and such continuation is approved by the Trustee;
(b) Merger, consolidation or reorganization of the Employer into
one or more corporations or organizations, unless the surviving
corporations or organizations adopt the Plan by an instrument in
writing delivered to the Trustee within 60 days after such a
merger, consolidation and reorganization;
(c) Sale of all or substantially all of the assets of the
Employer, unless the purchaser adopts the Plan by an instrument
in writing delivered to the Trustee within 60 days after the
sale;
(d) the institution of bankruptcy proceedings by or against the
Employer, or a general assignment by the Employer to or for the
benefit of its creditors; or
(e) Delivery of notice as provided in Section 19.1.
19.3 Effect of Termination. Notwithstanding any other provisions
of this Plan, other than Section 19.4, upon termination of the
Plan or complete discontinuance of contributions thereunder, each
Participant s Accounts will become fully vested and
nonforfeitable, and upon partial termination of the Plan, the
Accounts of each Participant affected by the partial termination
will become fully vested and nonforfeitable. The Employer shall
notify the Trustee and the Insurance Trustee in writing of such
termination, partial termination or complete discontinuance of
contributions. In the events of the complete termination of the
Plan or discontinuance of contributions, the Trustee will, after
payment of all expenses of the Trust Fund, make distribution of
the Trust assets to the Participants or other persons entitled
thereto, in such form as the Employer may direct pursuant to
Article 10 or, in the absence of such direction, in a single
payment in cash or in kind. Upon completion of such
distributions under this Article, the Trust will terminate, the
Trustee and the Insurance Trustee will be relieved from their
obligations under the Trust, and no Participant or other person
will have any further claim thereunder.
19.4 Approval of Plan. Notwithstanding any other provision of
the Plan, if the Employer fails to obtain or to retain the
approval by the Internal Revenue Service of the Plan as a
qualified plan under Section 401(a) of the Code, then (i) the
Employer shall promptly notify the Trustee, and (ii) the Employer
may no longer participate in the Putnam prototype plan, but will
be deemed to have an individually designed plan. If it is
determined by the Internal Revenue Service that the Plan upon its
initial adoption does not qualify under Section 401(a) of the
Code, all assets then held under the Plan will be returned within
one year of the denial of initial qualification to the
Participants and the Employer to the extent attributable to their
respective contributions and any income earned thereon, but only
if the application for qualification is made by the time
prescribed by law for filing the Employer s federal income tax
return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe. Upon
such distribution, the Plan will be considered to be rescinded
and to be of no force or effect.
ARTICLE XX:
Transfers from Other Qualified Plans; Mergers
20.1 General. Notwithstanding any other provision hereof,
subject to he approval of the Trustee there may be transferred to
the Trustee all or any of the assets held (whether by a trustee,
custodian or otherwise) in respect of any other plan which
satisfies the applicable requirements of Section 401(a) of the
Code and which is maintained for the benefit of any Employee
(provided, however, that the Employee is not a member of a class
of Employees excluded from eligibility to participate in the
Plan) except that insurance policies held in respect of such
other plan shall be transferred tot he Insurance Trustee as
trustee if the Employer so determines. Any such assets so
transferred shall be accompanied by written instructions from the
Employer naming the persons for whose benefit such assets have
been transferred and showing separately the respective
contributions made by the Employer and by the Participants and
the current value of the assets attributable thereto.
20.2 Amounts Transferred. The Employer shall credit any assets
transferred pursuant to Section 201. 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 e treated as contributions previously made under the Plan
by the Employer or by such persons, as the case may be.
20.3 Merger or Consolidation. The Plan shall not be merged or
consolidated with any other plan, nor shall any assets or
liabilities of the Trust Fund be transferred to any other plan,
unless each Participant would receive a benefit immediately after
the transaction, if the Plan then terminated, which is equal to
or greater than the benefit he would have been entitled to
receive immediately before the transaction if the Plan had then
terminated.
ARTICLE XXI:
Miscellaneous
21.1 Notice of Plan. The Plan shall be communicated to all
Participants by the Employer on or before the last day on which
such communication may be made under applicable law.
21.2 No Employment Rights. Neither the establishment of the Plan
and the Trust, nor any amendment thereof, nor the creation of any
fund or account, nor the purchase of Policies, nor the payment of
any benefits shall be construed as giving to any Participant or
any other person any legal or equitable right against the
Employer, the Trustee, or the Insurance Trustee, or the Insurance
Trustee, except as provided herein or by ERISA; and in no event
shall the terms of employment or service of any Participant be
modified or in any way be affected hereby.
21.3 Distributions Exclusively From Plan. Participants and
Beneficiaries shall look solely to the assets held in the trust
and any Policies purchased pursuant to the Plan for the payment
of any benefits under the Plan.
21.4 No Alienation. The benefits provided hereunder shall not be
subject to alienation, assignment, garnishment, attachment,
execution or levy of any kind, and any attempt to cause such
benefits to be so subjected shall not be recognized, except as
provided in Section 12.4 or in accordance with a Qualified
domestic relations order within the meaning of Section 414(p) of
the Code. The Plan Administrator shall determine whether a
domestic relations order is qualified in accordance with written
procedures adopted by the Plan Administrator.
21.5 Provision of Information. The Employer, Trustee and
Insurance Trustee shall furnish to each other such information
relating to the Plan and Trust as may be required under the Code
or ERISA and any regulations issued or forms adopted by the
Treasury Department or the Labor Department or otherwise
thereunder.
21.6 no Prohibited Transactions. The Employer, Trustee, and
Insurance Trustee shall, to the extent of their respective powers
and authority under the Plan, prevent the Plan from engaging in
any transaction known by that person to constitute a transaction
prohibited by Section 4975 of the Code and any rules or
regulations with respect thereto.
21.7 Governing Law. The Plan shall be construed, administered,
regulated and governed in all respects under and by the laws of
the United States, and to the extent permitted by such laws, by
the laws of the Commonwealth of Massachusetts.
21.8 Gender. Whenever used herein, a pronoun in the masculine
gender includes the feminine gender unless the context clearly
indicates otherwise.
<PAGE>
II. IRS Opinion Letters
II. IRS Opinion Letters
Putnam Standard Profit Sharing and 401(k) Plan
Opinion Letter 38
Putnam Standard Money Purchase Pension Plan
Opinion Letter 39
Putnam Variable Profit Sharing and 401(k) Plan
Opinion Letter 40
Putnam Variable Money Purchase Pension Plan
Opinion Letter 41
<PAGE>
Putnam
Retirement
Plans:
Plan Agreements
for the Simplified
Retirement Plans
Putnam Profit Sharing Plan (Keogh)
Putnam Money Purchase Pension Plan (Keogh)
Putnam Profit Sharing and 401(k) Plan
Boston*London*Tokyo
<PAGE>
Contents
Part I: Summary of Plan Services
Summary of Plan Services 2
Part II: Adopting a Simplified Putnam Retirement Plan
Step-by-Step Guide to Establishing a
Putnam Profit Sharing Plan (Keogh) 4
Step-by-Step Guide to Establishing a
Putnam Money Purchase Pension
Plan (Keogh) 5
Step-by-Step Guide to Establishing a
Putnam Profit Sharing and 401(k) Plan 6
Suggested Form of Board Resolution
for a New Plan 7
Putnam Plan Agreement #001 9
Putnam Plan Agreement #002 19
Instructions for Completing and Distributing
Notice to Interested Parties 27
Notice to Interested Parties 29
Plan Investment Form 33
Part III: Questions and Answers about the
Simplified Putnam Retirement Plans
General Comments 39
Key Definitions 40
Contributions 41
Plan Investments 45
Plan Distributions 45
Top-Heavy Testing 46
Plan Administration 47
Glossary of Terms 49
<PAGE>
Part I: Summary of Plan Services
Summary of Plan Services 2
Summary of Plan Services
Putnam will provide the following administrative services listed
below for each of the Simplified Putnam Retirement Plans.
A. Plan Installation/Maintenance:
1 Putnam will provide the initial SUMMARY PLAN DESCRIPTION to the
Employer for the Employer s completion, review, approval and
submission to the Department of Labor and distribution to the
Plan Participants and Beneficiaries.
2 Putnam will provide the NOTICE TO INTERESTED PARTIES (page 29
of this booklet) for the Employer s completion, review, approval
and distribution to the Plan Participants.
3 Putnam will provide the Employer any PLAN AMENDMENTS necessary
to comply with changes required by law.
B. Employer and Employee Reports
1 Putnam will process Employer authorization for hardship
withdrawals, if applicable, benefit payments, and investment
change elections pursuant to Employer instructions in accordance
with the Plan.
2 Putnam will allocate contributions to Participant accounts
pursuant to Employer instructions in accordance with the Plan.
3 Putnam will provide Consolidated Quarterly Statements and
confirmations of each fund transaction to Participants.
4 Putnam will provide the Employer with assistance with the
preparation of a Summary Annual Report for distribution to Plan
Participants.
5 Putnam will provide the Employer with a 401(k) Plan Group
Investment Report, if applicable.
6 Putnam will provide the Employer with sample administrative
forms.
7 Putnam will provide the Employer with a Form 5500 kit with
instructions to assist the Employer with preparation of the
applicable Form 5500 for filing with the IRS.
<PAGE>
8 Putnam will provide the Employer with an information kit to
assist the Employer in performing an annual TEFRA Top-Heavy Test,
if applicable.*
9 Putnam will provide the Employer with an informational kit to
assist the Employer in performing a Plan Year-end 401(k) Actual
Deferral Percentage Test, if applicable.*
10 Putnam will process Plan distributions, including preparation
and mailing of IRS Forms 1099-R. Plan distributions include all
payments to Participants and Beneficiaries, and payments to the
Employer or its designee.
*Putnam will not be responsible for providing information
necessary for aggregating tests with other plans maintained by
the Employer or plans maintained by other companies under the
same controlled group of companies or affiliated service group.
Part II: Adopting a Simplified Putnam Retirement Plan
Step-by-Step Guide to Establishing a
Putnam Profit Sharing Plan (Keogh) 4
Step-by-Step Guide to Establishing a
Putnam Money Purchase Pension
Plan (Keogh) 5
Step-by-Step Guide to Establishing a
Putnam Profit Sharing and 401(k) Plan 6
Suggested Form of Board Resolution
for a New Plan 7
Putnam Plan Agreement #001 9
Putnam Plan Agreement #002 19
Notice to Interested Parties 29
Plan Investment Form 33
<PAGE>
Step-by-Step Guide to Establishing a Putnam Profit Sharing Plan
(Keogh)
1 Contact Putnam or your investment dealer to order Employee
Enrollment Kits and the appropriate fund prospectuses for each of
your employees. If you already have a retirement plan and will
be transferring assets to Putnam, please request the Plan
Transfer Booklet.
2 Before adopting the Putnam Plan, corporate employers must pass
a Board Resolution. A suggested Form of Board Resolution for New
Plan is on page 7. (If you are transferring from your current
plan, please see the Suggested Form of Board Resolution provided
in the Plan Transfer Booklet.)
3 Complete Plan Agreement #001 on pages 9-18. (You do not need
to complete Item 12 of Plan Agreement #001 when adopting a Putnam
Profit Sharing Plan.) If you wish to adopt a Paired Putnam
Profit Sharing and Money Purchase Pension Plan, you must also
complete Plan Agreement #002.
4 Complete and post the Notice to Interested Parties on page 29.
5 Enroll your employees. Each eligible employee must receive an
employee enrollment kit and Buyer s Guides (prospectuses) for the
Putnam funds that are being offered through your plan. All
eligible employees should return a signed enrollment form to you.
6 Complete the Plan Investment Form on pages 33-37 using the
employee enrollment forms.
7 Send the following items to Putnam Investor Services, ATTN:
Investment Processing, P.O. Box 2701, Boston, MA 02208:
* Board Resolution
* Plan Agreement #001
* Employee Enrollment Forms
* Plan Investment Form
* Check payable to Putnam Fiduciary Trust Company for initial
contribution and annual participant fee
Be sure to keep copies of these forms for your files.
8 Putnam will review your Plan Agreement for acceptance. (Putnam
must accept this Agreement in order for you to receive future
amendments to the plan.) Putnam will provide you with a Summary
Plan Description and Your Putnam Retirement Plan Kit. This kit
contains the administrative forms associated with the operation
of a Putnam plan.
Step-by-Step Guide to Establishing a Putnam Money Purchase
Pension Plan (Keogh)
1 Contact Putnam or your investment dealer to order Employee
Enrollment Kits and the appropriate fund prospectuses for each of
your employees. If you already have a retirement plan and will
be transferring assets to Putnam, please request the Plan
Transfer Booklet.
2 Before adopting the Putnam Plan, corporate employers must pass
a Board Resolution. A suggested Form of Board Resolution for New
Plan is on page 7. (If you are transferring from your current
plan, please see the Suggested Form of Board Resolution provided
in the Plan Transfer Booklet.)
3 Complete Plan Agreement #002 on pages 19-26. (If you wish to
adopt a Paired Putnam Profit Sharing and Money Purchase Pension
Plan, you must also complete Plan Agreement #001.
4 Complete and post the Notice to Interested Parties on page 29.
5 Enroll your employees. Each eligible employee must receive an
employee enrollment kit and Buyers Guides (prospectuses) for the
Putnam funds that are being offered through your plan. All
eligible employees should return a signed enrollment form to you.
6 Complete the Plan Investment Form on pages 33-37 using the
employee enrollment forms.
7 Send the following items to Putnam Investor Services, ATTN:
Investment Processing, P.O. Box 2701, Boston, MA 02208:
* Board Resolution
* Plan Agreement #002
* Employee Enrollment Forms
* Plan Investment Form
* Check payable to Putnam Fiduciary Trust Company for initial
contribution and annual participant fee
Be sure to keep copies of these forms for your files.
8 Putnam will review your Plan Agreement for acceptance. (Putnam
must accept this Agreement in order for you to receive future
amendments to the plan.) Putnam will provide you with a Summary
Plan Description and Your Putnam Retirement Plan Kit. This kit
contains the administrative forms associated with the operation
of a Putnam plan.
<PAGE>
Step-by-Step Guide to Establishing a Putnam Profit Sharing and
401(k) Plan
1 Contact Putnam or your investment dealer to order Employee
Enrollment Kits and the appropriate fund prospectuses for each of
your employees. If you already have a retirement plan and will
be transferring assets to Putnam, please request the Plan
Transfer Booklet.
2 Before adopting the Putnam Plan, corporate employers must pass
a Board Resolution. A Suggested Form of Board Resolution for New
Plan is on page 7. (If you are transferring from your current
plan, please see the Suggested Form of Board Resolution provided
in the Plan Transfer Booklet.)
3 Complete Plan Agreement #001 on pages 9-18.
4 Complete and post the Notice to Interested Parties on page 29.
5 Enroll your employees. Each eligible employee must receive an
employee enrollment kit and Buyers Guides (prospectuses) for the
Putnam funds that are being offered through your plan. All
eligible employees should return a signed enrollment form to you.
6 Based on the information provided in your employee s Salary
Reduction Agreements, perform the preliminary 401(k) Actual
Deferral Percentage Test which is described on page 43 of this
booklet. Once you are sure that your plan meets the Actual
Deferral Percentage Test, begin payroll deduction procedures.
7 Complete the Plan Investment Form on pages 33-37 using the
employee enrollment forms.
8 Send the following items to Putnam Investor Services, ATTN:
Investment Processing, P.O. Box 2701, Boston, MA 02208:
* Board Resolution
* Plan Agreement #001
* Employee Enrollment Forms
* Plan Investment Form
* Check payable to Putnam Fiduciary Trust Company for initial
contribution and annual participant fee
Be sure to keep copies of these forms for your files.
9 Putnam will review your Plan Agreement for acceptance. (Putnam
must accept this Agreement in order for you to receive future
amendments to the plan.) Putnam will provide you with a Summary
Plan Description and Your Putnam Retirement Plan Kit. This kit
contains the administrative forms associated with the operation
of a Putnam plan.
<PAGE>
For Corporate Employers Only
Suggested Form of Board Resolution for New Plan
THE UNDERSIGNED certifies that he/she is Secretary of ,
a corporation organized and existing under the laws of the State
of
,
and that the following resolutions were adopted at a meeting of
the Board of Directors of the Corporations called and held on the
day of _______ , 19_______, and that the same have not been
amended or rescinded and are in full force and effect:
RESOLVED, that this Board authorizes and directs the proper
officers of this Corporation in the name an on behalf of this
Corporation to execute and deliver a Plan Agreement in the form
now before this meeting, adopting, effective as of ______, 19____
, the Putnam _________________ Plan (insert type of plan);
FURTHER RESOLVED, that this Board authorizes and directs the
proper officers of this Corporation to do all such acts and
things as they, in their discretion and with advice of counsel,
find necessary or desirable to carry out the Plan, including
making contributions out of funds of the Corporation in
accordance with the Plan Agreement;
FURTHER RESOLVED, that ______________ is appointed as Trustee to
serve in accordance with the terms and conditions of the Plan,
commencing on the effective date as designated in the foregoing
resolution:
FURTHER RESOLVED, that this Board authorizes and empowers any one
of the following officers of this Corporation (insert designated
officers): ___________________________________________
to represent this Corporation in all transactions with the
Trustee under the terms and conditions of the Plan, and in the
name of and on behalf of this Corporation to give all notices and
instructions to the Trustee which are necessary or desirable to
carry out the Plan, and to receive all communications for the
Trustee pursuant thereto;
FURTHER RESOLVED, that the President of this Corporation is
authorized and directed to submit an application to the Internal
Revenue Service for a determination that the Plan qualifies under
the provisions of Section 401 of the Internal Revenue Code of
1986, as amended.
(Note: IRS filing will not be necessary for most adopters of the
Putnam Standard Plans.)
THE UNDERSIGNED further certifies that the following are the
names and authentic signatures of the officers of the Corporation
referred to in the foregoing resolution. (Insert designated
officers.)
<PAGE>
Title Name Signature
____________________ ________________________
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
and the corporate seal of the Corporation this ____________ day
of___________, 19__________.
Secretary
_______________________________________
(Corporate Seal)
<PAGE>
Plan Agreement #001
Putnam Standard Profit Sharing and 401(k) Plan
This is the Plan Agreement for a Putnam prototype profit sharing
plan with optional Section 401(k) provisions. Please consult a
tax or legal advisor and review the entire form before you sign
it. If you fail to fill out this Putnam Plan Agreement properly,
the Plan may be disqualified. You can get further information to
help you complete the Plan Agreement from your investment dealer,
or from Putnam at:
Putnam Retirement Plan Services
P.O. Box 2701
Boston, Ma 02208
Phone: 1-800-662-0019
By executing this Plan Agreement, the Employer establishes a
profit sharing plan and trust upon the terms and conditions of
Putnam Basic Plan document #01, 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 Standard
Profit Sharing and 401(k) Plan.
All Employers complete items 1-11 below. Employers who wish to
adopt Section 401(k) provisions also complete item 12.
1. Business Information
A. Business Name
B. Business Address
Street City/State Zip Code
Phone SIC Code
Person for Putnam to Contact
C. Federal Tax Identification Number
D. Form of Organization (check one):
_____Sole Proprietorship _____Corporation
_____Partnership _____SCorporation
E. Taxable Year of Business:
_____Calendar Year _____Fiscal year ending on_____
1
Provide the Information requested about the Employer.
2. Plan Information
A. Plan Year The Plan Year of your Plan will be the same as the
Taxable Year of your Business shown in 1.E. above. If you change
the Taxable Year of your Business, the Plan Year will change
accordingly. 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.
Are you adopting this Plan to replace an existing plan?
_____Yes _____No
If you answered Yes in 2.B. above, the Effective Date of your
adoption of this Plan will be the first day of the current Plan
Year. Please complete the following:
Name of the plan you are replacing
Original Effective Date of the plan you are replacing
If you answered No in 2.B. above, the Effective Date of your
adoption of this Plan will be the later of the first day of the
current Plan Year, or the first day your Business began.
The Effective Date is (month/day/year)
2B
Complete this section only if the adoption of this plan is an
amendment to an existing plan. When signed, this document
becomes the official plan agreement, superseding any previously
signed plan agreements.
NOTE: If you are adopting this Plan to replace an existing plan,
certain retroactive dates shall apply to comply with the Tax
Reform Act of 1986, provided that you adopt this Plan before the
end of the 1994 Plan year.
3. Eligibility for Plan Participation (Plan Section 3.1)
NOTE: Refer to the Affiliated Employer Determination section in
the Putnam Retirement Planning, Easy-to-Follow Instructions
Booklet.
Employees will be eligible to participate in the Plan when they
complete the requirements you select in A, B and C below.
A. Classes of Eligible Employees The Plan requires coverage of
all classes of employees of the Employer and any Affiliated
Employer, except for union employees and nonresident aliens
without U.S.source income. The general rules of the Plan exclude
employees in those two groups, but if you want employees in one
or both categories to be eligible for your Plan, check the
appropriate space below.
The following employees will be eligible to participate in the
Plan:
_____Members of the following collective bargaining unit(s) (give
names of unions)
_____Nonresident aliens with no U.S. source income
B. Age Requirement (check one)
_____No minimum age required for participation
_____Employees must reach age_______(not over 21)to participate
3B
Complete 3B to establish the age required (if any) before an
employee can become a Plan Participant.
C. Service Requirements
1. To become eligible, an employee must complete (check one)
_____No minimum service requirement. Skip the rest of this part
C if you select this rule.
_____One Eligibility Period
_____Two Eligibility Periods (may not be chosen if you adopt
Section 401(k) provisions under item 12)
An Eligibility Period is the 12 month period beginning on an
employee s first day of work, and anniversaries of that day.
2. To receive credit for an Eligibility Period, an employee must
complete during that period at least (check one)
_____1,000 Hours of Service
_____Hours of Service (may not exceed 1,000)
3C
Complete 3C1 and 3C2 to establish the service required (if any)
before an employee can become a Plan Participant.
NOTE: A plan may not condition eligibility to participate in the
plan on more than two years of service, and may require two years
of eligibility service only if the plan provides for full and
immediate vesting after two years of service.
3. Hours of Service will be credited to employees by the
following method (check one)
_____Actual hours for which an employee is paid
_____Any employee who has one actual paid hour in the following
period will be credited with the number of Hours of Service
indicated (check one):
_____Day(10 Hours of Service) _____Week(45 Hours of Service)
_____Semi-monthly payroll period (95 Hours of Service)
_____Month (190 Hours of Service)
<PAGE>
Complete 3C3 to indicate how Hours of Service will be measured.
NOTE: An employee begins participation as of the first day of the
month in which he first fulfills the eligibility requirements you
have selected. 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.
4. Compensation (Plan Section 2.8)
Compensation for purposes of the Plan will be the amount of the
following that is actually paid by your Business to an employee
during the Plan Year (check one)
_____Form W-2 earnings as descried in Section 2.8 of the Plan
_____Form W-2 earnings as described in Section 2.8 of the Plan
plus any amounts withheld from the employee under a 401(k) plan,
cafeteria plan, SARSEP, tax-sheltered 403(b) arrangement, Section
457 deferred compensation plan or contributions described in
Section 414(h)(2) that are picked up by a governmental
employer.
_____All compensation included in the definition of Section 415
Compensation in Section 6.5(b) of the Plan
_____All compensation included in the definition in Section
6.5(b) of the Plan, plus any amounts withheld from the employee
under a 401(k) plan, cafeteria plan, SARSEP, tax-sheltered 403(b)
arrangement, Section 457 deferred compensation plan or
contributions described in Section 414(h)(2) that are picked up
by a governmental employer.
4
Complete this section to define plan compensation for employees
other than owner-employees or self-employed individuals. For
owner-employees and self-employed individuals, compensation is
earned income as defined in Section 2.12 of the Basic Plan
Document.
5. Contributions (Plan Sections 4.1 and 4.2)
A. Profit Limitation Will your contributions to the Plan be
limited to the current and accumulated profits of your Business?
(check one)
_____Yes _____NO
5
NOTE: Refer to the Contribution Limits Worksheet contained in a
separate booklet for a detailed explanation of contribution
limits.
You may limit Plan contributions to the profits of your business,
but you are not required to do so. Employer Contributions under
this plan include profit sharing contributions, Elective
Deferrals, Qualified Nonelective Contributions and Qualified
Matching Contributions.
If you will make contributions only under the Section 401(k)
provisions in item 12 of this Plan Agreement, skip the rest of
this part 5.
B. Amount The Employer will contribute to the Plan for each Plan
Year (check one)
_____An amount chosen by the Employer from year to year
_____% (not more than 15%) of the Earnings of all Qualified
Participants for the Plan Year
Any Employee who has met the eligibility requirements in item 3
of this Plan Agreement is a Qualified Participant unless his
employment terminates before the last day of the Plan Year for
reasons other than his death or Retirement, and he is not
credited with more than 500 Hours of Service in the Plan Year.
C. Allocation to Qualified Participants Contributions under
paragraph B will be shared by Qualified Participants in
proportion to their Earnings, unless you check the following
space to indicate that your Plan will be integrated with Social
Security, as explained on page 41. You must choose the Top-Heavy
Integration Formula unless you elect to perform annual top-heavy
testing for your Plan.
_____Contributions will be shared according to the Top-Heavy
Integration Formula in Section 4.2(c)(1) of the Basic Plan
Document in every Plan Year, whether or not the Plan is
top-heavy.
_____Contributions will be shared according to the Top-Heavy
Integration Formula in Section 4.2(c)(1) of the Basic Plan
Document only in Plan Years in which the Plan is top-heavy. In
all other Plan Years, contributions will be shared according to
the Non-Top-Heavy Integration Formula in Section 4.2(c)(2) of the
Basic Plan Document.
Complete 5B and 5C only if you wish to increase the amount of
contributions allocated to Participants who earn more than the
stated amount, by integrating your plan with Social Security.
See page 41 for more information.
NOTE: If you maintain any other qualified plan in addition to
this Plan, only one plan may be integrated with Social Security.
If you integrate this Plan with Social Security, see also the
top-heavy provisions in item 10.
D. Integration Level The Integration Level will be (check one)
_____The Social Security Wage Base in effect at the beginning of
the Plan Year.
_____% (not more than 100%) of the Social Security Wage Base in
effect at the beginning of the Plan Year.
_____$_____(not more than the Social Security Wage Base).
5D
Complete 5D only if you have elected in 5C to integrate your plan
with Social Security. See page 41 for more information.
6. Investments (Plan Sections 13.2 and 13.3)
The Employer selects in part A below the Investment Products that
will be available under the Plan (in addition to life insurance
policies selected under Plan Article 14, if any). All Investment
Products must be sponsored, underwritten or managed by Putnam.
From the group of available Investment Products selected by the
Employer, each Participant chooses the investments for his own
Accounts, unless the Employer elects differently in part B below.
Investment instructions may be changed on any business day.
A. Available Investment Products (Plan Section 13.2) The
following investments will be available under the Plan (check
one)
_____Any Putnam funds _____Other Investment Products
In the event that there is any amount in the Trust Fund for which
no instructions or unclear instructions are delivered, it will be
invested in Putnam Daily Dividend Trust until instructions are
received in good order, and the Employer will be deemed to have
selected Putnam Daily Dividend Trust as an available Investment
Product for that purpose.
6A
If you wish to offer Putnam Capital Manager a variable annuity
issued by Hartford with underlying funds managed by
Putnam through your plan, please call Putnam for more
information, 1-800-662-0019.
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 by the
Employer. Check below only if the Employer will make investment
decisions under the Plan.
_____The Employer will make investment decisions.
<PAGE>
6B
Place a check mark in the blank if the Employer will direct the
investment of Employer Contributions. If you do not check the
blank, the Plan provides that each Participant will direct the
investment of Employer Contributions allocated to the Employee s
account.
7. Distributions and Withdrawals.
A. Retirement Distributions.
1. Retirement Age (Plan Section 7.1) Normal retirement age will
be _____ (not over the lesser of 65 or any mandatory retirement
age enforced by the Employer).
2. Annuities (Plan Section 9.3) Will your Plan permit a
Participant to select a life annuity form of distribution? You
must check Yes if this Plan replaces an existing Plan that
permits distributions in life annuity form. (check one)
_____Yes _____No
7A
Enter the age (no later than 65) when an Employee may retire from
the service of the Employer.
B. Hardship Distributions (Plan Section 12.2) Will your Plan
permit hardship distributions from Employer Contribution
Accounts? You must check Yes if this Plan replaces an existing
Plan that permits hardship distributions. (check one)
_____Yes _____No
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. (check one)
_____Yes _____No
8. Other Plans
You must complete this section if you maintain or ever maintained
another qualified plan (other than a Putnam Money Purchase
Pension Plan under Plan Agreement #002) in which any Participant
in this Plan is (or was) a participant or could become a
participant, or if you maintain 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) under which
amount are treated as annual additions with respect to any
Participant in this Plan.
8
Skip this item 8 if the Plan is the only qualified plan your
Business has ever had.
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)
_____The provisions of Section 6.2 of the Plan will apply as if
the other plan were a master or prototype plan.
_____The plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess amounts,
in the manner you describe below.
_____
_____
B. If a Participant in the Plan is or has ever been a participant
in a defined benefit plan maintained by your Business, the plans
will meet the limits of Article 6 in the manner you describe
below:
_____
_____
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
8A and 8B
Complete 8A only if the Employer maintains or ever maintained any
other defined contribution plan (other than a master or prototype
plan) or any other defined benefit plan.
Complete 8B only if the Employer maintains or ever maintained a
defined benefit plan.
If any of these factual situations exist, the Employer should
consult with an attorney or actuary. Failure to complete this
section when applicable may adversely affect the tax-qualified
status of the Plan.
NOTE: Your description under A or B above must not leave the
selection of a method to your discretion from year to year.
9. Vesting
All Accounts are fully vested at all times.
10. Top-Heavy Provisions (Plan Section 15.3)
Federal tax laws require certain plans, called top-heavy plans,
to provide a minimum contribution for every non-key employee
covered by the plan. Whether a plan is top-heavy is determined
by an annual test, explained on page 46. If the plan s regular
contribution provisions already meet or exceed the top-heavy
minimum contribution, no additional action is required when the
plan is top-heavy, so there is no need to perform annual testing.
If the plan s regular contribution provisions do not already meet
or exceed the top-heavy minimum contribution, annual testing must
be performed, and, if the plan proves to be top-heavy, an
additional contribution must be made.
Your Plan s regular contribution provisions will meet or exceed
the top-heavy minimum, and you will not need to perform annual
testing, if any of the following applies:
(a) You will make contributions only under item 5 of this Plan
Agreement (no Section 401(k)), and your Plan is not integrated
with Social Security; or
(b) Your Plan is integrated with Social Security and you have
specified the Top-Heavy Integration Formula in item 5.C; or
(c) You will make contributions under item 12 (Section 401(k)),
and you have specified in item 12.C. a Qualified Nonelective
Contribution of at least 3% on behalf of all Participants; or
(d) You will make contributions under item 5 and item 12 (Section
401(k)), and you have specified in item 5.B a contribution of at
least 3% of Earnings that will not be integrated with Social
Security; or
(e) You maintain paired Putnam plans, or you maintain any other
qualified plan that automatically provides a minimum top-heavy
contribution or benefit for every non-key employee covered by
this Plan.
NOTE: If you maintain a defined benefit plan in additions to this
Plan, you cannot rely on categories (a) through (d).
If you fit into any of the above categories, STOP HERE. You do
not need to perform annual top-heavy testing.
If you do not fit into any of the above categories, then unless
you check this item 10 to indicate that you will perform annual
top-heavy testing for your Plan, the requirement of a minimum
contribution for each non-key employee, contained in Plan Section
15.3, will apply to your Plan at all times. If you check this
item 10, Section 15.3 will apply only in Plan Years when you Plan
fails the top-heavy test.
_____The Employer will perform annual top-heavy testing for the
Plan.
<PAGE>
11. Plan Administrator (Plan Section 16.1)
You may appoint a person or a committee to serve as Plan
Administrator. You may remove and replace anyone you have
appointed, and anyone you have appointed may resign, without the
need to amend this Plan Agreement, provided that you notify
Participants in writing of any such change. If you do not
appoint a Plan Administrator, the Plan provides that the Employer
will be the Plan Administrator.
The initial Plan Administrator will be (check one)
_____This person:
_____A committee composed of these people:
__________
__________
__________
12. Section 401(k) Plan Provisions (Plan Article 5)
12
Complete item 12 below if your Plan will allow employees to elect
pre-tax contributions under Section 401(k) of the Code. If you
will make contributions to the Plan only under item 12, see also
the top-heavy provisions in item 10.
A. Elective Deferrals (Plan Section 5.2)
1. A Participant may make Elective Deferrals in an amount not to
exceed (check one)
_____% of his Earnings (not more than 15%)
_____$_____(specify a dollar amount in each payroll period)
12A1
Complete section 12 only if you are adopting a Putnam Profit
Sharing and 401(k) Plan. If you are adopting a Putnam Profit
Sharing Plan (Keogh), go to section 13.
By the option selected in 12A1, the Employee s Elective Deferral
will be limited to a stated percentage of annual pay, or a stated
amount for each pay period. You must state a percentage or an
amount, as applicable.
NOTE: Elective Deferrals may not exceed the annual dollar limit
under Section 402(g) of the Internal Revenue Code.
2. A Participant may begin to make Elective Deferrals, or change
the amount of his Elective Deferrals, as of the following dates
(check one):
_____First business day of each month (monthly).
_____First business day of the first, fourth, seventh and tenth
months of the Plan Year (quarterly).
<PAGE>
_____First business day of the first and sixth months of the Plan
Year (semiannually).
_____First business day of the Plan Year only (annually).
12A2
Complete this section by designating the periods during which
employee elections to make Elective Deferral contributions will
be permitted, the date such an election will become effective,
the periods during which modifications can be made to employees
Elective Deferral elections and the date such a modification will
take effect.
3. May Participants make Elective Deferrals of bonuses?
_____Yes _____No
12A3
If this option is checked, Employees will be entitled to
contribute as Elective Deferrals to the Plan a percentage of (or
an amount from) bonuses that would otherwise be paid in cash.
B. Qualified Matching Contributions (Plan Section 2.60)
12B
Skip this part B if you will not make Qualified Matching
Contributions.
1. Qualified Matching contributions will be made with respect to
(check one)
_____Elective Deferrals by all Participants
_____Elective Deferrals only by Non-Highly Compensated
Participants
12B1
If this section is checked, the Employer will make Qualified
Matching contributions (i.e., contributions that match employee
Elective Deferrals and that can be used to assist in satisfying
the special 401(k) non-discrimination test). These contributions
must be fully vested at all times and must be subject to the
distribution restrictions described in Section 5.13 of the Basic
Plan Document. You must designate the class of employees on
whose behalf Qualified Matching Contributions will be made.
2. The amount of Qualified Matching Contributions made with
respect to a Participant will be:
(Check the provision desired and fill in the % blank(s) in the
provision you check. If you wish to determine the amount of
Qualified Matching Contributions from year to year instead of
specifying a fixed percentage, write V for variable in the %
blank at the beginning of each provision you check.)
_____% of his Elective Deferrals
_____% of his Elective Deferrals that do not exceed _____% of his
Compensation.
12B2
By completing this section, the Employer determines the degree to
which Qualified Matching Contributions will match the
Employees Elective Deferrals. Check one blank and provide the
appropriate information for the sentence following the one that
you check.
C. Qualified Nonelective Contributions (Plan Section 2.62)
12C
Skip this part C if you will not make Qualified Nonelective
Contributions.
If this section is checked, the Employer will be entitled to make
Qualified Nonelective Contributions to the Plan, as described
in Section 2.62 of the Basic Plan Document. These contributions
can assist the Employer in meeting the special 401(k)
non-discrimination test. If you complete 1, you must also check
2 (and provide percentage limits where appropriate), to determine
the amount of Qualified Nonelective Contributions to be made.
See page 42 for more information.
Note: If you wish to avoid annual testing to determine whether
your Plan is top-heavy, you may need to select a Qualified
Nonelective Contribution of at least 3% for all Participants,
because Elective Deferrals and Qualified Matching Contributions
for non-key employees do not count toward the top-heavy minimum
contribution requirement. See item 10 for more information.
1. Qualified Nonelective Contributions will be made on behalf of
(check one):
_____All Participants
_____Only Participants who are not Highly Compensated Employees
2. The amount of Qualified Nonelective Contributions for a Plan
Year will be (check one):
_____% (not over 15%) of the Earnings of Participants on whose
behalf Qualified Nonelective Contributions are made
_____An amount determined by the Employer, to be shared in
proportion to Compensation by Participants on whose behalf
Qualified Nonelective Contributions are made
D. Hardship Distributions from 401(k) Accounts (Plan Sections
12.2 and 5.14) Will your Plan permit hardship distributions from
Elective Deferral Accounts? (check one)
_____Yes _____No
13. Reliance on Opinion Letter
You may rely on the opinion letter issued by the National Office
of the Internal Revenue Service for this Plan, and avoid filing
an application for an IRS determination letter, only if you never
maintain or maintained at any time any other plan, except a
Putnam Standard Money Purchase Pension Plan under Plan Agreement
#002.
If you even maintained or you later adopt any plan (including a
welfare benefit fund, as defined in Section 419(e) of the Code,
which provides post-retirement medical benefits allocated to
separate account for key employees, as defined in section
419A(d)(3) of the Code; or an individual medical account, as
defined in section 415(1)(2) of the Code) in addition to this
plan (other than a Putnam Standard Money Purchase Pension Plan
under Plan Agreement #002), you may not rely on the opinion
letter issued by the National Office of the Internal Revenue
Service as evidence that your Plan is qualified under Section 401
of the Internal Revenue Code. If you adopt or maintain multiple
plans and you wish to obtain reliance that your plan(s) are
qualified, you should apply to the appropriate Key District
Director of Internal Revenue for a determination letter.
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
#01.
13
Employers should review this section carefully. The adoption of
the Putnam Standard Profit Sharing Plan should be reviewed with
your legal counsel and tax advisor.
<PAGE>
Employers Adoption of Putnam Standard Profit Sharing Plan
The Employer named below hereby adopts a PUTNAM STANDARD PROFIT
SHARING PLAN, and appoints ___________ to serve as Trustee of the
Plan. The Employer agrees to pay the fees as determined by
completing the Plan Investment Form, in accordance with the terms
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 a Putnam
Standard Profit Sharing Plan upon Putnam s acceptance of this
Plan Agreement.
Employer signature(s) to adopt Plan:
_____
Date of signature:
Provide a signature form an authorized representative of the
Employer
Please print name(s) of authorized person(s) signing above:
_________ Phone:
Phone:
A new Plan must be signed by the last day of the Employer s
Taxable Year in which the Plan is to be effective.
Dealer Information (to be completed by investment dealer)
Name of Investment Dealer
Name and No. of Investment Dealer/Representative
Name and No of Branch Office
Signature of Investment Dealer/Representative
Authorized Dealer Signature
Representative Phone Number
Acceptance of Trustee
The Trustee accepts appointment in accordance with the terms and
conditions of the Plan, effective as of the date of execution by
the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By _______________________________
B. Other Trustee
By _________________________ Trustees Tax I.D. Number __
(Trustee)
Address of Trustee ______________________________________
Person for Putnam to Contact ____ Phone ____________________
Complete Part B only if you have appointed a Trustee other than
Putnam Fiduciary Trust Company.
NOTE: Putnam may impose an annual maintenance fee as a condition
of its acceptance of this plan as a Putnam Standard Profit
Sharing Plan.
C. Appointment and Acceptance of Insurance Trustee
1. Appointment to:
Name of Insurance Trustee ________________________________
You are hereby designated as Insurance Trustee for Policies to be
held in accordance with the terms and conditions of this Plan and
Trust.
Employer signature to appoint Insurance Trustee:
By ___________________________________________________
(Authorized Signature)
2. Acceptance as Insurance Trustee is agreed to in accordance
with the terms and conditions of the Plan, effective as of the
date of execution by the Employer as set forth above.
By _________________________ Trustee s Tax I.D. Number _____
Address of Insurance Trustee ______________________________
Person for Putnam to Contact ____ Phone ____________________
Complete Part C only if insurance Policies will be purchased
under Article 14 of the Plan (in addition to Putnam investment
Products).
Acceptance by Putnam
Putnam hereby accepts this Employer s Plan as a prototype
established under the Putnam Defined Contribution Retirement Plan
and Trust Agreement.
Putnam Mutual Funds Corp.
By ___________________________________________________
<PAGE>
Plan Agreement #002
Putnam Standard Money Purchase Pension Plan
This is the Plan Agreement for a Putnam prototype money purchase
pension plan. Please consult a tax or legal advisor and review
the entire form before you sign it. If you fail to fill out this
Putnam Plan Agreement properly, the Plan may be disqualified.
You can get further information to help you complete the Plan
Agreement from your investment dealer, or from Putnam at:
Putnam Retirement Plan Services
P.O. Box 2701
Boston, MA 02208
Phone: 1-800-662-0019
By executing this Plan Agreement, the Employer establishes a
money purchase pension plan and trust upon the terms and
conditions of Putnam Basic Plan Document #01, 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
Standard Money Purchase Pension Plan.
1. Business Information
A. Business Name
B. Business Address
Street City/State Zip Code
Phone SIC Code
Person for Putnam to Contact
C. Federal Tax Identification Number
D. Form of Organization (check one):
_____Sole proprietorship _____Corporation
_____Partnership _____S Corporation
E. Taxable Year of Business:
_____Calendar Year _____Fiscal year ending on:_____
1
Provide the information requested about the Employer.
2. Plan Information
Plan Year The Plan Year of your Plan will be the same as the
Taxable Year of your Business shown in 1.E. above. If you change
the Taxable Year of your Business, the Plan Year will change
accordingly. The Plan Year will also be your Plan s Limitation
Year for purposes of the contribution limitation rules in Article
6 of the Plan.
<PAGE>
A. Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____Yes _____No
If you answered Yes in 2.A. above, the Effective Date of your
adoption of this Plan will be the first day of the current Plan
Year. Please complete the following:
Name of the plan you are replacing:
Original Effective Date of the plan you are replacing:
If you answered No in 2.A. above, the Effective Date of your
adoption of this Plan will be the later of the first day of the
current Plan Year, or the first day your Business began.
The Effective Date is (month/day/year)
2A
Complete this section only if the adoption of this plan is an
amendment to an existing Plan. When signed, this document
becomes the official plan agreement, superseding any previously
signed plan agreements.
NOTE: If you are adopting this Plan to replace an existing Plan,
certain retroactive dates shall apply to comply with the Tax
Reform Act of 1986, provided that you adopt this Plan before the
end of the 1994 Plan year.
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 and C below.
A. Classes of Eligible Employees The Plan requires coverage of
all classes of employees of the Employer and any Affiliated
Employer, except for union employees and nonresident aliens
without U.S. source income. The general rules of the Plan
exclude employees in those two groups, but if you want employees
in one or both categories to be eligible for your Plan, check the
appropriate space below.
The following employees will be eligible to participate in the
Plan:
_____Members of the following collective bargaining unit(s) (give
names of unions)
_____Nonresident aliens with no U.S. source income
<PAGE>
NOTE: Refer to the Affiliated Employer Determination section in
the Putnam Retirement Planning, Easy-to-Follow Instructions
booklet.
B. Age Requirement (check one)
_____No minimum age required for participation
_____Employees must reach age_______(not over 21) to participate
3B
Complete 3B to establish the age required (if any) before an
employee can become a Plan Participant.
C. Service Requirements
1. To become eligible, an employee must complete (check one)
_____No minimum service requirement. Skip the rest of this part
C if you select this rule.
_____One Eligibility Period
_____Two Eligibility Periods
An Eligibility Period is the 12 months beginning on an employees
first day of work, and anniversaries of that day.
2. To receive credit for an Eligibility Period, an employee must
complete during that period at least (check one)
_____1,000 Hours of Service
_____Hours of Service (may not exceed 1,000)
3C1 and 3C2
Complete 3C1 and 3C2 to establish the service required (if any)
before an Employee can become a Plan Participant.
NOTE: A plan may not condition eligibility to participate in the
plan on more than two years of service and may require two years
of eligibility service only if the plan provides for full and
immediate vesting after two years of service.
3. Hours of Service will be credited to employees by the
following method (check one)
_____Actual hours for which an employee is paid
_____Any employee who has one actual paid hour in the following
period will be credited with the number of Hours of Service
indicated (check one):
_____Day(10 Hours of Service) _____Week(45 Hours of Service)
_____Semi-monthly payroll period (95 Hours of Service)
_____Month (190 Hours of Service)
3C3
Complete 3C3 to indicate how Hours of Service will be measured.
NOTE: An employee begins participation as of the first day of the
month in which he first fulfills the eligibility requirements you
have selected. 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.
4. Compensation (Plan Section 2.8)
Compensation for purposes of the Plan will be the amount of the
following that is actually paid by your Business to an employee
during the Plan Year (check one)
_____Form W-2 earnings as descried in Section 2.8 of the Plan
_____Form W-2 earnings as described in Section 2.8 of the Plan
plus any amounts withheld from the employee under a 401(k) plan,
cafeteria plan, SARSEP, tax-sheltered 403(b) arrangement, Section
457 deferred compensation plan or contributions described in
Section 414(h)(2) that are picked up by a governmental
employer.
_____All compensation included in the definition of Section 415
Compensation in Section 6.5(b) of the Plan
_____All compensation included in the definition of section 415
compensation in Section 6.5(b) of the Plan, plus any amounts
withheld from the employee under a 401(k) plan, cafeteria plan,
SARSEP, tax-sheltered 403(b) arrangement, Section 457 deferred
compensation plan or contributions described in Section 414(h)(2)
that are picked up by a governmental employer.
4
Complete this section to determine Plan compensation for
Employees other than owner-employees or self-employed
individuals. For owner-employees and self-employed individuals,
Compensation is earned income as defined in Section 2.12 of the
Basic Plan Document.
5. Contributions (Plan Section 4.3)
A. Amount The Employer will contribute to the Plan for each Plan
Year this Base Contribution Percentage _____ (not more than 25%)
of the Earnings of all Qualified Participants for the Plan Year.
Any Employee who has met the eligibility requirements in item 3
of this Plan Agreement is a Qualified Participant unless his
employment terminates before the last day of the Plan Year for
reasons other than his death or Retirement, and he is not
credited with more than 500 Hours of Service in the Plan Year.
5
NOTE: Refer to the Contribution Limits Worksheet contained in a
separate booklet for a detailed explanation of contribution
limits.
Enter the percentage of Compensation required to be contributed
to the Plan each year. The contribution cannot exceed 25% of
Compensation paid to all Participants during the Plan Year. If
you accept both this Plan and a profit sharing plan, the combined
percentages for the two must not exceed 25% of Compensation. If
you wish to integrate your Plan, skip 5A and complete 5B and 5C.
B. Allocation to Qualified Participants Contributions will be
shared by Qualifed Participants in proportion to their Earnings,
unless you check the following space to indicate that your Plan
will be integrated with Social Security, as explained on page 41.
_____The Plan will be integrated with Social Security, and the
Base Contribution Percentage will be _____% (not less than 3%
unless you will perform annual top-heavy testing for your Plan).
C. Integration Level The Integration Level will be (check one)
_____The Social Security Wage Base in effect at the beginning of
the Plan Year.
_____% (not more tan 100%) of the Social Security Wage Base in
effect at the beginning of the Plan Year.
_____$_____ (not more than the Social Security Wage Base).
5B and 5C
Complete 5B and 5C only if you wish to increase the amount of
contributions allocated to Participants who earn more than a
stated amount by integrating your plan with Social Security. See
page 41 for more information.
NOTE: If you maintain any other qualified plan in addition to
this Plan, only one plan may be integrated with Social Security.
If you integrate this Plan with Social Security, see also the
top-heavy provisions in item 10.
6. Investments (Plan Sections 13.2 and 13.3)
The Employer selects in part A below the Investment Products that
will be available under the Plan (in addition to life insurance
policies selected under Plan Article 14, if any). All Investment
Products must be sponsored, underwritten or managed by Putnam.
From the group of available Investment Products selected by the
Employer, each Participant chooses the investments for his own
Accounts, unless the Employer elects differently in part B below.
Investment instructions may be changed on any business day.
A. Available Investment Products (Plan Section 13.2) The
following investments will be available under the Plan (check
one)
_____Any Putnam funds _____Other Investment Products
In the event that there is any amount in the Trust Fund for which
no instructions or unclear instructions are delivered, it will be
invested in Putnam Daily Dividend Trust until instructions are
received in good order, and the Employer will be deemed to have
selected Putnam Daily Dividend Trust as an available Investment
Product for that purpose.
6A
If you wish to offer Putnam Capital Manager a variable annuity
issued by Hartford with underlying funds managed by
Putnam through your plan, please call Putnam for more
information, 1-800-662-0019.
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 by the
Employer. Check below only if the Employer will make investment
decisions under the Plan.
_____The Employer will make investment decisions.
6B
If you place a check mark in the blank the Employer will direct
the investment of Employer contributions. If you do not check
the blank, the Plan provides that each Participant will direct
the investment of Employer contributions allocated to his
account.
7. Retirement Age (Plan Section 7.1)
Normal retirement age will be _____ (not over the lesser of 65 or
any mandatory retirement age enforced by the Employer).
7
Enter the age (no later than 65) when an Employee may retire from
the service of the Employer.
8. Other Plans
You must complete this section if you maintain or ever maintained
another qualified plan (other than a Putnam Profit Sharing Plan
under Plan Agreement #001) in which any Participant in this Plan
is (or was) a participant or could become a participant, or if
you maintain 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) under which amounts are treated as
annual additions with respect to any Participant in this Plan.
8
Skip this item 8 if the Plan is the only qualified plan your
Business has ever had.
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)
_____The provisions of Section 6.2 of the Plan will apply as if
the other plan were a master or prototype plan.
_____The plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess amounts,
in the manner you describe below.
_____
_____
B. If a Participant in the Plan is or has ever been a participant
in a defined benefit plan maintained by your Business, the plans
will meet the limits of Article 6 in the manner you describe
below:
_____
_____
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:_________________________________________
8A and 8B
Complete 8A only if the Employer maintains or ever maintained any
other defined contribution plan (other than a master or prototype
plan) or any other defined benefit plan.
Complete 8B only if the Employer maintains or ever maintained a
defined benefit plan.
If any of these factual situations exist, the Employer should
consult with an attorney or actuary. Failure to complete this
section when applicable may adversely affect the tax-qualified
status of the Plan.
NOTE: Your description under A or B above must not leave the
selection of a method to your discretion from year to year.
9. Vesting
All Accounts are fully vested at all times.
10. Top-Heavy Provisions (Plan Section 15.3)
Federal tax laws require certain plans, called top-heavy plans,
to provide a minimum contribution for every non-key employee
covered by the plan. Whether a plan is top-heavy is determined
by an annual test, explained on page 46. If the plan s regular
contribution provisions already meet or exceed the top-heavy
minimum contribution, no additional action is required when the
plan is top-heavy, so there is no need to perform annual testing.
If the plan s regular contribution provisions do not already meet
or exceed the top-heavy minimum contribution, annual testing must
be performed, and, if the plan proves to be top-heavy, an
additional contribution must be made.
Your Plan s regular contribution provisions will meet or exceed
the top-heavy minimum, and you will not need to perform annual
testing, if any of the following applies:
(a) Your Plan is not integrated with Social Security; or
(b) Your Plan is integrated with Social Security and you have
specified in item 5.B. a Base Contribution Percentage of at least
3%; or
(c) You maintain any other qualified plan that automatically
provides a minimum top-heavy contribution or benefit for every
non-key employee covered by this Plan.
NOTE: If you maintain a defined benefit plan in addition to this
Plan, you cannot rely on categories (a) or (b).
If you fit into any of the above categories, STOP HERE. You do
not need to perform annual top-heavy testing.
If you do not fit into any of the above categories, then unless
you check this item 10 to indicate that you will perform annual
top-heavy testing for your Plan, the requirement of a minimum
contribution for each non-key employee, contained in Plan Section
15.3, will apply to your Plan at all times. If you check this
item 10, Section 15.3 will apply only in Plan Years when you Plan
fails the top-heavy test.
_____The Employer will perform annual top-heavy testing for the
Plan.
11. Plan Administrator (Plan Section 16.1)
You may appoint a person or a committee to serve as Plan
Administrator. You may remove and replace anyone you have
appointed, and anyone you have appointed may resign, without the
need to amend this Plan Agreement, provided that you notify
Participants in writing of any such change. If you do not
appoint a Plan Administrator, the Plan provides that the Employer
will be the Plan Administrator.
The initial Plan Administrator will be (check one)
_____This person:
_____A committee composed of these people:
__________
__________
__________
12. Reliance on Opinion Letter
You may rely on the opinion letter issued by the National Office
of the Internal Revenue Service for this Plan, and avoid filing
an application for an IRS determination letter, only if you never
maintain or maintained at any time any other plan, except a
Putnam Standard Profit Sharing Plan under Plan Agreement #001.
If you ever maintained or you later adopt any plan (including a
welfare benefit fund, as defined in Section 419(e) of the Code,
which provides post-retirement medical benefits allocated to
separate account for key employees, as defined in section
419A(d)(3) of the Code; or an individual medical account, as
defined in section 415(1)(2) of the Code) in addition to this
plan (other than a Putnam Standard Profit Sharing Plan under Plan
Agreement #001), you may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as evidence
that your Plan is qualified under Section 401 of the Internal
Revenue Code. If you adopt or maintain multiple plans and you
wish to obtain reliance that your plan(s) are qualified, you
should apply to the appropriate Key District Director of Internal
Revenue for a determination letter.
Putnam will inform you of all amendments it makes to the
prototype plan. If Putnam ever discontinues or abandons the
prototype plan, Putnam will inform you. This Plan Agreement #002
may be used only in conjunction with Putnam s basic plan document
#01.
12
Employers should review this section carefully. Adoption of the
Plan should be reviewed with your legal counsel and tax advisor.
<PAGE>
Employers Adoption of Putnam Standard Money Purchase Pension Plan
The Employer named below hereby adopts a PUTNAM STANDARD MONEY
PURCHASE PENSION PLAN, and appoints ___________ to serve as
Trustee of the Plan. The Employer agrees to pay the fees as
determined by completing the Plan Investment Form, in accordance
with the terms 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
a Putnam Money Purchase Pension Sharing Plan upon Putnam s
acceptance of this Plan Agreement.
Employer signature(s) to adopt Plan:
_____
Date of signature:
Provide a signature from an authorized representative of the
Employer.
Please print name(s) of authorized person(s) signing above:
_________ Phone:
Phone:
A new Plan must be signed by the last day of the Employer s
Taxable Year in which the Plan is to be effective.
Dealer Information (to be completed by investment dealer)
Name of Investment Dealer ________________________________
Name and No. of Investment Dealer/Representative ______________
Name and No. of Branch Office ______________________________
Signature of Investment Dealer/Representative ________________
Authorized Dealer Signature _______________________________
Representative Phone Number ______________________________
Acceptance of Trustee
The Trustee accepts appointment in accordance with the terms and
conditions of the Plan, effective as of the date of execution by
the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By ___________________________________________________
B. Other Trustee ________________________________________
By (Trustee) _________________ Trustee s Tax I.D. Number _____
Address of Trustee ______________________________________
Person for Putnam to Contact ____ Phone ____________________
Complete Part B only if you have appointed a Trustee other than
Putnam Fiduciary Trust Company.
NOTE: Putnam may impose an annual maintenance fee as a condition
of its acceptance of this plan as a Putnam Standard Money
Purchase Pension Plan.
C. Appointment and Acceptance of Insurance Trustee
1. Appointment to:
Name of Insurance Trustee ________________________________
You are hereby designated as Insurance Trustee for Policies to be
held in accordance with the terms and conditions of this Plan and
Trust.
Employer signature to appoint Insurance Trustee
By (Authorized Signature)
2. Acceptance as Insurance Trustee is agreed to in accordance
with the terms and conditions of the Plan, effective as of the
date of execution by the Employer as set forth above.
By Trustee s Tax I.D. Number
Address of Insurance Trustee
Person for Putnam to Contact Phone
Complete Part C only if insurance Policies will be purchased
under Article 14 of the Plan (in addition to Putnam Investment
Products).
Acceptance by Putnam
Putnam hereby accepts this Employer s Plan as a prototype
established under the Putnam Defined Contribution Retirement Plan
and Trust Agreement.
Putnam Mutual Funds Corp.
By ___________________________________________________
<PAGE>
Instructions for Completing and Distributing Notice to Interested
Parties
You must distribute the completed Notice to Interested Parties no
less than 7 days and no more than 21 days after you sign the Plan
Agreement for your Putnam Plan. For your current employees, you
may simply post a copy of the Notice on a bulletin board or other
space customarily used for announcements to your employees. If
you adopt your Putnam Plan as an amendment to an existing plan,
individuals who are not current employees but are entitled to
benefits under your existing plan (for example, vested former
employees or beneficiaries of deceased employees) should be sent
a copy of the Notice by first class mail no less than 10 days and
no more than 24 days after you sign your Putnam Plan Agreement.
Portions of the Notice must be completed by you as described
below.
Item 1 Enter the name of your business.
Item 2 Enter the name of your plan.
Item 3 Enter the final digit of the plan number you have chosen
for your plan. If this is the first plan you have ever adopted
for your business, or if you have adopted the Putnam Plan as an
amendment of your only existing plan, the correct number is 001.
If your business has one or more other tax qualified retirement
plans that were adopted before this plan, and you have not
adopted the Putnam Plan as an amendment to any plan, the correct
number for his plan is the next higher number after the number(s)
of your existing plan(s); for example, 002 or 003. Enter the
appropriate IRS opinion letter number. If you have adopted the
Profit Sharing and 401(k) Plan, enter D240174a, if you have
adopted the Money Purchase Pension Plan, D240175a.
Item 4 Enter the name and address of your business and the
nine-digit tax identification number assigned to your business
for federal income tax and employment tax reporting; for example,
04-0010023.
Item 5 If you have appointed a committee or a particular person
as plan administrator, enter the name(s) and address of the
person(s) appointed. If you have not selected a plan
administrator enter the word "Employer."
Item 6 Enter the minimum number of years of service and minimum
age required for eligibility to participate in your plan, as
selected by you in the Plan Agreement. If you selected no
minimum requirement, enter "0".
Item 7 Select from the attached address chart on page 28 the
address of the IRS Key District office that applies to you, and
enter that address in the space provided.
Item 8 If you have fewer than 100 employees, enter the number
equal to 10% of your employees, rounded up. For example, if you
have 12 employees, enter "2." If you have 100 or more employees,
enter "10."
Item 9 Calculate the dates that are 45, 55, 75 and 90 days after
the date you signed the Plan Agreement. Enter these dates in the
blanks as marked on the Notice.
Item 13 Enter the name of your business.
<PAGE>
IRS DISTRICT
Albany, August, Boston, Brooklyn,
Buffalo, Burlington, Hartford,
Manhattan, Portsmouth, Providence
KEY DISTRICT OFFICE
Internal Revenue Service
EP/EO Division
P.O. Box 1680, GPO
Brooklyn, NY 11202
IRS DISTRICT
Baltimore, District of Columbia, Newark, Philadelphia,
Pittsburgh, Richmond, Wilmington, any U.S. possession or foreign
country
KEY DISTRICT OFFICE
Internal Revenue Service
EP/EO Division
P.O. Box 17010
Baltimore, MD 21203
IRS DISTRICT
Cincinnati, Cleveland, Detroit, Indianapolis, Louisville,
Parkersburg
KEY DISTRICT OFFICE
Internal Revenue Service
EP/EO Division
P.O. Box 3159
Cincinnati, OH 45201
IRS DISTRICT
Albuquerque, Austin, Cheyenne, Dallas, Denver, Houston, Oklahoma
City, Phoenix, Salt Lake City, Wichita
KEY DISTRICT OFFICE
Internal Revenue Service
EP/EO Division
Mail code 4950 DAL
1100 Commerce Street
Dallas, TX 75242
IRS DISTRICT
Atlanta, Birmingham, Columbia, Ft. Lauderdale, Greensboro,
Jackson, Jacksonville, Little Rock, Nashville, New Orleans
KEY DISTRICT OFFICE
Internal Revenue Service
EP/EO Division
P.O. Box 941
Atlanta, GA 30370
IRS DISTRICT
Honolulu, Laguna Niguel, Las Vegas, Los Angeles, San Jose
KEY DISTRICT OFFICE
Internal Revenue Service
EP Application Receiving
Room 5127
P.O. Box 536
Los Angeles, CA 90053-0536
IRS DISTRICT
Aberdeen, Chicago, Des Moines, Fargo, Helena, Milwaukee, Omaha,
St. Louis, St. Paul, Springfield
KEY DISTRICT OFFICE
Internal Revenue Service
EP/EO Division
230 S. Dearborn
DPN 20-6
Chicago, IL 60604
IRS DISTRICT
Sacramento, San Francisco
KEY DISTRICT OFFICE
Internal Revenue Service
EP Application Receiving
Stop SF 4446
P.O. Box 36001
San Francisco, CA 94102
IRS DISTRICT
Anchorage, Boise, Portland, Seattle
KEY DISTRICT OFFICE
Internal Revenue Service
EP Application Receiving
P.O. Box 21224
Seattle, WA 98111
<PAGE>
Notice to Interested Parties
1. Notice to: All Employees of ______________________________
The employer named above has adopted the plan described in this
notice, and had provided this notice as part of the automatic
plan qualification process prescribed by the Internal Revenue
Service.
2. Name of Plan: ________________________________________
3. Plan Number: 00_______
Opinion Letter No.______
4. Name and address of Plan Sponsor:
Employer's Tax Identification No.: ________________________
5. Name of Plan Administrator:
______
______
6. The employees eligible to participate under the Plan are
those who have reached at least _____ years of age and completed
at least _____ years of service.
In addition, the following classifications of employees are
included:
7. Address of Key District Director having jurisdiction of Plan:
___
____
_____
_____Members of the following collective bargaining unit(s)(give
names of unions):
_____
_______
_____Nonresident aliens with no U.S. source of income.
Requests for Comments by the Department of Labor
8. It is not contemplated that the Plan will be submitted to the
Internal Revenue Service for an advanced determination as to
whether or not it meets the qualification requirements of Section
401 or 403(a) of the Internal Revenue Code.
9. The Internal Revenue Service has not issued a determination
letter with respect to the qualification of this Plan, which is a
standardized prototype plan sponsored by Putnam Mutual Funds
Corp. Plans in this category generally are entitled to automatic
qualification and are not required to seek a determination
letter.
Rights of Interested Parties
10. You have the right to submit to the IRS Key District
Director at the above address, either individually or jointly
with other interested parties, your comments as to whether this
Plan meets the qualification requirements of the Internal Revenue
Code.
You may instead, individually or jointly with other interested
parties, request the Department of Labor to submit comments on
your behalf to the Key District Director regarding qualification
of the Plan. If the Department declines to comment on all or
some of the matters you raise, you may individually or jointly
(if your request was made to the Department jointly) submit your
comments on these matters directly to the IRS Key District
Director.
11. The Department of Labor may not comment on behalf of
interested parties unless requested to do so by the lesser of ten
employees or ten percent of the employees who qualify as
interested parties. The number of persons needed for the
Department to comment with respect to this Plan is _____ . If
you request the Department to comment, your request must be in
writing and must specify the matters upon which comments are
requested, and must also include:
(1) The information contained in items 2 through 5 of this
Notice; and
(2) the number of persons needed for the Department to comment.
A request to the Department to comment should be addressed as
follows:
Assistant Secretary
Pension and Welfare Benefit Administration
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20216
Attn: 3001 Comment Request
Comments to the Internal Revenue Service
12. Comments submitted by you to the IRS Key District Director
must be in writing and received by him by _____ , 199_____ (75
days after Plan adoption). However, if there are matters that
you request the Department of Labor to comment upon on your
behalf, and the Department declines, you may submit comments on
these matters to the Key District Director to be received by him
within 15 days from the time the Department notifies you that it
will not comment on a particular matter, or by ____ , 199_____
(75 days after Plan adoption), whichever is later, but in no
event later than ___, 199__(90 days after Plan adoption). A
request to the Department to comment on your behalf must be
received by it by _____ , 199_____ (45 days after Plan adoption)
if you wish to preserve your right to comment on a matter upon
which the Department declines to comment, or by _____ , 199_____
(55 days after Plan adoption) if you wish to waive that right.
Additional Information
13. Detailed instructions regarding the requirements for
notification of interested parties may be found in sections 16,
17 and 18 of Revenue Procedure 91-10. Additional information
concerning this application (including an updated copy of the
Plan and related trust and copies of section 16 of Revenue
Procedure 91-10) are available at the offices of ______________
during the hours of 9:00 a.m. to 5:00 p.m. for inspection and
copying. (There may be a nominal charge for copying and/or
mailing.)
NOTE: Section 17 of Revenue Procedure 94-6 is included to provide
plan participants with additional information.
<PAGE>
Section 17 of Revenue Procedure 94-6
WHAT RIGHTS TO NOTICE AND COMMENT DO INTERESTED PARTIES HAVE?
* 01 Persons who qualify as interested parties under section
1.7476-1(b) of the regulations, have the following rights:
(1) To receive notice, in accordance with section 18 below, that
there will be filed an application for an
advance determination regarding the qualification of plans
described in sections 401, 403(a), 409 and 4975(e)(7) of the
Code, or, with respect to plans described in section 7.05 above,
to receive notice, in accordance with section 19 below, of the
adoption or amendment of such plans;
(2) To submit written comments with respect to the qualification
of such plans to the Internal Revenue Service;
(3) To request the Department of Labor to submit a comment to the
Service on behalf of the interested parties; and
(4) To submit written comments to the Service on matters with
respect to which the Department of Labor was requested to comment
but declined.
* 02 comments submitted by interested parties must be received
by the Key District Director by the 45th day after the date on
which the application for determination is received by the Key
District Director (see section 17.03 and 17.04 for filing
deadlines where the Department of Labor has been requested to
comment). Such comments must be in writing, signed by the
interested parties or by an authorized representative of such
parties (as provided in section 9.01(7) of Rev. Proc. 91-4),
addressed to the Key District director to whom the application
for determination was submitted, and contain the following
information:
(1) The names of the interested parties making the comments;
(2) The name and taxpayer identification number of the applicant
for a determination:
(3) The name of the plan, the plan identification number, and the
name of the plan administrator;
(4) Whether the parties submitting the comment are:
(a) Employees eligible to participate under the plan,
(b) Employees with accrued benefits under the plan, or former
employees with vested benefits under the plan,
(c) Beneficiaries of deceased former employees who are eligible
to receive or are currently receiving benefits under the plan,
(d) Employees not eligible to participate under the plan.
(5) The specific matters raised by the interested parties on the
question of whether the plan meets the requirements for
qualification involving sections 401 and 403(a) of the Code, and
how such matters relate to the interests of the parties making
the comment; and
(6) The address of the interested party submitting the comment
(or if a comment is submitted jointly by more than one party, the
name and address of a designated representative) to which all
correspondence, including a notice of the Service's final
determination with respect to qualification, should be sent.
(The address designated for notice by the Service will also be
used by the Department of Labor in communicating with the parties
submitting a request for comment.) The designated representative
may be one of the interested parties submitting the comment or an
authorized representative. If two or more interested parties
submit a single comment and one person is not designated in the
comment as the representative for receipt of correspondence, a
notice of determination mailed to any interested party who
submitted the comment shall be notice to all the interested
parties who submitted the comment for purposes of section
7476(b)(5) of the Code.
* 03 A request to the Department of Labor to submit to the Key
District Director a comment pursuant to section 3001(b)(2) of the
Employee Retirement Income Security Act of 1974 (ERISA) must be
made in accordance with the following procedures:
(1) The request must be received by the Department of Labor by
the 25th day after the day the application is received by the Key
District Director. However, if the parties requesting the
Department to submit a comment wish to preserve the right to
comment to the Key District Director in the event the Department
declines to comment, the request must be received by the
Department by the 15th day after the application is received by
the Key District Director.
(2) The request to the Department of Labor to submit a comment to
the Key District Director must:
(a) Be in writing;
(b) Be signed as provided in section 17.02 above;
(c) Contain the names of the interested parties requesting the
Department to comment and the address of the interested party or
designated representative to whom all correspondence with respect
to the request should be sent. See also section 17.02(6) above;
(d) Contain the information prescribed in section 17.02(2), (3),
(4), above;
(e) Contain the address of the Key District Director to whom the
application was or will be submitted;
(f) Contain a statement of the specific matters upon which the
Department's comment is sought, as well as how such matters
relate to the interested parties making the request; and
(g) Be addressed as follows:
Deputy Assistant Secretary
Pension and Welfare Benefits
Administration
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Attention: 3001 Comment Request
04 If a request described in 17.03 is made and the Department of
Labor notifies the interested parties making the request that it
declines to comment on a matter concerning qualification of the
plan which was raised in the request, the parties submitting the
request may still submit a comment to the Key District Director
on such matter. The comment must be received by the later of the
45th day after the day the application for determination is
received by the Key District Director or the 15th day after the
day on which notification is given by the Department that it
declines to submit a comment on such matter. (See section 17.07
for the date of notification.) In no event may the comment be
received later than the 60th day after the application for
determination was received. Such a comment must comply with the
requirements of section 17.02 and include a statement that the
comment is being submitted on matters raised in a request to the
Department upon which the Department declined to comment.
05 For rules regarding the confidentiality of contents of
written comments submitted by interested parties to the Service
pursuant to section 17.02 or 17.04, see section 601.201(o)(5) of
the Statement of Procedural Rules.
06 For rules regarding the availability to the application of
copies of all comments on the application submitted pursuant to
section 17.01(1), (2), or (3) of this revenue procedure, see
section 601.201(o)(5) of the Statement of Procedural Rules.
07 An application for an advance determination, a comment to the
Key District Director, or a request to the Department of Labor
shall be deemed made when it is received by the Key District
Director, or the Department. Notification by the Department that
it declines to comment shall be deemed given when it is received
by the interested party or designated representative. The notice
described in section 18.01 below shall be deemed given when it is
given in person, posted as prescribed in the regulations under
section 7476 of the Code, or received through the mail. In any
case where such an application, comment, request, notification,
or notice is sent by mail, it shall be deemed received as of the
date of the postmark (or if sent by certified or registered mail,
the date of certification or registration), if it is deposited in
the mail in the United States in an envelope or other appropriate
wrapper, first class postage prepaid, properly addressed.
However, if such an application, comment, request, notification,
or notice is not received within a reasonable period from the
date of postmark, the immediately preceding sentence shall not
apply.
<PAGE>
Plan Investment Form
Simplified Putnam Retirement Plans
Please use this form to indicate your plan's initial investment
in the Putnam Family of Funds, listing only one source of
contribution per page.
1. Employer Phone No. ( )
Address
City/State/Zip
Employer's Name (Please Print)
Authorized Employer Signature
2. Type of Simplified Putnam Retirement Plan (check one)
_____ Putnam Profit Sharing Plan (Keogh)
_____ Putnam Money Purchase Pension Plan (Keogh)
_____ Paired Putnam Profit Sharing and Money Purchase Pension
Plan (Keogh)
_____ Putnam Profit Sharing and 401(k) Plan
Note: If you have a Paired Putnam Profit Sharing and Money
Purchase Pension Plan, you have two plans involving separate Plan
contributions. Check this option and complete two Plan
Investment Forms. To do this, make a copy of this Form, complete
it accordingly and send both Forms with the plans' initial
contribution checks. Remember, you only need to include one
participant fee in one of your Plan contribution checks.
3. Dealer Representative Phone No. ( )
Dealer Firm
Branch Location
Representative's Signature
4. Participant Fee: $10.00 X _______ = ___________________
Number of
Participants Annual Participant Fee
Total Check Amount:
Annual Participant Fee $ __________
Employer Contribution $ __________
(from final page)
TOTAL $ __________
NOTE: Minimum contribution: $500 per plan; $25 per participant
account. This plan does not allow for employee voluntary
after-tax contributions.
<PAGE>
The following Putnam funds are available for retirement plan
accounts. Please use these fund codes, listing only one fund per
line, when completing the Plan Investment Form.
A26 Putnam Adjustable Rate U.S. Government Fund
A08 Putnam Convertible Income-Growth Trust
A0A Putnam Daily Dividend Trust
A43 Putnam Dividend Growth Fund
A29 Putnam Diversified Income Trust
B0H Putnam Energy-Resources Trust
A44 Putnam Europe Growth Fund
A02 The Putnam Fund for Growth and Income
A01 The George Putnam Fund of Boston
A18 Putnam Global Governmental Income Trust
A05 Putnam Global Growth Fund
A16 Putnam Federal Income Trust
A0L Putnam Health Sciences Trust
A10 Putnam American Government Income Fund
A0D Putnam High Yield Trust
A15 Putnam High Yield Advantage Fund
A04 Putnam Income Fund
A0U Putnam New Opportunities Trust
A03 Putnam Investors Fund
A0C Putnam Equity/Income Fund
A19 Putnam OTC Emerging Growth Fund
A0Y Putnam U.S. Government Income Trust
A06 Putnam Vista Fund
A07 Putnam Voyager Fund
In addition to Putnam mutual funds, retirement investments may be
made through the Putnam Capital Manager (PCM), a variable
annuity. The PCM investment options are listed below. (Please
call Putnam if you wish to use PCM in your retirement plan.)
PCM Fixed Account
PCM Money Market Account
PCM U.S. Government and High Quality Bond Fund
PCM High Yield Fund
PCM Growth and Income Fund
PCM International Equities Fund, a global fund
PCM Voyager Fund
PCM Multi-Strategy Fund
<PAGE>
Profit Sharing Plan Contributions
Employer Date
(Please list only one fund per line. Continue on an additional
sheet if necessary.)
Participant Participant Investment Employer
Name Social Security Fund Selected Profit Sharing Plan
Number (Please list only Contribution
one fund per line)
___________ ______________ __________ $__________
___________ ______________ __________ __________
Total Profit Sharing Plan Contributions: $ _____________
<PAGE>
Money Purchase Pension Plan Contributions
Employer Date
(Please list only one fund per line. Continue on an additional
sheet if necessary.)
Participant Participant Investment Employer
Name Social Security Fund Selected Money Purchase
Number (Please list only Pension Plan
one fund per line) Contribution
___________ _________ __________ $__________
___________ _________ __________ __________
Total Money Purchase Pension Plan Contributions: $ ___________
<PAGE>
Employee 401(k) Contributions
Employer Date
(Please list only one fund per line. Continue on an additional
sheet if necessary.)
Participant Participant Investment
Name Social Security Fund Selected Employee
Number (Please list only 401(k)
one fund per line) Contribution
________ ____________ __________ $__________
________ ____________ __________ __________
Total 401(k) Contributions: $ _____________
<PAGE>
Part III: Questions and Answers about the Simplified Putnam
Retirement Plans
General Comments 39
Key Definitions 40
Contributions 41
Plan Investments 45
Plan Distributions 45
Top-Heavy Testing 46
Plan Administration 47
Glossary of Terms 49
<PAGE>
Questions and Answers about the Simplified Putnam Retirement
Plans
While Putnam cannot give you legal or tax advice, our
professionals have prepared these Questions and Answers to assist
you in selecting among the many options presented in the Putnam
Plan Agreements #001 and #002. If you have questions after
reviewing them, consult your investment dealer or call Putnam
Retirement Plan Services at 1-800-662-0019.
Please remember that these Questions and Answers are only a
general guide to help you make decisions in consultation with
your legal and tax advisors.
I. General Comments
Q-1. Why should I adopt a Putnam Plan?
A-1. Simplified Putnam Retirement Plans offer you and your
Employees the opportunity to make retirement contributions on a
tax-favored basis. The benefits to your business are twofold.
First, a retirement plan will help you attract and retain good
employees. Second, your Plan will qualify for tax-favored
treatment. The tax laws generally do not allow employers to
deduct wages until an employee includes those wages in income.
But an employer can deduct its qualified retirement plan
contributions when they are made, even though employees will not
have to report those amounts as taxable income until the plan
later distributes benefits. In the meantime, the plan
contributions accumulate earnings tax-deferred.
Q-2. What documents do I need?
A-2. (1) A Putnam Basic Plan Document and
(2) A Putnam Plan Agreement #001 (Standard Profit Sharing (Keogh)
and Standard Profit Sharing and 401(k) Plan) or Putnam Plan
Agreement #002 (Standard Money Purchase Pensions Plan (Keogh)).
Q-3. What are these documents for?
A-3. The Putnam Basic Plan Document contains the general rules
for maintaining a Putnam Retirement Plan, and allows you to make
certain choices for your own plan. You indicate your choices
when you complete Putnam Plan Agreement #001 (for the Profit
Sharing Plan (Keogh) or the Profit Sharing and 401(k) Plan) or
#002 (for the Money Purchase Pension Plan Keogh).
Q-4. Do terms beginning with capital letters have special
meanings?
A-4. Both the Putnam Basic Plan Document and the Plan Agreements
contain terms that begin with capital letters because they have
special definitions in the Basic Plan Document. These Questions
and Answers also contain terms that begin with a capital letter
because they have a special definition, either here or in Article
2 of the Basic Plan Document. All of these terms are defined in
the Glossary of Terms at the end of these Questions and Answers.
When the term "item" is used in these Questions and Answers, it
refers to the numbered and lettered items to be completed in
Putnam Plan Agreement #001 or #002.
II. Key Definitions
Q-5. What is an Affiliated Employer for purposes of the Plan?
(Item 3.A)
A-5. The term Affiliated Employer includes the business that is
adopting or amending a Putnam plan, and any businesses related to
that business as part of:
* a "controlled group of corporations," as defined in Internal
Revenue Code Section 414(b),
* a group of businesses under "common control," as defined in
Internal Revenue Code Section 414(c), or
* an "affiliated service group," as defined in Internal Revenue
Code Section 414(m).
Generally, businesses that have 80% or more common ownership are
Affiliated Employers, and businesses with as little as 10% common
ownership may form an affiliated service group if one of them
regularly performs services for or with the other. Your close
relatives generally are considered to own any interest in a
business that you own, and vice versa, for purposes of these
rules. Please read the Affiliated Employers Worksheet (contained
in a separate booklet) and consult your attorney or tax advisor
if you suspect your business falls within any of the categories
mentioned above.
Q-6. How many Hours of Service should I specify as the minimum
requirement for an Eligibility Period? (item 3.C.2)
A-6. You may not require an Employee to complete more than 1,000
Hours of Service during the 12 months following his date of hire
(or anniversaries of that date) in order to be credited with an
Eligibility Period. Because 1,000 Hours of Service over 12
months equals approximately 20 hours per week, your election of
the 1,000-hour option will prevent Employees who normally work
less than 20 hours per week from becoming participants in your
Plan. On the other hand, you could completely avoid counting
Hours of Service by entering "1" in item 3.C.2 as the Hours of
Service requirement. In that case, an individual who is paid
for one Hour of Service will be credited with that Eligibility
Period. You may require, in item 3.C.1, that an employee remain
employed for one or two Eligibility Periods before he begins to
participate in your Plan. (One Eligibility Period maximum for
Elective Deferrals.)
Q-7. How should "Compensation" be defined for purposes of my
Plan? (Item 4)
A-7. The definition of Compensation you choose will affect the
amount you contribute to the Plan for you Employees. As a basic
measure, you may elect either Form W-2 wages or the amount
treated as compensation for purposes of Code Section 415, which
is described in Section 6.5(b) of the Basic Plan Document. (The
principal difference is that Form W-2 wages include all
reimbursements for moving expenses, while the Code Section 415
amount includes reimbursements for moving expenses only if the
reimbursed amount is not deductible by the Employee.)
The term Earnings refers to both the Compensation paid to an
Employee and the earned income of a self-employed worker. The
Earnings of a self-employed worker include only his earned income
from the trade or business with respect to which the Plan is
established, and do not include contributions to the Plan (to the
extent deductible under Code Section 404). See Section 2.13 of
the Basic Plan Document.
The definition of Compensation that you choose in the Plan
Agreement will not affect the calculation of certain limits in
the tax laws, for which special definitions apply regardless of
the definition in the Plan. For an explanation of these limits
and special definitions, see the Contribution Limits Worksheet
contained in a separate booklet.
Profit Sharing and 401(k) Plans Only:
Both of the basic measures of compensation exclude any pre-tax
contributions made by the Employee under a cafeteria (flexible
compensation) plan, 401(k) plan, SARSEP, 403(b) plan, Section 457
deferred compensation plan or contributions described in Section
414(h)(2) that are "picked up" by a governmental employer. You
may choose to add back these pre-tax amount for purposes of your
Putnam Plan. For example, suppose Employee A has Form W-2 wages
of $25,000, and he makes Elective Deferrals of $2,000 under a
Putnam Profit Sharing and 401(k) Plan. If your business makes an
Employer Contribution equal to 3% of each Plan Participant's
Earnings, Employee A's allocation will be $750 (3% of 25,000) if
the Plan counts only Form W-2 wages as Earnings, but $810 (3% of
$27,000) if the Elective Deferral
is added back.
Q-8. Is there a limit on the amount of Earnings my Plan may take
into account during a Plan Year?
A-8. Yes. Regardless of the definition of Earnings you choose
in item 4, for Plan Years beginning after December 31, 1993, only
the first $150,000 of any Employee's Gross Earnings (including
any pre-tax contributions) counts for your 1994 Plan Year for
purposes of your Putnam Plan. The calculation is made on the
basis of your Plan Year specified in item 2.A., which may or may
not be the calendar year. If your Plan Year contains less than
12 months (for example, if you did not establish your Plan as of
the first day of the Plan Year), you must limit each Employee's
Earnings to the portion of the $150,000 limit that corresponds to
the portion of 12 months represented by your Plan Year. The
ceiling will be adjusted periodically for inflation.
If your business employs the spouse or child (under age 19) of a
5% owner of the business, or of one of its ten most highly
compensated employees, the combined Earnings of the spouse or
child and those of the 5% owner or highly compensated employee
may not exceed the current dollar limit.
III. Contributions
Q-9. What does it mean to "integrate" my Plan with Social
Security? (Item 5.C and D of Plan Agreement #001, and Item 5.B
and C of Plan Agreement #002).
A-9. Generally, a Profit Sharing Plan or Money Purchase Pension
Plan must allocate Employer Contributions pro rata according to
the Earnings of Participants. For example, if the Earnings of
all Participants total $200,000 for a given year, a Participant
who earns $20,000 will be entitled to 10% ($20,000/$200,000) of
the Employer Contribution.
Integration represents a narrow exception to that general rule.
By integrating, a plan may allocate extra contributions to
Employees who have Earnings in excess of the Social Security Wage
Base ("Wage Base"). This extra allocation is allowed because
Social Security calls for no employer FICA tax payments on an
employee's income in excess of the Wage Base, and thus prevents
individuals who earn above the Wage Base from accruing Social
Security retirement benefits in the same proportion to total pay
as those earning below the Wage Base.
Q-10. How does integration work?
A-10. Section 4.2(c) of the Basic Plan Document sets forth the
Integration Formula according to which Employer Contributions
will be allocated among participants in an integrated Plan.
Under that formula, the amount of Earnings at which a plan begins
to make extra allocations is called its Integration Level.
A related term is Excess Earnings, which means the amount of a
Participant's Earnings above in Integration Level. For example,
if a plan has an Integration Level of $16,000, an Employee whose
Earnings are $20,000 a year has Excess Earnings of $4,000.
Remember, the term Earnings includes amounts above and below the
Integration Level.
Putnam has designed its Integration Formula to adjust
automatically each year so that the percentage of the extra
Employer Contribution allocated in proportion to Excess Earnings
is the maximum allowed by law. In general, the percentage rate
of extra Employer Contributions allocated on the basis of Excess
Earnings cannot exceed the percentage rate allocated on the basis
of total Earnings, or 5.7% of Excess Earnings, whichever is less.
For example, if your Plan requires an Employer Contribution
sufficient to provide all Participants an allocation of 3% of
their total Earnings, it may also allocate to the accounts of
Participants who earn more than the Integration Level an extra
amount equal to no more than 3% of their Excess Earnings. Thus,
a Participant with Earnings of $20,000 will get a regular
allocation of $600. If the Integration Level of the Plan is
$16,000, he will also get an extra allocation of $120. On the
other hand, if the Integration Formula results in an allocation
to all Participants of an amount in excess of 5.7% of their total
Earnings, the extra amount allocated to the Accounts of
Participants who earn more than the Integration Level may not be
more than 5.7% of their Excess Earnings.
Q-11. How should I choose my Plan's Integration Level? (Item 5.D
of Plan Agreement #001, and Item 5.C of Plan Agreement #002)
A-11. You may select an Integration Level from among the three
alternatives listed. The first choice presented is the Wage
Base, which is adjusted annually to keep pace with the cost of
living. Over recent years, the Wage Base has risen steadily:
Year 1991 1992 1993 1994
Wage Base $53,400 $55,500 $57,600 $60,600
By defining your Plan's Integration Level as the Wage Base, or as
a percentage of the Wage Base (the second option listed), you
will build in an annual increase that you can expect to reflect
the annual increase in pay levels. If instead you select a fixed
dollar amount as your Integration Level (the third option), your
formula is simpler, but it does not provide any hedge against
annual wage inflation.
To Maximize the extra allocations to Employees you want to
benefit through integration, the Integration Level should be set
as close as possible to the highest Earnings of the Participants
you want to exclude from sharing in extra contributions. For
example, suppose that your work force breaks down as follows for
1994:
Class of Employee Executives Supervisors Rank and File
Earnings Range Over $65,000 $30,000-$45,000 Under $20,000
If you want to make extra allocations only to your executives,
the Wage Base ($60,600 for 1994) would be appropriate. An
Integration Level equal to 50% of the Wage Base ($30,300 for
1994) would extend the benefits of integration to your
supervisors as well as executives.
Q-12. What types of contributions should I choose for my Profit
Sharing and 401(k) Plan? (Items 5 and 12 of Plan Agreement #001)
A-12. The various types of employer and employee contributions
that may be made to your Putnam Profit Sharing and 401(k) Plan
are described below.
Employer Contributions (Item 5).
Your business may make contributions in a discretionary amount
that can vary from year to year, or you may specify a formula
that will be used to calculate every year's contributions (for
example, 5% of pay for the year). Generally, every Employee's
share of each Employer Contribution will equal the percentage
that his Earnings bear to the total Earnings of all Participants.
Alternatively, you may elect to "integrate" your Plan with Social
Security. Item 5.C presents this choice, and Q&A-9 and Q&A-10
explain how integration works.
Elective Deferrals (Item 12.A).
These contributions are often called 401(k) or before-tax
contributions, because an Employee's taxable income will be
reduced by the amount he chooses to contribute as an Elective
Deferral. An active Employee under age 59 1/2 may withdraw
elective Deferrals only in the event of financial hardship, and
then only if you check "Yes" for item 12.D.
Qualified Matching Contributions (Item 12.B).
Qualified Matching Contributions cannot be withdrawn while a
Participant remains an active Employee. You may use Qualified
Matching Contributions to help your Plan pass the ADP Test, and
thereby increase the Elective Deferrals allowed for Highly
Compensated Employees. See Q&A-19.
Qualified Nonelective Contributions (Item 12.C).
Qualified Nonelective Contributions are subject to the same
distribution restrictions as Qualified Matching Contributions.
You may use Qualified Nonelective Contributions to help your Plan
pass the ADP Test, and thereby increase the Elective Deferrals
allowed for your Highly Compensated Employees. See Q&A-19.
Q-13. Are there any overall limits on the amount that may be
contributed to my Plan each year?
A-13. Yes, there are two different limits. For a detailed
explanation, refer to the Contribution Limits Worksheet contained
in a separate Booklet.
The first rule limits your overall contribution to the Plan for
each Plan Year to the amount your business is allowed to deduct
under section 404 of the Internal Revenue Code (see Section
4.2(a) of your Basic Plan Document).
The deduction limit for Profit Sharing Plans is 15% of the total
Earning paid during the Plan Year to all Plan Participants,
excluding Elective Deferrals. For purposes of the 15% Profit
Sharing Plan deduction limit, all of the following types of
contributions are aggregated:
* Employer Contributions
* Qualified Matching contributions
* Qualified Nonelective Contributions
* Elective Deferrals
The deduction limit for Money Purchase Pension Plans is 25% of
the total Earnings paid during the Plan Year to all Plan
Participants.
The second overall Plan contribution limit applies on a
Participant-by-Participant basis. This limit provides generally
that the Annual Additions (as defined in the next paragraph) to
each Participant's Account for a Plan Year may not exceed the
lesser of:
* 25% of the Participant's Earnings, excluding Elective Deferrals
and pre-tax contributions under a cafeteria (flexible
compensation) plan, SARSEP, 403(b) annuity or account, or a
Section 457 deferred compensation plan, or
* $30,000.
The following types of contributions are considered to be Annual
Additions: Employer Contributions, Qualified Matching
Contributions, Qualified Nonelective Contributions, and Elective
Deferrals. Rollover Contributions and investment earnings of all
kinds are not Annual Additions.
The Annual Additions limit applies on a combined basis to all
plans of a single business, and to all plans of any businesses
that would meet the definition of Affiliated Employers (in Q&A-3)
if "50%" were substituted for "80%."
Q-14. What is the deadline for making employer contributions for
a Plan Year?
A-14. In order to deduct the contributions your business makes
for a Plan Year, the contributions must be paid to the Trustee no
later than the due date (including any applicable extension) for
filing the tax return for the taxable year of your business that
corresponds to the Plan Year. In addition, ERISA requires that
Elective Deferrals to a 401(k) plan be paid to the Trustee as
soon as practicable after they are made or withheld, and in any
event within 90 days.
Q-15. For a Putnam Profit Sharing and 401(k) Plan, what is the
current dollar limit on the amount of a Participant's annual
Elective Deferrals, and how is that amount determined? (Item 12.A
of Plan Agreement #001)
A-15. For calendar year 1994, the dollar limit is $9,240. This
amount is revised annually by the Internal Revenue Service to
reflect the cost-of-living adjustments, and is published in an
IRS announced issued early each year. The limits for the past
four years have been as follows:
Year 1991 1992 1993 1994
Deferral Limit $8,475 $8,728 $8,994 $9,240
For the current limit, please call Putnam Retirement Plan
Services at 1-800-662-0019.
Q-16. Is there any other limit on the amount of Elective
Deferrals that my Employees may make?
A-16. No, for your Non-Highly Compensated Employees ("NHCEs").
Yes, for your Highly Compensated Employees ("HCEs"), because the
amount of their Elective Deferrals is subject to a second limit
under the ADP Test contained in Section 401(k) of the Internal
Revenue Code.
"ADP," an abbreviation of the term "actual deferral percentage,"
means the average of the percentages of Earnings that a group of
Employees contribute in the form of Elective Deferrals during the
Plan Year. For example, suppose Widget Company's Plan covers two
HCEs, who earn $75,000 and $100,000 respectively during the 1991
Plan Year. If the first HCE makes total Elective Deferrals of
$7,500 for the year, his deferral percentage equals 10% ($7,500
deferred divided by $75,000 Earnings). If the other HCE makes no
Elective Deferrals, her deferral percentage equals 0%. The
actual deferral percentage, or ADP, for the HCEs as a group
equals the average of 10% and 0%, or 5%. The same method applies
when you calculate the ADP of your NHCEs.
For each Plan Year, the ADP of your HCEs cannot exceed the ADP
of your NHCEs by more than a certain percentage. That percentage
varies as shown below:
Actual ADP of NHCE Group
1% 2% 3% 4% 5% 6% 8% 10% 12%
14% 16%
Maximum ADP of HCE Group
2% 4% 5% 6% 7% 8% 10% 2.5% 15%
17.5% 20%
For example, the ADP of Widget's two HCEs was 5%. According to
the above chart, the ADP of Widget's NHCEs must be at least 3% in
order for Widget's Plan to satisfy the ADP test.
Suppose the ADP of Widget's NHCEs was only 1%. The ADP of its
HCEs would then be capped at 2%. If the ADP of Widget's HCEs
exceeded 2% as of the end of the Plan Year being tested, Widget
would have to reduce that ADP to 2% by following one of the two
methods described in Q&A-18.
The precise rules for ADP testing are set forth in Section 5.6 of
your Basic Plan Document and a separate booklet. To protect the
qualified status of your Plan, your Plan Administrator is
responsible for performing the ADP Test each year to ensure that
the ADP of your HCEs falls within the limits described above.
The ADP Worksheet will guide you, step-by-step, through
performance of this test.
Q-17. Who is a Highly Compensated Employee?
A-17. Your Highly Compensated Employees ("HCEs") include any
Employee described in Section 2.58 of the Basic Plan Document.
The HCE Worksheet contained in a separate booklet will help you
identify your HCEs. Any Employee who is not an HCE is a
Non-Highly Compensated Employee ("NHCE").
Q-18. What if my Plan fails the ADP Test for a Plan Year?
A-18. If the ADP for HCEs for a Plan Year exceeds the maximum
allowed under the ADP Test, then the difference between the ADP
for HCEs and the ADP for NHCEs must be reduced by either lowering
the ADP for HCEs, or raising the ADP for NHCEs, or both.
To lower the ADP for HCEs, your Plan may refund sufficient
Elective Deferrals to HCEs to bring their ADP down to the level
that satisfies the ADP Test. Amounts refunded within the first
2-1/2 months after the end of a Plan Year, and the income
attributable to the refunded Excess Contributions, will be
included in the contributing HCEs' gross income in the taxable
year when the Excess Contributions were made (not the year when
the distribution occurs). Exception: If the total amount of
Excess Contributions refunded to a Participant is less than $100,
the refunded amount is taxable in the year of distribution. If
the refunds are not made until after the 2-1/2 month deadline,
the refunded amount and income will be taxable in the year of
distribution. Section 5.4 of your Basic Plan Document sets forth
the rules for calculating the income attributable to Excess
Contributions by HCEs.
Your business must take action to make the necessary refunds
within 2-1/2 months after the Plan Year ends in order to avoid
paying a nondeductible 10% excise tax on the Excess
Contributions. If the excess is not corrected within 12 months
after the Plan Year ends, the Elective Deferral portion of your
Plan will be disqualified.
An alternative way to correct a failed ADP Test is to raise the
ADP of the NHCE group to the required level by making Qualified
Nonelective Contributions for allocation to NHCEs only (see item
12.C.1). These contributions must be made by the due date
(including extensions) for the Employer's tax return for its
fiscal year that corresponds to the Plan Year to which the ADP
Test applies.
Q-19. How may Qualified Nonelective Contributions ("QNECs") and
Qualified Matching Contributions help my Plan pass the ADP Test
for a Plan Year?
A-19. QNECs and Qualified Matching Contributions may be counted
as Elective Deferrals by NHCEs in the ADP Test.
IV. Plan Investments
Q-20. Who should direct the investment of Employer contributions
to my Plan? (Item 6.B)
A-20. If your Plan is a 401(k) Plan, Participants always control
the investment of Elective Deferrals themselves. With respect to
all other contributions to a Profit Sharing or Money Purchase
Pension Plan, you may choose in item 6.B of your Plan Agreement
to make investment decisions for those contributions yourself.
If you elect to direct your Plan's investments, you may be held
personally liable for losses or for an inadequate rate of return.
On the other hand, if you do not elect this option, the Plan
provides that your Employees will direct the investment of all
assets in their accounts. The Plan has been drafted to take
advantage of the provisions of ERISA Section 404(c)1 if you
choose. Generally you cannot be held responsible for the
performance of the Plan's investments directed by Participants
and Beneficiaries in an ERISA Section 404(c) plan, provided that:
(1) Participants and Beneficiaries may choose from at least three
diversified categories of investments, designated by you, having
materially different risk and return characteristics;
(2) Participants and Beneficiaries may change their investment
instructions at least once in any three-month period, and more
frequently if any investment with comparatively high market
volatility is offered under the Plan; and
(3) You provide Participants and Beneficiaries with sufficient
information concerning the Plan's investment alternatives, such
as prospectuses. Please call Putnam Retirement Plan Services at
1-800-662-0019 for more information regarding these requirements.
Even if your Plan complies with the requirements described above
for an ERISA Section 404(c) plan, you remain responsible for
selecting and monitoring on an on-going basis the group of
investments that will be available under the Plan, and for
directing the investment of the account of a Participant or
Beneficiary who gives no directions himself or who is legally
incompetent. Putnam mutual funds and the separate investment
portfolios available under PCM annuity contracts are considered
"look-through" investments that provide diversification within a
risk and return category, even for small accounts in a Plan. Of
course, your Plan may offer more than three choices of
investments.
V. Plan Distributions
Q-21. Should my Profit Sharing and 401(k) Plan permit
Participants to choose life annuities as a form of distribution?
(Item 7.A.2 of Plan Agreement #001)
(Note: All Money Purchase Pension Plans are required to include
life annuities as a form of distribution.)
A-21. The life annuity option presented in item 7.A.2 allows
Participants to use their Account balances to purchase an annuity
contract such as the Putnam Capital Manager variable annuity.
Under the annuity contract, a Participant will receive monthly
payments for the remainder of his life, or for the Participant's
life and that of another person. If a Participant who is married
at the time of separation from service chooses a life annuity,
then the Participant's spouse must give notarized, written
consent to the election of any form of distribution other than a
"joint and survivor" annuity providing income for the spouse's
life, after the death of the Participant (see Article 11 of the
Basic Plan Document). Spousal consent will also be required for
any subsequent hardship distribution.
If you are adopting your Putnam Plan as a replacement for a prior
plan under which Participants had an option to receive their
benefits in the form of a life annuity, you must check "Yes" for
item 7.A.2.
Q-22. What rules apply if my Profit Sharing (Keogh) or Profit
Sharing and 401(k) Plan permits hardship distributions to
Participants? (Items 7.B and 12.D of Plan Agreement #001)
(Note: Money Purchase Pension Plans are not allowed to make
hardship distributions.)
A-22. Section 5.14 of the Basic Plan Document sets forth the
precise standards for making hardship distributions to Employees
from Putnam's Profit Sharing Plans.
Generally, an applicant for a hardship distribution must fulfill
two conditions to the satisfaction of the Plan Administrator.
The purpose for the hardship distribution must be one of the
following: (1) paying medical expenses of the Participant and his
family, (2) making a down payment or paying closing costs for
purchasing the Participant's primary residence, (3) paying
tuition for the upcoming 12 months of post-secondary education
for the Participant or his immediate family, or (4) paying an
amount necessary to prevent the Participant's eviction form his
principal residence, or foreclosure of the mortgage on it. In
addition, the amount distributed must be limited to the amount of
the expense that creates the hardship (plus taxes generated by
the distribution), and in a Profit Sharing and 401(k) Plan the
amount of a hardship distribution from any source other than the
Employer Contribution Account cannot exceed the aggregate amount
of Elective Deferrals he has made after December 31, 1988, plus
the balance credited to the Participant's Elective Deferral
Account as of December 31, 1988. Earnings that accrue on
Elective Deferrals after that date may not be distributed on
account of hardship.
Q-23. What income tax withholding rules apply to distributions
from the Plan?
A-23. If a Participant's Account distributions will continue
over a period of at least 10 years in substantially equal
installments, the Participant may elect whether to have federal
income tax withheld. If the Account will be distributed in any
other form -- such as a single payment -- then the Plan must
withhold federal income tax from the distribution unless the
Participant elects to have the distribution transferred directly
to an individual retirement account (IRA) or to another
employer's qualified retirement plan. Each Participant who is
entitled to a Plan distribution should receive the Special Tax
Notice explaining the choices the Participant has with respect to
income tax withholding. A copy of the Special Tax Notice is
available by contacting ***** at 1-800-622-0019.
VI. Top-Heavy Testing
Q-24. Can I avoid annual top-heavy testing of my Plan? (Item
10).
A-24. Yes, if you design the Plan to operate as though it is
always top-heavy. To do that, you must select in item 5 of your
Plan Agreement a contribution formula that meets the following
requirements:
If your Plan is a Profit Sharing Plan (Keogh), either leave item
5.C blank, or check the first blank in item 5.C.
If your Plan is a Profit Sharing and 401(k) Plan, either complete
the second blank in item 5.B with a percentage that is at least
3% AND leave item 5.C blank, or complete the first blank in item
12.C.2 with a percentage that is at least 3%.
If your Plan is a Money Purchase Pension Plan, either complete
item 5.A and leave items 5.B and 5.C blank, or leave item 5.A
blank and complete the second blank in item 5.B with a percentage
that is at least 3%.
Q-25. What is a top-heavy Plan? (Item 10).
A-25. Your Plan will be top-heavy for a Plan Year it its
Top-Heavy Ratio exceeds 60%. Q&A-26 explains how to compute the
Top-Heavy Ratio. The determination of whether your plan is
top-heavy must be made separately for each Plan Year, because the
top-heavy status of your Plan can change from Plan Year to Plan
Year.
Q-26. How is the Top-Heavy Ratio calculated?
A-26. The Top-Heavy Ratio is a fraction, determined for a Plan
Year, based on the Account balances in all qualified defined
contribution plans of your business as of the last day of the
preceding Plan Year. (In the first Plan Year of your Plan, these
determinations are made as of its last day.) The numerator of
the Top-Heavy Ratio fraction equals the sum of the Account
balances of your Key Employees, as defined in Q&A-27. The
denominator of the Top-Heavy Ratio fraction equals the sum of the
Account balances of all of your Employees (including Key
Employees). For purposes of determining the numerator and
denominator of the Top-Heavy Ratio fraction, any part of any
Account balance which has been distributed to a Participant in
the five-year period ending on the calculation date is added back
to the Participant's Account.
Q-27. Who is a Key Employee?
A-27. A person is a Key Employee of a business (corporation or
unincorporated form) if he owns certain amounts of the business
or has relatively large Gross Earnings from the business. Gross
Earnings means Earnings plus Elective Deferrals plus any pre-tax
contributions made by the Employee under a cafeteria (flexible
compensation) plan, 401(k) plan, SARSEP, 403(b) plan, or a
Section 457 deferred compensation plan.
Your Key Employees for 1994 include any individual who, during
your Plan Year beginning in 1994, falls into at least one of the
following categories:
receive more than $59,400 in Gross Earnings and is an officer of
your business.
receives more than $30,000 in Gross Earnings, and is one of the
ten (or fewer) Employees who own the largest employee-owned
interests in your business.
owns at least a 5% interest in your business.
receives more than $150,000 in Gross Earnings and owns at least
a 1% interest in your business.
Your Key Employees for 1994 also include anyone who was a Key
Employee in any of the previous four Plan Years.
The IRS annually adjusts the dollar amounts listed above
according to cost-of-living increases. For the most current
amounts, call Putnam Retirement Plan Services at 1-800-662-0019.
any Employee who is not a Key Employee is a Non-Key Employee.
Q-28. What are the consequences if my Plan is Top-Heavy? (Item
10)
A-28. As explained in item 10 of your Plan Agreement, for any
Plan Year in which your Plan is top-heavy, each Non-Key Employee
who is employed on the last day of the Plan Year must have
allocated to his account an Employer Contribution equal to the
lesser of:
(1) 3% of his Earnings, or
(2) the highest percentage of Earnings allocated to any Key
Employee (including the Key Employees' Elective Deferrals, if
any).
See the Top-Heavy Worksheet contained in a separate booklet for a
detailed explanation.
Q-29. Does this mean the contribution rules of my Plan may
change form year to year, depending on whether it is top-heavy?
A-29. Yes, unless you design the Plan to operate as though it is
always top-heavy, as described in Q&A-24.
VII. Plan Administration
Q-30. Whom should I appoint to be my Plan Administrator? (Item
11)
A-30. The person or entity you appoint as Plan Administrator
bears legal responsibility for the operation of your Plan. A
plan's administrator is a "fiduciary" under federal law, and is
therefore subject to duties of prudence and loyalty to the Plan
when acting as Plan Administrator. Frequently, the business that
adopts a Plan acts in this capacity, although you may instead
name a committee or individual by resolution or vote of the board
of directors.
The Plan Administrator has authority to interpret the provisions
of the Plan and apply them to specific situations, a such as
whether an Employee has become eligible to participate. All
decisions of the Plan Administrator must follow the written rules
of the Plan and must apply uniformly to all Participants in
similar circumstances.
Q-31. Do I have to obtain a special fidelity bond from an
insurance company for my Plan?
A-31. Yes, federal law requires a bond insuring the Plan against
any fraud or dishonesty which may be committed by you or any of
your officers or Employees who have access to the Plan's assets.
Often the bond coverage can be obtained as a rider to your
existing business insurance.
Q-32. Should I submit my Plan to the Internal Revenue Service
for a determination letter?
A-32. The Internal Revenue Service has issued a favorable
opinion letter as to the form of the Putnam Basic Plan Document,
Plan Agreement #001, and Plan Agreement #002. This letter shows
that Putnam's plan documents include all the terms required to
qualify for tax-favored treatment under Section 401(a) of the
Internal Revenue Code (see Q&A-1). You do not need to submit
your Putnam Plan to the Internal Revenue Service, provided that:
(1) you make only the choices presented in the Plan Agreement and
do not modify the Plan in any other way; and
(2) your business does not now have, and never has had, any other
plan except for a Putnam paired plan, as explained in Q&A-33.
Note: if you adopt a Putnam Plan as an amendment to an existing
plan of the same type (profit sharing or money purchase), the
existing plan is not an "other" plan for this purpose.
If you now maintain or you have ever maintained any other plan
except your Putnam Plan or a Putnam paired plan, you must file
IRS Form 5307, "Application for Determination for Adopters of
Master or Prototype, Regional Prototype or Volume Submitter
Plans," with the Internal Revenue Service no later than the last
day of your first Plan Year that begins after December 31, 1991.
Please keep in mind that, even if you take the above steps,
Putnam's opinion letter and your Plan's own determination letter
do not control whether or not your Plan complies in operation
with the Internal Revenue Code requirements described in the
Putnam Basic Plan Document and Plan Agreement. Compliance in
operation is your responsibility. We have prepared these
Questions and Answers to assist you, but there is no substitute
for individual attention to your particular situation.
Therefore, we strongly encourage you to consult with your legal
and tax advisors.
Q-33. What are Putnam paired plans?
A-33. Putnam paired plans are specially designed so that you can
adopt both a Profit Sharing Plan and a Money Purchase Pension
Plan, and not be required to submit either Putnam plan to the
Internal Revenue Service for a determination letter. A Putnam
Standard Money Purchase Pension Plan may be paired with either a
Putnam Standard Profit Sharing Plan (Keogh) or a Putnam Standard
Profit Sharing and 401(k) Plan. Only one of two paired plans may
be integrated with Social Security. If paired plans are
top-heavy, the top-heavy minimum contributions will be made in
the Money Purchase Pension Plan.
You might choose to adopt paired plans if you want to provide a
minimum contribution every year (such as 5% of Earnings), but
you also want to have the flexibility of making contributions
greater than 15% of Earnings when your business has an especially
profitable year. For example, if you adopt a Money Purchase
Pension Plan with an annual contribution equal to 10% of Earnings
and a Profit Sharing Plan with a discretionary contribution that
varies from year to year, your business could contribute and
deduct 10% of Earnings to the Money Purchase Pension Plan in any
year regardless of profits or losses, but could also contribute
and deduct up to 25% of Earnings in a profitable year (10% in the
Money Purchase Pension Plan and 15% in the Profit Sharing Plan).
Alternatively, you could use paired plans in order to have both a
fixed rate of annual employer contributions (in a Money Purchase
Pension Plan) and permit optional 401(k) contributions (in a
Profit Sharing and 401(k) Plan).
<PAGE>
Part VIII. Glossary of Terms
Account: All of a Participant s accounts. Basic Plan Document.
(BPD section 2.1)
ADP Test: A test limiting the Elective Deferrals that may be
made on behalf of HCEs. (BPD5.6)
Affiliated Employer: A member of a controlled group of
corporations, or trades or businesses under common control, or an
affiliated service group, with your business. (BPD2.2)
Annual Additions: All of the following: Elective Deferrals,
Employer Contributions, Qualified Matching Contributions, and
Qualified Nonelective Contributions. (BPD Article 6)
Actual Deferral Percentage Test: See ADP Test.
Compensation: Whatever amount you designate in item 4. (BPD2.8)
Earnings: Compensation of an employee or earned income of a
self-employed worker, as limited (for 1994) to $150,000. Call
Putnam Retirement Plan Services 1-800-662-0019 for the current
limit. (BPD2.13)
Elective Deferrals: Before-tax contributions made pursuant to an
Employee s salary reduction agreement, according to the terms you
select in item 12.A of your Plan Agreement. (BPD2.54)
Eligibility Period: The 12-month periods beginning on an
Employees first day of work and anniversaries of that date.
(BPD2.15)
Employee: An individual who performs services for your business.
(BPD2.16)
Employer Contributions: Contributions made pursuant to item 5 of
your Plan Agreement. (BPD2.18)
ERISA: The Employee Retirement Income Security Act of 1974, a
federal law governing employee benefits, as amended from time to
time. (BPD2.19)
Family Member: An Employees spouse, children, grandchildren,
parents or grandparents, and the spouse of an Employee s child or
grandchild.
A Family Member of an Employee who is one of the 10 highest paid
Employees or is a 5% owner is not considered separately from the
Employee for purposes of determining who are HCEs. (BPD2.58)
Fidelity Bond: A bond, obtained from an insurance company, that
protects the Plan against loss from the dishonesty of persons who
handle contributions or distributions.
Gross Earnings: Earnings plus Elective Deferrals plus any other
pre-tax contributions to a cafeteria (flexible compensation)
plan, SARSEP or 403(b) plan.
Highly Compensated Employee (HCE): Generally, one who:
Received more than $99,000 in Gross Earnings in the 1994 Plan
Year or $96,368 the previous Plan Year.
Received more than $66,000 in Gross Earnings in the 1994 Plan
Year or $64,245 the previous Plan Year, and was in the top-paid
20% of your Employees.
Received more than $59,400 in Gross Earnings in the 1994 Plan
Year or $57,821 the previous Plan Year, and acted as an officer
of your business.
Owned at least a 5% interest in your business in the 1994 or 1993
Plan Year.
These compensation limits are adjusted annually. Please call
Putnam Retirement Plan Services at 1-800-662-0019 for the current
limits.
Hour of Service: Generally, any hour for which an Employee is
paid or entitled to payment. (BPD2.22)
Integration Level: The level of Earnings selected in item 5.
Participants who earn in excess of the Integration Level receive
an extra share of Employer Contributions. (BPD2.24)
Key Employee: Generally, an Employee who during the current Plan
Year falls into one of the following categories or was a Key
Employee during any of the previous four years:
Received more than $59,400 in Gross Earnings and acted as an
officer of the business.
Received more than $30,000 in Gross Earnings and was one of 10
Employees who owned the largest employee-owned interests in your
business.
Owned at least a 5% interest in your business.
Received more than $150,000 in Gross Earnings and owned at least
a 1% interest in your business. (BPD 15.2(a))
These compensation limits are adjusted annually. Please call
Putnam Retirement Plan Services at 1-800-345-4000 for the current
limits.
Non-Key Employee: An Employee who is not a Key Employee.
(BPD15.2(a))
Officer: For both corporate and non-corporate entities, officer
includes any person who performs officer-like functions.
Participant: An Employee who has satisfied the eligibility
requirements specified in item 3 of your Plan Agreement.
(BPD2.32)
Plan: Your Putnam Profit Sharing Plan (Keogh), Putnam Profit
Sharing and 401(k) Plan or Putnam Money Purchase Pension Plan
(Keogh). (BPD2.34)
Plan Administrator: The entity you appoint in item 11. The Plan
Administrator has responsibility for enforcing the terms of the
Plan. (Q&A-29; BPD2.35 and 16.1)
Plan Year: Your Plans 12-month reporting year, as selected in
item 2.A of your Plan Agreement. (BPD2.37)
Qualified Matching Contributions: Contributions made pursuant to
item 12.B. (BPD2.60)
Qualified Nonelective Contributions: Contributions made pursuant
to item 12.C. (BPD2.62)
Top-Heavy Plan: A plan subject to special contribution rules
because Key Employees Accounts hold 60% or more of Plan assets.
(BPD15.3)
Top-Heavy Ratio: The ratio of Key Employees Account balances to
total assets of the Plan, used to determine whether a plan is
top-heavy. (BPD15(c))
Wage Base: The maximum amount considered as wages for purposes
of Social Security (FICA) tax, as in effect on the first day of
the Plan Year. (BPD2.46)
<PAGE>
DRAFT OF 10/15/93
PUTNAM PROFIT SHARING AND 401(K) PLAN
PLAN AGREEMENT #001
This is the Plan Agreement for a Putnam prototype profit sharing
plan with optional Section 401(k) provisions. Please consult a
tax or legal advisor and review the entire form before you sign
it. If you fail to fill out this Putnam Plan Agreement properly,
the Plan may be disqualified. You can get further information to
help you complete the Plan Agreement from your investment dealer,
or from Putnam at:
Putnam Dedicated Corporate Services
One Adams Place E2B
Quincy, MA 02169
Phone: 1-800-752-9894
* * * * *
By executing this Plan Agreement, the Employer establishes a
profit sharing plan and trust upon the terms and conditions of
Putnam Basic Plan Document #05, as supplemented and modified by
the provisions elected by the Employer in this Plan Agreement.
This Plan Agreement must be accepted by Putnam in order for the
Employer to receive future amendments to the Putnam Profit
Sharing and 401(k) Plan.
* * * * *
All Employers complete items 1-13 below. Employers who wish to
adopt Section 401(k) provisions also complete item 14.
1. Business Information. The Employer adopting this Plan
is:
a. Business Name: ____________________________________
b. Business Address: _____________________________
________________________SIC Code: _______
_______________________________
Person for Putnam to Contact: __________________________
Phone: __________________________
c. Federal Tax Identification Number: __________________
<PAGE>
d. Form of Organization (check one):
_____ Sole proprietorship _____ Corporation
_____ Partnership _____ S Corporation
e. Taxable Year of Business:
______ Calendar Year
______ Fiscal year ending on _______________________
2. Plan Information.
a. Plan Year. Check one:
_____ The Plan Year will be the
same as the Taxable Year of
the Business shown in 1.E.
above. If the Taxable Year
of the Business changes, the
Plan Year will change
accordingly.
_____ The Plan Year will be the period of 12
months beginning on the first day of
__________________________ (month) and
ending on the last day of
__________________________ (month).
The Plan Year will also be your Plan's Limitation
Year for purposes of the contribution limitation
rules in Article 6 of the Plan.
If your Plan Year is the calendar year, do you
wish to make the "calendar year election" for
identifying your Highly Compensated Employees?
_____ Yes
_____ No
b. Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____ Yes
_____ No
If you answered Yes in 2.B. above, the Effective Date
of your adoption of this Plan will be the first day of
the current Plan Year. Please complete the following:
<PAGE>
____________________________________________________________
Name of the plan you are replacing
____________________________________________________________
Original Effective Date of the plan you are replacing
If you answered No in 2.B. above, the Effective Date of
your adoption of this Plan will be the day you select
below (not before the first day of the current Plan
Year, and not before the day your Business began).
The Effective Date is: _______________________
month/day/year
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
and C below.
a. Classes of Eligible Employees. The Plan requires
coverage of all classes of employees of the
Employer and any Affiliated Employer, except for
union employees and nonresident aliens without
U.S.-source income. The general rules of the
Plan exclude employees in those two groups, but
if you want employees in one or both categories
to be eligible for your Plan, check the
appropriate space below.
The following employees will be eligible to participate
in the Plan:
_____ Members of the following collective
bargaining unit(s) (give names of unions):
________________________________________________________________
________________________________________________________________
________________________________________________________________
_____ Nonresident aliens with no U.S.-source
income
b. Age Requirement (check and complete one):
_____ No minimum age required for participation
_____ Employees must reach age __ (not over 21) to
participate
<PAGE>
c. Service Requirements.
i. To become eligible, an employee must
complete (choose one):
_____ a. No minimum service required. Skip
the rest of this part C.
_____ b. One 6-month Eligibility Period
_____ c. One 12-month Eligibility Period
_____ d. Two 12-month Eligibility Periods
(may not be chosen if you adopt
either Section 401(k) provisions
under item 14 or a vesting schedule
other than the first choice under
item 8.A, which provides for 100%
full and immediate vesting).
ii. A 6-month Eligibility Period is a 6 month
period beginning either on an employee's
first day of work with the Employer, or on
the date 6 months following the employee's
first day of work and anniversaries of those
dates. A 12-month Eligibility Period is the
12-month period beginning on an employee's
first day of work with the Employer, and
anniversaries of that date. If the Employer
acquires a business, will the Eligibility
Period for employees of the acquired
business be the 12-month period beginning on
the first day of work for the acquired
business and anniversaries of that date (or
the 6 month period beginning on the first
day of work for the acquired business, the
date 6 months following the first day of
work and anniversaries of those dates, if
applicable)?
_____ Yes
_____ No
<PAGE>
iii.
a. To receive credit for a 6-month Eligibility
Period, an employee must complete during it
at least:
_____ 500 Hours of Service
_____ _____________ Hours of Service
(under 500)
Note: If you adopt a 6-month Eligibility Period,
in any event, an employee will automatically
receive credit for the Eligibility Period if the
employee completes at least 1,000 Hours of
Service during a 12-month consecutive month
period following the first day of work.
b. To receive credit for a 12-month Eligibility
Period, an employee must complete during it
at least:
_____ 1,000 Hours of Service
_____ _____________ Hours of Service
(under 1,000)
iv. Hours of Service will be credited to
employees by the following method (check
one):
_____ a. Actual hours for which an employee
is paid
_____ b. Any employee who has one actual
paid hour in the following period
will be credited with the number of
Hours of Service indicated (check
one):
_____ Day (10 Hours of Service)
_____ Week (45 Hours of Service)
_____ Semi-monthly payroll period
(95 Hours of Service)
_____ Month (190 Hours of Service)
Note: If you are adopting this Plan to replace an existing plan,
employees will be credited under this Plan with all service
credited to them under the plan you are replacing.
v. Entry Dates. Each Employee in an eligible
class who completes the age and service
requirements specified above will begin to
participate in the Plan on (check one):
_____ The first day of the month in which he
fulfills the requirements
_____ The first of the following dates
occurring after he fulfills the
requirements (or, if earlier, the first
day of the first Plan Year that begins
after the date he fulfills the
requirements) (check one):
_____ The first day of any month (monthly).
_____ The first day of the first, fourth,
seventh and tenth months in a Plan Year
(quarterly).
_____ The first day of the first month and
the seventh month in a Plan Year
(semiannually).
d. (For New Plans Only) Will all Employees be
required to meet the age and service requirements
specified in B and C above?
_____ Yes
_____ No; all Employees on the Effective Date will
be eligible as of the Effective Date, even
if they have not met the age and service
requirements.
4. Compensation (Plan Section 2.8). Compensation for
purposes of the Plan will be the amount of the
following that is actually paid by your Business to an
employee during the Plan Year (check one):
_____ Form W-2 earnings as defined in Section 2.8 of
the Plan
_____ Form W-2 earnings as defined in Section 2.8 of
the Plan, plus any amounts withheld from the
employee under a 401(k) plan, cafeteria plan,
SARSEP, tax sheltered 403(b) arrangement, or
Code Section 457 deferred compensation plan, or
contributions described in Code Section 414(h)(2)
that are picked up by a governmental employer
<PAGE>
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b)
of the Plan
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b)
of the Plan, plus any amounts withheld from the
employee under a 401(k) plan, cafeteria plan,
SARSEP, tax sheltered 403(b) arrangement, or Code
Section 457 deferred compensation plan, or
contributions described in Code Section 414(h)(2)
that are picked up by a governmental employer
5. Contributions (Plan Sections 4.1 - 4.3).
a. Profit Limitation. Will Employer contributions
to the Plan be limited to the current and
accumulated profits of your Business? Check one:
_____ Yes
_____ No
If you will make contributions only under the Section
401(k) provisions in item 14 of this Plan Agreement,
skip the rest of this part 5.
b. Amount. The Employer will contribute to the Plan
for each Plan Year (check one):
_____ An amount chosen by the Employer from year
to year
______ ____% of the Earnings of all Qualified
Participants for the Plan Year
If you checked (2) above, will Forfeitures for a Plan
Year be applied to reduce the amount of the
contribution otherwise required?
_____ Yes
_____ No
If you check No, Forfeitures will be allocated as
though they were additional Employer Contributions.
<PAGE>
c. Allocations to Participants
1. Allocation to Qualified Participants. Any
Employee who has met the eligibility requirements
in item 3 of this Plan Agreement is a Qualified
Participant unless, for reasons other than his
death or Retirement, he is not an active Employee
on the last day of the Plan Year, and he is not
credited with more than 500 Hours of Service in
the Plan Year.
2. Integration with Social Security. Contributions
under paragraph B will be shared by Qualified
Participants in proportion to their Earnings,
unless you check one of the spaces below.
_____ Each Qualified Participant's share will be a
uniform dollar amount.
_____ Contributions will be shared according to
the Top-Heavy Integration Formula in Section
4.2(d)(1) of the Basic Plan Document in
every Plan Year, whether or not the Plan if
top-heavy.
_____ Contributions will be shared according to
the Top-Heavy Integration Formula in Section
4.2(d)(1) of the Basic Plan Document only in
Plan Years in which the Plan is top-heavy.
In all other Plan Years, contributions will
be shared according to the Non-Top-Heavy
Integration Formula in Section 4.2(d)(2) of
the Basic Plan Document.
3. Integration Level. (Complete only if you have
elected in 5C2 to integrate your Plan with Social
Security). The Integration Level will be (check
one):
____ The Social Security Wage Base in effect at the
beginning of the Plan Year.
____ __% (not more than 100%) of the Social Security
Wage Base in effect at the beginning of the Plan
Year.
____ $__________ (not more than the Social Security
Wage Base).
D. Participant Contributions. Will your Plan allow
Participants to make after-tax contributions?
Yes
No
6. Investments (Plan Sections 13.2 and 13.3). The
Employer selects in part A below the Investment
Products that will be available under the Plan (in
addition to life insurance policies selected under Plan
Article 14, if any). All Investment Products must be
sponsored, underwritten, managed or expressly agreed to
in writing by Putnam. From the group of available
Investment Products selected by the Employer, each
Participant chooses the investments for his own
Accounts unless the Employer elects differently in B
below.
a. Available Investment Products (Plan Section
13.2). The following investments will be
available under the Plan (check one):
_____ The group of Putnam funds selected by the
Employer and communicated to Participants in
writing. A current list of the funds
selected by the Employer from time to time
shall be kept with the records of the Plan.
The initial list of funds is as follows:
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
______ Putnam Fiduciary Trust Company GIC Fund
______ Other Investment Products (as defined in
Section 2.26 of the Plan)
In the event that there is any amount in the Trust Fund for which
no instructions or unclear instructions are delivered, it will be
invested in the default option selected by the Employer in its
Service Agreement with Putnam (or if the Employer makes no such
selection, in Putnam Daily Dividend Trust) until instructions are
received in good order, and the Employer will be deemed to have
selected the option indicated in its Service Agreement with
Putnam (or if none, Putnam Daily Dividend Trust) 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.
_____ The Employer will make investment decisions.
<PAGE>
c. Changes. Investment instructions may be changed
(check one):
_____ on any Valuation Date (daily)
_____ on the first day of any month (monthly)
_____ on the first day of the first, fourth,
seventh and tenth months in a Plan Year
(quarterly)
d. Voting of Employer Stock. Section 13.8 of the
Plan provides that Employer Stock held as an
investment under the Plan will be voted in
accordance with the Employer's instructions
unless the Employer elects that Participants will
direct the voting of Employer Stock to the extent
described in Section 13.8. Check below only if
Participants will direct the voting of Employer
Stock.
_____ Participants are hereby appointed named
fiduciaries for the purpose of voting of
Employer Stock in accordance with Section
13.8.
7. Distributions and Withdrawals.
a. Retirement Distributions.
i. Normal Retirement Age (Plan Section 7.1).
Normal retirement age will be _______ (not
over the lesser of 65 or any mandatory
retirement age enforced by the Employer).
ii. Early Retirement (Plan Section 7.1). Check
and complete the item below only if you want
Participants to become fully vested upon
fulfilling specified age and service
requirements before reaching normal
retirement age:
_____ Early retirement will be permitted at
age ____ with at least ________ Years
of Service.
<PAGE>
iii. Annuities (Plan Section 9.3). Will your
Plan permit a Participant to select a life
annuity form of distribution? You must
check Yes if this Plan replaces an existing
Plan that permits distributions in life
annuity form. Check one:
_____ Yes
_____ No
b. Hardship Distributions (Plan Section 12.2). Will
your Plan permit hardship distributions from
Employer Contribution Accounts? You must check
Yes if this Plan replaces an existing Plan that
permits hardship distributions. Check one:
_____ Yes
_____ No
c. Withdrawals after Age 591 one and half (Plan Section 12.3).
Will your Plan permit employees over age 59 one and half to
withdraw amounts upon request? You must check
Yes if this Plan replaces an existing Plan that
permits withdrawals after age 59 one and half. Check one:
_____ Yes
_____ No
8. Vesting.
a. Time of Vesting. The provision checked below
will determine a Participant's vested percentage
in his Employer Contribution Account and, if you
adopt the Section 401(k) provisions in item 14
and will make Employer Matching Contributions,
his Employer Matching Contribution Account (check
one):
_____ 100% vesting immediately upon participation
in the Plan. If you check this option, skip
the rest of this part 8.
_____ Six Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
Years of Service 2 3 4 5 6
<PAGE>
_____ Three Year Cliff Schedule:
Vested Percentage 0% 100%
Years of Service 0-2 3
_____ Other Schedule (must be at least as
favorable as Six Year Graded Schedule or
Three Year Cliff Schedule):
Vested Percentage __% __% __% __% __%
Years of Service ___ ___ ___ ___ ___
b. Service. Skip this part B if your Plan will
include all of an employee's service in
determining his Years of Service for vesting.
Years of Service for vesting will exclude (check one or
more):
_____ Service before the Effective Date of the
Plan, if this is a new plan, or service
before the effective date of your existing
plan, if this Plan replaces an existing plan
_____ Service before the Plan Year in which an
employee reached age 18
_____ Service for a business acquired by the
Employer, before the date of acquisition
c. Hours of Service. The number of Hours of Service
required for crediting a Year of Service for
vesting will be (check one):
_____ 1,000 Hours of Service
_____ ___________________ Hours of Service
(under 1,000)
d. Year of Service Measuring Period (Plan Section
2.49). The periods of 12 months used for
measuring Years of Service will be (check one):
_____ Plan Years
_____ 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an existing plan,
employees will be credited under this Plan with all service
credited to them under the plan you are replacing.
<PAGE>
9. Loans. Will your Plan permit loans to employees from
their Accounts?
_____ Yes
_____ No
10. Automatic Distribution of Small Accounts (Plan Section
9.1). Will your Plan automatically distribute vested
account balances not exceeding $3,500, within 60 days
after the end of the Plan Year in which a Participant
separates from employment?
_____ Yes
_____ No
Note: The time for distribution cannot be left to the discretion
of the Employer or the Plan Administrator. If you check No
above, small accounts will be distributable at the time selected
by the Participant.
11. Top-Heavy Minimum Contributions (Plan Section 15.3).
For any Plan Year in which the Plan is top-heavy, you
must provide for each Participant who is a non-key
employee and who is employed on the last day of the
Plan Year an allocation equal to 3% of his Earnings (or
if less, the highest percentage allocated to any key
employee). Neither Elective Deferrals, nor Employer
Matching Contributions nor Qualified Matching
Contributions for a non-key employee may be taken into
account for purposes of this requirement.
Skip paragraphs A and B below if you do not maintain any
other qualified plan in addition to this Plan.
a. If you maintain another qualified plan in
addition to this Plan, specify below whether a
non-key employee who participates in both plans
will receive a top-heavy minimum contribution (or
benefit) in this Plan or the other plan (check
one):
The top-heavy minimum contribution (or benefit) for
non-key employees participating both in this Plan and
another qualified plan maintained by the Employer will
be provided in:
_____ This Plan
_____ The plan named here: ______________________
<PAGE>
b. (Skip this paragraph if you do not maintain a
defined benefit plan.) If you maintain a defined
benefit plan in addition to this Plan, and the
Top-Heavy Ratio (as defined in Plan Section
15.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased
minimum allocation or benefit pursuant to Plan
Section 15.4. Specify your election by
completing the statement below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as required under Plan
Section 15.4.
12. Other Plans. Skip this item 12 if the Plan is the only
qualified plan your Business has ever had. 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):
_____ The provisions of Section 6.2 of the Plan
will apply as if the other plan were a
master or prototype plan.
_____ The plans will limit total annual additions
to the maximum permissible amount, and will
properly reduce any excess amounts, in the
manner you describe below.
_________________________________________________________________
_________________________________________________________________
B. If a Participant in the Plan is or has ever been a
participant in a defined benefit plan maintained by
your Business, the plans will meet the limits of
Article 6 in the manner you describe below:
_________________________________________________________________
_________________________________________________________________
Note: Your description under A or B above must not leave the
selection of a method to your discretion from year to year.
13. Administration.
a. Plan Administrator (Plan Section 16.1). You may
appoint a person or a committee to serve as Plan
Administrator. You may remove and replace anyone
you have appointed, and anyone you have appointed
may resign, without the need to amend this Plan
Agreement, provided that you notify Participants
in writing of any such change. If you do not
appoint a Plan Administrator, the Plan provides
that the Employer will be the Plan
Administrator.
The initial Plan Administrator will be (check one):
_____ This person:
_______________________________
_____ A committee composed of these people:
________________________________________________________________
________________________________________________________________
________________________________________________________________
b. Recordkeeper (Plan Section 16.3). Unless Putnam
expressly permits otherwise, you must appoint
Putnam as Recordkeeper to perform certain routine
services determined upon execution of a written
Service Agreement between Putnam and you.
The initial Recordkeeper will be:
_______________________________________________________
Name
_______________________________________________________
Address
Complete item 14 below if your Plan will allow employees to elect
pre-tax contributions under Section 401(k) of the Code.
14. Section 401(k) Plan Provisions (Plan Article 5).
a. Elective Deferrals (Plan Section 5.2).
i. A Participant may make Elective Deferrals in
an amount not to exceed (check one):
_____ (a) ___% of his Earnings
_____ (b) $_______ (specify a dollar
amount) for each payroll
period
Note: Elective Deferrals may not exceed the annual dollar limit
under Section 402(g) of the Internal Revenue Code.
ii. A Participant may begin to make Elective
Deferrals, or change the amount of his
Elective Deferrals, as of the following
dates (check one):
_____ First business day of each month
(monthly).
_____ First business day of the first,
fourth, seventh and tenth months of the
Plan Year (quarterly).
_____ First business day of the first and
seventh months of the Plan Year
(semiannually).
_____ First business day of the Plan Year
only (annually).
iii. May Participants make Elective Deferrals of
bonuses?
_____ Yes
_____ No
Note: You may choose to make Employer Matching Contributions or
Qualified Matching Contributions, or neither, or both. Qualified
Matching Contributions are always fully vested and cannot be
distributed from the Plan before a Participant reaches age 59 one and half or
leaves employment. They will be used, to the extent needed, to
help the Plan pass the ADP test explained on page __ of the Q &
As. Employer Matching Contributions are subject to the vesting
schedule elected in item 8 of this Plan Agreement, and can be
withdrawn during employment in the event of financial hardship
(as defined in Section 12.2 of the Plan) if you so elect in part
F below.
b. Employer Matching Contributions (Plan Section
5.8). Skip this part B if you will not make
Employer Matching Contributions.
i. The Employer will contribute and will
allocate to each Participant's Employer
Matching Account an amount equal to:
(Check the provision(s) desired, and fill in the
% blank(s) in each provision you check. If you
wish to determine the amount of Employer Matching
Contributions from year to year instead of
specifying a fixed percentage, write "V" for
variable in the % blank at the beginning of each
provision you check.)
_____ ___% of Elective Deferrals
_____ ___% of Elective Deferrals that do not
exceed ___% of Earnings
_____ ___% of Elective Deferrals that do not
exceed ___% of Earnings plus
___% of Elective Deferrals that do not
exceed ___% of Earnings
_____ ___% of Elective Deferrals that do not
exceed ___% of Earnings plus
___% of Elective Deferrals that do not
exceed ___% of Earnings plus
___% of Elective Deferrals that do not
exceed ___% of Earnings
ii. Will forfeited Employer Matching
Contributions be applied to reduce the total
contribution specified in B.(1) above?
_____ Yes
_____ No
If you check No, forfeited Employer Matching
Contributions will be allocated as though they
were additional Employer Matching Contributions.
c. Qualified Matching Contributions (Plan Section
2.58). Skip this part C if you will not make
Qualified Matching Contributions.
i. Qualified Matching Contributions will be
made with respect to (check one):
_____ Elective Deferrals by all Participants
_____ Elective Deferrals only by Non-Highly
Compensated Participants
ii. The amount of Qualified Matching
Contributions made with respect to a
Participant will be:
(Check the provision desired and fill in the %
blank(s) in the provision you check. If you wish
to determine the amount of Qualified Matching
Contributions from year to year instead of
specifying a fixed percentage, write "V" for
variable in the % blank at the beginning of each
provision you check.)
_____ ___% of his Elective Deferrals
_____ ___% of his Elective Deferrals that do
not exceed ___% of his Earnings
_____ ___% of his Elective Deferrals that do
not exceed ___% of Earnings, plus ___%
of Elective Deferrals that do not
exceed ___% of Earnings
_____ ___% of his Earnings
d. Qualified Nonelective Contributions (Plan Section
2.60): Skip this part D if you will not make
Qualified Nonelective Contributions.
i. Qualified Nonelective Contributions will be
made on behalf of (check one):
_____ All Participants
_____ Only Participants who are not Highly
Compensated Employees
ii. The amount of Qualified Nonelective
Contributions for a Plan Year will be (check
one):
_____ ___% (not over 15%) of the Earnings of
Participants on whose behalf Qualified
Nonelective Contributions are made
_____ An amount determined by the Employer
from year to year, to be shared in
proportion to Earnings by Participants
on whose behalf Qualified Nonelective
Contributions are made
Note: Qualified Nonelective Contributions will be used, to the
extent needed, to help the Plan pass the ADP test, explained on
page __ of the Q & As.
e. ACP Test. Every plan that has after-tax
Participant Contributions, Employer Matching
Contributions or Qualified Matching Contributions
must pass an annual test called the ACP test,
which is explained on page __ of the Q & As.
Elective Deferrals and Qualified Nonelective
Contributions will be used to help the Plan pass
the ACP test, to the extent needed.
f. Hardship Distributions from 401(k) Accounts (Plan
Sections 12.2 and 5.14).
<PAGE>
i. Will your Plan permit hardship distributions
from Elective Deferral Accounts? Check one:
_____ Yes
_____ No
ii. If your Plan has Employer Matching
Contributions, will it permit hardship
distributions from Employer Matching
Accounts? You must check Yes if this Plan
replaces an existing plan that permits
hardship distributions. Check one:
_____ Yes
_____ No
15. Reliance on Opinion Letter. If you ever maintained or
you later adopt any plan (including a welfare benefit
fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to
separate accounts for key employees, as defined in
Section 419A(d)(3) of the Code; or an individual
medical account, as defined in Section 415(l)(2) of
the Code) in addition to this plan, you may not rely on
an opinion letter issued to Putnam by the National
Office of the Internal Revenue Service as evidence that
the Plan is qualified under Section 401 of the
Internal Revenue Code. If you maintain or adopt
multiple plans, in order to obtain reliance with
respect to plan qualification of the Plan, you must
receive a determination letter from the appropriate Key
District Office of Internal Revenue. Putnam will
prepare an application for such a letter upon your
request at a fee agreed upon by the parties.
The Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Section 401 of
the Code unless the terms of the plan, as herein adopted or
amended, that pertain to the requirements of Section
401(a)(4), 401(a)(17), 401(1), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or
later laws, (a) are made effective retroactively to the
first day of the first Year beginning after December 31,
1988 (or such later date on which these requirements first
become effective with respect to this plan); or (b) are made
effective no later than the first day on which the Employer
is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements,
and the prior provisions of the plan constitute such an
interpretation.
Putnam will inform you of all amendments it makes to the
prototype plan. If Putnam ever discontinues or abandons the
prototype plan, Putnam will inform you. This Plan Agreement
#001 may be used only in conjunction with Putnam's basic
plan document #05.
<PAGE>
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
PROFIT SHARING AND 401(k) PLAN
The Employer named below hereby adopts a PUTNAM PROFIT SHARING
AND 401(k) PLAN, and appoints __________________ to serve as
Trustee of the Plan. (Note: you may appoint a trustee other than
Putnam Fiduciary Trust Company only with Putnam's express
permission.) The Employer acknowledges that it has received
copies of the current prospectus for each Investment Product
available under the Plan, and represents that it will deliver
copies of the then current prospectus for each such Investment
Product to each Participant before each occasion on which the
Participant makes an investment instruction as to his Account.
The Employer further acknowledges that the Plan will be
acknowledged by Putnam as a Putnam Profit Sharing and 401(k) Plan
only upon Putnam's acceptance of this Plan Agreement.
Employer signature(s) to adopt Plan: Date of
signature:
_________________________________________________________________
_________________________________________________________________
Please print name(s) of authorized person(s) signing above:
_________________________________________________________________
Phone:____________________
_________________________________________________________________
Phone:____________________
A new Plan must be signed by the last day of the Plan Year in
which the Plan is to be effective.
INVESTMENT DEALER INFORMATION
Firm: _________________________________________________________________
Branch: ________________________________________________________________
Address: _________________________________________________________________
<PAGE>
Registered Representative: ___________________________________
Name
_________________________________________
Phone
<PAGE>
* * * * *
ACCEPTANCE OF TRUSTEE
The Trustee accepts appointment in accordance with the terms and
conditions of the Plan, effective as of the date of execution by
the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By: _________________________________________________________________
Complete Part B only if you have appointed a Trustee other than
Putnam Fiduciary Trust Company. Note: Putnam may impose an
annual maintenance fee as a condition of its acceptance of this
plan as a Putnam Prototype Profit Sharing and 401(k) Plan.
B. _________________________________, Trustee
By: _________________________________ Trustee's Tax I.D.
Number _______________
(Trustee)
_________________________________________________________________
Address of Trustee
Person for Putnam to Contact: ________________________________
P
h
o
n
e
:
_______________
Complete Part C only if insurance Policies will be purchased
under Article 14 of the Plan (in addition to Putnam Investment
Products).
C. Appointment and Acceptance of Insurance Trustee
1. Appointment to:
_________________________________________________________________
Name of Insurance Trustee
You are hereby designated as Insurance Trustee for Policies to be
held in accordance with the terms and conditions of this Plan and
Trust.
Employer signature to appoint Insurance Trustee:
By:______________________________________________________________
(Authorized Signature)
2. Acceptance as Insurance Trustee is agreed to in accordance
with the terms and conditions of the Plan, effective as of
the date of execution by the Employer as set forth above.
By:_____________________________________ Trustee's Tax I.D.
Number _________________
_________________________________________________________________
Address of Insurance Trustee
Person for Putnam to Contact: ________________________________
Phone: _______________
<PAGE>
* * * * *
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype
established under Putnam Basic Plan Document #05.
Putnam Mutual Funds Corp.
By: ______________________________
<PAGE>
DRAFT OF 10/18/93
PUTNAM MONEY PURCHASE PLAN
PLAN AGREEMENT #002
This is the Plan Agreement for a Putnam prototype money purchase
plan. Please consult a tax or legal advisor and review the
entire form before you sign it. If you fail to fill out this
Putnam Plan Agreement properly, the Plan may be disqualified.
You can get further information to help you complete the Plan
Agreement from your investment dealer, or from Putnam at:
Putnam Dedicated Corporate Services
One Adams Place E2B
Quincy, MA 02169
Phone: 1-800-752-9894
* * * * *
By executing this Plan Agreement, the Employer establishes a
money purchase plan and trust upon the terms and conditions of
Putnam Basic Plan Document #05, as supplemented and modified by
the provisions elected by the Employer in this Plan Agreement.
THIS PLAN AGREEMENT MUST BE ACCEPTED BY PUTNAM IN ORDER FOR THE
EMPLOYER TO RECEIVE FUTURE AMENDMENTS TO THE PUTNAM MONEY
PURCHASE PLAN.
* * * * *
16. Business Information. The Employer adopting this Plan
is:
a. Business Name: ____________________________________
b. Business Address: ______________________________
_______________________________ SIC Code: ______
_______________________________
Person for Putnam to Contact: __________________________
Phone: __________________________
c. Federal Tax Identification Number: _____________
<PAGE>
d. Form of Organization (check one):
_____ Sole proprietorship _____ Corporation
_____ Partnership _____ S Corporation
e. Taxable Year of Business:
______ Calendar Year
______ Fiscal year ending on ________________________
17. Plan Information.
a. Plan Year. Check one:
_____ The Plan Year will be the
same as the Taxable Year of
the Business shown in 1.E.
above. If the Taxable Year
of the Business changes, the
Plan Year will change
accordingly.
_____ The Plan Year will be the period of 12
months beginning on the first day of
__________________________ (month) and
ending on the last day of
__________________________ (month).
The Plan Year will also be your Plan's Limitation
Year for purposes of the contribution limitation
rules in Article 6 of the Plan.
If your Plan Year is the calendar year, do you
wish to make the "calendar year election" for
identifying your Highly Compensated Employees?
_____ Yes
_____ No
b. Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____ Yes
_____ No
<PAGE>
If you answered Yes in 2.B. above, the Effective Date
of your adoption of this Plan will be the first day of
the current Plan Year. Please complete the following:
_____________________________________________________________
Name of the plan you are replacing
______________________________________________________________
Original Effective Date of the plan you are replacing
If you answered No in 2.B. above, the Effective Date of
your adoption of this Plan will be the day you select
below (not before the first day of the current Plan
Year, and not before the day your Business began).
The Effective Date is: _______________________
month/day/year
18. Eligibility for Plan Participation (Plan Section 3.1).
Employees will be eligible to participate in the Plan
when they complete the requirements you select in A, B
and C below.
a. Classes of Eligible Employees. The Plan requires
coverage of all classes of employees of the
Employer and any Affiliated Employer, except for
union employees and nonresident aliens without
U.S.-source income. The general rules of the
Plan exclude employees in those two groups, but
if you want employees in one or both categories
to be eligible for your Plan, check the
appropriate space below.
The following employees will be eligible to participate
in the Plan:
_____ Members of the following collective
bargaining unit(s) (give names of unions):
________________________________________________________________
________________________________________________________________
________________________________________________________________
_____ Nonresident aliens with no U.S.-source
income
<PAGE>
b. Age Requirement (check and complete one):
_____ No minimum age required for participation
_____ Employees must reach age __ (not over 21) to
participate
c. Service Requirements.
i. To become eligible, an employee must
complete (choose one):
_____ a. No minimum service required. Skip
the rest of this part C.
_____ b. One 6-month Eligibility Period
_____ c. One 12-month Eligibility Period
_____ d. Two 12-month Eligibility Periods
(may not be chosen if you adopt
either Section 401(k) provisions
under item 14 or a vesting schedule
other than the first choice under
item 8.A, which provides for 100%
full and immediate vesting).
ii. A 6-month Eligibility Period is a 6-month
period beginning either on an employee's
first day of work with the Employer or on
the date 6-months following the employee's
first day of work, and anniversaries of
those dates. A 12-month Eligibility Period
is the 12-month period beginning on an
employee's first day of work with the
Employer, and anniversaries of that date.
If the Employer acquires a business, will
the Eligibility Period for employees of the
acquired business be the 12-month period
beginning on the first day of work for the
acquired business and anniversaries of that
date (or the 6-month period beginning on the
first day of work for the acquired business,
the date 6 months following the first day of
work and anniversaries of those dates, if
applicable)?
_____ Yes
_____ No
<PAGE>
iii.
a. To receive credit for a 6-month Eligibility
Period, an employee must complete during it
at least:
_____ 500 Hours of Service
_____ _____________ Hours of Service
(under 500)
Note: If you adopt a 6-month Eligibility Period,
in any event, an employee will automatically
receive credit for the Eligibility Period if the
employee completes at least 1,000 Hours of
Service during a 12-month consecutive month
period following the first day of work.
b. To receive credit for a 12-month Eligibility
Period, an employee must complete during it
at least:
_____ 1,000 Hours of Service
_____ _____________ Hours of Service
(under 1,000)
iv. Hours of Service will be credited to
employees by the following method (check
one):
_____ a. Actual hours for which an employee
is paid
_____ b. Any employee who has one actual
paid hour in the following period
will be credited with the number of
Hours of Service indicated (check
one):
_____ Day (10 Hours of Service)
_____ Week (45 Hours of Service)
_____ Semi-monthly payroll period
(95 Hours of Service)
_____ Month (190 Hours of Service)
Note: If you are adopting this Plan to replace an existing plan,
employees will be credited under this Plan with all service
credited to them under the plan you are replacing.
<PAGE>
v. Entry Dates. Each Employee in an eligible
class who completes the age and service
requirements specified above will begin to
participate in the Plan on (check one):
_____ The first day of the month in which he
fulfills the requirements.
_____ The first of the following dates
occurring after he fulfills the
requirements (or, if earlier, the first
day of the first Plan Year that begins
after the date he fulfills the
requirements) (check one):
_____ The first day of any month (monthly).
_____ The first day of the first, fourth,
seventh and tenth months in a Plan Year
(quarterly).
_____ The first day of the first month and
the seventh month in a Plan Year
(semiannually).
d. (For New Plans Only) Will all Employees be
required to meet the age and service requirements
specified in B and C above?
_____ Yes
_____ No; all Employees on the Effective Date will
be eligible as of the Effective Date, even
if they have not met the age and service
requirements.
19. Compensation (Plan Section 2.8). Compensation for
purposes of the Plan will be the amount of the
following that is actually paid by your Business to an
employee during the Plan Year (check one):
_____ Form W-2 earnings as defined in Section 2.8 of
the Plan.
_____ Form W-2 earnings as defined in Section 2.8 of
the Plan, plus any amounts withheld from the
employee under a 401(k) plan, cafeteria plan,
SARSEP, tax sheltered 403(b) arrangement, or
Code Section 457 deferred compensation plan, or
contributions described in Code Section 414(h)(2)
that are picked up by a governmental employer.
<PAGE>
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b)
of the Plan.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b)
of the Plan, plus any amounts withheld from the
employee under a 401(k) plan, cafeteria plan,
SARSEP, tax sheltered 403(b) arrangement, or Code
Section 457 deferred compensation plan, or
contributions described in Code Section 414(h)(2)
that are picked up by a governmental employer.
20. Contributions (Plan Section 4.3).
a. Amount. The Employer will contribute to the Plan
for each Plan Year this Basic Contribution
Percentage (not more than 25%) ____% of the
Earnings of all Qualified Participants for the
Plan Year.
b. Allocations to Participants
1. Allocation to Qualified Participants. Any
Employee who has met the eligibility requirements
in item 3 of this Plan Agreement is a Qualified
Participant unless, for reasons other than his
death or Retirement, he is not an active Employee
on the last day of the Plan Year, and he is not
credited with more than 500 Hours of Service in
the Plan Year.
2. Integration with Social Security. Contributions
under paragraph B will be shared by Qualified
Participants in proportion to their Earnings,
unless you check the following space to indicate
that your Plan will be integrated with Social
Security, as explained on page 3 of the Qs & As.
The Plan will be integrated with Social Security,
and the Base Contribution Percentage will be ___%
(not less than 3% unless you will perform annual
top-heavy testing for your Plan).
3. Integration Level. (Complete only if you have
elected in 5.B.2. to integrate your Plan with
Social Security). The Integration Level will be
(check one):
____ The Social Security Wage Base in effect at the
beginning of the Plan Year.
<PAGE>
____ __% (not more than 100%) of the Social Security
Wage Base in effect at the beginning of the Plan
Year.
____ $__________ (not more than the Social Security
Wage Base).
c. Participant Contributions. Will your Plan allow
Participants to make after-tax contributions?
Yes
No
21. Investments (Plan Sections 13.2 and 13.3). The
Employer selects in part A below the Investment
Products that will be available under the Plan (in
addition to life insurance policies selected under Plan
Article 14, if any). All Investment Products must be
sponsored, underwritten, managed or expressly agreed to
in writing by Putnam. From the group of available
Investment Products selected by the Employer, each
Participant chooses the investments for his own
Accounts unless the Employer elects differently in B
below.
a. Available Investment Products (Plan Section
13.2). The following investments will be
available under the Plan (check one):
_____ The group of Putnam funds selected by the
Employer and communicated to Participants in
writing. A current list of the funds
selected by the Employer from time to time
shall be kept with the records of the Plan.
The initial list of funds is as follows:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
______ Putnam Fiduciary Trust Company GIC Fund
______ Other Investment Products (as defined in
Section 2.26 of the Plan)
In the event that there is any amount in the Trust Fund for which
no instructions or unclear instructions are delivered, it will be
invested in the default option selected by the Employer in its
Service Agreement with Putnam (or if the Employer makes no such
selection, in Putnam Daily Dividend Trust) until instructions are
received in good order, and the Employer will be deemed to have
selected the option indicated in its Service Agreement with
Putnam (or if none, Putnam Daily Dividend Trust) 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.
_____ The Employer will make investment decisions.
c. Changes. Investment instructions may be changed
(check one):
_____ on any Valuation Date (daily)
_____ on the first day of any month (monthly)
_____ on the first day of the first, fourth,
seventh and tenth months in a Plan Year
(quarterly)
d. Voting of Employer Stock. Section 13.8 of the
Plan provides that Employer Stock held as an
investment under the Plan will be voted in
accordance with the Employer's instructions
unless the Employer elects that Participants will
direct the voting of Employer Stock to the extent
described in Section 13.8. Check below only if
Participants will direct the voting of Employer
Stock.
_____ Participants are hereby appointed named
fiduciaries for the purpose of voting of
Employer Stock in accordance with Section
13.8.
22. Retirement Age.
a. Normal Retirement Age (Plan Section 7.1). Normal
retirement age will be _______ (not over the
lesser of 65 or any mandatory retirement age
enforced by the Employer).
b. Early Retirement (Plan Section 7.1). Check and
complete the item below only if you want
Participants to become fully vested upon
fulfilling specified age and service requirements
before reaching normal retirement age:
_____ Early retirement will be permitted at
age ____ with at least ________ Years
of Service.
23. Vesting.
a. Time of Vesting. The provision checked below
will determine a Participant's vested percentage
in his Employer Contribution Account.
_____ 100% vesting immediately upon participation
in the Plan. If you check this option, skip
the rest of this part 8.
_____ Six Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Three Year Cliff Schedule:
Vested Percentage 0% 100%
Years of Service 0-2 3
_____ Other Schedule (must be at least as
favorable as Six Year Graded Schedule or
Three Year Cliff Schedule):
Vested Percentage __% __% __% __% __%
Years of Service ___ ___ ___ ___ ___
b. Service. Skip this part B if your Plan will
include all of an employee's service in
determining his Years of Service for vesting.
Years of Service for vesting will exclude (check one or
more):
_____ Service before the Effective Date of the
Plan, if this is a new plan, or service
before the effective date of your existing
plan, if this Plan replaces an existing plan
_____ Service before the Plan Year in which an
employee reached age 18
_____ Service for a business acquired by the
Employer, before the date of acquisition
c. Hours of Service. The number of Hours of Service
required for crediting a Year of Service for
vesting will be (check one):
_____ 1,000 Hours of Service
_____ ___________________ Hours of Service
(under 1,000)
d. Year of Service Measuring Period (Plan Section
2.49). The periods of 12 months used for
measuring Years of Service will be (check one):
_____ Plan Years
_____ 12-month Eligibility Periods
NOTE: IF YOU ARE ADOPTING THIS PLAN TO REPLACE AN EXISTING PLAN,
EMPLOYEES WILL BE CREDITED UNDER THIS PLAN WITH ALL SERVICE
CREDITED TO THEM UNDER THE PLAN YOU ARE REPLACING.
24. Loans. Will your Plan permit loans to employees from
their Accounts?
_____ Yes
_____ No
25. Automatic Distribution of Small Accounts (Plan Section
9.1). Will your Plan automatically distribute vested
account balances not exceeding $3,500, within 60 days
after the end of the Plan Year in which a Participant
separates from employment?
_____ Yes
_____ No
Note: The time for distribution cannot be left to the discretion
of the Employer or the Plan Administrator. If you check No
above, small accounts will be distributable at the time selected
by the Participant.
26. Top-Heavy Minimum Contributions (Plan Section 15.3).
For any Plan Year in which the Plan is top-heavy, you
must provide for each Participant who is a non-key
employee and who is employed on the last day of the
Plan Year an allocation equal to 3% of his Earnings (or
if less, the highest percentage allocated to any key
employee).
Skip paragraphs A and B below if you do not maintain any
other qualified plan in addition to this Plan.
a. If you maintain another qualified plan in
addition to this Plan, specify below whether a
non-key employee who participates in both plans
will receive a top-heavy minimum contribution (or
benefit) in this Plan or the other plan (check
one):
<PAGE>
The top-heavy minimum contribution (or benefit) for
non-key employees participating both in this Plan and
another qualified plan maintained by the Employer will
be provided in:
_____ This Plan (Check this if the other plan is
another Putnam prototype plan.)
_____ The plan named here: ______________________
b. (Skip this paragraph if you do not maintain a
defined benefit plan.) If you maintain a defined
benefit plan in addition to this Plan, and the
Top-Heavy Ratio (as defined in Plan Section
15.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased
minimum allocation or benefit pursuant to Plan
Section 15.4. Specify your election by
completing the statement below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as required under Plan
Section 15.4.
27. Other Plans. Skip this item 12 if the Plan is the only
qualified plan your Business has ever had. 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):
_____ The provisions of Section 6.2 of the Plan
will apply as if the other plan were a
master or prototype plan.
_____ The plans will limit total annual additions
to the maximum permissible amount, and will
properly reduce any excess amounts, in the
manner you describe below.
_________________________________________________________________
________________________________________________________________
B. If a Participant in the Plan is or has ever been a
participant in a defined benefit plan maintained by
your Business, the plans will meet the limits of
Article 6 in the manner you describe below:
_________________________________________________________________
________________________________________________________________
NOTE: YOUR DESCRIPTION UNDER A OR B ABOVE MUST NOT LEAVE THE
SELECTION OF A METHOD TO YOUR DISCRETION FROM YEAR TO YEAR.
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: __________________________________
28. Administration.
a. Plan Administrator (Plan Section 16.1). You may
appoint a person or a committee to serve as Plan
Administrator. You may remove and replace anyone
you have appointed, and anyone you have appointed
may resign, without the need to amend this Plan
Agreement, provided that you notify Participants
in writing of any such change. If you do not
appoint a Plan Administrator, the Plan provides
that the Employer will be the Plan
Administrator.
The initial Plan Administrator will be (check one):
_____ This person:
_______________________________
_____ A committee composed of these people:
________________________________________________________________
________________________________________________________________
________________________________________________________________
b. Recordkeeper (Plan Section 16.3). Unless Putnam
expressly permits otherwise, you must appoint
Putnam as Recordkeeper to perform certain routine
services determined upon execution of a written
Service Agreement between Putnam and you.
<PAGE>
The initial Recordkeeper will be:
______________________________________________________
Name
______________________________________________________
Address
29. Reliance on Opinion Letter. If you ever maintained or
you later adopt any plan (including a welfare benefit
fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to
separate accounts for key employees, as defined in
Section 419A(d)(3) of the Code; or an individual
medical account, as defined in Section 415(l)(2) of
the Code) in addition to this plan, you may not rely on
an opinion letter issued to Putnam by the National
Office of the Internal Revenue Service as evidence that
the Plan is qualified under Section 401 of the
Internal Revenue Code. If you maintain or adopt
multiple plans, in order to obtain reliance with
respect to plan qualification of the Plan, you must
receive a determination letter from the appropriate Key
District Office of Internal Revenue. Putnam will
prepare an application for such a letter upon your
request at a fee agreed upon by the parties.
The Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Section 401 of
the Code unless the terms of the plan, as herein adopted or
amended, that pertain to the requirements of Section
401(a)(4), 401(a)(17), 401(1), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or
later laws, (a) are made effective retroactively to the
first day of the first Year beginning after December 31,
1988 (or such later date on which these requirements first
become effective with respect to this plan); or (b) are made
effective no later than the first day on which the Employer
is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements,
and the prior provisions of the plan constitute such an
interpretation.
Putnam will inform you of all amendments it makes to the
prototype plan. If Putnam ever discontinues or abandons the
prototype plan, Putnam will inform you. This Plan Agreement
#002 may be used only in conjunction with Putnam's basic
plan document #05.
<PAGE>
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
MONEY PURCHASE PLAN
The Employer named below hereby adopts a PUTNAM MONEY PURCHASE
PLAN, and appoints __________________ to serve as Trustee of the
Plan. (Note: you may appoint a trustee other than Putnam
Fiduciary Trust Company only with Putnam's express permission.)
The Employer acknowledges that it has received copies of the
current prospectus for each Investment Product available under
the Plan, and represents that it will deliver copies of the then
current prospectus for each such Investment Product to each
Participant before each occasion on which the Participant makes
an investment instruction as to his Account. The Employer
further acknowledges that the Plan will be acknowledged by Putnam
as a Putnam Money Purchase Plan only upon Putnam's acceptance of
this Plan Agreement.
Employer signature(s) to adopt Plan: Date of
signature:
____________________________________________________
____________________________________________________
Please print name(s) of authorized person(s) signing above:
____________________________________________________
Phone:____________________
____________________________________________________
Phone:____________________
A new Plan must be signed by the last day of the Plan Year in
which the Plan is to be effective.
INVESTMENT DEALER INFORMATION
Firm: ____________________________________________________________
Branch: __________________________________________________________
Address: ________________________________________________________
<PAGE>
Registered Representative:__________________________________
Name
______________________________________
Phone
<PAGE>
* * * * *
ACCEPTANCE OF TRUSTEE
The Trustee accepts appointment in accordance with the terms and
conditions of the Plan, effective as of the date of execution by
the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By: ______________________________________________________________
Complete Part B only if you have appointed a Trustee other than
Putnam Fiduciary Trust Company. Note: Putnam may impose an
annual maintenance fee as a condition of its acceptance of this
plan as a Putnam Prototype Money Purchase Plan.
B. _________________________________, Trustee
By: _________________________________ Trustee's Tax I.D.
Number _______________
(Trustee)
_________________________________________________________________
Address of Trustee
Person for Putnam to Contact: ________________________________
P
h
o
n
e
:
_______________
Complete Part C only if insurance Policies will be purchased
under Article 14 of the Plan (in addition to Putnam Investment
Products).
C. Appointment and Acceptance of Insurance Trustee
1. Appointment to:
_________________________________________________________________
Name of Insurance Trustee
You are hereby designated as Insurance Trustee for Policies to be
held in accordance with the terms and conditions of this Plan and
Trust.
Employer signature to appoint Insurance Trustee:
By:_____________________________________________________________
(Authorized Signature)
2. Acceptance as Insurance Trustee is agreed to in accordance
with the terms and conditions of the Plan, effective as of
the date of execution by the Employer as set forth above.
By:___________________ Trustee's Tax I.D. Number ________
_______________________________________________________________
Address of Insurance Trustee
Person for Putnam to Contact: ________________________________
Phone: _____________
<PAGE>
* * * * *
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype
established under Putnam Basic Plan Document #05.
Putnam Mutual Funds Corp.
By: ______________________________
<PAGE>
PUTNAM PROFIT SHARING AND 401(K) PLAN
PLAN AGREEMENT #003
This is the Plan Agreement for a Putnam prototype profit sharing
plan with optional Section 401(k) provisions. Please consult a
tax or legal advisor and review the entire form before you sign
it. If you fail to fill out this Putnam Plan Agreement properly,
the Plan may be disqualified. You can get further information to
help you complete the Plan Agreement from your investment dealer,
or from Putnam at:
Putnam Defined Contribution Plans
Attn: Trust Administration/Level 3
859 Willard St. E3D
Quincy, MA 02269
Phone: 1-800-752-5766
* * * * *
By executing this Plan Agreement, the Employer establishes a
profit sharing plan and trust upon the terms and conditions of
Putnam Basic Plan Document #05, as supplemented and modified by
the provisions elected by the Employer in this Plan Agreement.
THIS PLAN AGREEMENT MUST BE ACCEPTED BY PUTNAM IN ORDER FOR THE
EMPLOYER TO RECEIVE FUTURE AMENDMENTS TO THE PUTNAM PROFIT
SHARING AND 401(K) PLAN.
* * * * *
All Employers complete items 1-11 below. Employers who wish to
adopt Section 401(k) provisions also complete item 12.
30. Business Information. The Employer adopting this Plan
is:
a. Business Name: ____________________________________
b. Business Address: ______________________________
_______________________________
_______________________________
Person for Putnam to Contact: __________________________
Phone: __________________________
c. Federal Tax Identification Number: _____________
<PAGE>
d. Form of Organization (check one):
_____ Sole proprietorship _____ Corporation
_____ Partnership _____ S Corporation
e. Taxable Year of Business:
_____ Calendar Year
_____ Fiscal year ending on _______________________
31. Plan Information.
a. Plan Year. Check one:
_____ The Plan Year will be the
same as the Taxable Year of
the Business shown in 2.A.
above. If the Taxable Year
of the Business changes, the
Plan Year will change
accordingly.
_____ The Plan Year will be the period of 12
months beginning on the first day of
__________________________ (month) and
ending on the last day of
__________________________ (month).
The Plan Year will also be your Plan's Limitation Year
for purposes of the contribution limitation rules in
Article 6 of the Plan.
b. Effective Date of Adoption of Plan.
Are you adopting this Plan to replace an existing plan?
_____ Yes
_____ No
If you answered Yes in 2.B. above, please complete the
following:
_____________________________________________________________
Name of the plan you are replacing
______________________________________________________________
Original Effective Date of the plan you are replacing
<PAGE>
The Effective Date of your adoption of this Plan will
be the day you select below (not before the first day
of the current Plan Year, and not before the day your
Business began).
The Effective Date is: _______________________
month/day/year
c. Identifying Highly Compensated Employees. Check
One:
_____ The Plan will use the regular method under
Plan Section 2.56 for identifying Highly
Compensated Employees.
If your Plan Year is the calendar year, do you
wish to make the regular method's "calendar year
election" for identifying your Highly Compensated
Employees?
_____ Yes
_____ No
_____ The Plan will use the simplified method
under Plan Section 2.56 for identifying
Highly Compensated Employees.
32. Eligibility for Plan Participation (Plan Section 3.1).
Employees will be eligible to participate in the Plan
when they complete the requirements you select in A, B
and C below.
a. Classes of Eligible Employees. The Plan requires
coverage of all classes of employees of the
Employer and any Affiliated Employer, except for
union employees and nonresident aliens without
U.S.-source income. The general rules of the
Plan exclude employees in those two groups, but
if you want employees in one or both categories
to be eligible for your Plan, check the
appropriate space below.
The following employees will be eligible to participate
in the Plan:
_____ Members of the following collective
bargaining unit(s) (give names of unions):
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_____ Nonresident aliens with no U.S.-source
income
b. Age Requirement (check and complete one):
_____ No minimum age required for participation
_____ Employees must reach age ___ (not over 21)
to participate
c. Service Requirements.
A 6-month Eligibility Period is a 6-month period
beginning either on an employee's first day of work
with the Employer or on the date 6 months following the
employee's first day of work, and anniversaries of
those dates. A 12-month Eligibility Period is the 12-
month period beginning on an employee's first day of
work with the Employer, and anniversaries of that date.
i. To become eligible, an employee must
complete (choose one):
_____ a. No minimum service required. Skip
the rest of this part C.
_____ b. One 6-month Eligibility Period
_____ c. One 12-month Eligibility Period
_____ d. Two 12-month Eligibility Periods
(may not be chosen if you adopt
either the Section 401(k)
provisions under item 12 or a
vesting schedule other than the
first choice under item 8.A, which
provides for 100% full and
immediate vesting).
<PAGE>
ii. If the Employer acquires a business, will
the Eligibility Period for employees of the
acquired business be the 12-month period
beginning on the first day of work for the
acquired business, and anniversaries of that
date (or the 6-month period beginning on the
first day of work for the acquired business,
the date 6 months following the first day of
work and anniversaries of those dates, if
applicable)?
_____ Yes
_____ No
iii. a. To receive credit for a 6-month
Eligibility Period, an employee must
complete during it at least:
_____ 500 Hours of Service
_____ _____________ Hours of Service (must be
1 hour or more)
(under 500)
Note: If you adopt a 6-month Eligibility Period,
in any event, an employee will automatically
receive credit for the Eligibility Period if the
employee completes at least 1,000 Hours of
Service during a 12 consecutive month period
following the first day of work.
b. To receive credit for a 12-month Eligibility
Period, an employee must complete it during
at least:
_____ 1,000 Hours of Service
_____ _____________ Hours of Service (must be
1 hour or more)
(under 1,000)
iv. Hours of Service will be credited to
employees by the following method (check
one):
_____ a. Actual hours for which an employee
is paid
<PAGE>
_____ b. Any employee who has one actual
paid hour in the following period
will be credited with the number of
Hours of Service indicated (check
one):
_____ Day (10 Hours of Service)
_____ Week (45 Hours of Service)
_____ Semi-monthly payroll period
(95 Hours of Service)
_____ Month (190 Hours of Service)
Note: If you are adopting this Plan to replace an existing plan,
employees will be credited under this Plan with all service
credited to them under the plan you are replacing.
v. Entry Dates. Each Employee in an eligible
class who completes the age and service
requirements specified above will begin to
participate in the Plan on (check one):
_____ The first day of the month in which he
fulfills the requirements.
_____ The first of the following dates
occurring after he fulfills the
requirements (check one):
_____ The first day of the month
following the date he fulfills the
requirements (monthly).
_____ The first day of the first, fourth,
seventh and tenth months in a Plan
Year (quarterly).
_____ The first day of the first month
and the seventh month in a Plan
Year (semiannually).
d. (For New Only) Will all Employees be required to
meet the age and service requirements specified
in B and C above?
_____ Yes
_____ No; all Employees on the Effective Date will
be eligible as of the Effective Date, even
if they have not met the age and service
requirements.
33. Compensation (Plan Section 2.8). Compensation for
purposes of the Plan will be the amount of the
following that is actually paid by your Business to an
employee during the Plan Year (check one):
_____ Form W-2 earnings as defined in Section 2.8 of
the Plan.
_____ Form W-2 earnings as defined in Section 2.8 of
the Plan, plus any amounts withheld from the
employee under a 401(k) plan, cafeteria plan,
SARSEP, tax sheltered 403(b) arrangement, or
Code Section 457 deferred compensation plan, or
contributions described in Code Section 414(h)(2)
that are picked up by a governmental employer.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b)
of the Plan.
_____ All compensation included in the definition of
Code Section 415 Compensation in Section 6.5(b)
of the Plan, plus any amounts withheld from the
employee under a 401(k) plan, cafeteria plan,
SARSEP, tax sheltered 403(b) arrangement, or Code
Section 457 deferred compensation plan, or
contributions described in Code Section 414(h)(2)
that are picked up by a governmental employer.
34. Contributions (Plan Sections 4.1 and 4.2).
a. Profit Limitation. Will Employer contributions
to the Plan be limited to the current and
accumulated profits of your business? (check
one):
_____ Yes
_____ No
If you will make contributions only under the Section
401(k) provisions in item 12 of this Plan Agreement,
skip the rest of this part 5.
b. Amount. The Employer will contribute to the Plan
for each Plan Year (check one):
_____ An amount chosen by the Employer from year
to year
______ ____% of the Earnings of all Qualified
Participants for the Plan Year
______ $____ for each Qualified Participant
How will Forfeitures of Employer Contributions (Profit
Sharing) be applied?
_____ to reduce the amount of the contribution
otherwise required
_____ to reallocate as an additional Employer
Contribution to current participants
c. Allocations to Participants
1. Allocation to Qualified Participants. Any
Employee who has met the eligibility requirements
in item 3 of this Plan Agreement is a Qualified
Participant unless, for reasons other than his
death or Retirement, he is not an active Employee
on the last day of the Plan Year, and he is not
credited with more than 500 Hours of Service in
the Plan Year.
How will contributions be allocated?
_______ Prorata (percentage based on
compensation)
_______ Uniform Dollar (specific dollar amount
for each participant) $ _______.
_______ Integrated With Social Security (complete
(2) and (3) below)
2. Integration with Social Security. Contributions
under paragraph B will be shared by Qualified
Participants in proportion to their Earnings,
unless you check one of the spaces below.
_____ Contributions will be shared according
to the Top-Heavy Integration Formula in
Section 4.2(d)(1) of the Basic Plan
Document in every Plan Year, whether or
not the Plan is top-heavy.
_____ Contributions will be shared according
to the Top-Heavy Integration Formula in
Section 4.2(d)(1) of the Basic Plan
Document only in Plan Years in which
the Plan is top-heavy. In all other
Plan Years, contributions will be
shared according to the Non-Top-Heavy
Integration Formula in Section
4.2(d)(2) of the Basic Plan Document.
<PAGE>
3. Integration Level. (Complete only if you have
elected in 5.C.2 to integrate your Plan with
Social Security. The Integration Level will be
(check one):
____ The Social Security Wage Base in effect
at the beginning of the Plan Year.
____ __% (not more than 100%) of the Social
Security Wage Base in effect at the
beginning of the Plan Year.
____ $__________ (not more than the Social
Security Wage Base).
NOTE: The Social Security Wage Base is indexed
annually to reflect increases in the cost of living.
D. Participant Contributions (Plan Section 4.2(f)). Will
your Plan allow Participants to make after-tax
contributions?
Yes
No
35. Investments (Plan Sections 13.2 and 13.3). The
Employer selects in part A below the Investment
Products that will be available under the Plan. All
Investment Products must be sponsored, underwritten,
managed or expressly agreed to in writing by Putnam.
From the group of available Investment Products
selected by the Employer, each Participant chooses the
investments for his own Accounts unless the Employer
elects differently in B below.
a. Available Investment Products (Plan Section
13.2). The following investments will be
available under the Plan (check one):
Mutual Funds
_____ The group of Putnam funds selected by the
Employer and communicated to Participants in
writing. A current list of the funds
selected by the Employer from time to time
shall be kept with the records of the Plan.
The initial list of funds is as follows (up
to six (6) funds may be selected):
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Other Investment Options
______ Putnam Stable Value Fund
______ Existing Guaranteed Investment Contract
("GIC")
______________________________
Note: You may include an existing GIC option
above, provided that the entire balance of the
contract(s) mature within three years of the date
your assets are transferred to Putnam.
In the event that there is any amount in the Trust Fund
for which no instructions or unclear instructions are
delivered, it will be invested in the default option
selected by the Employer in its Service Agreement with
Putnam (or if the Employer makes no such selection, in
Putnam Daily Dividend Trust) until instructions are
received in good order, and the Employer will be deemed
to have selected the option indicated in its Service
Agreement with Putnam (or if none, Putnam Daily
Dividend Trust) 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.
_____ The Employer will make all investment
decisions.
_____ The Employer will make investment decisions
with respect to Employer Matching
Contributions made pursuant to Section 12.B
and C of this Plan Agreement.
_____ The Employer will make investment decisions
with respect to Qualified Nonelective
Contributions made pursuant to Section 12.D
of this Plan Agreement.
_____ The Employer will make investment decisions
with respect to Employer profit sharing
contributions made pursuant to Section 5.B.
of this Plan Agreement.
<PAGE>
c. Changes. Investment instructions may be changed
(check one):
_____ on any Valuation Date (daily)
_____ on the first day of any month.
_____ on the first day of the first, fourth,
seventh and tenth months in a Plan Year
(quarterly)
36. Distributions and Withdrawals.
a. Retirement Distributions.
i. Normal Retirement Age (Plan Section 7.1).
Normal retirement age will be _______ (not
over age 65).
ii. Early Retirement (Plan Section 7.1). Check
and complete the item below only if you want
Participants to become fully vested upon
fulfilling specified age and service
requirements before reaching normal
retirement age:
_____ Early retirement will be permitted at
age ____ with at least ________ Years
of Service.
iii. Annuities (Plan Section 9.3). Will your
Plan permit a Participant to select a life
annuity form of distribution? You must
check Yes if this Plan replaces an existing
plan that permits distributions in life
annuity form. Check one:
_____ Yes
_____ No
b. Hardship Distributions (Plan Section 12.2). Will
your Plan permit hardship distributions from
Employer Contribution Accounts? You must check
Yes if this Plan replaces an existing plan that
permits hardship distributions from Employer
Contribution Accounts. Check one:
_____ Yes
_____ No
<PAGE>
c. Withdrawals after Age 59 one and half (Plan Section 12.3).
Will your Plan permit employees over age 59 one and half to
withdraw amounts upon request? You must check
Yes if this Plan replaces an existing plan that
permits withdrawals after age 59 one and half. (check one):
_____ Yes
_____ No
d. Loans. Will your Plan permit loans under the
Putnam Loan Program to employees from their
Accounts? (Note: no other loan program may be
used)
_____ Yes
_____ No
e. Automatic Distribution of Small Accounts (Plan
Section 9.1). Will your Plan automatically
distribute vested account balances not exceeding
$3,500, within 60 days after the end of the Plan
Year in which a Participant separates from
employment?
_____ Yes
_____ No
Note: If you check No above, the time for
distribution cannot be left to the discretion of the
Employer or the Plan Administrator. Small accounts
will be distributable at the time selected by the
Participant.
37. Vesting (Plan Article 8).
a. Time of Vesting. The provision checked below
will determine a Participant's vested percentage
in his Employer Contribution Account and, if you
adopt the Section 401(k) provisions in item 12
and will make Employer Matching Contributions, in
his Employer Matching Account (check one):
_____ 100% vesting immediately upon participation
in the Plan. If you check this option, skip
the rest of this part 8.
_____ Six Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
Years of Service 2 3 4 5 6
_____ Three Year Cliff Schedule:
Vested Percentage 0% 100%
Years of Service 0-2 3
_____ Other Schedule (must be at least as
favorable as Six Year Graded Schedule or
Three Year Cliff Schedule):
Vested Percentage __% __% __% __% __%
Years of Service ___ ___ ___ ___ ___
b. Service for Vesting. Skip this part B if your
Plan will include all of an employee's service in
determining his Years of Service for vesting.
Years of Service for vesting will exclude (check one or
more):
_____ Service before the Effective Date of the
Plan, if this is a new plan, or service
before the effective date of your existing
plan, if this Plan replaces an existing plan
_____ Service before the Plan Year in which an
employee reached age 18
_____ Service for a business acquired by the
Employer, before the date of acquisition
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):
_____ 1,000 Hours of Service
_____ ___________________ Hours of Service
(under 1,000)
d. Year of Service Measuring Period for Vesting
(Plan Section 2.50). The periods of 12 months
used for measuring Years of Service will be
(check one):
_____ Plan Years
_____ 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an
existing plan, employees will be credited under this
Plan with all service credited to them under the plan
you are replacing.
<PAGE>
38. Top-Heavy Minimum Contributions (Plan Section 15.3).
For any Plan Year in which the Plan is top-heavy, you
must provide for each Participant who is a non-key
employee and who is employed on the last day of the
Plan Year an allocation equal to 3% of his Earnings (or
if less, the highest percentage allocated to any key
employee). Neither Elective Deferrals, Employer
Matching Contributions nor Qualified Matching
Contributions for a non-key employee may be taken into
account for purposes of this requirement.
Skip paragraphs A and B below if you do not maintain any
other qualified plan in addition to this Plan.
a. If you maintain another qualified plan in
addition to this Plan, specify below whether a
non-key employee who participates in both plans
will receive a top-heavy minimum contribution (or
benefit) in this Plan or the other plan (check
one):
The top-heavy minimum contribution (or benefit) for
non-key employees participating both in this Plan and
another qualified plan maintained by the Employer will
be provided in:
_____ This Plan
_____ The plan named here: ______________________
b. (Skip this paragraph if you do not maintain a
defined benefit plan.) If you maintain a defined
benefit plan in addition to this Plan, and the
Top-Heavy Ratio (as defined in Plan Section
15.2(c)) for the combined plans is between 60%
and 90%, you may elect to provide an increased
minimum allocation or benefit pursuant to Plan
Section 15.4. Specify your election by
completing the statement below:
The Employer will provide an increased (specify
contribution or benefit)
__________________________________ in its (specify
defined contribution or defined benefit)
______________________ plan as required under Plan
Section 15.4.
39. Other Plans. Skip this item 10 if this Plan is the
only qualified plan your Business has ever had or if
the only other plan your Business ever maintained was a
defined contribution master or prototype plan. 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):
_____ The provisions of Section 6.2 of the Plan
will apply as if the other plan were a
master or prototype plan.
_____ The plans will limit total annual additions
to the maximum permissible amount, and will
properly reduce any excess amounts, in the
manner you describe below.
_________________________________________________________________
_________________________________________________________________
B. If a Participant in the Plan is or has ever been a
participant in a defined benefit plan maintained by
your Business, the plans will meet the limits of
Article 6 in the manner you describe below:
________________________________________________________________
________________________________________________________________
Note: Your description under A or B cannot be left to discretion
changed from year to year. If you want to amend it from year to
year, you must execute a new plan agreement.
If your Business has ever maintained a defined benefit plan,
state below the interest rate and mortality table to be used in
establishing the present value of any benefit under the defined
benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %__________________________
Mortality Table: __________________________
40. Administration.
a. Plan Administrator (Plan Section 16.1). You may
appoint a person or a committee to serve as Plan
Administrator. You may remove and replace anyone
you have appointed, and anyone you have appointed
may resign, without the need to amend this Plan
Agreement, provided that you notify Participants
in writing of any such change. If you do not
appoint a Plan Administrator, the Plan provides
that the Employer will be the Plan
Administrator.
The initial Plan Administrator will be (check one):
_____ This person:
_______________________________
_____ A committee composed of these people:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
b. Recordkeeper (Plan Section 16.4). You must
appoint Putnam as Recordkeeper to perform certain
routine services determined upon execution of a
written Service Agreement between Putnam and you.
_______________________________________________________
Name
_______________________________________________________
Address
COMPLETE ITEM 12 BELOW IF YOUR PLAN WILL ALLOW EMPLOYEES TO
ELECT PRE-TAX CONTRIBUTIONS UNDER SECTION 401(K) OF THE
CODE.
41. Section 401(k) Plan Provisions (Plan Article 5).
a. Elective Deferrals (Plan Section 5.2).
i. A Participant may make Elective Deferrals
for each year in an amount not to exceed
(check one):
_____ (a) _______% of his Earnings
_____ (b) $______ (specify a dollar
amount)
_____ (c) _______% of his Earnings up to
$_______ (specify dollar
amount)
Note: Elective Deferrals may not exceed the annual dollar
limit under Section 402(g) of the Internal Revenue Code.
ii. A Participant may begin to make Elective
Deferrals, or change the amount of his
Elective Deferrals, as of the following
dates (check one):
_____ First business day of each month
(monthly).
_____ First business day of the first,
fourth, seventh and tenth months of the
Plan Year (quarterly).
_____ First business day of the first and
seventh months of the Plan Year
(semiannually).
_____ First business day of the Plan Year
only (annually).
iii. May Participants make Elective Deferrals of
bonuses?
_____ Yes
_____ No
b. Employer Matching Contributions of Employee
Elective Deferrals (Plan Section 5.8). Skip this
part B if you will not make Employer Matching
Contributions. Employer Matching Contributions
are subject to the vesting schedule elected in
item 8 of this Plan Agreement, and can be
withdrawn during employment in the event of
financial hardship (as defined in Section 12.2 of
the Plan) if you so elect in part F below.
i. The Employer will contribute and will
allocate to each Participant's Employer
Matching Account an amount equal to:
(Check the provision(s) desired, and fill in the
% blank(s) in each provision you check. If you
wish to determine the amount of Employer Matching
Contributions from year to year instead of
specifying a fixed percentage, write "V" for
variable in the % blank at the beginning of each
provision you check. Also write "V" for variable
in the % blank for earnings.)
_____ ___% of Elective Deferrals
_____ ___% of Elective Deferrals that do not
exceed ___% of Earnings
_____ Additionally, in applying the above
limitation(s), Elective Deferrals shall
not exceed $__________.
(2) How will Forfeitures for Employer Matching
Contributions be applied?
_____ to reduce the amount of the
contribution otherwise required
_____ to reallocate as an additional Employer
Matching Contribution to current
participants
c. Hardship Distributions from 401(k) Accounts (Plan
Sections 12.2 and 5.14).
(1) Will your Plan permit hardship distributions from
Elective Deferral Accounts? (check one):
_____ Yes
_____ No
(2) If your Plan has Employer Matching Contributions,
will it permit hardship distributions from
Employer Matching Accounts?
_____ Yes
_____ No
42. QNEC and QMACs.
Note: Qualified Matching Contributions are always fully
vested and cannot be distributed from the Plan before a
Participant reaches age 59 one and half or leaves employment.
They will
be used to the extent needed, to help the Plan pass the ADP
test explained on page 8 of the Qs & As.
a. Qualified Matching Contributions (Plan Section
2.58). Skip this part A if you will not make
Qualified Matching Contributions.
i. Qualified Matching Contributions will be
made with respect to (check one):
_____ Elective Deferrals by all Participants
_____ Elective Deferrals only by Non-Highly
Compensated Participants
ii. The amount of Qualified Matching
Contributions made with respect to a
Participant will be:
(Check the provision desired and fill in the %
blank(s) in the provision you check. If you wish
to determine the amount of Qualified Matching
Contributions from year to year instead of
specifying a fixed percentage, write "V" for
variable in the % blank at the beginning of each
provision you check.)
_____ ___% of his Elective Deferrals
_____ ___% of his Elective Deferrals that do
not exceed ___% of his
Earnings
_____ ___% of his Earnings
_____ Additionally, in applying the above
limitation(s), Qualified Matching
Contributions shall not exceed
$________.
b. Qualified Nonelective Contributions (Plan Section
2.60).
i. Qualified Nonelective Contributions will be
made on behalf of (check one):
_____ All Participants
_____ Only Participants who are not Highly
Compensated Employees
ii. The amount of Qualified Nonelective
Contributions for a Plan Year will be (check
one). If you wish to determine the amount
of Qualified Nonelective Contributions from
year to year instead of specifying a fixed
percentage, write "V" for variable in the %
blank at the beginning of each provision you
check:
_____ ___% (not over 15%) of the Earnings of
Participants on whose behalf Qualified
Nonelective Contributions are made
_____ An amount determined by the Employer
from year to year, to be shared in
proportion to Earnings by Participants
on whose behalf Qualified Nonelective
Contributions are made
Note: Qualified Nonelective Contributions will be
used, to the extent needed, to help the Plan pass the
ADP test, explained on page 8 of the Qs & As.
c. ACP Test. Every plan that has after-tax
Participant Contributions, Employer Matching
Contributions or Qualified Matching Contributions
must pass an annual test called the ACP test,
which is explained on page 10 of the Qs & As.
Elective Deferrals and Qualified Nonelective
Contributions will be used to help the Plan pass
the ACP test, to the extent needed.
<PAGE>
43. Reliance on Opinion Letter. If you ever maintained or
you later adopt any plan (including a welfare benefit
fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to
separate accounts for key employees, as defined in
Section 419A(d)(3) of the Code; or an individual
medical account, as defined in Section 415(l)(2) of
the Code) in addition to this plan, you may not rely on
an opinion letter issued to Putnam by the National
Office of the Internal Revenue Service as evidence that
the Plan is qualified under Section 401 of the
Internal Revenue Code. If you maintain or adopt
multiple plans, in order to obtain reliance with
respect to plan qualification of the Plan, you must
receive a determination letter from the appropriate Key
District Office of Internal Revenue. Putnam will
prepare an application for such a letter upon your
request at a fee agreed upon by the parties.
The Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Section 401 of
the Code unless the terms of the plan, as herein adopted or
amended, that pertain to the requirements of Sections
401(a)(4), 401(a)(5), 401(a)(17), 401(l), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or
later laws, (a) are made effective retroactively to the
first day of the first Year beginning after December 31,
1988 (or such later date on which these requirements first
become effective with respect to this plan); or (b) are made
effective no later than the first day on which the Employer
is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements,
and the prior provisions of the plan constitute such an
interpretation.
Putnam will inform you of all amendments it makes to the
prototype plan. If Putnam ever discontinues or abandons the
prototype plan, Putnam will inform you. This Plan Agreement
#001 may be used only in conjunction with Putnam's basic
plan document #05.
<PAGE>
* * * * *
EMPLOYER'S ADOPTION OF PUTNAM
PROFIT SHARING AND 401(k) PLAN
The Employer named below hereby adopts a PUTNAM PROFIT SHARING
AND 401(k) PLAN, and appoints 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 Profit Sharing and 401(k) Plan
only upon Putnam's acceptance of this Plan Agreement.
Employer signature(s) to adopt Plan: Date of
signature:
____________________________________________________
____________________________________________________
Please print name(s) of authorized person(s) signing above:
____________________________________________________
Phone:____________________
____________________________________________________
Phone:____________________
A new Plan must be signed by the last day of the Plan Year in
which the Plan is to be effective.
INVESTMENT DEALER INFORMATION
Firm: ___________________________________________________________
Branch: _________________________________________________________
Address: ________________________________________________________
Registered Representative: ___________________________________
Name
_________________________________________
Phone
<PAGE>
* * * * *
ACCEPTANCE OF TRUSTEE
The Trustee accepts appointment in accordance with the terms and
conditions of the Plan, effective as of the date of execution by
the Employer set forth above.
A. Putnam Fiduciary Trust Company, Trustee
By: ______________________________________________________________
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype
established under Putnam Basic Plan Document #05.
Putnam Mutual Funds Corp.
By: ______________________________
<PAGE>
PUTNAM BASIC PLAN DOCUMENT #05
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Account. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Affiliated Employer. . . . . . . . . . . . . . . . . . . . 2
2.3 Authorized Leave of Absence. . . . . . . . . . . . . . . . 2
2.4 Base Contribution Percentage . . . . . . . . . . . . . . . 3
2.5 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 CODA . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Compensation . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Date of Employment . . . . . . . . . . . . . . . . . . . . 3
2.10 Disabled . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11 Earned Income. . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Effective Date . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Eligibility Period . . . . . . . . . . . . . . . . . . . . 4
2.15 Employee . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 Employer . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 Employer Contribution Account. . . . . . . . . . . . . . . 5
2.17(a) Employer Stock . . . . . . . . . . . . . . . . . . . . 5
2.18 Excess Earnings. . . . . . . . . . . . . . . . . . . . . . 6
2.19 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.20 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . 6
2.21 Hour of Service. . . . . . . . . . . . . . . . . . . . . . 6
2.22 Insurance Trustee. . . . . . . . . . . . . . . . . . . . . 7
2.23 Integration Level. . . . . . . . . . . . . . . . . . . . . 7
2.24 Investment Company . . . . . . . . . . . . . . . . . . . . 8
2.25 Investment Company Shares. . . . . . . . . . . . . . . . . 8
2.26 Investment Products. . . . . . . . . . . . . . . . . . . . 8
2.27 Leased Employee. . . . . . . . . . . . . . . . . . . . . . 8
2.28 One-Year Eligibility Break . . . . . . . . . . . . . . . . 8
2.29 One-Year Vesting Break . . . . . . . . . . . . . . . . . . 9
2.30 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . 9
2.31 Participant. . . . . . . . . . . . . . . . . . . . . . . . 9
2.32 Participant Contribution Account . . . . . . . . . . . . . 9
2.33 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.34 Plan Administrator . . . . . . . . . . . . . . . . . . . . 9
2.35 Plan Agreement . . . . . . . . . . . . . . . . . . . . . . 9
2.36 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.37 Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.38 Putnam . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.39 Qualified Domestic Relations Order . . . . . . . . . . . . 10
2.40 Qualified Participant. . . . . . . . . . . . . . . . . . . 10
2.41 Recordkeeper . . . . . . . . . . . . . . . . . . . . . . . 10
2.42 Retirement . . . . . . . . . . . . . . . . . . . . . . . . 10
2.43 Rollover Account . . . . . . . . . . . . . . . . . . . . . 10
2.44 Self-Employed Individual . . . . . . . . . . . . . . . . . 10
2.45 Shareholder-Employee . . . . . . . . . . . . . . . . . . . 11
2.46 Social Security Wage Base. . . . . . . . . . . . . . . . . 11
2.47 Trust and Trust Fund . . . . . . . . . . . . . . . . . . . 11
2.48 Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.49 Valuation Date . . . . . . . . . . . . . . . . . . . . . . 11
2.50 Year of Service. . . . . . . . . . . . . . . . . . . . . . 11
2.51 Deferral Agreement . . . . . . . . . . . . . . . . . . . . 12
2.52 Elective Deferral. . . . . . . . . . . . . . . . . . . . . 12
2.53 Elective Deferral Account. . . . . . . . . . . . . . . . . 12
2.54 Employer Matching Contribution . . . . . . . . . . . . . . 12
2.55 Employer Matching Account. . . . . . . . . . . . . . . . . 12
2.56 Highly Compensated Employee. . . . . . . . . . . . . . . . 12
2.57 Non-Highly Compensated Employee. . . . . . . . . . . . . . 15
2.58 Qualified Matching Contribution. . . . . . . . . . . . . . 15
2.59 Qualified Matching Account . . . . . . . . . . . . . . . . 15
2.60 Qualified Nonelective Contribution . . . . . . . . . . . . 15
2.61 Qualified Nonelective Contribution Account . . . . . . . . 16
ARTICLE 3. PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Initial Participation. . . . . . . . . . . . . . . . . . . 17
3.2 Special Participation Rule . . . . . . . . . . . . . . . . 17
3.3 Resumed Participation. . . . . . . . . . . . . . . . . . . 18
3.4 Benefits for Owner-Employees . . . . . . . . . . . . . . . 18
3.5 Changes in Classification. . . . . . . . . . . . . . . . . 18
ARTICLE 4. CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Provisions Applicable to All Plans . . . . . . . . . . . . 20
4.2 Provisions Applicable Only to Profit Sharing Plans . . . . 21
4.3 Provisions Applicable Only to Money Purchase Pension
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Rollover Contributions . . . . . . . . . . . . . . . . . . 26
4.5 No Deductible Employee Contributions . . . . . . . . . . . 26
4.6 Paired Plans . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION
401(k) (CODA) . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Applicability; Allocations . . . . . . . . . . . . . . . . 28
5.2 CODA Participation . . . . . . . . . . . . . . . . . . . . 28
5.3 Annual Limit on Elective Deferrals . . . . . . . . . . . . 28
5.4 Distribution of Certain Elective Deferrals . . . . . . . . 29
5.5 Satisfaction of ADP and ACP Tests. . . . . . . . . . . . . 30
5.6 Actual Deferral Percentage Test Limit. . . . . . . . . . . 30
5.7 Distribution of Excess Contributions . . . . . . . . . . . 32
5.8 Matching Contributions . . . . . . . . . . . . . . . . . . 33
5.9 Participant Contributions. . . . . . . . . . . . . . . . . 34
5.10 Recharacterization of Excess Contributions . . . . . . . . 34
5.11 Average Contribution Percentage Test Limit and
Aggregate Limit . . . . . . . . . . . . . . . . . . . . . . . . 35
5.12 Distribution of Excess Aggregate Contributions . . . . . . 38
5.13 Restriction on Distributions . . . . . . . . . . . . . . . 39
5.14 Hardship Distributions . . . . . . . . . . . . . . . . . . 40
5.15 Special Effective Dates. . . . . . . . . . . . . . . . . . 41
ARTICLE 6. LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . . . . 42
6.1 No Additional Plan . . . . . . . . . . . . . . . . . . . . 42
6.2 Additional Master or Prototype Plan. . . . . . . . . . . . 43
6.3 Additional Non-Master or Non-Prototype Plan. . . . . . . . 44
6.4 Additional Defined Benefit Plan. . . . . . . . . . . . . . 45
6.5 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS . . . . . . . . . . 50
7.1 Retirement . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.3 Other Termination of Employment. . . . . . . . . . . . . . 51
ARTICLE 8. VESTING. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.1 Vested Balance . . . . . . . . . . . . . . . . . . . . . . 52
8.2 Vesting of Accounts of Returned Former Employees . . . . . 52
8.3 Forfeiture of Non-Vested Amounts . . . . . . . . . . . . . 53
8.4 Special Rule in the Event of a Withdrawal. . . . . . . . . 54
8.5 Vesting Election . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 9. PAYMENT OF BENEFITS. . . . . . . . . . . . . . . . . . . . . 56
9.1 Distribution of Accounts . . . . . . . . . . . . . . . . . 56
9.2 Restriction on Immediate Distributions . . . . . . . . . . 56
9.3 Optional Forms of Distribution . . . . . . . . . . . . . . 58
9.4 Distribution Procedure . . . . . . . . . . . . . . . . . . 58
9.5 Lost Distributee . . . . . . . . . . . . . . . . . . . . . 59
9.6 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . 59
9.7 Distributions Required by a Qualified Domestic Relations
Order. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS . . . . . . . . . . 61
10.1 Applicability . . . . . . . . . . . . . . . . . . . . . . 61
10.2 Qualified Joint and Survivor Annuity. . . . . . . . . . . 62
10.3 Qualified Preretirement Survivor Annuity. . . . . . . . . 62
10.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . 62
10.5 Notice Requirements . . . . . . . . . . . . . . . . . . . 64
10.6 Transitional Rules. . . . . . . . . . . . . . . . . . . . 65
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS . . . . . . . . . . . . . 68
11.1 General Rules . . . . . . . . . . . . . . . . . . . . . . 68
11.2 Required Beginning Date . . . . . . . . . . . . . . . . . 68
11.3 Limits on Distribution Periods. . . . . . . . . . . . . . 69
11.4 Determination of Amount to Be Distributed Each Year. . . 70
11.5 Death Distribution Provisions . . . . . . . . . . . . . . 71
11.6 Transitional Rule . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 12. WITHDRAWALS AND LOANS . . . . . . . . . . . . . . . . . . . 75
12.1 Withdrawals from Participant Contribution Accounts . . . 75
12.2 Withdrawals on Account of Hardship. . . . . . . . . . . . 75
12.3 Withdrawals After Reaching Age 59 one and half. . . . . . 75
12.4 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.5 Procedure; Amount Available . . . . . . . . . . . . . . . 78
ARTICLE 13. TRUST FUND AND INVESTMENTS. . . . . . . . . . . . . . . . . 79
13.1 Establishment of Trust Fund . . . . . . . . . . . . . . . 79
13.2 Management of Trust Fund. . . . . . . . . . . . . . . . . 79
13.3 Investment Instructions . . . . . . . . . . . . . . . . . 80
13.4 Valuation of the Trust Fund . . . . . . . . . . . . . . . 82
13.5 Distributions on Investment Company Shares. . . . . . . . 82
13.6 Registration and Voting of Investment Company Shares . . 83
13.7 Investment Manager. . . . . . . . . . . . . . . . . . . . 83
13.8 Employer Stock. . . . . . . . . . . . . . . . . . . . . . 83
13.9 Insurance Contracts . . . . . . . . . . . . . . . . . . . 86
ARTICLE 14. INSURANCE POLICIES. . . . . . . . . . . . . . . . . . . . . 88
14.1 Purchase of Insurance Products. . . . . . . . . . . . . . 88
14.2 Limitation on Premiums. . . . . . . . . . . . . . . . . . 88
14.3 Policy Options. . . . . . . . . . . . . . . . . . . . . . 88
14.4 Insurability. . . . . . . . . . . . . . . . . . . . . . . 88
14.5 Dividends on Policies . . . . . . . . . . . . . . . . . . 88
14.6 Trustee of Policy . . . . . . . . . . . . . . . . . . . . 89
14.7 Obligations with Respect to Policies. . . . . . . . . . . 89
14.8 Distribution of Proceeds on Participant's Death . . . . . 89
14.9 Conversion of Policies. . . . . . . . . . . . . . . . . . 89
14.10 Conflict with Policies. . . . . . . . . . . . . . . . . . 90
14.11 Insurance Loans to Owner-Employees. . . . . . . . . . . . 90
ARTICLE 15. TOP-HEAVY PLANS . . . . . . . . . . . . . . . . . . . . . . 91
15.1 Superseding Effect. . . . . . . . . . . . . . . . . . . . 91
15.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . 91
15.3 Minimum Allocation. . . . . . . . . . . . . . . . . . . . 94
15.4 Adjustment of Fractions . . . . . . . . . . . . . . . . . 95
ARTICLE 16. ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . 96
16.1 Plan Administrator. . . . . . . . . . . . . . . . . . . . 96
16.2 Claims Procedure. . . . . . . . . . . . . . . . . . . . . 96
16.3 Employer's Responsibilities . . . . . . . . . . . . . . . 97
16.4 Recordkeeper. . . . . . . . . . . . . . . . . . . . . . . 97
16.5 Prototype Plan. . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE 17. TRUSTEE AND INSURANCE TRUSTEE . . . . . . . . . . . . . . . 99
17.1 Powers and Duties of the Trustee. . . . . . . . . . . . . 99
17.2 Limitation of Responsibilities. . . . . . . . . . . . . .100
17.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . .101
17.4 Reliance on Employer. . . . . . . . . . . . . . . . . . .101
17.5 Action Without Instructions . . . . . . . . . . . . . . .101
17.6 Advice of Counsel . . . . . . . . . . . . . . . . . . . .102
17.7 Accounts. . . . . . . . . . . . . . . . . . . . . . . . .102
17.8 Access to Records . . . . . . . . . . . . . . . . . . . .103
17.9 Successors. . . . . . . . . . . . . . . . . . . . . . . .103
17.10 Persons Dealing with Trustee or Insurance Trustee. . . .103
17.11 Resignation and Removal; Procedure. . . . . . . . . . . .103
17.12 Action of Trustee Following Resignation or Removal . . .103
17.13 Action of Insurance Trustee Following Resignation or
Removal. . . . . . . . . . . . . . . . . . . . . . . . . .103
17.14 Effect of Resignation or Removal. . . . . . . . . . . . .103
17.15 Fiscal Year of Trust. . . . . . . . . . . . . . . . . . .104
17.16 Limitation of Liability . . . . . . . . . . . . . . . . .104
17.17 Indemnification . . . . . . . . . . . . . . . . . . . . .104
ARTICLE 18. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . .105
18.1 General . . . . . . . . . . . . . . . . . . . . . . . . .105
18.2 Delegation of Amendment Power . . . . . . . . . . . . . .106
ARTICLE 19. TERMINATION OF THE PLAN AND TRUST . . . . . . . . . . . . .107
19.1 General . . . . . . . . . . . . . . . . . . . . . . . . .107
19.2 Events of Termination . . . . . . . . . . . . . . . . . .107
19.3 Effect of Termination . . . . . . . . . . . . . . . . . .107
19.4 Approval of Plan. . . . . . . . . . . . . . . . . . . . .108
ARTICLE 20. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS;
MERGERS. . . . . . . . . . . . . . . . . . . . . . . . . . .109
20.1 General . . . . . . . . . . . . . . . . . . . . . . . . .109
20.2 Amounts Transferred . . . . . . . . . . . . . . . . . . .109
20.3 Merger or Consolidation . . . . . . . . . . . . . . . . .109
ARTICLE 21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .110
21.1 Notice of Plan. . . . . . . . . . . . . . . . . . . . . .110
21.2 No Employment Rights. . . . . . . . . . . . . . . . . . .110
21.3 Distributions Exclusively From Plan . . . . . . . . . . .110
21.4 No Alienation . . . . . . . . . . . . . . . . . . . . . .110
21.5 Provision of Information. . . . . . . . . . . . . . . . .110
21.6 No Prohibited Transactions. . . . . . . . . . . . . . . .110
21.7 Governing Law . . . . . . . . . . . . . . . . . . . . . .110
21.8 Gender. . . . . . . . . . . . . . . . . . . . . . . . . .111
<PAGE>
PUTNAM BASIC PLAN DOCUMENT #05
ARTICLE 44. INTRODUCTION
By executing the Plan Agreement, the Employer has established
a retirement plan (the "Plan") according to the terms and
conditions of the Plan Agreement and this Putnam Basic Plan
Document #05, for the purpose of providing a retirement fund for
the benefit of Participants and Beneficiaries.<PAGE>
ARTICLE 45. DEFINITIONS
The terms defined in Sections 2.1 through 2.49 appear
generally throughout the document. Sections 2.50 through 2.60 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.
45..1 Account means any of, and Accounts means all of, a
Participant's Employer Contribution Account, Participant
Contribution Account, Rollover Account, and if the Plan contains a
CODA, the accounts maintained for the Participant pursuant to
Article 5.
45..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."
45..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.
45..4 Base Contribution Percentage means the percentage so
specified in the Plan Agreement.
45..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.
45..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.
45..7 Code means the Internal Revenue Code of 1986, as
amended.
45..8 Compensation means all of an Employee's compensation
determined in accordance with the definition elected by the
Employer in the Plan Agreement. For purposes of that election,
"Form W-2 earnings" means "wages" as defined in Section 3401(a) of
the Code in connection with income tax withholding at the source,
and all other compensation paid to the Employee by the Employer in
the course of its trade or business, for which the Employer is
required to furnish the Employee with a written statement under
Sections 6041(d), 6051(a)(3) and 6052 of the Code, determined
without regard to exclusions based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2) of the Code).
Compensation shall include only amounts actually paid to the
Employee during the Plan Year, except that if the Employer so
elects in the Plan Agreement, 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(a)(8), 402(h) or 403(b) of the Code. (For a self-employed
person, the relevant term is Earned Income, as defined in Section
2.11.)
45..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.
45..10 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.
45..11 Earned Income means a Self-Employed Individual's net
earnings from self-employment in the trade or business with respect
to which the Plan is established, excluding items not included in
gross income and the deductions allocable to such items, and
reduced by (i) contributions by the Employer to qualified plans, to
the extent deductible under Section 404 of the Code, and (ii) the
deduction allowed to the taxpayer under Section 164(f) of the Code
for taxable years beginning after December 31, 1989.
45..12 Earnings, for determining all benefits provided under
the Plan for all Plan Years beginning after December 31, 1988,
means the first $200,000 (as adjusted by the Secretary of the
Treasury at the same time and in the same manner as under Section
415(d) of the Code, except that the dollar increase effective on
any January 1 is effective for all Plan Years beginning in the
calendar year in which that January 1 occurs, and the first such
dollar increase is effective on January 1, 1990) of the sum of the
Compensation and the Earned Income received by an Employee during
a Plan Year. Notwithstanding the foregoing, for Plan Years
beginning after December 31, 1993, Earnings means the first
$150,000 (as adjusted periodically by the Secretary of the Treasury
for inflation) of the sum of the Compensation and Earned Income
received by an Employee during a Plan Year. To calculate an
allocation to a Participant's Account for any Plan Year shorter
than 12 months, the dollar limit on Earnings must be multiplied by
a fraction of which the denominator is 12 and the numerator is the
number of months in the Plan Year. In determining the Earnings of
a Participant, the rules of Section 414(q)(6) of the Code shall
apply, except that in applying those rules the term "family" shall
include only the Participant's spouse and the Participant's lineal
descendants who have not reached age 19 by the last day of the Plan
Year. If as a result of the application of such rules the
applicable Earnings limitation described above is exceeded, then
the limitation shall be prorated among the affected individuals in
proportion to each such individual's Earnings as determined under
this Section prior to the application of this limitation.
45..13 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.
45..14 Eligibility Period means a period of service with the
Employer which an Employee is required to complete in order to
commence participation in the Plan. A 12-month Eligibility Period
is a period of 12 consecutive months beginning on an Employee's
most recent Date of Employment or any anniversary thereof, in which
he is credited with at least 1,000 Hours of Service. A 6-month
Eligibility Period is a period of 6 consecutive months beginning on
an Employee's most recent Date of Employment or any anniversary
thereof, or on the 6-month anniversary of such Date of Employment
or any anniversary thereof, in which he is credited with at least
500 Hours of Service; provided, however, that if he 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. Notwithstanding the
foregoing, if the Employer has elected in the Plan Agreement to
establish a number less than 1,000 as the requisite for crediting
a 12-month Eligibility Period or less than 500 a 6-month
Eligibility Period, that number shall be so substituted, and 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 2.14 shall be the first date on which he
performed services for a business acquired by the Employer.
45..15 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.
45..16 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.
45..17 Employer Contribution Account means an account
maintained on the books of the Plan on behalf of a Participant, in
which are recorded the amounts allocated for his benefit from
contributions by the Employer (other than contributions pursuant to
Article 5), Forfeitures by former Participants (if the Plan
provides for reallocation of Forfeitures), amounts reapplied under
Section 6.1(d), and the income, expenses, gains and losses incurred
thereon.
2.17(a) Employer Stock means securities constituting
"qualifying employer securities" of an Employer within the meaning
of Section 407(d)(5) of ERISA.
45..18 Excess Earnings means a Participant's Earnings in
excess of the Integration Level of the Plan.
45..19 ERISA means the Employee Retirement Income Security
Act of 1974, as amended.
45..20 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.
45..21 Hour of Service means each hour described in
paragraphs (a), (b), (c), (d) or (e) below, subject to paragraphs
(f) and (g) below.
(a) Each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for an Affiliated
Employer. These hours shall be credited to the Employee for
the computation period or periods in which the duties are
performed.
(b) Each hour for which an Employee is paid, or entitled
to payment, by an Affiliated Employer on account of a period
of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this
paragraph for any single continuous period of absence (whether
or not such period occurs in a single computation period)
unless the Employee's absence is not an Authorized Leave of
Absence. Hours under this paragraph shall be calculated and
credited pursuant to Section 2530.200b-2 of the Department of
Labor Regulations, which are incorporated herein by this
reference.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliated Employer. The same Hours of Service shall not be
credited under both paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c); and no more than
501 Hours of Service shall be credited under this paragraph
(c) with respect to payments of back pay, to the extent that
such pay is agreed to or awarded for a period of time
described in paragraph (b) during which the Employee did not
perform or would not have performed any duties. These hours
shall be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or
payment is made.
(d) Each hour during an Authorized Leave of Absence.
Such hours shall be credited at the rate of a customary full
work week for an Employee.
(e) Solely for purposes of determining whether a 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.
45..22 Insurance Trustee means the person named in the Plan
Agreement as Insurance Trustee, and any successor thereto.
45..23 Integration Level means the Earnings amount selected
by the Employer in the Plan Agreement.
45..24 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.
45..25 Investment Company Shares means shares issued by an
Investment Company.
45..26 Investment Products means any of the investment
products specified by the Employer in accordance with Section 13.2,
from the group of those products sponsored, underwritten or managed
by Putnam as shall be made available by Putnam under the Plan, and
such other products as shall be expressly agreed to in writing by
Putnam for availability under the Plan. The term "Investment
Products" does not include any Policy selected pursuant to Article
14.
45..27 Leased Employee means any person (other than an
Employee of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Section 414(n)(6) of
the Code) on a substantially full time basis for a period of at
least one year, and such services are of a type historically
performed by Employees in the business field of the recipient
Employer. The compensation of a Leased Employee for purposes of
the Plan means the Compensation (as defined in Section 2.8) of the
Leased Employee attributable to services performed for the
recipient Employer. Contributions or benefits provided to a leased
Employee by the leasing organization which are attributable to
services performed for the recipient Employer shall be treated as
provided by the recipient Employer. Provided that leased Employees
do not constitute more than 20% of the recipient's nonhighly
compensate 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(a)(8),
Section 402(h) or Section 403(b) of the Code), (2) immediate
participation, and (3) full and immediate vesting.
45..28 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.
45..29 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.
45..30 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.
45..31 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.
45..32 Participant Contribution Account means an account
maintained on the books of the Plan, in which are recorded
nondeductible contributions by a Participant pursuant to Sections
4.2(f), 4.3(e) and 5.9, and any income, expenses, gains or losses
incurred thereon.
45..33 Plan means the form of defined contribution retirement
plan and trust agreement adopted by the Employer, consisting of the
Plan Agreement and the Putnam Basic Plan Document #05 as set forth
herein, together with any and all amendments and supplements
thereto.
45..34 Plan Administrator means the Employer or its appointee
pursuant to Section 16.1.
45..35 Plan Agreement means the separate agreement entered
into between the Employer and the Trustee (and the Insurance
Trustee, if any) and accepted by Putnam, under which the Employer
adopts the Plan and selects among its optional provisions.
45..36 Plan Year means the period of 12 consecutive months
specified by the employer in the Plan Agreement.
45..37 Policy means an ordinary life insurance, term
insurance, retirement income or endowment policy or an individual
or group annuity contract issued by a life insurance company in
connection with the Plan, or an interest therein. An ordinary life
insurance policy within the meaning of this definition provides
non-decreasing death benefits and non-increasing premiums. Policy
shall also include any other insurance policy expressly agreed to
in writing by Putnam.
45..38 Putnam means Putnam Mutual Funds Corp., or a company
affiliated with it which Putnam Mutual Funds Corp. has designated
as its agent to perform specified actions or procedures in
connection with the prototype Plan.
45..39 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.
45..40 Qualified Participant means any Participant who is an
active Employee on the last day of the Plan Year in question or who
is credited with more than 500 Hours of Service during the Plan
Year in question or whose Retirement or death occurred during the
Plan Year in question. If the Plan is not adopted to replace an
existing plan, this Section 2.39 is effective on the Effective
Date. If the Plan replaces an existing plan, this Section 2.39 is
effective on the first day of the first Plan Year that begins after
December 31, 1988, or if later, on the Effective Date, and the
provision of the existing plan that this Section 2.39 replaces
shall continue to apply until that time.
45..41 Recordkeeper means the person or entity designated by
the Employer in the Plan Agreement to perform the duties described
in Section 16.4, and any successor thereto. If Putnam is the
Recordkeeper, the terms and conditions of its service will be as
specified in a service agreement between the Employer and Putnam.
45..42 Retirement means ceasing to be an Employee in
accordance with Section 7.1.
45..43 Rollover Account means an account established for an
Employee who makes a rollover contribution to the Plan pursuant to
Section 4.4.
45..44 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.
45..45 Shareholder-Employee means any officer or Employee of
an electing small business corporation, within the meaning of
Section 1362 of the Code, who on any day during a taxable year of
the Employer owns (or is considered as owning under Section
318(a)(1) of the Code) more than 5% of the outstanding stock of the
Employer. The Plan administrator shall be responsible for
identifying Shareholder-Employees to the Recordkeeper.
45..46 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.
45..47 Trust and Trust Fund mean the trust fund established
under Section 13.1.
45..48 Trustee means the person, or the entity with trustee
powers, named in the Plan Agreement as trustee, and any successor
thereto.
45..49 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.
45..50 Year of Service means a Plan Year or an 12-month
Eligibility Period, as elected by the Employer in the Plan
Agreement, in which an Employee is credited with at least 1,000
Hours of Service; provided, however, that if the Employer has
elected in the Plan Agreement to establish a number less than 1,000
as the requisite for crediting a Year of Service, that number shall
be substituted for 1,000, and provided further that in the case of
an Employee in a seasonal industry (as defined under regulations
prescribed by the Secretary of Labor) in which the customary extent
of employment during a calendar year is fewer than 1,000 Hours of
Service, the number specified in any regulations prescribed by the
Secretary of Labor dealing with years of service shall be
substituted for 1,000. An Employee's Years of Service shall
include service credited prior to the Effective Date under any
predecessor plan. If the initial Plan Year is shorter than 12
months, each Employee who is credited with at least 1,000 Hours of
Service in the 12-month period ending on the last day of the
initial Plan Year shall be credited with a Year of Service with
respect to the initial Plan Year.
If the Employer has so elected in the Plan Agreement, Years of
Service for vesting shall not include:
(a) Service in any Plan Year (or comparable period prior
to the Effective Date) completed before the Employee reached
age 18;
(b) Service completed during a period in which the
Employer did not maintain the Plan or any predecessor plan (as
defined under regulations prescribed by the Secretary of the
Treasury).
If the Employer has so elected in the Plan Agreement, Years of
Service for vesting shall include employment by a business acquired
by the Employer, before the date of the acquisition.
The following definitions apply only to cash or deferred
arrangements under Section 401(k) (CODA):
45..51 Deferral Agreement means an Employee's agreement to
make one or more Elective Deferrals in accordance with Section 5.2.
45..52 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.
45..53 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.
45..54 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.
45..55 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.
45..56 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 (i) 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 (ii) 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 2.56(a), family members include the spouse,
lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and
descendants.
For purposes of this subsection (a), the "determination
year" shall be the Plan Year, and the "look-back year" shall be the
12-month period immediately preceding the determination year;
provided, however, that in a Plan for which the Plan Year is the
calendar year, the current Plan Year shall be both the
"determination year" and the "look-back year" if the Employer so
elects in the Plan Agreement.
(b) Simplified Method. An Employee is a Highly
Compensated Employee under this simplified method if (i) the
Employee is a 5-percent owner during the Plan Year; (ii) the
Employee's compensation for the Plan Year exceeds $75,000 (as
adjusted pursuant to Section 415(d) of the Code); (iii) the
Employee's compensation for the Plan Year exceeds $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and the
Employee is in the top-paid group of Employees; or (iv) the
Employee is an officer of the Employer and received
compensation during the Plan Year that is greater than 50% of
the dollar limitation under Code Section 415(b)(1)(A).
The lookback provisions of Code Section 414(q) do not
apply to determining Highly Compensated Employees under this
simplified method. An Employer that applies this simplified
method for determining Highly Compensated Employees may choose
to apply this method on the basis of the Employer's workforce
as of a single day during the Plan Year ("snapshot day"). In
applying this simplified method on a snapshot basis, the
Employer shall determine who is a Highly Compensated Employee
on the basis of the data as of the snapshot day. If the
determination of who is a Highly Compensated Employee is made
earlier than the last day of the Plan Year, the Employee's
compensation that is used to determine an Employee's status
must be projected for the Plan Year under a reasonable method
established by the Employer.
Notwithstanding the foregoing, in addition to those
Employees who are determined to be highly compensated on the
Plan's snapshot day, as described above, where there are
Employees who are not employed on the snapshot day but who are
taken into account for purposes of testing under Section 5.6
or 5.11, the Employer must treat as a Highly Compensated
Employee any Eligible Employee for the Plan Year who:
(1) terminated prior to the snapshot day and was
a Highly Compensated Employee in the prior year;
(2) terminated prior to the snapshot day and (i)
was a 5-percent 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-percent 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-percent owner, (ii) has compensation for
the Plan Year greater than or equal to the projected
compensation of any Employe 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-percent owners or officers), or (iii)
is an officer and has compensation greater than or equal
to the projected compensation of any other officer who is
a Highly Compensated Employee on the snapshot day solely
because that person is an officer.
If during a Plan Year an Employee is a family member of
either a 5-percent 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-percent 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-percent owner or top-
ten-Highly-Compensated-Employee. For purposes of this Section
2.56(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.
45..57 Non-Highly Compensated Employee means an Employee who
is not a Highly Compensated Employee.
45..58 Qualified Matching Contribution means a contribution
made by the Employer that: (i) is allocated in proportion to a
Participant's Elective Deferrals, (ii) is fully vested at all times
and (iii) is distributable only in accordance with Section 5.11.
45..59 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.
45..60 Qualified Nonelective Contribution means a
contribution (other than an Employer Matching Contribution or
Qualified Matching Contribution) made by the Employer, that: (i) a
Participant may not elect to receive in cash until it is
distributed from the Plan; (ii) is fully vested at all times; and
(iii) is distributable only in accordance with Section 5.11.
45..61 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.<PAGE>
ARTICLE 46.
PARTICIPATION
46..1 Initial Participation. An Employee shall begin
participation in the Plan as of the entry date specified in the
Plan Agreement, or as of the Effective Date, whichever is later;
provided, however, that:
(a) If the Plan is adopted as an amendment of a
predecessor plan of the Employer, every Employee who was
participating under the predecessor plan when it was so
amended shall become a Participant in the Plan as of the
Effective Date, whether or not he has satisfied the age and
service requirements specified in the Plan Agreement; and
(b) Unless the Employer specifies otherwise in the Plan
Agreement, any individual who is (i) a nonresident alien
receiving no earned income from an Affiliated Employer which
constitutes income from sources within the United States, or
(ii) included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
representatives (excluding from the term "Employee
representatives" any organization of which more than half of
the members are Employees who are owners, officers, or
executives of an Affiliated Employer), if retirement benefits
were the subject of good faith bargaining and no more than 2%
of the Employees covered by the collective bargaining
agreement are professionals as defined in Section 1.410(b)-9
of the Income Tax Regulations, shall not participate in the
Plan until the later of the date on which he ceases to be
described in clause (i) or (ii), whichever is applicable, or
the entry date specified by the Employer in the Plan
Agreement; and
(c) If the Plan is not adopted as an amendment of a
predecessor plan of the Employer, all Employees on the
Effective Date shall begin participation on the Effective
Date, if the Employer so elects in the Plan Agreement; and
(d) A Participant shall cease to participate in the Plan
when he becomes a member of a class of Employees ineligible to
participate in the Plan, and shall resume participation
immediately upon his return to a class of Employees eligible
to participate in the Plan.
46..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.
46..3 Resumed Participation. A former Employee who incurs a
One-Year Eligibility Break after having become a Participant shall
participate in the Plan as of the date on which he again becomes an
Employee, if (i) his Employer Contribution Account or Employer
Matching Account had become partially or fully vested before he
incurred a One-Year Vesting Break, or (ii) he incurred fewer than
five consecutive One-Year Eligibility Breaks. In any other case,
when he again becomes an Employee he shall be treated as a new
Employee under Section 3.1.
46..4 Benefits for Owner-Employees. If the Plan provides
contributions or benefits for one or more Owner-Employees who
control both the trade or business with respect to which the Plan
is established and one or more other trades or businesses, the Plan
and plans established with respect to such other trades or
businesses must, when looked at as a single plan, satisfy Sections
401(a) and (d) of the Code with respect to the Employees of this
and all such other trades or businesses. If the Plan provides
contributions or benefits for one or more Owner Employees who
control one or more other trades or businesses, the Employees of
each such other trade or business must be included in a plan which
satisfies Sections 401(a) and (d) of the Code and which provides
contributions and benefits not less favorable than those provided
for such Owner-Employees under the Plan. If an individual is
covered as an Owner-Employee under the plans of two or more trades
or businesses which he does not control and such individual
controls a trade or business, then the contributions or benefits of
the Employees under the plan of the trade or business which he does
control must be as favorable as those provided for him under the
most favorable plan of the trade or business which he does not
control. For purposes of this Section 3.4, an Owner-Employee, or
two or more Owner-Employees, shall be considered to control a trade
or business if such Owner-Employee, or such two or more Owner-
Employees together:
(a) own the entire interest in an unincorporated trade
or business, or
(b) in the case of a partnership, own more than 50% of
either the capital interest or the profits interest in such
partnership.
For purposes of the preceding sentence, an Owner-Employee or
two or more Owner-Employees shall be treated as owning any interest
in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee or such two or more Owner--
Employees are considered to control within the meaning of the
preceding sentence.
46..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.<PAGE>
ARTICLE 47. CONTRIBUTIONS
47..1 Provisions Applicable to All Plans.
(a) Payment and Crediting of Employer Contributions.
The Employer shall pay to the order of the Trustee the
aggregate contribution to the Trust Fund (other than the
premium payments on any Policy) for each Plan Year. Each
contribution shall be accompanied by written instructions from
the Employer, in the manner prescribed by Putnam. Neither the
Trustee nor Putnam shall be under any duty to inquire into the
correctness of the amount or the timing of any contribution,
or to collect any amount if the Employer fails to make a
contribution as provided in the Plan.
(b) Responsibility for Premium Payments. Contributions
to be applied to the payment of the premiums on any Policy
shall be paid by the Employer directly to the insurer in cash.
In determining the amount of any premium due under any Policy
with respect to any Participant, the Employer and the
Insurance Trustee may rely conclusively upon information
furnished by the provider of the Policy. For purposes of
Sections 4.2, 4.3 and Article 5, all Employer contributions
used to pay premiums on Policies shall be treated as
contributions made to the appropriate Participant's Employer
Contribution Account. If the Employer omits any premium
payment or makes any mistake concerning a premium payment,
neither the Employer nor the Insurance Trustee shall have any
liability in excess of the premium to be paid.
(c) Time for Payment. The aggregate of all
contributions with respect to a Plan Year shall be transferred
to the Trustee or the insurer no later than the due date
(including extensions) for filing the Employer's federal
income tax return for that Plan Year.
(d) Limitations on Allocations. All allocations shall
be subject to the limitations in Article 6.
(e) Establishment of Accounts. The Employer will
establish and maintain (or cause to be established and
maintained) for each Participant individual accounts adequate
to disclose his interest in the Trust Fund, including such of
the following separate accounts as shall apply to the
Participant: Employer Contribution Account, Participant
Contribution Account, and Rollover Account; and in a Plan with
a CODA, Elective Deferral Account, Qualified Nonelective
Account, Qualified Matching Account and Employer Matching
Account. The maintenance of such accounts shall be only for
recordkeeping purposes, and the assets of separate accounts
shall not be required to be segregated for purposes of
investment.
(f) Restoration of Accounts. Notwithstanding any other
provision of the Plan, for any Plan Year in which it is
necessary to restore any portion of a Participant's Account
pursuant to Section 8.3(b) or 9.5, to the extent that the
amount of Forfeitures available is insufficient to accomplish
such restoration, the Employer shall contribute the amount
necessary to eliminate the insufficiency, regardless of
whether the contribution is currently deductible by the
Employer under Section 404 of the Code. Forfeitures shall be
considered available for allocation pursuant to Sections 4.2
and 5.8 in a Plan Year only after all necessary restoration of
Accounts has been accomplished.
47..2 Provisions Applicable Only to Profit Sharing Plans.
(a) Amount of Annual Contribution. The Employer will
contribute for each Plan Year an amount determined in
accordance with the formula specified by the Employer in the
Plan Agreement, less any amounts reapplied for the Plan Year
under Section 6.1(d), not to exceed the amount deductible
under Section 404 of the Code. If the Employer so elects in
the Plan Agreement, the amount of Forfeitures occurring in a
Plan Year shall be applied to reduce the Employer's
contribution by a like amount, and such Forfeitures shall be
treated as a portion of the Employer contribution for purposes
of paragraphs (b) and (c).
(b) Allocation of Contributions: General Rule. As of
the last day of each Plan Year, the Employer's contribution
(and any amounts reapplied under Section 6.1(d)) for the Plan
Year shall be allocated among the Employer Contribution
Accounts of Qualified Participants in proportion to their
Earnings, unless the Employer elects in the Plan Agreement to
allocate contributions in a uniform dollar amount to the
Account of each Qualified Participant. This rule does not
apply to a Plan that is integrated with Social Security or to
allocations in a CODA.
(c) Per Capita Allocation. An Employer may elect in the
Plan Agreement to allocate Employer Contributions and any
amounts reapplied under Section 6.1(d) (but not allocations in
a CODA) in a uniform dollar amount to the Account of each
Qualified Participant.
(d) Plans Integrated with Social Security. Subject to
Section 4.6 and if the Employer elects in the Plan Agreement
an allocation formula integrated with Social Security,
Employer contributions (and any amounts reapplied under
Section 6.1(d)) shall be allocated as of the last day of the
Plan Year, as follows:
(1) Top-Heavy Integration Formula. If the Plan is
required to provide a minimum allocation for the Plan
Year pursuant to the Top-Heavy Plan rules of Article 15,
or if the Employer has specified in the Plan Agreement
that this paragraph (1) will apply whether or not the
Plan is Top-Heavy, then:
(A) First, among the Employer Contribution
Accounts of all Qualified Participants, in the
ratio that each Qualified Participant's Earnings
bears to all Qualified Participants' Earnings. The
total amount allocated in this manner shall be
equal to 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
3% of all Qualified Participants' Excess Earnings
(or, if less, the entire amount remaining to be
allocated).
(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.
(D) Finally, any amount remaining shall be
allocated among the Employer Contribution Accounts
of all Qualified Participants in the ratio that
each Qualified Participant's Earnings bears to all
Qualified Participants' Earnings.
(E) The Top-Heavy Maximum Disparity
Percentage shall be the lesser of (i) 2.7% or (ii)
the applicable percentage from the following table:
<PAGE>
If the Plan's
Integration Level
is More than:<PAGE>
But not more than:<PAGE>
The applicable
percentage is:<PAGE>
$0<PAGE>
The greater of
$10,000 or 20% of
the Social Security
Wage Base<PAGE>
2.7%<PAGE>
The greater of
$10,000 or 20% of
the Social Security
Wage Base<PAGE>
80% of the Social
Security Wage Base<PAGE>
1.3%<PAGE>
80% of the Social
Security Wage Base<PAGE>
Less than the
Social Security
Wage Base<PAGE>
2.4%<PAGE>
<PAGE>
If the Plan's Integration Level is equal to the Social
Security Wage Base, the Top-Heavy Maximum Disparity Percentage is
2.7%.
(2) Non-Top Heavy Integration Formula. If the Plan
is not required to provide a minimum allocation for the
Plan Year pursuant to the Top-Heavy Plan rules of Article
15, and the Employer has not specified in the Plan
Agreement that paragraph (1) will apply whether or not
the Plan is Top-Heavy, then:
(A) An amount equal to (i) the Maximum
Disparity Percentage determined under subparagraph
(2)(C) multiplied by the sum of all Qualified
Participants' Earnings and Excess Earnings, or (ii)
if less, the entire amount to be allocated, shall
be allocated among the Employer Contribution
Account of all Participants in the ratio that the
sum of each Qualified Participant's Earnings and
Excess Earnings bears to the sum of all Qualified
Participants' Earnings and Excess Earnings.
(B) Any amount remaining after the allocation
in paragraph (2)(A) shall be allocated among the
Employer Contribution Accounts of all Qualified
Participants in the ratio that each Qualified
Participant's Earnings bears to all Qualified
Participants' Earnings.
(C) The Maximum Disparity Percentage shall be
the lesser of (i) 5.7% or (ii) the applicable
percentage from the following table:
If the Plan's
Integration Level
is more than:<PAGE>
But not more than:<PAGE>
The applicable
percentage is:<PAGE>
$0<PAGE>
The greater of
$10,000 or 20% of
the Social Security
Wage Base<PAGE>
5.7%<PAGE>
The greater of
$10,000 or 20% of
the Social Security
Wage Base<PAGE>
80% of the Social
Security Wage Base<PAGE>
4.3%<PAGE>
80% of the Social
Security Wage Base<PAGE>
Less than the
Social Security
Wage Base<PAGE>
5.4%<PAGE>
<PAGE>
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 2.12.
(e) Allocation of Forfeitures. Forfeitures shall be
allocated among the Employer Contribution Accounts of all
Qualified Participants in accordance with paragraph (a) or
(b), whichever applies to Employer Contributions. Forfeitures
may be allocated pursuant to paragraphs (d)(1)(B), (d)(1)(C)
and (d)(2)(A) only to the extent that the limitation described
therein has not been fully utilized by the allocation of
Employer Contributions and amounts reapplied under Section
6.1(d).
(f) Participant Contributions. If so specified in the
Plan Agreement, a Participant may make nondeductible
contributions to the Plan in accordance with the Plan
Agreement. Such contributions shall be limited so as to meet
the nondiscrimination test of Section 401(m) of the Code, as
set out in Section 5.11 of the Plan. Participant
contributions will be allocated to the Participant
Contributions Account of the contributing Participant. All
Participant Contributions Accounts will be fully vested at all
times.
47..3 Provisions Applicable Only to Money Purchase Pension
Plans.
(a) Amount of Annual Contributions. The Employer will
contribute for each Plan Year an amount described in paragraph
(b) or (c) below, whichever is applicable, less any amounts
reapplied for the Plan Year under Section 6.1(d), not to
exceed the amount deductible under Section 404(c) of the Code.
If the Employer so elects in the Plan Agreement, the amount of
Forfeitures occurring in a Plan Year shall be applied to
reduce the Employer's contribution by a like amount, and such
Forfeitures shall be treated as a portion of the Employer
Contribution for purposes of paragraphs (b) and (c).
(b) Allocation of Contributions; General Rule. The
Employer shall contribute an amount equal to the product of
the Earnings of all Qualified Participants and the Base
Contribution Percentage, and the contribution shall be
allocated as of the last day of the Plan Year among the
Employer Contribution Accounts of all Qualified Participants
in the ratio that the Earnings of each Qualified Participant
bears to the Earnings of all Qualified Participants. This
general rule does not apply to a Plan that is integrated with
Social Security.
(c) Plans Integrated with Social Security. Subject to
Section 4.6 and if the Employer has elected in the Plan
Agreement to integrate the Plan with Social Security, the
Employer shall contribute an amount equal to the sum of the
following amounts, and the contribution shall be allocated as
of the last day of the Plan Year as follows:
(1) To the Employer Contribution Account of each
Qualified Participant, an amount equal to the product of
the Base Contribution Percentage and his Earnings, and
(2) To the Employer Contribution Account of each
Qualified Participant who has Excess Earnings, the
product of his Excess Earnings and the lesser of (i) the
Base Contribution Percentage or (ii) the Money Purchase
Maximum Disparity Percentage determined under paragraph
(d).
(3) The Base Contribution Percentage shall be no
less than three percent in either of the following
circumstances: (i) any Plan Year of a Plan for which the
Plan Agreement does not specify that the Employer will
perform annual Top-Heavy testing, or (ii) any Plan Year
in which the Plan is required to provide a minimum
allocation for the Plan Year pursuant to the Top-Heavy
Plan rules of Article 15.
(d) The Money Purchase Maximum Disparity Percentage is
equal to the lesser of (i) 5.7% or (ii) the applicable
percentage from the following table:
If the Plan's
Integration Level
is more than:<PAGE>
But not more than:<PAGE>
The applicable
percentage is:<PAGE>
$0<PAGE>
The greater of
$10,000 or 20% of
the Social Security
Wage Base<PAGE>
5.7%<PAGE>
The greater of
$10,000 or 20% of
the Social Security
Wage Base<PAGE>
80% of the Social
Security Wage Base<PAGE>
4.3%<PAGE>
80% of the Social
Security Wage Base<PAGE>
Less than the
Social Security
Wage Base<PAGE>
5.4% <PAGE>
If the Plan's Integration Level is equal to the Social
Security Wage Base, the Money Purchase Maximum Disparity Percentage
is 5.7%.
(e) Participant Contributions. If so specified in the
Plan Agreement, a Participant may make nondeductible
contributions to the Plan in accordance with the Plan
Agreement. Such contributions shall be limited so as to meet
the nondiscrimination test of Section 401(m) of the Code, as
set out in Section 5.11 of the Plan. Participant
contributions will be allocated to the Participant
Contributions Account of the contributing Participant. All
Participant Contributions Accounts will be fully vested at all
times.
(f) Separate Allocation of Forfeitures. If the Employer
has not elected in the Plan Agreement to use Forfeitures to
reduce the amount of its contribution, Forfeitures shall be
allocated among the Employer Contribution Accounts of all
Qualified Participants in proportion of their Earnings.
47..4 Rollover Contributions. An Employee in an eligible
class may contribute at any time cash or other property (which is
not a collectible within the meaning of Section 408(m) of the Code)
acceptable to the Trustee representing qualified rollover amounts
under Sections 402, 403, or 408 of the Code. Amounts so
contributed shall be credited to a Rollover Account for the
Participant.
47..5 No Deductible Employee Contributions. The Plan
Administrator shall not accept deductible employee contributions.
47..6 Paired Plans. An Employer may adopt as paired plans
Putnam Profit Sharing and 401(k) Plan (Plan Agreement #001) and
Putnam Money Purchase Pension Plan (Plan Agreement #002). Only one
of the two paired plans may be integrated with Social Security. In
any Plan Year in which Putnam paired plans are top-heavy, each non-
key employee who is eligible to participate in both plans will have
allocated to his account in the Putnam Money Purchase Pension Plan
a minimum contribution that meets the requirements of Section 15.3.<PAGE>
ARTICLE 48.
CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA)
48..1 Applicability; Allocations. This Article 5 applies to
any plan for which the Employer has elected in the Plan Agreement
to include a CODA. The Employer may specify in the Plan Agreement
that contributions will be made to the Plan only under the CODA, or
that contributions may be made under Section 4.2 as well as under
the CODA. Allocations to Participants' Accounts of contributions
made pursuant to this Article 5 shall be made as soon as
administratively feasible after their receipt by the Trustee, but
in any case no later than as of the last day of the Plan Year for
which the contributions were made.
48..2 CODA Participation. Each Employee who has met the
eligibility requirements of Article 3 may make Elective Deferrals
to the Plan by completing and returning to the Plan Administrator
a Deferral Agreement form which provides that the Participant's
cash compensation from the Employer will be reduced by the amount
indicated in the Deferral Agreement, and that the Employer will
contribute an equivalent amount to the Trust on behalf of the
Participant. The following rules will govern Elective Deferrals:
(a) Subject to the limits specified in the Plan
Agreement and set forth in Section 5.3, a Deferral Agreement
may apply to any amount or percentage of either or both of the
Earnings payable to a Participant in each regular payroll
period of the Employer, or one or more bonuses payable to a
Participant from time to time as specified by the Employer.
(b) In accordance with such reasonable rules as the Plan
Administrator shall specify, a Deferral Agreement will become
effective as soon as is administratively feasible after the
Deferral Agreement is returned to the Plan Administrator, and
will remain effective until it is modified or terminated. No
Deferral Agreement may become effective retroactively.
(c) A Participant may modify his Deferral Agreement by
completing and returning to the Plan Administrator a new
Deferral Agreement form as of any of the dates specified in
the Plan Agreement, and any such modification will become
effective as described in paragraph (b).
(d) A Participant may terminate his Deferral Agreement
at any time upon advance written notice to the Plan
Administrator, and any such Termination will become effective
as described in paragraph (b).
48..3 Annual Limit on Elective Deferrals. During any taxable
year of a Participant, his Elective Deferrals under the Plan and
any other qualified plan of an Affiliated Employer shall not exceed
the dollar limit contained in Section 402(g) of the Code in effect
at the beginning of the taxable year. With respect to any taxable
year, a Participant's Elective Deferrals for purposes of this
Section 5.3 include all Employer contributions made on his behalf
pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement (SARSEP) as described in
Section 402(h)(1)(B) of the Code, any eligible deferred
compensation plan under Section 457 of the Code, any plan described
under Section 501(c)(18) of the Code, and any Employer
contributions made on behalf of the Participant for the purchase of
an annuity contract under Section 403(b) of the Code pursuant to a
salary reduction agreement. The amount of Elective Deferrals of a
Participant who receives a hardship distribution pursuant to
Section 5.14 shall be reduced, for the taxable year next following
the distribution, by the amount of Elective Deferrals made in the
taxable year of the hardship distribution.
48..4 Distribution of Certain Elective Deferrals. "Excess
Elective Deferrals" means those Elective Deferrals described in
Section 5.3 that are includible in a Participant's gross income
under Section 402(g) of the Code, to the extent that the
Participant's aggregate elective deferrals for a taxable year
exceed the dollar limitation under that Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, whether or not they are distributed under this Section 5.4.
A Participant may designate to the Plan any Excess Elective
Deferrals made during his taxable year by notifying the Employer on
or before the following March 15 of the amount of the Excess
Elective Deferrals to be so designated. A Participant who has
Excess Elective Deferrals for a taxable year, taking into account
only his Elective Deferrals under the Plan and any other plans of
the Affiliated Employers, shall be deemed to have designated the
entire amount of such Excess Elective Deferrals.
Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss allocable
thereto, shall be distributed no later than April 15 to any
Participant to whose Account Excess Elective Deferrals were so
designated or deemed designated for the preceding year. The income
or loss allocable to Excess Elective Deferrals is the income or
loss allocable to the Participant's Elective Deferral Account for
the taxable year multiplied by a fraction, the numerator of which
is the Participant's Excess Elective Deferrals for the year and the
denominator of which is the Participant's Account balance
attributable to Elective Deferrals without regard to any income or
loss occurring during the year.
To the extent that the return to a Participant of his Elective
Deferrals would reduce an Excess Amount (as defined in Section
6.5(f)), such Excess Deferrals shall be distributed to the
Participant in accordance with Article 6.
48..5 Satisfaction of ADP and ACP Tests. In each Plan Year,
the Plan must satisfy the ADP test described in Section 5.6 and the
ACP test described in Section 5.9. The Employer may cause the Plan
to satisfy the ADP or ACP test or both tests for a Plan Year by any
of the following methods or by any combination of them:
(a) By the distribution of Excess Contributions in
accordance with Section 5.7, or the distribution of Excess
Aggregate Contributions in accordance with Section 5.12, or
both; or
(b) If the Employer has so elected in the Plan
Agreement, by making Qualified Nonelective Contributions or
Qualified Matching Contributions or both, in accordance with
the Plan Agreement and this Section 5.5.
48..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 Year, the Participant's Earnings for that
portion of the Plan Year during which he was eligible to
participate in the Plan). Employer contributions on behalf of
any Participant shall include: (i) his Elective Deferrals,
including Excess Elective Deferrals of Highly Compensated
Employees, but excluding (A) Excess Elective Deferrals of Non-
Highly Compensated Employees that arise solely from Elective
Deferrals made under the Plan or another plan maintained by an
Affiliated Employer, and (B) Elective Deferrals that are taken
into account in the Average Contribution Percentage test
described in Section 5.11 (provided the ADP test is satisfied
both with and without exclusion of these Elective Deferrals),
and excluding Elective Deferrals returned to a Participant to
reduce an Excess Amount as defined in Section 6.5(f); and (ii)
if the Employer has elected to make Qualified Nonelective
Contributions, such amount of Qualified Nonelective
Contributions, if any, as shall be necessary to enable the
Plan to satisfy the ADP test; and (iii) if the Employer has
elected to make Qualified Matching Contributions, such amount
of Qualified Matching Contributions, if any, as shall be
necessary to enable the Plan to satisfy the ADP test. For
purposes of computing Actual Deferral Percentages, an Employee
who would be a Participant but for his failure to make
Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
(d) In the event that the Plan satisfies the
requirements of Sections 401(k), 401(a)(4), or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with the Plan, then
this Section 5.6 shall be applied by determining the ADP of
Employees as if all such plans were a single plan. For Plan
Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(k) of the Code only
if they have the same Plan Year.
(e) The ADP for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
these are treated as Elective Deferrals for purposes of the
ADP test) allocated to his Accounts under two or more CODAs
described in Section 401(k) of the Code that are maintained by
the Affiliated Employers shall be determined as if such
Elective Deferrals (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single CODA. If a Highly
Compensated Employee participates in two or more CODAs that
have different Plan Years, all CODAs ending with or within the
same calendar year shall be treated as a single CODA, except
that CODAs to which mandatory disaggregation applies in
accordance with regulations issued under Section 401(k) of the
Code shall be treated as separate CODAs.
(f) For purposes of determining the ADP of a Participant
who is a 5% owner or one of the ten most highly-paid Highly
Compensated Employees, the Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both, if these are treated as Elective Deferrals for
purposes of the ADP test) and the Compensation of such a
Participant shall include the Elective Deferrals (and, if
applicable, Qualified Nonelective Contributions and Qualified
Matching Contributions, or both) and Compensation for the Plan
Year of his Family Members (as defined in Section 414(q)(6) of
the Code). Family Members of such Highly Compensated
Employees shall be disregarded as separate employees in
determining the ADP both for Participants who are Non-Highly
Compensated Employees and for Participants who are Highly
Compensated Employees.
(g) For purposes of the ADP test, Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the 12-month
period immediately following the Plan Year to which those
contributions relate.
(h) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in satisfying the test.
(i) The determination and treatment of the ADP amounts
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
48..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 one and half 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.
48..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
that is returned to a Participant because it represents an Excess
Elective Deferral, an Excess 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,
the Matching Contribution shall be forfeited, notwithstanding any
other provision of the Plan.
(a) Employer Matching Contributions. Employer Matching
Contributions will be allocated among the Employer Matching
Accounts of Participants in proportion to their Elective
Deferrals. Employer Matching Accounts shall become vested
according to the vesting schedule specified in the Plan
Agreement, but regardless of that schedule shall be fully
vested upon the Participant's Retirement (or, if earlier, his
fulfillment of the requirements for early retirement, if any,
or attainment of the normal retirement age specified in the
Plan Agreement), his death during employment with an
Affiliated Employer, and in accordance with Section 19.3.
Forfeitures of Employer Matching Contributions, other than
Excess Aggregate Contributions, shall be made in accordance
with Section 8.3. Forfeitures of Employer Matching Accounts
for a Plan Year shall be applied to reduce the total Employer
Matching Contribution for the Plan Year, or allocated among
the Employer Matching Accounts of Participants in addition to
the Employer Matching Contribution for the Plan Year, as
elected by the Employer in the Plan Agreement.
(b) Qualified Matching Contributions. Qualified
Matching Contributions will be allocated among the Qualified
Matching Contribution Accounts of Participants as specified by
the Employer in the Plan Agreement.
48..9 Participant Contributions. If so specified in the Plan
Agreement, a Participant may make nondeductible contributions to
the Plan in accordance with the Plan Agreement. Such
contributions, together with any matching contributions (as defined
in Section 401(m)(4) of the Code), shall be limited so as to meet
the nondiscrimination test of Section 401(m) of the Code, as set
forth in Section 5.11 of the Plan. Participant contributions will
be allocated to the Participant Contributions Account of the
contributing Participant. All Participant Contribution Accounts
will be fully vested at all times.
48..10 Recharacterization of Excess Contributions. Provided
that the Plan Agreement permits all Participants to make
Participant Contributions, the Employer may treat a Participant's
Excess Contributions as an amount distributed to the Participant
and then contributed by the Participant to the Plan as a
Participant Contribution. Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements as
Elective Deferrals. Amounts may not be recharacterized by a Highly
Compensated Employe 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.
48..11 Average Contribution Percentage Test Limit and
Aggregate Limit. The Average Contribution Percentage (hereinafter
"ACP") for Participants who are Highly Compensated Employees for
each Plan Year and the ACP for Participants who are Non-Highly
Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(a) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by two (2), provided that the ACP
for Participants who are Highly Compensated Employees does not
exceed the ACP for Participants who are Non-Highly Compensated
Employees by more than two percentage points.
The following rules shall apply to the computation of the ACP:
(c) Average Contribution Percentage means the average of
the Contribution Percentages of the Eligible Participants in
a group.
(d) Contribution Percentage means the ratio (expressed
as a percentage) of a Participant's Contribution Percentage
Amounts to the Participant's Earnings for the Plan Year (or,
provided that the Employer applies this method to all
Employees for a Plan Year, the Participant's Earnings for that
portion of the Plan Year during which he was eligible to
participate in the Plan).
(e) Contribution Percentage Amounts means the sum of the
Participant Contributions, Employer Matching Contributions,
and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test) made under the Plan
on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall include Forfeitures of
Excess Aggregate Contributions or Employer Matching
Contributions allocated to the Participant's Account, taken
into account in the year in which the allocation is made. If
the Employer has elected in the Plan Agreement to make
Qualified Nonelective Contributions, such amount of Qualified
Nonelective Contributions, if any, as shall be necessary to
enable the Plan to satisfy the ACP test shall be in the
Contribution Percentage Amounts. Elective Deferrals shall
also be included in the Contribution Percentage Amounts to the
extent, if any, needed to enable the Plan to satisfy the ACP
test, so long as the ADP test is met before the Elective
Deferrals are used in the ACP test, and continues to be met
following the exclusion of those Elective Deferrals that are
used to meet the ACP test.
(f) Eligible Participant means any Employee who is
eligible to make an Elective Deferral, if Elective Deferrals
are taken into account in the calculation of the Contribution
Percentage, or to receive an Employer Matching Contribution
(or a Forfeiture thereof) or a Qualified Matching
Contribution.
(g) Aggregate Limit means the sum of (i) 125% of the
greater of the ADP of the Non-Highly Compensated Employees for
the Plan Year, or the ACP of Non-Highly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of the CODA, and
(ii) the lesser of 200% of, or two plus, the lesser of the ADP
or ACP. "Lesser" is substituted for "greater" in clause (i)
of the preceding sentence, and "greater" is substituted for
"lesser" after the phrase "two plus the" in clause (ii) of the
preceding sentence, if that formulation will result in a
larger Aggregate Limit.
(h) If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test
maintained by an Affiliated Employer, and the sum of the ADP
and ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the ACP
of those Highly Compensated Employees who also participate in
a CODA will be reduced (beginning with the Highly Compensated
Employee whose ACP is the highest) so that the Aggregate Limit
is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amount is reduced shall be
treated as an Excess Aggregate Contribution. In determining
the Aggregate Limit, the ADP and ACP of Highly Compensated
Employees are determined after any corrections required to
meet the ADP and ACP tests. The Aggregate Limit will be
considered satisfied if both the ADP and ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the
ADP and ACP of the Non-Highly Compensated Employees.
(i) For purposes of this section, the Contribution
Percentage for any Participant who is a Highly Compensated
Employee and who is eligible to have Contribution Percentage
Amounts allocated to his account under two or more plans
described in Section 401(a) of the Code, or CODAs described in
Section 401(k) of the Code, that are maintained by an
Affiliated Employer, shall be determined as if the total of
such Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or more
CODAs that have different plan years, all CODAs ending with or
within the same calendar year shall be treated as a single
CODA, except that CODAs to which mandatory disaggregation
applies in accordance with regulations issued under Section
401(k) of the Code shall be treated as separate CODAs.
(j) In the event that the Plan satisfies the
requirements of Sections 401(m), 401(a)(4) or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with the Plan, then
this Section 5.11 shall be applied by determining the
Contribution Percentage of Employees as if all such plans were
a single plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy Section
401(m) of the Code only if they have the same Plan Year.
(k) For purposes of determining the Contribution
Percentage of a Participant who is a 5% owner or one of the
ten most highly-paid Highly Compensated Employers, the
Contribution Percentage Amounts and Compensation of the
Participant shall include the Contribution Percentage Amounts
and Compensation for the Plan Year of Family Members (as
defined in Section 414(q)(6) of the Code). Family Members of
such Highly Compensated Employees shall be disregarded as
separate employees in determining the Contribution Percentage
both for Participants who are Non-Highly Compensated Employees
and for Participants who are Highly Compensated Employees.
(l) For purposes of the ACP test, Matching Contributions
and Qualified Nonelective Contributions will be considered
made for a Plan Year if made no later than the end of the
12-month period beginning on the day after the close of the
Plan Year.
(m) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in the ACP test.
(n) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
48..12 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 and Elective Deferral
Account for the Plan Year, multiplied by a fraction, the numerator
of which is the Participant's Excess Aggregate Contributions for
the year and the denominator of which is the Participant's account
balance(s) attributable to Contribution Percentage Amounts without
regard to any income or loss occurring during the Plan Year.
Excess Aggregate Contributions shall be allocated to a Participant
who is subject to the family member aggregation rules of Section
414(q)(6) of the Code in the proportion that the Participant's
Employer Matching Contributions (and other amounts treated as his
Employer Matching Contributions) bear to the combined Employer
Matching Contributions (and other amounts treated as Employer
Matching Contributions) of all of the Participants aggregated to
determine its family members' combined ACP. If excess amounts
attributable to Excess Aggregate Contributions are distributed more
than 2 one and half months after the last day of the Plan Year in which such
excess amounts arose, an excise tax equal to 10% of the excess
amounts will be imposed on the Employer maintaining the Plan.
Excess Aggregate Contributions shall be treated as Annual Additions
under the Plan.
Forfeitures of Excess Aggregate Contributions that are
Employer Matching Contributions shall either be reallocated to the
accounts of Non-Highly Compensated Employees or applied to reduce
Employer Contributions, as elected by the Employer in the Plan
Agreement. Other forfeitures of Excess Aggregate Contributions
shall be applied to reduce Employer contributions.
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.
48..13 Restriction on Distributions. No distribution may be
made from a Participant's Elective Deferral Account, Qualified
Nonelective Account or Qualified Matching Account until the
occurrence of one of the following events:
(a) The Participant's Disability, death or termination
of employment with the Affiliated Employers;
(b) Termination of the Plan without the establishment of
another defined contribution plan other than an employee stock
ownership plan as defined in Section 4975(e) or Section 409 of
the Code, or a simplified employee pension plan as defined in
Section 408(k) of the Code;
(c) The Participant's attainment of age 59 one and half (if the
Employer has elected in the Plan Agreement to permit such
distributions); or
(d) In the case of an Employer that is a corporation,
the disposition by the Employer to an unrelated entity of (i)
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of the
Employer, if the Employer continues to maintain the Plan after
the disposition, but only with respect to Employees who
continue employment with the entity acquiring such assets; or
(ii) the Employer's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code), if the Employer
continues to maintain the Plan after the disposition, but only
with respect to Employees who continue employment with such
subsidiary.
In addition, if the Employer has elected in the Plan Agreement
to permit such distributions, a distribution may be made from a
Participant's Elective Deferral Account in the event of his
financial hardship as described in Section 5.14. All distributions
upon any of the events listed above are subject to the conditions
of Article 10, Joint and Survivor Annuity Requirements. In
addition, distributions made after March 31, 1988, on account of an
event described in subSection (b) or (d) above must be made in a
lump sum.
48..14 Hardship Distributions. If the Employer has so
elected in the Plan Agreement, upon a Participant's written request
the Employer may permit a distribution from his Elective Deferral
Account and from his Employer Matching Account. The terms and
conditions of Section 12.2 and the special vesting rule contained
in Section 8.4 shall apply to hardship distributions from an
Employer Contribution Account or an Employer Matching Account. The
further terms of this Section 5.14 shall apply to hardship
distributions from an Elective Deferral Account. No hardship
distribution shall be made from a Qualified Nonelective Account or
a Qualified Matching Account.
(a) The maximum amount that may be distributed on
account of hardship from an Elective Deferral Account after
December 31, 1988, shall not exceed the sum of (1) the amount
credited to the Account as of December 31, 1988, and (2) the
aggregate amount of the Elective Deferrals made by the
Participant after December 31, 1988, and before the hardship
distribution.
(b) Hardship distributions shall be permitted only on
account of the following financial needs:
(1) Expenses for medical care described in Section
213(d) of the Code for the Participant, his spouse,
children and dependents, or necessary for these persons
to obtain such care;
(2) Purchase of the principal residence of the
Participant (excluding regular mortgage payments);
(3) Payment of tuition and related educational fees
for the upcoming 12 months of post-secondary education
for the Participant, his spouse, children or dependents;
or
(4) Payments necessary to prevent the Participant's
eviction from, or the foreclosure of a mortgage on, his
principal residence.
(c) Hardship distributions shall be subject to the
spousal consent requirements contained in Sections 411(a)(11)
and 417 of the Code, to the same extent that those
requirements apply to a Participant pursuant to Section 10.1.
(d) A hardship distribution will be made to a
Participant only upon satisfaction of the following
conditions:
(1) The Participant has obtained all nontaxable
loans and all distributions other than hardship
distributions available to him from all plans maintained
by the Affiliated Employers;
(2) The hardship distribution does not exceed the
amount of the Participant's financial need as described
in paragraph (b) plus any amounts necessary to pay
federal, state and local income taxes and penalties
reasonably anticipated to result from the distribution;
(3) All plans maintained by the Affiliated
Employers provide that the Participant's Elective
Deferrals and voluntary after-tax contributions will be
suspended for a period of 12 months following his receipt
of a hardship distribution; and
(4) All plans maintained by the Affiliated
Employers provide that the amount of Elective Deferrals
that the Participant may make in his taxable year
immediately following the year of a hardship distribution
will not exceed the applicable limit under Section 402(g)
of the Code for the taxable year, reduced by the amount
of Elective Deferrals made by the Participant in the
taxable year of the hardship distribution.
48..15 Special Effective Dates. If the Plan is adopted as an
amendment of an existing plan, the provisions of Sections 5.3 and
Section 5.7 through 5.11 are effective as of the first day of the
first Plan Year beginning after December 31, 1986.<PAGE>
ARTICLE 49. LIMITATIONS ON
ALLOCATIONS
49..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(1)(2) of the Code) which provides an Annual Addition as defined
in Section 6.5(a), maintained by an Affiliated Employer:
(a) The amount of Annual Additions (as defined in
Section 6.5(a)) which may be credited to the Participant's
Accounts for any Limitation Year will not exceed the lesser of
the Maximum Annual Additions or any other limitation contained
in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's
Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Annual Additions, the amount
contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum
Annual Additions.
(b) Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant on
the basis of a reasonable estimation of the Participant's
Section 415 Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the
end of the Limitation Year, the Maximum Annual Additions for
the Limitation Year will be determined on the basis of the
Participant's actual Section 415 Compensation for the
Limitation Year.
(d) If pursuant to paragraph (c), or as a result of the
reallocation of Forfeitures, or as a result of a reasonable
error in determining the amount of Elective Deferrals that may
be made by a Participant, the Annual Additions exceed the
Maximum Annual Additions, the Excess Amount will be disposed
of as follows:
(1) Any nondeductible voluntary 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.
49..2 Additional Master or Prototype Plan. If in addition to
this Plan a Participant is covered under another qualified Master
or Prototype defined contribution plan or a welfare benefit fund
(as defined in Section 419(e) of the Code), or an individual
medical account (as defined in Section 415(1)(2) of the Code) which
provides an Annual Addition as defined in Section 6.5(a),
maintained by an Affiliated Employer during any Limitation Year:
(a) The Annual Additions which may be credited to a
Participant's Accounts under this Plan for any such Limitation
Year will not exceed the Maximum Annual Additions reduced by
the Annual Additions credited to a Participant's accounts
under the other plans and welfare benefit funds for the same
Limitation Year. If the Annual Additions with respect to the
Participant under other defined contribution plans and welfare
benefit funds maintained by an Affiliated Employer are less
than the Maximum Annual Additions, and the Employer
contribution that would otherwise be contributed or allocated
to the Participant's Accounts under this Plan would cause the
Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be
reduced so that the Annual Additions under all such plans and
funds for the Plan Year will equal the Maximum Annual
Additions. If the Annual Additions with respect to the
Participant under such other defined contribution plans and
welfare benefit funds in the aggregate are equal to or greater
than the Maximum Annual Additions, no amount will be
contributed or allocated to the Participant's Accounts under
this Plan for the Limitation Year.
(b) Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant in
the manner described in Section 6.1(b).
(c) As soon as is administratively feasible after the
end of the Plan Year, the Maximum Annual Additions for the
Plan Year will be determined on the basis of the Participant's
actual Section 415 Compensation for the Plan Year.
(d) If, pursuant to Section 6.2(c) or as a result of the
allocation of Forfeitures, or of a reasonable error in
determining the amount of Elective Deferrals that may be made
by him, a Participant's Annual Additions under this Plan and
such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist
of the Annual Additions last allocated under any qualified
Master or Prototype defined contribution plan, except that
Annual Additions to any welfare benefit fund or individual
medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of X and Y, where (X) is the
total Excess Amount allocated as of such date, and (Y) is the
ratio of: (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified Master or Prototype defined
contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in Section 6.1(d).
49..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.
49..4 Additional Defined Benefit Plan. If an Affiliated
Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction will not exceed 1.0 in any Limitation
Year. The Annual Additions which may be credited to the
Participant's Accounts under this Plan for any Limitation Year will
be limited in accordance with the Plan Agreement.
49..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, after-tax Employee 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
person, his earned income; and for any other Participant, his
"Form W-2 earnings" as defined in Section 2.8, if the Employer
has elected in item 4 of the Plan Agreement a definition of
Compensation based on "Form W-2 earnings"; or if the Employer
has not so elected, his wages, salaries, and fees for
professional services and other amounts received for personal
services actually rendered in the course of employment with
the Employer maintaining the Plan (including, but not limited
to, commissions paid salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements or
other expense allowances under a nonaccountable plan as
described in Income Tax Regulations Section 1.62-2(c)), and
excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not includible in the
Participant's gross income for the taxable year in which
contributed, or Employer contributions under a simplified
Employee pension plan to the extent such contributions
are deductible by the Employee, or any distributions from
a plan of deferred compensations;
(2) Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or
property) held by the Participant either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified
stock option; and
(4) Other amounts which received special tax
benefits, or contributions made by the Employer (whether
or not under a salary reduction agreement) towards the
purchase of an annuity contract described in Section
403(b) of the Code (whether or not the contributions are
actually excludable from the gross income of the
Participant).
For purposes of applying the limitations of this Article 6,
Section 415 Compensation for a Limitation Year is the Section
415 Compensation actually paid or made available during such
Limitation Year.
(c) Defined Benefit Fraction means a fraction, the
numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether
or not terminated) maintained by the Affiliated Employers, and
the denominator of which is the lesser of 125% of the dollar
limitation in effect for the Limitation Year under Sections
415(b) and (d) of the Code, or 140% of the Participant's
Highest Average Compensation including any adjustments under
Section 415(b) of the Code. Notwithstanding the foregoing, if
the Participant was a Participant as of the first day of the
first Limitation Year beginning after December 31, 1986, in
one or more defined benefit plans maintained by an Affiliated
Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125% of the
sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1987, disregarding any change
in the terms and conditions of the Plan after May 5, 1986.
The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of Section 415 of the Code for all Limitation
Years beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation means $30,000
or if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as in
effect for the Limitation Year.
(e) Defined Contribution Fraction means a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's accounts under all the defined contribution
plans (whether or not terminated) maintained by Affiliated
Employers for the current and all prior Limitation Years
(including the Annual Additions attributable to the
Participant's nondeductible Employee contributions to all
defined benefit plans, whether or not terminated, maintained
by the Affiliated Employers, and the Annual Additions
attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, and individual medical accounts,
as defined in Section 415(l)(2) of the Code), and the
denominator of which is the sum of the Maximum Annual
Additions for the current and all prior Limitation Years of
service with the Affiliated Employers (regardless of whether
a defined contribution plan was maintained by any Affiliated
Employer). The Maximum Annual Additions in any Plan Year is
the lesser of 125% of the dollar limitation determined under
Sections 415(b) and (d) of the Code in effect under Section
415(c)(1)(A) of the Code, or 35% of the Participant's Section
415 Compensation for such year. If the Employee was a
Participant as of the end of the first day of the first
Limitation Year beginning after December 31, 1986 in one or
more defined contribution plans maintained by an Affiliated
Employer which were in existence on May 6, 1986, the numerator
of this fraction will be adjusted if the sum of this fraction
and the Defined Benefit Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount
equal to product of the excess of the sum of the fractions
over 1.0, multiplied by the denominator of this fraction, will
be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes
in the terms and conditions of the Plan after May 5, 1986, but
using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The
Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat 100% of
nondeductible Employee contributions as Annual Additions.
(f) Excess Amount means, with respect to any
Participant, the amount by which Annual Additions exceed the
Maximum Annual Additions.
(g) Highest Average Compensation means the average
compensation for the three consecutive Years of Service with
the Employer that produces the highest average. A Year of
Service with the Employer is the period of 12 consecutive
months specified as the Limitation Year in the Plan Agreement.
(h) Limitation Year means the period of 12 consecutive
months specified in the Plan Agreement. All qualified plans
maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different period of 12
consecutive months, the new Limitation Year must begin on a
date within the Limitation Year in which the amendment is
made.
(i) Master or Prototype plan means a plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
(j) Maximum Annual Additions, which is the maximum
annual addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year,
means an amount not exceeding the lesser of (a) the Defined
Contribution Dollar Limitation or (b) 25% of the Participant's
Section 415 Compensation for the Limitation Year. The
compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of
Section 401(h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition under Section
415(l)(1) or Section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different period
of 12 consecutive months, the Maximum Annual Additions will
not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
number of months in the
short Limitation Year
12
(k) Projected Annual Benefit means the annual retirement
benefit (adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than a
straight life annuity or Qualified Joint and Survivor Annuity)
to which the Participant would be entitled under the terms of
the Plan assuming:
(1) The Participant will continue employment until
normal retirement age under the Plan (or current age, if
later), and
(2) The Participant's Section 415 Compensation for
the current Limitation Year and all other relevant
factors used to determine benefits under the plan will
remain constant for all future Limitation Years.<PAGE>
ARTICLE 50.
ELIGIBILITY FOR DISTRIBUTION OF BENEFITS
50..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.
50..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.
50..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.<PAGE>
ARTICLE 51. VESTING
51..1 Vested Balance. The vested balance of a Participant's
Accounts will be determined as follows:
(a) General Rule. A Participant's Participant
Contribution Account and Rollover Account shall be fully
vested at all times. The vested portion of his Employer
Contribution Account shall be equal to the percentage that
corresponds, in the vesting schedule specified in the Plan
Agreement, to the number of Years of Service credited to the
Participant as of the end of the Year of Service in which his
employment terminates. The vesting schedule specified in the
Plan Agreement applies to all benefits within the meaning of
Section 411(a)(7) of the Code, except those attributable to
Employee contributions.
(b) Special Rules for CODA. In a Plan that includes a
CODA, a Participant's Elective Deferral Account, Qualified
Nonelective Account, and Qualified Matching Account shall be
fully vested at all times. The vested portion of his Employer
Matching Account shall be equal to the percentage that
corresponds, in the vesting schedule specified in the Plan
Agreement, to the number of Years of Service credited to the
Participant as of the end of the Year of Service in which his
employment terminates.
(c) Retirement. All of a Participant's Accounts shall
become fully vested upon his Retirement or his earlier
attainment of early retirement age (if any) or the normal
retirement age elected by the Employer in the Plan Agreement.
For so long as a former Employee does not receive a
distribution (or a deemed distribution) of the vested portion of
his Accounts, the undistributed portion shall be held in a separate
account which shall be invested pursuant to Section 13.3 and shall
share in earnings and losses of the Trust Fund pursuant to Section
13.4 in the same manner as the Accounts of active Participants.
51..2 Vesting of Accounts of Returned Former Employees. The
following rules apply in determining the vested portion of the
Accounts of a Participant who incurs one or more consecutive One-
Year Vesting Breaks and then returns to employment with an
Affiliated Employer:
(a) If the Participant incurred fewer than five
consecutive One-Year Vesting Breaks, then all of his Years of
Service will be taken into account in determining the vested
portion of his Accounts, as soon as he has completed one Year
of Service following his return to employment.
(b) If the Participant incurred five or more consecutive
One-Year Vesting Breaks, then:
(1) No Year of Service completed after his return
to employment will be taken into account in determining
the vested portion of his Accounts as of any time before
he incurred the first One-Year Vesting Break;
(2) Years of Service completed before he incurred
the first One-Year Vesting Break will not be taken into
account in determining the vested portion of his Accounts
as of any time after his return to employment (i) unless
some portion of his Employer Contribution Account or
Employer Matching Account had become vested before he
incurred the first One-Year Vesting Break, and (ii) until
he has completed one Year of Service following his return
to employment; and
(3) Separate sub-accounts will be maintained for
the Participant's pre-break and post-break Employer
Contribution Account and Employer Matching Account, until
both sub-accounts become fully vested. Both sub-accounts
will share in the earnings and losses of the Trust Fund.
51..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 4.2 or
Article 5 (whichever applies) no later than the end of the Plan
Year in which it becomes a Forfeiture.
(a) If Distribution Is Made. If any or all of the
vested portion of a Participant's Accounts is distributed in
accordance with Section 9.1 or 9.2 before the Participant
incurs five consecutive One-Year Vesting Breaks, the nonvested
portion of his Accounts shall become a Forfeiture in the Plan
Year in which the distribution occurs. For purposes of this
Section 8.3, if the value of the vested portion of a
Participant's Accounts is zero, he shall be deemed to have
received a distribution of the entire vested balance of his
Accounts on the day his employment terminates. If the
Participant elects to have distributed less than the entire
vested portion of his Employer Contribution Account or
Employer Matching Accounts, the part of the nonvested portion
that will become a Forfeiture is the total nonvested portion
multiplied by a fraction, the numerator of which is the amount
of the distribution and the denominator of which is the total
value of the entire vested portion of such Accounts.
(b) Right of Repayment. If a Participant who receives
a distribution pursuant to paragraph (a) returns to employment
with an Affiliated Employer, the balance of his Employer
Contribution Account and Employer Matching Account will be
restored to the amount of such balance on the date of
distribution, if he repays to the Plan the full amount of the
distribution, before the earlier of (i) the fifth anniversary
of his return to employment or (ii) the date he incurs five
consecutive One-Year Vesting Breaks following the date of
distribution. If an Employee is deemed to receive a
distribution pursuant to this Section 8.3, and he resumes
employment covered under this Plan before the date he incurs
five consecutive One-Year Vesting Breaks, upon his
reemployment the Employer-derived account balance of the
Employee will be restored to the amount on the date of such
deemed distribution. Such restoration will be made, first,
from the amount of any Forfeitures available for reallocation
as of the last day of the Plan Year in which repayment is
made, to the extent thereof; and to the extent that
Forfeitures are not available or are insufficient to restore
the balance, from contributions made by the Employer pursuant
to Section 4.1(f).
(c) If No Distribution Is Made. If no distribution (or
deemed distribution) is made to a Participant before he incurs
five consecutive One-Year Vesting Breaks, the nonvested
portion of his Accounts shall become a Forfeiture at the end
of the Plan Year that constitutes his fifth consecutive One-
Year Vesting Break.
(d) Adjustment of Accounts. Before a Forfeiture is
incurred, a Participant's Accounts shall share in earnings and
losses of the Trust Fund pursuant to Section 13.4 in the same
manner as the Accounts of active Participants.
(e) Accumulated Deductible Contributions. For Plan
Years beginning before January 1, 1989, a Participant's vested
Account balance shall not include accumulated deductible
contributions within the meaning of Section 72(o)(5)(B) of the
Code.
51..4 Special Rule in the Event of a Withdrawal. If a
withdrawal pursuant to Section 12.2 or 12.3 is made from a
Participant's Employer Contribution Account or Employer Matching
Account before the Account is fully vested, and the Participant may
increase the vested percentage in the Account, then a separate
account will be established at the time of the withdrawal, and at
any relevant time after the withdrawal the vested portion of the
separate account will be equal to the amount "X" determined by the
following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested
percentage at the relevant time, AB is the account balance at the
relevant time, and D is the amount of the withdrawal.
51..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.<PAGE>
ARTICLE 52. PAYMENT OF BENEFITS
52..1 Distribution of Accounts. A Participant or Beneficiary
who has become eligible for a distribution of benefits pursuant to
Article 7 may elect to receive such benefits at any time, subject
to the terms and conditions of this Article 9, Article 10 and
Article 11. Unless a Participant or Beneficiary elects otherwise,
distribution of benefits will begin no later than the 60th day
after the end of the Plan Year in which the latest of the following
events occurs:
(a) The Participant attains age 65 (or if earlier, the
normal retirement age specified by the Employer in the Plan
Agreement); or
(b) The tenth anniversary of the year in which the
Participant commenced participation in the Plan; or
(c) The Participant's employment with the Affiliated
Employers terminates.
A Beneficiary who is the surviving spouse of a Participant may
elect to have distribution of benefits begin within the 90-day
period following the Participant's death.
For purposes of this Section 9.1, the failure of a Participant
(and his spouse, if spousal consent is required pursuant to Article
10) to consent to a distribution while a benefit is "immediately
distributable" within the meaning of Section 9.2 shall be
considered an election to defer commencement of payment. If the
Employer has so specified in the Plan Agreement, the vested portion
of a Participant's Accounts will be distributed in a lump sum in
cash no later than 60 days after the end of the Plan Year in which
his employment terminates, if at the time the Participant first
became entitled to a distribution the value of such vested portion
derived from Employer and Employee contributions does not exceed
$3,500. Commencement of distributions in any case shall be subject
to Section 9.4.
52..2 Restriction on Immediate Distributions. A
Participant's account balance is considered "immediately
distributable" if any part of the account balance could be
distributed to the Participant (or his surviving spouse) before the
Participant attains, or would have attained if not deceased, the
later of the normal retirement age specified in the Plan Agreement
or age 62.
(a) If the value of a Participant's vested account
balance derived from Employer and Employee contributions
exceeds (or at the time of any prior distribution exceeded)
$3,500, and the account balance is immediately distributable,
the Participant and his spouse (or where either the
Participant or the spouse has died), the survivor must consent
to any such distribution, unless an exception described in
paragraph (b) applies. The consent of the Participant and his
spouse shall be obtained in writing within the 90-day period
ending on the annuity starting date, which is the first day of
the first period for which an amount is paid as an annuity (or
any other form). The Plan Administrator shall notify the
Participant and the spouse, no less than 30 days and no more
than 90 days before the annuity starting date, of the right to
defer any distribution until the Participant's account balance
is no longer immediately distributable. Such notification
shall include a general description of the material features
of the optional forms of benefit available under the Plan and
an explanation of their relative values, in a manner that
would satisfy the notice requirements of Section 417(a)(3) of
the Code. If a distribution is one to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution
may commence less than 30 days after the required notification
is given, provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a period
of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option); and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
(b) Notwithstanding paragraph (a), only the Participant
need consent to the commencement of a distribution in the form
of a Qualified Joint and Survivor Annuity while the account
balance is immediately distributable. Furthermore, if payment
in the form of a Qualified Joint and Survivor Annuity is not
required with respect to the Participant pursuant to Section
10.1(b) of the Plan, only the Participant need consent to the
distribution of an account balance that is immediately
distributable. Neither the consent of the Participant nor the
spouse shall be required to the extent that a distribution is
required to satisfy Section 401(a)(9) or Section 415 of the
Code. In addition, upon termination of the Plan, if the Plan
does not offer an annuity option purchased from a commercial
provider), and no Affiliated Employer maintains another
defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code),
a Participant's account balance shall be distributed to the
Participant without his consent. If any Affiliated Employer
maintains another defined contribution plan (other than an
employee stock ownership plan as defined in Section 4975(e)(7)
of the Code), a Participant's account balance shall be
transferred to that defined contribution plan without his
consent, unless he consents to an immediate distribution. For
purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first
day of the first Plan Year beginning after December 31, 1988,
the Participant's vested account balance shall not include
amounts attributable to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of the
Code.
52..3 Optional Forms of Distribution. Provided that the
Employer has so elected in the Plan Agreement, if at the time a
Participant first becomes entitled to a distribution the value of
his vested Account balance derived from Employer and Employee
contributions does not exceed $3,500, distribution shall be made in
a lump sum in cash. Subject to the preceding sentence and to the
rules of Article 10 concerning joint and survivor annuities, a
Participant or Beneficiary may elect to receive benefits in any of
the following optional forms:
(a) A lump sum payment in cash or in kind or in a
combination of both;
(b) A series of installments over a period certain that
meets the requirements of Article 11; or
(c) A nontransferable annuity contract, purchased from
a commercial provider, with terms complying with the
requirements of Article 11; provided, however, that an annuity
for the life of any person shall be available as an optional
form of distribution only if the Employer has so elected in
the Plan Agreement.
(d) In the event that the Plan is adopted as an
amendment to an existing plan, each optional form of
distribution available under the existing plan shall be made
available under the Plan, and may be made available where
necessary through the purchase of an appropriate annuity
contract in accordance with paragraph (c).
52..4 Distribution Procedure. The Trustee shall make or
commence distributions to or for the benefit of Participants only
on receipt of an order from the Employer in writing or by such
other means unable 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.
52..5 Lost Distributee. In the event that the Plan
Administrator is unable with reasonable effort to locate a person
entitled to distribution under the Plan, the Accounts distributable
to such a person shall become a Forfeiture at the end of the third
Plan Year after the Plan Administrator's efforts to locate such
person began; provided, however, that the amount of the Forfeiture
shall be restored in the event that such person thereafter submits
a claim for benefits under the Plan. Such restoration will be
made, first, from the amount of Forfeitures available for
reallocation as of the last day of the Plan Year in which the claim
is made, to the extent thereof; and to the extent that Forfeitures
are not available or are insufficient to restore the balance, from
contributions made by the Employer pursuant to Section 4.1(f). A
Forfeiture occurring under this Section 9.5 shall be reallocated as
though it were an Employer contribution.
52..6 Direct Rollovers. This Section 9.6 applies to
distributions made on or after January 1, 1993. Notwithstanding
any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Section, a distributee
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified
by the distributee in a direct rollover. For purposes of this
Section 9.6, the following definitions shall apply:
(a) Eligible Rollover Distribution: An eligible
rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributees and the distributee's Designated Beneficiary,
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, as defined in
section 414(p) of the Code, 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.
52..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.<PAGE>
ARTICLE 53. JOINT AND SURVIVOR ANNUITY REQUIREMENTS
53..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).
53..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.
53..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.
53..4 Definitions. The following definitions apply:
(a) Election Period means the period beginning on the
first day of the Plan Year in which a Participant attains age
35 and ending on the date of the Participant's death. If a
Participant separates from service before the first day of the
Plan Year in which he reaches age 35, the Election Period with
respect to his account balance as of the date of separation
shall begin on the date of separation. A Participant who will
not attain age 35 as of the end of a Plan Year may make a
special Qualified Election to waive the Qualified
Preretirement Survivor Annuity for the period beginning on the
date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such an
election shall not be valid unless the Participant receives a
written explanation of the Qualified Preretirement Survivor
Annuity in such terms as are comparable to the explanation
required under Section 10.5. Qualified Preretirement Survivor
Annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains
age 35. Any new waiver on or after that date shall be subject
to the full requirements of this article.
(b) Earliest Retirement Age means the earliest date on
which the Participant could elect to receive Retirement
benefits under the Plan.
(c) Qualified Election means a waiver of a Qualified
Joint and Survivor Annuity or a Qualified Preretirement
Survivor Annuity. Any such waiver shall not be effective
unless: (1) the Participant's spouse consents in writing to
the waiver; (2) the waiver designates a specific Beneficiary,
including any class of beneficiaries or any contingent
beneficiaries, which may not be changed without spousal
consent (unless the spouse's consent expressly permits
designations by the Participant without any further spousal
consent); (3) the spouse's consent acknowledges the effect of
the waiver; and (4) the spouse's consent is witnessed by a
plan representative or notary public. Additionally, a
Participant's waiver of the Qualified Joint and Survivor
Annuity shall not be effective unless the waiver designates a
form of benefit payment which may not be changed without
spousal consent (unless the spouse's consent expressly permits
designations by the Participant without any further spousal
consent). If it is established to the satisfaction of a plan
representative that there is no spouse or that the spouse
cannot be located, a waiver will be deemed a Qualified
Election. Any consent by a spouse obtained under these
provisions (and any establishment that the consent of a spouse
may not be obtained) shall be effective only with respect to
the particular spouse involved. A consent that permits
designations by the Participant without any requirement of
further consent by the spouse must acknowledge that the spouse
has the right to limit the consent to a specific Beneficiary
and a specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of
those rights. A revocation of a prior waiver may be made by
a Participant without the consent of the spouse at any time
before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under
this provision shall be valid unless the Participant has
received notice as provided in Section 10.5.
(d) Qualified Joint and Survivor Annuity means an
immediate annuity for the life of a Participant, with a
survivor annuity for the life of the spouse which is not less
than 50% and not more than 100% of the amount of the annuity
which is payable during the joint lives of the Participant and
the spouse, and which is the amount of benefit that can be
purchased with the Participant's Vested Account Balance. The
percentage of the survivor annuity under the Plan shall be
50%.
(e) Annuity Starting Date means the first day of the
first period for which an amount is paid as an annuity (or any
other form).
(f) Vested Account Balance means the aggregate value of
the Participant's vested account balance derived from Employer
and Employee contributions (including rollovers), whether
vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The
provisions of this Article 10 shall apply to a Participant who
is vested in amounts attributable to Employer contributions,
Employee contributions or both at the time of death or
distribution.
53..5 Notice Requirements. In the case of a Qualified Joint
and Survivor Annuity, no less than 30 days and no more than 90 days
before a Participant's Annuity Starting Date the Plan Administrator
shall provide to him a written explanation of (i) the terms and
conditions of a Qualified Joint and Survivor Annuity, (ii) the
Participant's right to make, and the effect of, an election to
waive the Qualified Joint and Survivor Annuity form of benefit,
(iii) the rights of the Participant's spouse, and (iv) the right to
make, and the effect of, a revocation of a previous election to
waive the Qualified Joint and Survivor Annuity.
In the case of a Qualified Preretirement Survivor Annuity,
within the applicable period for a Participant the Plan
Administrator shall provide to him a written explanation of the
Qualified Preretirement Survivor Annuity, in terms and manner
comparable to the requirements applicable to the explanation of a
Qualified Joint and Survivor Annuity as described in the preceding
paragraph. The applicable period for a Participant is whichever of
the following periods ends last: (i) the period beginning with the
first day of the Plan Year in which the Participant attains age 32
and ending with the close of the Plan Year preceding the Plan Year
in which the Participant attains age 35; (ii) a reasonable period
ending after an individual becomes a Participant; (iii) a
reasonable period ending after this Article 10 first applies to the
Participant. Notwithstanding the foregoing, in the case of a
Participant who separates from service before attaining age 35,
notice must be provided within a reasonable period ending after his
separation from service.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (ii) and
(iii) is the end of the two-year period beginning one year before
the date the applicable event occurs, and ending one year after
that date. In the case of a Participant who separates from service
before the Plan Year in which he reaches age 35, notice shall be
provided within the two-year period beginning one year before the
separation and ending one year after the separation. If such a
Participant thereafter returns to employment with the Employer, the
applicable period for the Participant shall be redetermined.
53..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:
(i) begins to receive payments under the Plan
on or after normal retirement age; or
(ii) dies on or after normal retirement age
while still working for the Employer; or
(iii) begins to receive payments on or after
the qualified early retirement age; or
(iv) separates from service on or after
attaining normal retirement age (or the qualified
early retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the Plan and thereafter dies before
beginning to receive such benefits;
then such benefits will be received under the Plan in the
form of a Qualified Joint and Survivor Annuity, unless
the Participant has elected otherwise during the election
period, which must begin at least six months before the
Participant attains qualified early retirement age and
end not more than 90 days before the commencement of
benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
(2) Election of early survivor annuity. A
Participant who is employed after attaining the qualified
early retirement age will be given the opportunity to
elect during the election period to have a survivor
annuity payable on death. If the Participant elects the
survivor annuity, payments under such annuity must not be
less than the payments which would have been made to the
spouse under the Qualified Joint and Survivor Annuity if
the Participant had retired on the day before his death.
Any election under this provision will be in writing and
may be changed by the Participant at any time. The
election period begins on the later of (i) the 90th day
before the Participant attains the qualified early
retirement age, or (ii) the date on which participation
begins, and ends on the date the Participant terminates
employment.
(3) For purposes of this Section 10.6, qualified
early retirement age is the latest of the earliest date
under the Plan on which the Participant may elect to
receive Retirement benefits, the first day of the 120th
month beginning before the Participant reaches normal
retirement age, or the date the Participant begins
participation.<PAGE>
ARTICLE 54. MINIMUM DISTRIBUTION REQUIREMENTS
54..1 General Rules. Subject to Article 10, Joint and
Survivor Annuity Requirements, the requirements of this Article 11
shall apply to any distribution of a Participant's interest and
will take precedence over any inconsistent provisions of the Plan.
Unless otherwise specified, the provisions of this Article 11 apply
to calendar years beginning after December 31, 1984. All
distributions required under this Article 11 shall be determined
and made in accordance with the Income Tax Regulations issued under
Section 401(a)(9) of the Code (including proposed regulations,
until the adoption of final regulations), including the minimum
distribution incidental benefit requirement of Section 1.401(a)(9)-
2 of the proposed regulations.
54..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 one and half.
(b) Transitional Rules. The required beginning date of
a Participant who attains age 70 one and half 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 one and half 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:
(i) the calendar year in which the Participant
attains age 70 one and half, or
(ii) 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 one and half 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 one and half,
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.
54..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.
54..4 Determination of Amount to Be Distributed Each Year.
If the Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply on
or after the required beginning date. Paragraphs (a) through (d)
apply to distributions in forms other than the purchase of an
annuity contract.
(a) If a Participant's Benefit is to be distributed over
(1) a period not extending beyond the Life Expectancy of the
Participant or the Joint Life and Last Survivor Expectancy of
the Participant and his Designated Beneficiary, or (2) a
period not extending beyond the Life Expectancy of the
Designated Beneficiary, the amount required to be distributed
for each calendar year, beginning with distributions for the
first Distribution Calendar Year, must at least equal the
quotient obtained by dividing the Participant's Benefit by the
Applicable Life Expectancy.
(b) For calendar years beginning before January 1, 1989,
if the Participant's spouse is not the Designated Beneficiary,
the method of distribution selected must assure that at least
50% of the present value of the amount available for
distribution is paid within the Life Expectancy of the
Participant.
(c) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year, shall
not be less than the quotient obtained by dividing the
Participant's Benefit by the lesser of (1) the Applicable Life
Expectancy or (2) if the Participant's spouse is not the
Designated Beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations. Distributions after the
death of the Participant shall be distributed using the
Applicable Life Expectancy in paragraph (a) above as the
relevant divisor, without regard to Proposed Regulations
Section 1.401(a)(9)-2.
(d) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on
or before the Participant's required beginning date. The
minimum distribution for other calendar years, including the
minimum distribution for the Distribution Calendar Year in
which the Employee's required beginning date occurs, must be
made on or before December 31 of that Distribution Calendar
Year.
(e) If the Participant's Benefit is distributed in the
form of an annuity contract purchased from an insurance
company, distributions thereunder shall be made in accordance
with the requirements of Section 401(a)(9) of the Code and the
regulations issued thereunder (including proposed regulations,
until the adoption of final regulations).
Applicable Life Expectancy means the Life Expectancy (or Joint
and Last Survivor Expectancy) calculated using the attained age of
the Participant (or Designated Beneficiary) as of the Participant's
(or Designated Beneficiary's) birthday in the applicable calendar
year, reduced by one for each calendar year which has elapsed since
the date Life Expectancy was first calculated. If Life Expectancy
is being recalculated, the Applicable Life Expectancy shall be the
Life Expectancy as so recalculated. The applicable calendar year
shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year. If
annuity payments commence in accordance with Section 11.4(e) before
the required beginning date, the applicable calendar year is the
year such payments commence. If distribution is in the form of an
immediate annuity purchased after the Participant's death with the
Participant's remaining interest in the Plan, the applicable
calendar year is the year of purchase.
Participant's Benefit means the account balance as of the last
valuation date in the calendar year immediately preceding the
Distribution Calendar Year (valuation calendar year), increased by
the amount of any contributions or Forfeitures allocated to the
account balance as of dates in the valuation calendar year after
the valuation date and decreased by distributions made in the
valuation calendar year after the valuation date. For purposes of
the preceding sentence, if any portion of the minimum distribution
for the first Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the required beginning
date, the amount of the minimum distribution made in the second
Distribution Calendar Year shall be treated as if it had been made
in the immediately preceding Distribution Calendar Year.
54..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 one and half.
If the Participant has not made an election pursuant to
this Section 11.5 by the time of his death, the Participant's
Designated Beneficiary must elect the method of distribution
no later than the earlier of (i) December 31 of the calendar
year in which distributions would be required to begin under
this Section 11.5, or (ii) December 31 of the calendar year
which contains the fifth anniversary of the date of death of
the Participant. If the Participant has no Designated
Beneficiary, or if the Designated Beneficiary does not elect
a method of distribution, distribution of the Participant's
entire interest must be completed by December 31 of the
calendar year containing the fifth anniversary of the
Participant's death.
(c) For purposes of paragraph (b), if the surviving
spouse dies after the Participant, but before payments to the
spouse begin, the provisions of paragraph (b), with the
exception of subparagraph (2) therein, shall be applied as if
the surviving spouse were the Participant.
(d) For purposes of this Section 11.5, any amount paid
to a child of the Participant will be treated as if it had
been paid to the surviving spouse of the Participant if the
amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(e) For the purposes of this Section 11.5, distribution
of a Participant's interest is considered to begin on the
Participant's required beginning date (or, if paragraph (c)
above is applicable, the date distribution is required to
begin to the surviving spouse pursuant to paragraph (b)
above). If distribution in the form of an annuity contract
described in Section 11.4(e) irrevocably commences to the
Participant before the required beginning date, the date
distribution is considered to begin is the date distribution
actually commences.
54..6 Transitional Rule. Notwithstanding the other
requirements of this Article 11, and subject to the requirements of
Article 10, Joint and Survivor Annuity Requirements, distribution
on behalf of any Participant, including a 5% owner, may be made in
accordance with all of the following requirements (regardless of
when such distribution commences):
(a) The distribution is one which would not have
disqualified the Trust under Section 401(a)(9) of the Internal
Revenue Code of 1954 as in effect before its amendment by the
Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
Trust is being distributed or, if the Employee is deceased, by
a Beneficiary of the Employee.
(c) The designation specified in paragraph (b) was in
writing, was signed by the Employee or the Beneficiary, and
was made before January 1, 1984.
(d) The Employee had accrued a benefit under the Plan as
of December 31, 1983.
(e) The method of distribution designated by the
Employee or the Beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the Beneficiaries of
the Employee listed in order of priority.
A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect to
the distributions to be made upon the death of the Employee. For
any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee or the Beneficiary
to whom such distribution is being made will be presumed to have
designated the method of distribution under which the distribution
is being made, if the method of distribution was specified in
writing and the distribution satisfies the requirements in
paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and the
regulations thereunder. If a designation is revoked after the date
distributions are required to begin, the Trust must distribute by
the end of the calendar year following the calendar year in which
the revocation occurs the total amount not yet distributed which
would have been required to have been distributed to satisfy
Section 401(a)(9) of the Code and the regulations thereunder, but
for the designation described in paragraphs (b) through (e). For
calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Any changes in the designation generally will be
considered to be a revocation of the designation, but the mere
substitution or addition of another beneficiary (one not named in
the designation) under the designation will not be considered to be
a revocation of the designation, so long as the substitution or
addition does not alter the period over which distributions are to
be made under the designation, directly or indirectly (for example,
by altering the relevant measuring life). In the case of an amount
transferred or rolled over from one plan to another plan, the rules
in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l of the Proposed
Income Tax Regulations shall apply.<PAGE>
ARTICLE 55. WITHDRAWALS AND LOANS
55..1 Withdrawals from Participant Contribution Accounts.
Subject to the requirements of Article 10, a Participant may upon
written notice to the Employer withdraw any amount from his
Participant Contribution Account. A withdrawn amount may not be
repaid to the Plan. No forfeiture will occur solely as a result of
an Employee's withdrawal of Participant contributions.
55..2 Withdrawals on Account of Hardship. If the Employer
has so elected in the Plan Agreement, upon a Participant's written
request the Plan Administrator may permit a withdrawal of funds
from the vested portion of the Participant's Accounts (excluding
the amount credited to a Rollover Account) on account of the
Participant's financial hardship, which must be demonstrated to the
satisfaction of the Plan Administrator. In considering such
requests, the Plan Administrator shall apply uniform standards that
do not discriminate in favor of Highly Compensated Employees. In
a Plan with a CODA, if hardship withdrawals are permitted from both
the Employer Contribution Account and the Elective Deferral
Account, they shall be made first from a Participant's Employer
Contribution Account and thereafter from a Participant's Elective
Deferral Account, subject to the additional requirements set forth
in Section 5.14. The requirements of Section 5.14(b), (c), (d)(1)
and (d)(2) shall also apply to hardship distributions from a
Participant's Employer Contribution Account and Employer Matching
Account. In a Plan with a CODA, if hardship withdrawals are
permitted from more than one of the Elective Deferral Account,
Employer Matching Account, and Employer Contribution Account, they
shall be made first from a Participant's Employer Contribution
Account, and thereafter from the Employer Matching Account, and
finally from the Elective Deferral Account, subject to the
additional requirements of Section 5.14. A withdrawn amount may
not be repaid to the Plan.
55..3 Withdrawals After Reaching Age 59 one and half. If so specified by
the Employer in the Plan Agreement, a Participant who has reached
age 59 one and half may upon written request to the Employer withdraw during
his employment any amount not exceeding the vested balance of his
Accounts. A withdrawn amount may not be repaid to the Plan.
55..4 Loans. If the Employer has so elected in the Plan
Agreement, the Employer may direct the Trustee to make a loan to a
Participant or Beneficiary from the vested portion of his Accounts,
subject to the following terms and conditions and to such
reasonable additional rules and regulations as the Plan
Administrator may establish for the orderly operation of the
program:
(a) The Plan Administrator shall administer the loan
program subject to the terms and conditions of this Section
12.4.
(b) A Participant's or Beneficiary's request for a loan
shall be submitted to the Plan Administrator by means of a
written application on a form supplied by the Plan
Administrator. Applications shall be approved or denied by
the Plan Administrator on the basis of its assessment of the
borrower's ability to collateralize and repay the loan, as
revealed in the loan application.
(c) Loans shall be made to all Participants and
Beneficiaries on a reasonably equivalent basis. Loans shall
not be made available to highly compensated Employees (as
defined in Section 414(q) of the Code) in amounts greater than
the amounts made available to other Employees (relative to the
borrower's Account balance).
(d) Loans must be evidenced by the Participant's
promissory note for the amount of the loan payable to the
order of the Trustee, and adequately secured by assignment of
not more than fifty percent (50%) of the Participant's entire
right, title and interest in and to the Trust Fund, exclusive
of any asset as to which Putnam is not the Trustee.
(e) Loans must bear a reasonable interest rate
comparable to the rate charged by commercial lenders in the
geographical area for similar loans. The Plan Administrator
shall not discriminate among Participants in the matter of
interest rates, but loans may bear different interest rates
if, in the opinion of the Plan Administrator, the difference
in rates is justified by conditions that would customarily be
taken into account by a commercial lender in the Employer's
geographical area.
(f) The Period for repayment for any loan shall not
exceed five years, except in the case of a loan used to
acquire a dwelling unit which within a reasonable time is to
be used as the principal residence of the Participant, in
which case the repayment period shall not exceed ten years.
The terms of a loan shall require that it be repaid in level
payments of principal and interest not less frequently then
quarterly throughout the repayment period, except that
alternative arrangements for repayment may apply in the event
that the borrower is on unpaid leave of absence for a period
not to exceed one year.
(g) To the extent that a Participant would be required
under Article 10 to obtain he consent of his spouse to a
distribution of an immediately distributable benefit other
than a Qualified Joint and Survivor Annuity, the consent of
the Participant's spouse shall be required for the use of his
Account as security for a loan. The spouse's consent must be
obtained no earlier than the beginning of the 90-day period
that ends on the date on which the loan is to be so secured,
and obtained in accordance with the requirements of Section
10.4(c) for a Qualified Election. Any such consent shall
thereafter be binding on the consenting spouse and any
subsequent spouse of the Participant. A new consent shall be
required for use of the Account as security for any extension,
renewal, renegotiation or revision of the original loan.
(h) If valid spousal consent has been obtained in
accordance with Section 12.4(g), then notwithstanding any
other provision of the Plan the portion of the Participant's
account balance used as a security interest held by the Plan
by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of
the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment
of the loan. If less than 100% of the Participant's vested
account balance (determined without regard to the preceding
sentence) is payable to the surviving spouse, then the account
balance shall be adjusted by first reducing the vested account
balance by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the
surviving spouse.
(i) In the event of default on a loan by a Participant
who is an active Employee, foreclosure on the Participant's
Account as security will not occur until the Employer has
reported to the Trustee the occurrence of an event permitting
distribution from the Plan in accordance with Article 9 or
Section 5.13.
(j) No loan shall be made to an Owner-Employee or a
Shareholder-Employee.
(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.
55..5 Procedure; Amount Available. Withdrawals and loans
shall be made subject to the terms and conditions applicable to
distributions pursuant to Section 9.4, except that the amount of
any withdrawal or loan shall be determined by reference to the
vested balance of the Participant's Account as of the most recent
Valuation Date preceding the withdrawal or loan, and shall not
exceed the amount of the vested account balance.<PAGE>
ARTICLE 56. TRUST FUND AND
INVESTMENTS
56..1 Establishment of Trust Fund. The Employer and the
Trustee hereby agree to the establishment of a Trust Fund
consisting of all amounts as shall be contributed or transferred
from time to time to the Trustee pursuant to the Plan, and all
earnings thereon. The Trustee shall hold the assets of the Trust
Fund for the exclusive purpose of providing benefits to
Participants and Beneficiaries and defraying the reasonable
expenses of administering the Plan, and no such assets shall ever
revert to the Employer, except that:
(a) contributions made by the Employer by mistake of
fact, as determined by the Employer, may be returned to the
Employer within one (1) year of the date of payment,
(b) contributions that are conditioned on their
deductibility under Section 404 of the Code may be returned to
the Employer, to the extent disallowed, within one (1) year of
the disallowance of the deduction,
(c) contributions that are conditioned on the initial
qualification of the Plan under the Code, and all investment
gains attributable to them, may be returned to the Employer
within one (1) year after such qualification is denied by
determination of the Internal Revenue Service, but only if an
application for determination of such qualification is made
within the time prescribed by law for filing the Employer's
federal income tax return for its taxable year in which the
Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe, and
(d) amounts held in a suspense account may be returned
to the Employer on termination of the Plan, to the extent that
they may not then be allocated to any Participant's Account in
accordance with Article 6.
All Employer contributions under the Plan other than those
made pursuant to Section 4.1(f) are hereby expressly conditioned on
the initial qualification of the Plan and their deductibility under
the Code. Investment gains attributable to contributions returned
pursuant to subSections (a) and (b) shall not be returned to the
contributing Employer, and investment losses attributable to such
contributions shall reduce the amount returned.
56..2 Management of Trust Fund. Except to the extent of any
investment in Policies pursuant to Article 14, the assets of the
Trust Fund shall be held in trust by the Trustee and accounted for
in accordance with this Article 13, and shall be invested in
accordance with Section 13.3 in the Investment Products specified
by the Employer in the Plan Agreement and from time to time
thereafter in writing. The Employer shall have the exclusive
authority and discretion to select the Investment Products
available under the Plan. In making that selection, the Employer
shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and with like aims. The
Employer shall cause the available Investment Products to be
diversified sufficiently to minimize the risk of large losses,
unless under the circumstances it is clearly prudent not to do so.
It is especially intended that the Trustee shall have no
discretionary authority to determine the investment of Trust
assets. Notwithstanding the foregoing, assets of the Trust Fund
shall also be invested in Employer Stock if so elected by the
Employer and agreed to by Putnam under the service agreement
executed by the Employer and Putnam pursuant to the establishment
of the Plan.
56..3 Investment Instructions. Except as Article 14 may
apply, all amounts held in the Trust Fund under the Plan shall be
invested in Investment Products. If the Employer has elected in
the Plan Agreement to make investment decisions with respect to
Employer contributions to the Plan, investment instructions as to
Employer Contribution Accounts, Employer Matching Accounts,
Qualified Matching Accounts and Qualified Nonelective Contribution
Accounts shall be the fiduciary responsibility of the Employer, and
each of such Accounts shall have a pro rata interest in all assets
of the Trust (other than Policies under Article 14) to which the
Employer's instructions apply. If the Employer has not elected to
make investment decisions for the Plan, then assets of the Trust
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 the 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. The
Trustee shall not be liable for any loss, or by reason of any
breach, which arises from the direction of the Plan Administrator
with respect to the acquisition and holding of Employer Stock. The
Employer shall be responsible for determining whether, under the
circumstances prevailing at a given time, its fiduciary duty to
Plan Participants and Beneficiaries under the Plan and ERISA
requires that the Employer follow the advice of independent counsel
as to the voting and tender or retention of Employer Stock.
Putnam shall be under no duty to question or review the
investment directions given by the Employer or to make suggestions
to the Employer in connection therewith. Putnam shall not be
liable for any loss, or by reason of any breach, that arises from
the Employer's exercise or non-exercise of rights under this
Article 13, or from any direction of the Employer unless it is
clear on the face of the direction that the actions to be taken
under the direction are prohibited by the fiduciary duty rules of
Section 404(a) of ERISA. All interest, dividends and other income
received with respect to, and any proceeds received from the sale
or other disposition of, securities or other property held in an
investment fund shall be credited to and reinvested in such
investment fund, and all expenses of the Trust that are properly
allocated to a particular investment fund shall be so allocated and
charged. The Employer may at any time direct Putnam to eliminate
any investment fund or funds, and Putnam shall thereupon dispose of
the assets of such investment fund and reinvest the proceeds
thereof in accordance with the directions of the Employer.
Neither the Employer nor the Trustee nor Putnam shall be
responsible for questioning any instructions of a Participant or
for reviewing the investments selected therein, or for any loss
resulting from instructions of a Participant or from the failure of
a Participant to provide or to change instructions. Neither Putnam
nor the Trustee shall have any duty to question any instructions
received from the Employer or a Participant or to review the
investments selected thereby, nor shall Putnam or the Trustee be
responsible for any loss resulting from instructions received from
the Employer or a Participant or from the failure of the Employer
or a Participant to provide or to change instructions. In the
event that Putnam or the Trustee receives a contribution under the
Plan as to which no instructions are delivered, or such
instructions as are delivered are unclear to Putnam or the Trustee,
such contribution shall be invested until clear instructions are
received in the default investment option set forth in the service
agreement between the Employer and Putnam, or if no such option is
so set forth, in Putnam Daily Dividend Trust. Neither Putnam nor
the Trustee shall have any discretionary authority or
responsibility in the investment of the assets of the Trust Fund.
56..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.
56..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.
56..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 share
holders, with respect to Investment Company Shares held in the
Trust Fund. The Trustee shall act in accordance with directions
received from Participants or the Employer, as the case may be,
with respect to matters to be voted upon by the shareholders of the
Investment Company. Such directions must be in writing on a form
approved by the Trustee, signed by the addressee and delivered to
the Trustee within the time prescribed by it. The Trustee will not
vote Investment Company Shares as to which it receives no written
directions.
56..7 Investment Manager. The Employer, with the consent of
Putnam, may appoint an investment manager, as defined in Section
3(38) of the Employee Retirement Income Security Act of 1974, with
respect to all or a portion of the assets of the Trust Fund. The
Trustee shall have no liability in connection with any action or
nonaction pursuant to directions of such an investment manager.
56..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.
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 last
preceding Valuation Date for which an allocation has been
completed and Employer Stock has actually been credited to
Participant's accounts. The Employer shall provide the
Trustee with a copy of any materials provided to Participants
and shall certify to the Trustee that the materials have been
mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the
Trustee as to the manner in which to vote that number of
shares of Employer Stock held under the Plan (whether or not
vested) equal to a fraction, of which the numerator is the
number of shares of Employer Stock credited to his account and
the denominator is the number of shares of Employer Stock
credited to all Participants' accounts. Such directions shall
be communicated in writing or by facsimile or similar means
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 name
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.
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 by facsimile or such
similar means as is agreed upon by the Trustees and the
Employer. The Trustee shall tender or not tender shares of
Employer Stock as directed by the Participant. A Participant
who has directed the Trustee to tender some or all of the
shares of Employer Stock credited to his accounts may, at any
time before the tender offer withdrawal date, direct the
Trustee to withdraw some or all of the tendered shares, and
the Trustee shall withdraw the directed number of shares from
the tender offer before the tender offer withdrawal deadline.
A Participant shall not be limited as to the number of
directions to tender or withdraw that he may give to the
Trustee. The Trustee shall not tender shares of Employer
Stock credited to a Participant's accounts for which it has
received no directions from the Plan Participant. The Trustee
shall tender that number of shares of Employer Stock not
credited to Participants' accounts determined by multiplying
the total number of such shares by a fraction, the numerator
of which is the number of shares of Employer Stock credited to
Participants' accounts for which the Trustee has received
directions from Participants to tender (which directions have
not been withdrawn as of the date of this determination), and
the denominator of which is the total number of shares of
Employer Stock credited to Participants' accounts.
A direction by a Participant to the Trustee to tender
shares of Employer Stock credited to his accounts shall not be
considered a written election under the Plan by the
Participant to withdraw or to have distributed to him any or
all of such shares. The Trustee shall credit to each account
of the Plan Participant from which the tendered shares were
taken the proceeds received by the Trustee in exchange for the
shares of Employer Stock tendered from that account. Pending
receipt of directions through the Administrator from the
Participant as to the investment of the proceeds of the
tendered shares, the Trustee shall invest the proceeds as the
Administrator shall direct. To the extent that any
Participant gives no direction as to the tendering of Employer
stock that he has the right to direct under this Section
13.8(a), the Trustee shall not tender such Employer Stock.
(c) Other Rights. With respect to all rights in connection
with Employer Stock other than the right to vote and the right
to tender, Participants are hereby appointed named fiduciaries
to the same extent (if any) as provided in the foregoing
paragraphs of this Section 13.8 with regard to the right to
vote, and the Trustee shall follow the directions of
Participants and the Plan Administrator with regard to the
exercise of such rights to the same extent as with regard to
the right to vote.
56..9 Insurance Contracts. If so provided in the Plan
Agreement, the Plan Administrator may direct the Trustee to receive
and hold or apply assets of the Trust to the purchase of individual
or group insurance or annuity contracts ("policies" or "contracts")
issued by any insurance company and in a form approved by the Plan
Administrator (including contracts under which the contract holder
is granted options to purchase insurance or annuity benefits), or
financial agreements which are backed by group insurance or annuity
contracts ("financial agreements"). If such investments are to be
made, the Plan Administrator shall direct the Trustee to execute
and deliver such applications and other documents as are necessary
to establish record ownership, to value such policies, contracts or
financial agreements under the method of valuation selected by the
Plan Administrator, and to record or report such values to the Plan
Administrator or any investment manager selected by the Plan
Administrator, in the form and manner agreed to by the Plan
Administrator.
The Plan Administrator may direct the Trustee to exercise or
may exercise directly the powers of contract holder under any
policy, contract or financial agreement, and the Trustee shall
exercise such powers only upon direction of the Plan Administrator.
The Trustee shall have no authority to act in its own discretion,
with respect to the terms, acquisition, valuation, continued
holding and/or disposition of any such policy, contract or
financial agreement or any asset held thereunder. The Trustee
shall be under no duty to question any direction of the Plan
Administrator or to review the form of any such policy, contract or
financial agreement or the selection of the issuer thereof, or to
make recommendations to the Plan Administrator or to any issuer
with respect to the form of any such policy, contract or financial
agreement.
The Trustee shall be fully protected in acting in accordance
with written directions of the Plan Administrator, and shall be
under no liability for any loss of any kind which may result by
reason of any action taken or omitted by it in accordance with any
direction of the Plan Administrator, or by reason of inaction in
the absence of written directions from the Plan Administrator. In
the event that the Plan Administrator directs that any monies or
property be paid or delivered to the contract holder other than for
the benefit of specific individual beneficiaries, the Trustee
agrees to accept such monies or property as assets of the Trust
subject to all the terms hereof.
<PAGE>
ARTICLE 57. INSURANCE POLICIES
57..1 Purchase of Insurance Products. At the time of
establishment of the Plan, if elected by the Employer and agreed to
by Putnam under the service agreement executed by the Employer and
Putnam pursuant to the establishment of the Plan, the Employer
shall purchase for each Participant such Policy or Policies, if
any, as a Participant shall request and annually thereafter such
additional Policies as a Participant shall request, subject to the
limitations of Section 14.2. All Policies shall have the same day
and month of issue, insofar as reasonably possible. The premiums
on all Policies shall be paid at the same intervals (for example,
annually, semi-annually, quarterly or monthly), but the interval
may be changed with respect to all Policies from time to time.
57..2 Limitation on Premiums. The premiums paid for Policies
in respect of any Participants shall be limited so that premiums
paid on any ordinary insurance Policies (that is, Policies with
both nonincreasing premiums and nondecreasing death benefits) on
the life of the Participant shall be 49% or less of the Employer's
total contributions for the Participant (and Forfeitures allocated
and amounts reapplied to his Employer Contribution Account), and
premiums paid on term insurance Policies on the life of the
Participant shall be less than 25% of such amount; provided that if
both ordinary life insurance Policies and term Policies are
purchased for any Participant, the total premiums on term Policies
plus one-half the premiums on ordinary life Policies shall be less
than 25% of such amount. If at any time the total premiums to be
paid by the Employer for a Participant shall equal or exceed the
above limitations, then the life insurance coverage of that
Participant shall be reduced so that the total premiums shall not
equal or exceed the limitations. The required reduction shall be
made by changing all or a portion of the life insurance on the
Participant to paid-up life insurance or by cancelling all or a
portion of any term life insurance.
57..3 Policy Options. At the election of the Participant
covered hereunder, a Policy may contain a waiver of premium
disability benefit provision or a provision for additional
indemnity in the event of accidental death, or both, if available
on the type of Policy selected and if permitted by the insurer.
57..4 Insurability. If any Participant who has elected that
a Policy be purchased is found by the insurer not to be insurable
at standard rates, the Employer shall, if permitted by the rules of
the insurer, purchase a similar Policy which provides a lesser
death benefit and which can be purchased for the same premium.
57..5 Dividends on Policies. Dividends and other credits
payable on any Policy shall be applied to the purchase of
additional benefits under the Policy unless the Participant
requests that they be applied in reduction of premiums.
57..6 Trustee of Policy. Upon direction by the Plan
Administrator, the Insurance Trustee shall apply for and be the
owner of each Policy purchased under the terms of the Plan. Each
Policy must provide that proceeds will be payable to the Insurance
Trustee; however, the Insurance Trustee shall be required to pay
over all such proceeds to the Participant's Designated Beneficiary
in accordance with the distribution provisions of the Plan
including, without limitation, Section 10.3. Under no
circumstances shall the Trust retain any part of the proceeds. In
the event of any conflict between the terms of the Plan and the
terms of any Policy purchased hereunder, the Plan provisions shall
control. The Insurance Trustee shall be fully protected in acting
in accordance with written instructions of the Plan Administrator
and shall be under no liability for any loss of any kind which may
result by reason of any action taken or omitted by it in accordance
with any direction of the Plan Administrator, or by reason of
inaction in the absence of written directions from the Plan
Administrator.
57..7 Obligations with Respect to Policies. Except as may be
otherwise provided in any conditional or binding receipt issued by
an insurer, there shall be no coverage and no death benefit payable
under any Policy to be purchased from such insurer until such
Policy shall have been delivered and the premium therefor shall
have been paid. The Employer and the Insurance Trustee shall not
have any responsibility as to the effectiveness of any Policy
purchased from an insurer, nor shall either of them have any
liability or obligation to pay any amount to any Participant or his
beneficiary by reason of any failure or refusal by the insurer to
make such payment.
57..8 Distribution of Proceeds on Participant's Death. In
the event of the death of a Participant before the conversion
provided for in Section 14.9, there shall be payable to the
beneficiary named in any Policy on his life the benefits provided
by the terms of such Policy.
57..9 Conversion of Policies. Except as provided in Section
19.3, if any Policies of a Participant (other than retirement
income, endowment or annuity Policies) are held for his benefit at
the time distribution is to commence, the Policies may be converted
by the Insurance Trustee into cash, paid to the Trustee, credited
to the Employer Contribution Account of the Participant, invested
in accordance with the written instructions of the Employer (and if
no such instructions have been given or if such instructions are
not clear, invested in Investment Company Shares in the same
proportion as the most recent contributions to the Participant's
Accounts) and distributed pursuant to Article 9, subject to the
terms and conditions of Article 10. Retirement income, endowment
or annuity Policies will be distributed directly to the Participant
at the time distribution is to commence.
57..10 Conflict with Policies. In the event of any conflict
between the terms of the Plan and the terms of any Policies
hereunder, the Plan provisions shall control.
57..11 Insurance Loans to Owner-Employees. If an Owner-
Employee or Shareholder-Employee receives, either directly or
indirectly, any amount from an Insurer as a loan under a Policy,
the amount so received shall be considered a distribution under the
Plan. Any assignment or pledge (or agreement to assign or pledge)
by an Owner-Employee or Shareholder-Employee of any interest in the
Plan shall be considered a distribution of such interest.<PAGE>
ARTICLE 58. TOP-HEAVY
PLANS
58..1 Superseding Effect. For any Plan Year beginning after
December 31, 1983, in which Plan is determined to be a Top-Heavy
Plan under Section 15.2(b), the provisions of this Article 15 will
supersede any conflicting provisions in the Plan or the Plan
Agreement.
58..2 Definitions. For purposes of this Article 15, the
terms below shall be defined as follows:
(a) Key Employee means any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the determination period was: (1) an officer of the
Employer having annual compensation greater than 50% of the
amount in effect under Section 415(b)(1)(A) of the Code; (2)
an owner (or considered an owner under Section 318 of the
Code) of one of the ten largest interests in the Employer
having annual compensation exceeding the dollar limitation
under Section 415(c)(1)(A) of the Code; (3) a 5% owner of the
Employer; or (4) a 1% owner of the Employer having annual
compensation of more than $150,000. Annual compensation means
compensation satisfying the definition elected by the Employer
in item 4 of the Plan Agreement, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross
income under Section 125, Section 402(a)(8), Section 402(h) or
Section 403(b) of the Code. The determination period is the
Plan Year containing the Determination Date and the four
preceding Plan Years. The determination of who is a Key
Employee will be made in accordance with Section 416(i)(1) of
the Code and the Regulations thereunder.
(b) Top-Heavy: The Plan is Top-Heavy for any Plan Year
beginning after December 31, 1983, if any of the following
conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds
60% and this Plan is not part of any Required Aggregation
Group or Permissive Aggregation Group of plans.
(2) If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the group
of plans exceeds 60%.
(3) If this plan is part of a Required Aggregation
Group and part of a Permissive Aggregation Group of Plans
and the Top-Heavy Ratio for the Permissive Aggregation
group exceeds 60%.
(c) Top-Heavy Ratio means the following:
(1) If the Employer maintains one or more qualified
defined contribution plans (or any simplified employee
pension plan) and the Employer has not maintained any
qualified defined benefit plan which during the 5-year
period ending on the Determination Date(s) has or has had
accrued benefits, the Top-Heavy ratio for this Plan alone
or for the Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the
sum of the account balances of all Key Employees as of
the Determination Date(s) (including any part of any
account distributed in the 5-year period ending on the
Determination Date(s)), and the denominator of which is
the sum of all account balances (including any part of
any account balance distributed in the 5-year period
ending on the Determination Date(s)), both computed in
accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and
denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the
Determination Date, but which is required to be taken
into account on that date under Section 416 of the Code
and the regulations thereunder.
(2) If the Employer maintains one or more qualified
defined contribution plans (or any simplified employee
pension plan) and the Employer maintains or has
maintained one or more qualified defined benefit plans
which during the 5-year period ending on the
Determination Date(s) has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of account
balances under the aggregated qualified defined
contribution plan or plans for all Key Employees,
determined in accordance with (1) above, and the Present
Value of accrued benefits under the aggregated qualified
defined benefit plan or plans for all Key Employees as of
the Determination Date(s), and the denominator of which
is the sum of the account balances under the aggregated
qualified defined contributions plan or plans for all
Participants, determined in accordance with (1) above,
and the Present Value of accrued benefits under the
qualified defined benefit plan or plans for all
Participants as of the Determination Date(s), all
determined in accordance with Section 416 of the Code and
the regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the 5-year
period ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value of
account balances and the Present Value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-
month period ending on the Determination Date; except as
provided in Section 416 of the Code and the regulations
thereunder for the first and second Plan Years of a
defined benefit plan. The account balances and accrued
benefits of a Participant (A) who is not a Key Employee
but who was a Key Employee in a prior Plan Year, or (B)
who has not been credited with at least one Hour of
Service for the Employer during the 5-year period ending
on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers and transfers are taken
into account will be made in accordance with Section 416
of the Code and the regulations thereunder. Deductible
Employee contributions will not be taken into account for
purposes of computing the Top-Heavy Ratio. When
aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar
year.
The accrued benefit of a Participant other than a
Key Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under
all defined benefit plans maintained by the Employer, or
(b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section
411(b)(1)(C) of the Code.
(d) Permissive Aggregation Group means the Required
Aggregation Group of plans plus any other qualified plan or
plans (or simplified employee pension plan) of the Employer
which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements
of Sections 401(a)(4) and 410 of the Code.
(e) Required Aggregation Group means (i) each qualified
plan of the Employer in which at least one Key Employee
participates or participated at any time during the
determination period (regardless of whether the Plan has
terminated) and (ii) any other qualified plan of the Employer
which enables a plan described in (i) to meet the requirements
of Section 401(a)(4) or 410 of the Code.
(f) Determination Date means, for any Plan Year
subsequent to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of the Plan, the
Determination Date is the last day of that Plan Year.
(g) Valuation Date means the last day of the Plan Year.
(h) Present Value means present value based only on the
interest and mortality rates specified by the Employer in the
Plan Agreement.
58..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 first
$200,000 of the Key Employee's Earnings, allocated on behalf
of any Key Employee for that year. The minimum allocation is
determined without regard to any Social Security contribution.
This minimum allocation shall be made even though, under other
Plan provisions, the Participant would not otherwise be
entitled to receive an allocation, or would have received a
lesser allocation of the Employer's contributions and
Forfeitures for the Plan Year because of (1) the Participant's
failure to be credited with at least 1,000 Hours of Service,
or (2) the Participant's failure to make mandatory Employee
contributions to the Plan, or (3) the Participant's receiving
Earnings less than a stated amount. Neither Elective
Deferrals, Employer Matching Contributions nor Qualified
Matching Contributions for non-Key Employees shall be taken
into account for purposes of satisfying the requirement of
this Section 15.3(a).
(b) For purposes of computing the minimum allocation,
Earnings will mean Section 415 Compensation as defined in
Section 6.5(b) of the Plan.
(c) The provision in paragraph (a) above shall not apply
to any Participant who was not employed by the Employer on the
last day of the Plan Year.
(d) The provision in paragraph (a) above shall not apply
to any Participant to the extent he is covered under any other
plan or plans of the Employer, and the Employer has provided
in the Plan Agreement that the minimum allocation requirement
applicable to Top-Heavy Plans will be met in the other plan or
plans.
(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.
58..4 Adjustment of Fractions. For any Plan Year in which
the Plan is Top-Heavy, the Defined Benefit Fraction and the Defined
Contribution Fraction in Article 6 shall each be computed using
100% of the dollar limitations specified in Sections 415(b)(1)(A)
and 415(c)(1)(A) instead of 125%. The foregoing requirement shall
not apply if the Top-Heavy Ratio does not exceed 90% and the
Employer has elected in the Plan Agreement to provide increased
minimum allocations or benefits satisfying Section 416(h)(2) of the
Code.<PAGE>
ARTICLE 59. ADMINISTRATION OF THE PLAN
59..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.
59..2 Claims Procedure. Claims for participation in or
distribution under the Plan shall be made in writing to the Plan
Administrator, or an agent designated by the Plan Administrator
whose name shall have been communicated to all Participants and
other persons as required by law. If any claim so made is denied
in whole or in part, the claimant shall be furnished promptly by
the Plan Administrator with a written notice:
(a) setting forth the reason for the denial,
(b) making reference to pertinent Plan provisions,
(c) describing any additional material or information
from the claimant which is necessary and why, and
(d) explaining the claim review procedure set forth
herein.
Within 60 days after denial of any claim for participation or
distribution under the Plan, the claimant may request in writing a
review of the denial by the Plan Administrator. Any claimant
seeking review hereunder shall be entitled to examine all pertinent
documents and to submit issues and comments in writing. The Plan
Administrator shall render a decision on review hereunder;
provided, that if the Plan Administrator determines that a hearing
would be appropriate, its decision on review shall be rendered
within 120 days after receipt of the request for review. The
decision on review shall be in writing and shall state the reason
for the decision, referring to the Plan provisions upon which it is
based.
59..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.
59..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.
59..5 Prototype Plan. Putnam is the sponsor of the Putnam
Basic Plan Document, a prototype plan approved as to form by the
Internal Revenue Service. Provided that an Employer's adoption of
the Plan is made known to and accepted by Putnam in accordance with
the Plan Agreement, Putnam will inform the Employer of amendments
to the prototype plan and provide such other services in connection
with the Plan as may be agreed between Putnam and the Employer.
Putnam may impose for its services as sponsor of the prototype plan
such fees as it may establish from time to time in a fee schedule
addressed to the Employer. Such fees shall, unless paid by the
Employer, be paid from the Trust Fund, and shall in that case be
charged pro rata against the Accounts of all Participants. The
Trustee is expressly authorized to cause Investment Products to be
sold or redeemed for the purpose of paying such fees.<PAGE>
ARTICLE 60. TRUSTEE AND
INSURANCE TRUSTEE
60..1 Powers and Duties of the Trustee. The Trustee shall
have the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
(a) To invest all or a part of the Trust Fund in
Investment Products in accordance with the investment
instructions delivered by the Employer pursuant to Section
13.3, without restriction to investments authorized for
fiduciaries, including without limitation any common,
collective or commingled trust fund maintained by the Trustee
(or any other such fund, acceptable to Putnam and the Trustee,
that qualifies for exemption from federal income tax pursuant
to Revenue Ruling 81-100). Any investment in, and any terms
and conditions of, any such common, collective or commingled
trust fund available only to employee trusts which meet the
requirements of the Code, or corresponding provisions of
subsequent income tax laws of the United States, shall
constitute an integral part of this Agreement;
(b) If Putnam and the Trustee have consented thereto in
writing, to invest without limit in stock of the Employer or
any affiliated company;
(c) To dispose of all or part of the investments,
securities or other property which may from time to time or at
any time constitute the Trust Fund in accordance with the
written directions furnished by the Employer for the
investment of Participants' separate Accounts or the payment
of benefits or expenses of the Plan, and to make, execute and
deliver to the purchasers thereof good and sufficient deeds of
conveyance therefore, and all assignments, transfers and other
legal instruments, either necessary or convenient for passing
the title and ownership thereto, free and discharged of all
trusts and without liability on the part of such purchasers to
see to the application of the purchase money;
(d) To hold cash uninvested to the extent necessary to
pay benefits or expenses of the Plan;
(e) To follow the directions of an investment manager
appointed pursuant to Section 13.7;
(f) To cause any investment of the Trust Fund to be
registered in the name of the Trustee or the name of its
nominee or nominees or to retain such investment unregistered
or in a form permitting transfer by delivery; provided that
the books and records of the Trustee shall at all times show
that all such investments are part of the Trust Fund;
(g) Upon written direction of or through the Employer,
to vote in person or by proxy (in accordance with Section 13.6
and, in the case of stock of the Employer, at the direction of
the Employer or Participants) with respect to all securities
that are part of the Trust Fund;
(h) To consult and employ any suitable agent to act on
behalf of the Trustee and to contract for legal, accounting,
clerical and other services deemed necessary by the Trustee to
manage and administer the Trust Fund according to the terms of
the Plan;
(i) Upon the written direction of the Employer, to make
loans from the Trust Fund to Participants in amounts and on
terms approved by the Plan Administrator in accordance with
the provisions of the Plan; provided that the Employer shall
have the sole responsibility for computing and collecting all
loan repayments required to be made under the Plan; and
(j) To pay from the Trust Fund all taxes imposed or
levied with respect to the Trust Fund or any part thereof
under existing or future laws, and to contest the validity or
amount of any tax assessment, claim or demand respecting the
Trust Fund or any part thereof.
60..2 Limitation of Responsibilities. Except as may
otherwise be required under applicable law, neither the Trustee nor
the Insurance Trustee nor any of their respective agents shall have
any responsibility for:
(a) Determining the correctness of the amount of any
contribution for the sole collection or payment of
contributions, which shall be the sole responsibility of the
Employer;
(b) Loss or breach caused by any Participant's exercise
of control over his Accounts, which shall be the sole
responsibility of the Participant;
(c) Loss or breach caused by the Employer's exercise of
control over Accounts pursuant to Section 13.3, which shall be
the sole responsibility of the Employer;
(d) Sums paid to an insurer or the validity of any
Policy or the accuracy of information provided by an insurer,
which shall be the sole responsibility of the insurer;
(e) Performance of any other responsibilities not
specifically allocated to them under the Plan.
60..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.
60..4 Reliance on Employer. The Trustee and its agents (and
the Insurance Trustee, if any) shall rely upon any decision of the
Employer, or of any person authorized by the Employer, purporting
to be made pursuant to the terms of the Plan, and upon any
information or statements submitted by the Employer or such person
(including those relating to the entitlement of any Participant to
benefits under the Plan), and shall not inquire as to the basis of
any such decision or information or statements, and shall incur no
obligation or liability for any action taken or omitted in reliance
thereon. The Trustee and its agents shall be entitled to rely on
the latest written instructions received from the Employer as to
the person or persons authorized to act for the Employer hereunder,
and to sign on behalf of the Employer any directions or
instructions, until receipt from the Employer of written notice
that such authority has been revoked.
60..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.
60..6 Advice of Counsel. The Trustee and the Insurance
Trustee may each consult with legal counsel (who may, but need not
be, counsel for the Employer) concerning any questions which may
arise with respect to their respective rights and duties under the
Plan, and the opinion of such counsel shall be full and complete
protection to the extent permitted by applicable law in the respect
of any action taken or omitted by the Trustee or the Insurance
Trustee, as the case may be, hereunder in accordance with the
opinion of such counsel.
60..7 Accounts. The Trustee shall keep full accounts of all
receipts and disbursements which pertain to investments in
Investment Products, and the Trustee and the Insurance Trustee
shall each keep accounts of such other transactions as it is
required to perform hereunder. Within a reasonable time following
the close of each Plan Year, or upon its removal or resignation or
upon termination of the Trust and at such other times as may be
appropriate, each shall render to the Employer and any other
persons as may be required by law an account of its administration
of the Plan and Trust during the period since the last previous
such accounting, including such information as may be required by
law. The written approval of any account by the Employer and all
other persons to whom an account is rendered shall be final and
binding as to all matters and transactions stated or shown therein,
upon the Employer and Participants and all persons who then are or
thereafter become interested in the Trust. The failure of the
Employer or any other person to whom an account is rendered to
notify the party rendering the account within 60 days after the
receipt of any account of his or its objection to the account shall
be the equivalent of written approval. If the Employer or any
other person to whom an account is rendered files any objections
within such 60-day period with respect to any matters or
transactions stated or shown in the account and the Employer or
such other person and the party rendering the account cannot
amicably settle the questions raised by such objections, the party
rendering the account and the Employer or such person shall have
the right to have such questions settled by judicial proceedings,
although the Employer or such other person to whom an account is
rendered shall have, to the extent permitted by applicable law,
only 60 days from filing of written objection to the account to
commence legal proceedings. Nothing herein contained shall be
construed so as to deprive the Trustee or the Insurance Trustee of
the right to have a judicial settlement of its accounts. In any
proceeding for a judicial settlements of any account or for
instructions, the only necessary parties shall be the Trustee, the
Insurance Trustee, the Employer and persons to whom an account is
required by law to be rendered.
60..8 Access to Records. The Trustee and the Insurance
Trustee shall give access to their respective records with respect
to the Plan at reasonable times and on reasonable notice to any
person required by law to have access to such records.
60..9 Successors. Any corporation into which the Trustee may
merge or with which it may consolidate or any corporation resulting
from any such merger or consolidation shall be the successor of the
Trustee without the execution or filing of any additional
instrument or the performance of any further act.
60..10 Persons Dealing with Trustee or Insurance Trustee. No
person dealing with the Trustee or the Insurance Trustee shall be
bound to see to the application of any money or property paid or
delivered to such party or to inquire into the validity or
propriety of any transactions.
60..11 Resignation and Removal; Procedure. The Trustee or
the Insurance Trustee may resign at any time by giving 60 days'
written notice to the Employer and to Putnam. The Employer may
remove the Trustee or the Insurance Trustee at any time by giving
60 days' written notice to the party removed and to Putnam. In any
case of resignation or removal hereunder, the period of notice may
be reduced to such shorter period as is satisfactory to the
Trustee, the Insurance Trustee and the Employer. Notwithstanding
anything to the contrary herein, any resignation hereunder shall
take effect at the time notice thereof is given if the Employer may
no longer participate in the prototype Plan and is deemed to have
an individually designed plan at the time notice is given.
60..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.
60..13 Action of Insurance Trustee Following Resignation or
Removal. When the Insurance Trustee's resignation or removal
becomes effective, the Insurance Trustee shall perform all acts
necessary to transfer ownership of the Policies to its successor.
If no successor has accepted appointment, the Policies shall be
held and owned by the Employer acting as Insurance Trustee until a
successor is appointed.
60..14 Effect of Resignation or Removal. Resignation or
removal of the Trustee or the Insurance Trustee shall not terminate
the Trust. In the event of any vacancy in the position of Trustee
(or, in a Plan having amounts invested in Policies, the position of
Insurance Trustee), whether the vacancy occurs because of the
resignation or removal of the Trustee (or the Insurance Trustee)
the Employer shall appoint a successor to fill the vacant position.
If the Employer does not appoint such a successor who accepts
appointment by the later of 60 days after notice of resignation or
removal is given or by such later date as the Trustee or the
Insurance Trustee, as the case may be, and Employer may agree in
writing to postpone the effective date of the Trustee's or the
Insurance Trustee's resignation or removal, the Trustee or
Insurance Trustee may apply to a court of competent jurisdiction
for such appointment or cause the Trust to be terminated, effective
as of the date specified by the Trustee or Insurance Trustee, as
the case may be, in writing delivered to the Employer. Each
successor Trustee so appointed and accepting a trusteeship
hereunder shall have all of the rights and powers and all of the
duties and obligations of the original Trustee or Insurance
Trustee, as the case may be, under the provisions hereof, but shall
have no responsibility for acts or omissions before he becomes a
Trustee or Insurance Trustee.
60..15 Fiscal Year of Trust. The fiscal year of the Trust
will coincide with the Plan Year.
60..16 Limitation of Liability. Except as may otherwise be
required by law and other provisions of the Plan, no fiduciary of
the Plan, within the meaning of Section 3(21) of ERISA, shall be
liable for any losses incurred with respect to the management of
the Plan, nor shall he or it be liable for any acts or omissions
except those caused by his or its own negligence or bad faith in
failing to carry out his or its duties under the terms contained in
the Plan.
60..17 Indemnification. Subject to the limitations of
applicable law, the Employer agrees to indemnify and hold harmless
(i) all fiduciaries, within the meaning of ERISA Sections 3(21) and
404, and (ii) Putnam, for all liability occasioned by any act of
such party or omission to act, in good faith and without gross
negligence, and for all expenses incurred by any such party in
determining its duty or liability under ERISA with respect to any
question under the Plan.<PAGE>
ARTICLE 61. AMENDMENT
61..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.
61..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.<PAGE>
ARTICLE 62. TERMINATION OF THE PLAN AND TRUST
62..1 General. The Employer has established the Plan and the
Trust with the bona fide intention and expectation that
contributions will be continued indefinitely, but the Employer
shall have no obligation or liability whatsoever to maintain the
Plan for any given length of time and may discontinue contributions
under the Plan or terminate the Plan at any time by written notice
delivered to the Trustee and the Insurance Trustee, without any
liability whatsoever for any such discontinuance or termination.
62..2 Events of Termination. The Plan will terminate upon
the happening of any of the following events:
(a) Death of the Employer, if a sole proprietor, or
dissolution or termination of the Employer, unless within 60
days thereafter provision is made by the successor to the
business with respect to which the Plan was established for
the continuation of the Plan, and such continuation is
approved by the Trustee;
(b) Merger, consolidation or reorganization of the
Employer into one or more corporations or organizations,
unless the surviving corporations or organizations adopt the
Plan by an instrument in writing delivered to the Trustee
within 60 days after such a merger, consolidation and
reorganization;
(c) Sale of all or substantially all of the assets of
the Employer, unless the purchaser adopts the Plan by an
instrument in writing delivered to the Trustee within 60 days
after the sale;
(d) The institution of bankruptcy proceedings by or
against the Employer, or a general assignment by the Employer
to or for the benefit of its creditors; or
(e) Delivery of notice as provided in Section 19.1.
62..3 Effect of Termination. Notwithstanding any other
provisions of this Plan, other than Section 19.4, upon termination
of the Plan or complete discontinuance of contributions thereunder,
each Participant's Accounts will become fully vested and
nonforfeitable, and upon partial termination of the Plan, the
Accounts of each Participant affected by the partial termination
will become fully vested and nonforfeitable. The Employer shall
notify the Trustee and the Insurance Trustee in writing of such
termination, partial termination or complete discontinuance of
contributions. In the event of the complete termination of the
Plan or discontinuance of contributions, the Trustee will, after
payment of all expenses of the Trust Fund, make distribution of the
Trust asses to the Participants or other persons entitled thereto,
in such form as the Employer may direct pursuant to Article 10 or,
in the absence of such direction, in a single payment in cash or in
kind. Upon completion of such distributions under this Article,
the Trust will terminate, the Trustee and the Insurance Trustee
will be relieved from their obligations under the Trust, and no
Participant or other person will have any further claim thereunder.
62..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.<PAGE>
ARTICLE 63.
TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS
63..1 General. Notwithstanding any other provision hereof,
subject to the approval of the Trustee there may be transferred to
the Trustee all or any of the assets held (whether by a trustee,
custodian or otherwise) in respect of any other plan which
satisfies the applicable requirements of Section 401(a) of the Code
and which is maintained for the benefit of any Employee (provided,
however, that the Employee is not a member of a class of Employees
excluded from eligibility to participate in the Plan) except that
insurance policies held in respect of such other plan shall be
transferred to the Insurance Trustee as trustee if the Employer so
determines. Any such assets so transferred shall be accompanied by
written instructions from the Employer naming the persons for whose
benefit such assets have been transferred and showing separately
the respective contributions made by the Employer and by the
Participants and the current value of the assets attributable
thereto. Notwithstanding the foregoing, if a Participant's
employment classification changes under Section 3.5 such that he
begins participation in another plan of the Employer, his Account,
if any, shall, upon the Administrator's direction, be transferred
to the plan in which he has become eligible to participate, if such
plan permits receipt of such Account.
63..2 Amounts Transferred. The Employer shall credit any
assets transferred pursuant to Section 20.1 or Section 3.5 to the
appropriate Accounts of the persons for whose benefit such assets
have been transferred. Any amounts credited as contributions
previously made by an employer or by such persons under such other
plan shall be treated as contributions previously made under the
Plan by the Employer or by such persons, as the case may be.
63..3 Merger or Consolidation. The Plan shall not be merged
or consolidated with any other plan, nor shall any assets or
liabilities of the Trust Fund be transferred to any other plan,
unless each Participant would receive a benefit immediately after
the transaction, if the Plan then terminated, which is equal to or
greater than the benefit he would have been entitled to receive
immediately before the transaction if the Plan had then terminated.<PAGE>
ARTICLE 64.
MISCELLANEOUS
64..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.
64..2 No Employment Rights. Neither the establishment of the
Plan and the Trust, nor any amendment thereof, nor the creation of
any fund or account, nor the purchase of Policies, nor the payment
of any benefits shall be construed as giving to any Participant or
any other person any legal or equitable right against the Employer,
the Trustee, or the Insurance Trustee, except as provided herein or
by ERISA; and in no event shall the terms of employment or service
of any Participant be modified or in any way be affected hereby.
64..3 Distributions Exclusively From Plan. Participants and
Beneficiaries shall look solely to the assets held in the Trust and
any Policies purchased pursuant to the Plan for the payment of any
benefits under the Plan.
64..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.
64..5 Provision of Information. The Employer, Trustee and
Insurance Trustee shall furnish to each other such information
relating to the Plan and Trust as may be required under the Code or
ERISA and any regulations issued or forms adopted by the Treasury
Department or the Labor Department or otherwise thereunder.
64..6 No Prohibited Transactions. The Employer, Trustee, and
Insurance Trustee shall, to the extent of their respective powers
and authority under the Plan, prevent the Plan from engaging in any
transaction known by that person to constitute a transaction
prohibited by Section 4975 of the Code and any rules or regulations
with respect thereto.
64..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
64..8 Gender. Whenever used herein, a pronoun in the
masculine gender includes the feminine gender unless the context
clearly indicates otherwise.
<PAGE>
PUTNAM BASIC PLAN DOCUMENT #05
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Authorized Leave of Absence . . . . . . . . . . . . . . . . . . 2
2.4 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 CODA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Date of Employment. . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Disabled. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Earned Income. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Eligibility Period . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 Employer Contribution Account. . . . . . . . . . . . . . . . . 5
2.17 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.18 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Hour of Service. . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 Insurance Trustee. . . . . . . . . . . . . . . . . . . . . . . 7
2.21 Investment Company . . . . . . . . . . . . . . . . . . . . . . 7
2.22 Investment Company Shares. . . . . . . . . . . . . . . . . . . 7
2.23 Investment Products. . . . . . . . . . . . . . . . . . . . . . 7
2.24 Leased Employee. . . . . . . . . . . . . . . . . . . . . . . . 7
2.25 One-Year Eligibility Break . . . . . . . . . . . . . . . . . . 8
2.26 One-Year Vesting Break . . . . . . . . . . . . . . . . . . . . 8
2.27 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . . . 8
2.28 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.29 Participant Contribution Account. . . . . . . . . . . . . . . 8
2.30 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.31 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . 9
2.32 Plan Agreement . . . . . . . . . . . . . . . . . . . . . . . . 9
2.33 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.34 Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.35 Putnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.36 Qualified Participant. . . . . . . . . . . . . . . . . . . . . 9
2.37 Recordkeeper . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.38 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.39 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . 10
2.40 Self-Employed Individual . . . . . . . . . . . . . . . . . . . 10
2.41 Shareholder-Employee . . . . . . . . . . . . . . . . . . . . . 10
2.42 Trust and Trust Fund . . . . . . . . . . . . . . . . . . . . . 10
2.43 Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.44 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . 10
2.45 Year of Service. . . . . . . . . . . . . . . . . . . . . . . . 10
2.46 Deferral Agreement . . . . . . . . . . . . . . . . . . . . . . 11
2.47 Elective Deferral. . . . . . . . . . . . . . . . . . . . . . . 11
2.48 Elective Deferral Account. . . . . . . . . . . . . . . . . . . 11
2.49 Employer Matching Contribution . . . . . . . . . . . . . . . . 11
2.50 Employer Matching Account. . . . . . . . . . . . . . . . . . . 11
2.51 Highly Compensated Employee. . . . . . . . . . . . . . . . . . 11
2.52 Non-Highly Compensated Employee. . . . . . . . . . . . . . . . 13
2.53 Qualified Matching Contribution. . . . . . . . . . . . . . . . 13
2.54 Qualified Matching Account . . . . . . . . . . . . . . . . . . 13
2.55 Qualified Nonelective Contribution . . . . . . . . . . . . . . 13
2.56 Qualified Nonelective Contribution Account . . . . . . . . . . 13
ARTICLE 3. PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Initial Participation . . . . . . . . . . . . . . . . . . . . . 14
3.2 Special Participation Rule. . . . . . . . . . . . . . . . . . . 14
3.3 Resumed Participation . . . . . . . . . . . . . . . . . . . . . 15
3.4 Benefits for Owner-Employees. . . . . . . . . . . . . . . . . . 15
ARTICLE 4. CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Payment and Crediting of Employer Contributions . . . . . . . . 16
4.2 Amount and Allocation of Annual Contribution. . . . . . . . . . 17
4.3 Rollover Contributions. . . . . . . . . . . . . . . . . . . . . 18
4.4 No Deductible Employee Contributions. . . . . . . . . . . . . . 18
ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER
SECTION 401(k) (CODA) . . . . . . . . . . . . . . . . . . . . 19
5.1 Applicability; Allocations. . . . . . . . . . . . . . . . . . . 19
5.2 CODA Participation. . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Annual Limit on Elective Deferrals. . . . . . . . . . . . . . . 19
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 Average Contribution Percentage Test Limit and
Aggregate Limit . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10 Distribution of Excess Aggregate Contributions . . . . . . . . 28
5.11 Restriction on Distributions . . . . . . . . . . . . . . . . . 29
5.12 Hardship Distributions . . . . . . . . . . . . . . . . . . . . 30
5.13 Special Effective Dates. . . . . . . . . . . . . . . . . . . . 32
ARTICLE 6. LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . . . . 33
6.1 No Additional Plan. . . . . . . . . . . . . . . . . . . . . . . 33
6.2 Additional Master or Prototype Plan . . . . . . . . . . . . . . 34
6.3 Additional Non-Master or Non-Prototype Plan . . . . . . . . . . 35
6.4 Additional Defined Benefit Plan . . . . . . . . . . . . . . . . 35
6.5 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS . . . . . . . . . . 41
7.1 Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Other Termination of Employment . . . . . . . . . . . . . . . . 42
ARTICLE 8. VESTING. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 Vested Balance. . . . . . . . . . . . . . . . . . . . . . . . . 43
8.2 Vesting of Accounts of Returned Former Employees. . . . . . . . 43
8.3 Forfeiture of Non-Vested Amounts. . . . . . . . . . . . . . . . 44
8.4 Special Rule in the Event of a Withdrawal. . . . . . . . . . . 45
8.5 Vesting Election. . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 9. PAYMENT OF BENEFITS. . . . . . . . . . . . . . . . . . . . . 47
9.1 Distribution of Accounts. . . . . . . . . . . . . . . . . . . . 47
9.2 Restriction on Immediate Distributions. . . . . . . . . . . . . 47
9.3 Optional Forms of Distribution. . . . . . . . . . . . . . . . . 49
9.4 Distribution Procedure. . . . . . . . . . . . . . . . . . . . . 49
9.5 Lost Distributee. . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS . . . . . . . . . . 51
10.1 Applicability. . . . . . . . . . . . . . . . . . . . . . . . . 51
10.2 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . 52
10.3 Qualified Preretirement Survivor Annuity . . . . . . . . . . . 52
10.4 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.5 Notice Requirements. . . . . . . . . . . . . . . . . . . . . . 54
10.6 Transitional Rules . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS . . . . . . . . . . . . . 58
11.1 General Rules. . . . . . . . . . . . . . . . . . . . . . . . . 58
11.2 Required Beginning Date. . . . . . . . . . . . . . . . . . . . 58
11.3 Limits on Distribution Periods . . . . . . . . . . . . . . . . 59
11.4 Determination of Amount to be Distributed Each
Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.5 Death Distribution Provisions. . . . . . . . . . . . . . . . . 61
11.6 Transitional Rule. . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 12. WITHDRAWALS AND LOANS . . . . . . . . . . . . . . . . . . . 65
12.1 Withdrawals from Participant Contribution
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.2 Withdrawals on Account of Hardship . . . . . . . . . . . . . . 65
12.3 Withdrawals After Reaching Age 59 one and half . . . . . . . . 65
12.4 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.5 Procedure; Amount Available. . . . . . . . . . . . . . . . . . 68
ARTICLE 13. TRUST FUND AND INVESTMENTS. . . . . . . . . . . . . . . . . 69
13.1 Establishment of Trust Fund. . . . . . . . . . . . . . . . . . 69
13.2 Management of Trust Fund . . . . . . . . . . . . . . . . . . . 69
13.3 Investment Instructions. . . . . . . . . . . . . . . . . . . . 70
13.4 Valuation of the Trust Fund. . . . . . . . . . . . . . . . . . 71
13.5 Distributions on Investment Company Shares . . . . . . . . . . 72
13.6 Registration and Voting of Investment Company
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
13.7 Investment Manager . . . . . . . . . . . . . . . . . . . . . . 72
13.8 Employer Stock . . . . . . . . . . . . . . . . . . . . . . . . 73
<PAGE>
ARTICLE 14. INSURANCE POLICIES. . . . . . . . . . . . . . . . . . . . . 75
14.1 Purchase of Insurance Products . . . . . . . . . . . . . . . . 75
14.2 Limitation on Premiums . . . . . . . . . . . . . . . . . . . . 75
14.3 Policy Options . . . . . . . . . . . . . . . . . . . . . . . . 75
14.4 Insurability . . . . . . . . . . . . . . . . . . . . . . . . . 75
14.5 Dividends on Policies. . . . . . . . . . . . . . . . . . . . . 75
14.6 Trustee of Policy. . . . . . . . . . . . . . . . . . . . . . . 76
14.7 Obligations with Respect to Policies . . . . . . . . . . . . . 76
14.8 Distribution of Proceeds on Participant's Death. . . . . . . . 76
14.9 Conversion of Policies . . . . . . . . . . . . . . . . . . . . 76
14.10 Conflict with Policies. . . . . . . . . . . . . . . . . . . . 76
14.11 Insurance Loans to Owner-Employees. . . . . . . . . . . . . . 76
ARTICLE 15. TOP-HEAVY PLANS . . . . . . . . . . . . . . . . . . . . . . 78
15.1 Superseding Effect . . . . . . . . . . . . . . . . . . . . . . 78
15.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 78
15.3 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . . 81
15.4 Adjustment of Fractions. . . . . . . . . . . . . . . . . . . . 82
ARTICLE 16. ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . 83
16.1 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . 83
16.2 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . 83
16.3 Employer's Responsibilities. . . . . . . . . . . . . . . . . . 84
16.4 Recordkeeper . . . . . . . . . . . . . . . . . . . . . . . . . 84
16.5 Prototype Plan . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE 17. TRUSTEE AND INSURANCE TRUSTEE . . . . . . . . . . . . . . . 86
17.1 Powers and Duties of the Trustee . . . . . . . . . . . . . . . 86
17.2 Limitation of Responsibilities . . . . . . . . . . . . . . . . 87
17.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . 88
17.4 Reliance on Employer . . . . . . . . . . . . . . . . . . . . . 88
17.5 Action Without Instructions. . . . . . . . . . . . . . . . . . 88
17.6 Advice of Counsel. . . . . . . . . . . . . . . . . . . . . . . 89
17.7 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
17.8 Access to Records. . . . . . . . . . . . . . . . . . . . . . . 90
17.9 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 90
17.10 Persons Dealing with Trustee or Insurance
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
17.11 Resignation and Removal; Procedure. . . . . . . . . . . . . . 90
17.12 Action of Trustee Following Resignation or
Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
17.13 Action of Insurance Trustee Following
Resignation or Removal. . . . . . . . . . . . . . . . . . . . 90
17.14 Effect of Resignation or Removal. . . . . . . . . . . . . . . 90
17.15 Fiscal Year of Trust. . . . . . . . . . . . . . . . . . . . . 91
17.16 Limitation of Liability . . . . . . . . . . . . . . . . . . . 91
17.17 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE 18. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . 92
18.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
18.2 Delegation of Amendment Power. . . . . . . . . . . . . . . . . 93
ARTICLE 19. TERMINATION OF THE PLAN AND TRUST . . . . . . . . . . . . . 94
19.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
19.2 Events of Termination. . . . . . . . . . . . . . . . . . . . . 94
19.3 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 94
19.4 Approval of Plan . . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE 20. TRANSFERS FROM OTHER QUALIFIED PLANS; MERGERS . . . . . . . 96
20.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
20.2 Amounts Transferred. . . . . . . . . . . . . . . . . . . . . . 96
20.3 Merger or Consolidation. . . . . . . . . . . . . . . . . . . . 96
ARTICLE 21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 97
21.1 Notice of Plan . . . . . . . . . . . . . . . . . . . . . . . . 97
21.2 No Employment Rights . . . . . . . . . . . . . . . . . . . . . 97
21.3 Distributions Exclusively From Plan. . . . . . . . . . . . . . 97
21.4 No Alienation. . . . . . . . . . . . . . . . . . . . . . . . . 97
21.5 Provision of Information . . . . . . . . . . . . . . . . . . . 97
21.6 No Prohibited Transactions . . . . . . . . . . . . . . . . . . 97
21.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 97
21.8 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
<PAGE>
PUTNAM BASIC PLAN DOCUMENT #05
ARTICLE 65. INTRODUCTION
By executing the Plan Agreement, the Employer has established
a retirement plan (the "Plan") according to the terms and
conditions of the Plan Agreement and this Putnam Basic Plan
Document #05, for the purpose of providing a retirement fund for
the benefit of Participants and Beneficiaries. The Plan is a
profit sharing plan for purposes of section 401(a)(27) of the Code.<PAGE>
ARTICLE 66.
DEFINITIONS
The terms defined in Sections 2.1 through 2.45 appear
generally throughout the document. Sections 2.46 through 2.56 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.
66..1 Account means any of, and Accounts means all of, a
Participant's Employer Contribution Account, Participant
Contribution Account, Rollover Account, and if the Plan contains a
CODA, the accounts maintained for the Participant pursuant to
Article 5.
66..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."
66..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.
66..4 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.
66..5 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.
66..6 Code means the Internal Revenue Code of 1986, as
amended.
66..7 Compensation means all of an Employee's compensation
determined in accordance with the definition elected by the
Employer in the Plan Agreement. For purposes of that election,
"Form W-2 earnings" means "wages" as defined in section 3401(a) of
the Code in connection with income tax withholding at the source,
and all other compensation paid to the Employee by the Employer in
the course of its trade or business, for which the Employer is
required to furnish the Employee with a written statement under
sections 6041(d), 6051(a)(3) and 6052 of the Code, determined
without regard to exclusions based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in section 3401(a)(2) of the Code).
Compensation shall include only amounts actually paid to the
Employee during the Plan Year, except that if the Employer so
elects in the Plan Agreement, 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(a)(8), 402(h) or 403(b) of the Code. (For a self-employed
person, the relevant term is Earned Income, as defined in Section
2.10.)
66..8 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.
66..9 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.
66..10 Earned Income means a Self-Employed individual's net
earnings from self-employment in the trade or business with respect
to which the Plan is established, excluding items not included in
gross income and the deductions allocable to such items, and
reduced by (i) contributions by the Employer to qualified plans, to
the extent deductible under section 404 of the Code, and (ii) the
deduction allowed to the taxpayer under section 164(f) of the Code
for taxable years beginning after December 31, 1989.
66..11 Earnings, for determining all benefits provided under
the Plan for all Plan Years beginning after December 31, 1988,
means the first $200,000 (as adjusted by the Secretary of the
Treasury at the same time and in the same manner as under section
415(d) of the Code, except that the dollar increase effective on
any January 1 is effective for all Plan Years beginning in the
calendar year in which that January 1 occurs, and the first such
dollar increase is effective on January 1, 1990) of the sum of the
Compensation and the Earned Income received by an Employee during
a Plan Year. To calculate an allocation to a Participant's Account
for any Plan Year shorter than 12 months, the dollar limit
described in the preceding sentence 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
descendant 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 adjusted
$200,000 limitation 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.
66..12 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.
66..13 Eligibility Period means 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; provided that if the Employer has elected
in the Plan Agreement to establish a number less than 1,000 as the
requisite for crediting an Eligibility Period, 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. If the Employer so elects in the Plan
Agreement, an Employee's most recent Date of Employment for
purposes of this Section 2.13 shall be the first date on which he
performed services for a business acquired by the Employer.
66..14 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.
66..15 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.
66..16 Employer Contribution Account means an account
maintained on the books of the Plan on behalf of a Participant, in
which are recorded the amounts allocated for his benefit from
contributions by the Employer (other than contributions pursuant to
Article 5), Forfeitures by former Participants (if the Plan
provides for reallocation of Forfeitures), amounts reapplied under
Section 6.1(d), and the income, expenses, gains and losses incurred
thereon.
66..17 ERISA means the Employee Retirement Income Security
Act of 1974, as amended.
66..18 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.
66..19 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 yo payments of back pay, to the extent that
such pay is agreed to or awarded for a period of time
described in paragraph (b) during which the Employee did not
perform or would not have performed any duties. These hours
shall be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or
payment is made.
(d) Each hour during an Authorized Leave of Absence.
Such hours shall be credited at the rate of a customary full
work week for an Employee.
(e) Solely for purposes of determining whether a 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.
66..20 Insurance Trustee means the person named in the Plan
Agreement as Insurance Trustee, and any successor thereto.
66..21 Investment Company means an open-end registered
investment company for which Putnam Financial Services, Inc., or
its affiliate acts as principal underwriter, or for which The
Putnam Management Company, Inc., or its affiliate serves as an
investment adviser; provided that its prospectus offers its shares
under the Plan.
66..22 Investment Company Shares means shares issued by an
Investment Company.
66..23 Investment Products means any of the investment
products specified by the Employer in accordance with Section 13.2,
from the group of those products sponsored, underwritten or managed
by Putnam as shall be made available by Putnam under the Plan, and
such other products as shall be expressly agreed to in writing by
Putnam for availability under the Plan. The term "Investment
Products" does not include any Policy selected pursuant to Article
14.
66..24 Leased Employee means any person (other than an
Employee of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with section 414(n)(6) of
the Code) on a substantially full time basis for a period of at
least one year, and such services are of a type historically
performed by Employees in the business field of the recipient
Employer. The compensation of a Leased Employee for purposes of
the Plan means the Compensation (as defined in Section 2.7) of the
Leased Employee attributable to services performed for the
recipient Employer. Contributions or benefits provided to a leased
Employee by the leasing organization which are attributable to
services performed for the recipient Employer shall be treated as
provided by the recipient Employer. Provided that leased Employees
do not constitute more than 20% of the recipient's nonhighly
compensate 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(a)(8),
section 402(h) or section 403(b) of the Code), (2) immediate
participation, and (3) full and immediate vesting.
66..25 One-Year Eligibility Break means an 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 an Eligibility Period, that number shall be substituted
for 500.
66..26 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.
66..27 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.
66..28 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.
66..29 Participant Contribution Account means an account
maintained on the books of the Plan, in which are recorded
nondeductible contributions by a Participant pursuant to Section
4.2(d), and any income, expenses, gains or losses incurred thereon.
66..30 Plan means the form of defined contribution retirement
plan and trust agreement adopted by the Employer, consisting of the
Plan Agreement and the Putnam Basic Plan Document #05 as set forth
herein, together with any and all amendments and supplements
thereto.
66..31 Plan Administrator means the Employer or its appointee
pursuant to Section 16.1.
66..32 Plan Agreement means the separate agreement entered
into between the Employer and the Trustee (and the Insurance
Trustee, if any) and accepted by Putnam, under which the Employer
adopts the Plan and selects among its optional provisions.
66..33 Plan Year means the period of 12 consecutive months
specified by the employer in the Plan Agreement; provided that if
the Effective Date is not the first day of the Employer's taxable
year, the initial Plan Year shall begin on the Effective Date and
end on the last day of the Employer's taxable year.
66..34 Policy means an ordinary life insurance, term
insurance, retirement income or endowment policy or an individual
or group annuity contract issued by a life insurance company in
connection with the Plan, or an interest therein. An ordinary life
insurance policy within the meaning of this definition provides
non-decreasing death benefits and non-increasing premiums.
66..35 Putnam means Putnam Financial Services, Inc., or a
company affiliated with it which Putnam Financial Services, Inc.
has designated as its agent to perform specified actions or
procedures in connection with the prototype Plan.
66..36 Qualified Participant means any Participant who is an
active Employee on the last day of the Plan Year in question or who
is credited with more than 500 Hours of Service during the Plan
Year in question or whose Retirement or death occurred during the
Plan Year in question. If the Plan is not adopted to replace an
existing plan, this Section 2.36 is effective on the Effective
Date. If the Plan replaces an existing plan, this Section 2.36 is
effective on the first day of the first Plan Year that begins after
December 31, 1988, or if later, on the Effective Date, and the
provision of the existing plan that this Section 2.36 replaces
shall continue to apply until that time.
66..37 Recordkeeper means the person or entity designated by
the Employer in the Plan Agreement to perform the duties described
in Section 16.4, and any successor thereto. If Putnam is the
Recordkeeper, the terms and conditions of its service will be as
specified in a service agreement between the Employer and Putnam.
66..38 Retirement means ceasing to be an Employee in
accordance with Section 7.1.
66..39 Rollover Account means an account established for an
Employee who makes a rollover contribution to the Plan pursuant to
Section 4.3.
66..40 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.
66..41 Shareholder-Employee means any officer or Employee of
an electing small business corporation, within the meaning of
section 1362 of the Code, who on any day during a taxable year of
the Employer owns (or is considered as owning under section
318(a)(1) of the Code) more than 5% of the outstanding stock of the
Employer. The Plan administrator shall be responsible for
identifying Shareholder-Employees to the Recordkeeper.
66..42 Trust and Trust Fund mean the trust fund established
under Section 13.1.
66..43 Trustee means the person, or the entity with trustee
powers, named in the Plan Agreement as trustee, and any successor
thereto.
66..44 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.
66..45 Year of Service means a Plan Year or an 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):
66..46 Deferral Agreement means an Employee's agreement to
make one or more Elective Deferrals in accordance with Section 5.2.
66..47 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.
66..48 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.
66..49 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.
66..50 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.
66..51 Highly Compensated Employee means any highly
compensated active Employee or highly compensated former Employee,
as defined in this Section 2.51. For this purpose, 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.
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 (i) 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 (ii) 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 Compensate
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 2.51, family members
include the spouse, lineal ascendants and descendants of the
Employee or former 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 mployees
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.
66..52 Non-Highly Compensated Employee means an Employee who
is not a Highly Compensated Employee.
66..53 Qualified Matching Contribution means a contribution
made by the Employer that: (i) is allocated in proportion to a
Participant's Elective Deferrals, (ii) is fully vested at all times
and (iii) is distributable only in accordance with Section 5.11.
66..54 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.
66..55 Qualified Nonelective Contribution means a
contribution (other than an Employer Matching Contribution or
Qualified Matching Contribution) made by the Employer, that: (i)
a Participant may not elect to receive in cash until it is
distributed from the Plan; (ii) is fully vested at all times; and
(iii) is distributable only in accordance with Section 5.11.
66..56 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.<PAGE>
ARTICLE 67.
PARTICIPATION
67..1 Initial Participation. An Employee shall begin
participation in the Plan as of the entry date specified in the
Plan Agreement, or as of the Effective Date, whichever is later;
provided, however, that:
(a) if the Plan is adopted as an amendment of a
predecessor plan of the Employer, every Employee who was
participating under the predecessor plan when it was so
amended shall become a Participant in the Plan as of the
Effective Date, whether or not he has satisfied the age and
service requirements specified in the Plan Agreement; and
(b) Unless the Employer specifies otherwise in the Plan
Agreement, any individual who is (i) a nonresident alien
receiving no earned income from an Affiliated Employer which
constitutes income from sources within the United States, or
(ii) included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
representatives (excluding from the term "Employee
representatives" any organization of which more than half of
the members are Employees who are owners, officers, or
executives of an Affiliated Employer), if retirement benefits
were the subject of good faith bargaining and no more than 2%
of the Employees covered by the collective bargaining
agreement are professionals as defined in Section 1.410(b)-9
of the Income Tax Regulations, shall not participate in the
Plan until the later of the date on which he ceases to be
described in clause (i) or (ii), whichever is applicable, or
the entry date specified by the Employer in the Plan
Agreement; and
(c) If the Plan is not adopted as an amendment of a
predecessor plan of the Employer, all Employees on the
Effective Date shall begin participation on the Effective
Date, if the Employer so elects in the Plan Agreement.
(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.
67..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.
67..3 Resumed Participation. A former Employee who incurs a
One-Year Eligibility Break after having become a Participant shall
participate in the Plan as of the date on which he again becomes an
Employee, if (i) his Employer Contribution Account or Employer
Matching Account had become partially or fully vested before he
incurred a One-Year Vesting Break, or (ii) he incurred fewer than
five consecutive One-Year Eligibility Breaks. In any other case,
when he again becomes an Employee he shall be treated as a new
Employee under Section 3.1.
67..4 Benefits for Owner-Employees. If the Plan provides
contributions or benefits for one or more Owner-Employees who
control both the trade or business with respect to which the Plan
is established and one or more other trades or businesses, the Plan
and plans established with respect to such other trades or
businesses must, when looked at as a single plan, satisfy sections
401(a) and (d) of the Code with respect to the Employees of this
and all such other trades or businesses. If the Plan provides
contributions or benefits for one or more Owner Employees who
control one or more other trades or businesses, the Employees of
each such other trade or business must be included in a plan which
satisfies sections 401(a) and (d) of the Code and which provides
contributions and benefits not less favorable than those provided
for such Owner-Employees under the Plan. If an individual is
covered as an Owner-Employee under the plans of two or more trades
or businesses which he does not control and such individual
controls a trade or business, then the contributions or benefits of
the Employees under the plan of the trade or business which he does
control must be as favorable as those provided for him under the
most favorable plan of the trade or business which he does not
control. For purposes of this Section 3.4, an Owner-Employee, or
two or more Owner-Employees, shall be considered to control a trade
or business if such Owner-Employee, or such two or more Owner-
Employees together:
(a) own the entire interest in an unincorporated trade
or business, or
(b) in the case of a partnership, own more than 50% of
either the capital interest or the profits interest in such
partnership.
For purposes of the preceding sentence, an Owner-Employee or
two or more Owner-Employees shall be treated as owning any interest
in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee or such two or more Owner--
Employees are considered to control within the meaning of the
preceding sentence.<PAGE>
ARTICLE 68. CONTRIBUTIONS
68..1 Payment and Crediting of Employer Contributions. The
Employer shall pay to the order of the Trustee the aggregate
contribution to the Trust Fund (other than the premium payments on
any Policy) for each Plan Year. Each contribution shall be
accompanied by written instructions from the Employer, in the
manner prescribed by Putnam. Neither the Trustee nor Putnam shall
be under any duty to inquire into the correctness of the amount or
the timing of any contribution, or to collect any amount if the
Employer fails to make a contribution as provided in the Plan.
(a) Responsibility for Premium Payments. Contributions
to be applied to the payment of the premiums on any Policy
shall be paid by the Employer directly to the insurer in cash.
In determining the amount of any premium due under any Policy
with respect to any Participant, the Employer and the
Insurance Trustee may rely conclusively upon information
furnished by the provider of the Policy. For purposes of
Section 4.2 and Article 5, all Employer contributions used to
pay premiums on Policies shall be treated as contributions
made to the appropriate Participant's Employer Contribution
Account. If the employer omits any premium payment or makes
any mistake concerning a premium payment, neither the Employer
nor the Insurance Trustee shall have any liability in excess
of the premium to be paid.
(b) Time for Payment. The aggregate of all
contributions with respect to a Plan Year shall be transferred
to the Trustee or the insurer no later than the due date
(including extensions) for filing the Employer's federal
income tax return for that Plan Year.
(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, 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 od the Plan, for any Plan Year in which it is
necessary to restore any portion of a Participant's Account
pursuant to Section 8.3(b) or 9.5, to the extent that the
amount of Forfeitures available is insufficient to accomplish
such restoration, the Employer shall contribute the amount
necessary to eliminate the insufficiency, regardless of
whether the contribution is currently deductible by the
Employer under section 404 of the Code. Forfeitures shall be
considered available for allocation pursuant to Sections 4.2
and 5.8 in a Plan Year only after all necessary restoration of
Accounts has been accomplished.
68..2 Amount and Allocation of Annual Contribution. The
Employer will contribute for each Plan Year an amount determined in
accordance with the formula specified by the Employer in the Plan
Agreement, less any amounts reapplied for the Plan Year under
Section 6.1(d), not to exceed the amount deductible under section
404 of the Code. If the Employer so elects in the Plan Agreement,
the amount of Forfeitures occurring in a Plan Year shall be applied
to reduce the Employer's contribution by a like amount, and such
Forfeitures shall be treated as a portion of the Employer
contribution for purposes of paragraphs (a) and (b).
(a) Allocation of Contributions: General Rule. As of
the last day of each Plan Year, the Employer's contribution
(and any amounts reapplied under Section 6.1(d)) for the Plan
Year shall be allocated among the Employer Contribution
Accounts of Qualified Participants in proportion to their
Earnings, unless the Employer elects in the Plan Agreement to
allocate contributions in a uniform dollar amount to the
Account of each Qualified Participant. This rule does not
apply to allocations in a CODA.
(b) Per Capita Allocation. An Employer may elect in the
Plan Agreement to allocate Employer Contributions and any
amounts reapplied under Section 6.1(d) (but not allocations in
a CODA) in a uniform dollar amount to the Account of each
Qualified Participant.
(c) Allocation of Forfeitures. Forfeitures shall be
allocated among the Employer Contribution Accounts of all
Qualified Participants in accordance with paragraph (a) or
(b), whichever applies to Employer Contributions.
(d) Participant Contributions. The Plan will accept no
nondeductible Participant contributions for any Plan Year
beginning after the Plan Year in which the Employer adopts
this Plan. Nevertheless, a Participant Contribution Account
shall be maintained in any Plan that accepted nondeductible
Participant contributions for any Plan Year, and such
contributions, together with any matching contributions (as
defined in section 401(m)(4) of the Code), shall be limited so
as to meet the nondiscrimination test of section 401(m) of the
Code, as set forth in Section 5.9 of the Plan. All
Participant Contribution Accounts will be fully vested at all
times.
68..3 Rollover Contributions. An Employee in an eligible
class may contribute at any time cash or other property (which is
not a collectible within the meaning of section 408(m) of the Code)
acceptable to the Trustee representing qualified rollover amounts
under sections 402, 403, or 408 of the Code. Amounts so
contributed shall be credited to a Rollover Account for the
Participant.
68..4 No Deductible Employee Contributions. The Plan
Administrator shall not accept deductible employee contributions.<PAGE>
ARTICLE 69.
CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k)
(CODA)
69..1 Applicability; Allocations. This Article 5 applies to
any plan for which the Employer has elected in the Plan Agreement
to include a CODA. The Employer may specify in the Plan Agreement
that contributions will be made to the Plan only under the CODA, or
that contributions may be made under Section 4.2 as well as under
the CODA. Allocations to Participants' Accounts of contributions
made pursuant to this Article 5 shall be made as soon as
administratively feasible after their receipt by the Trustee, but
in any case no later than as of the last day of the Plan Year for
which the contributions were made.
69..2 CODA Participation. Each Employee who has met the
eligibility requirements of Article 3 may make Elective Deferrals
to the Plan by completing and returning to the Plan Administrator
a Deferral Agreement form which provides that the Participant's
cash compensation from the Employer will be reduced by the amount
indicated in the Deferral Agreement, and that the Employer will
contribute an equivalent amount to the Trust on behalf of the
Participant. The following rules will govern Elective Deferrals:
(a) Subject to the limits specified in the Plan
Agreement and set forth in Section 5.3, a Deferral Agreement
may apply to any amount or percentage of either or both of the
Earnings payable to a Participant in each regular payroll
period of the Employer, or one or more bonuses payable to a
Participant from time to time as specified by the Employer.
(b) In accordance with such reasonable rules as the Plan
Administrator shall specify, a Deferral Agreement will become
effective as soon as is administratively feasible after the
Deferral Agreement is returned to the Plan Administrator, and
will remain effective until it is modified or terminated. No
Deferral Agreement may become effective retroactively.
(c) A Participant may modify his Deferral Agreement by
completing and returning to the Plan Administrator a new
Deferral Agreement form as of any of the dates specified in
the Plan Agreement, and any such modification will become
effective as described in paragraph (b).
(d) A Participant may terminate his Deferral Agreement
at any time upon advance written notice to the Plan
Administrator, and any such Termination will become effective
as described in paragraph (b).
69..3 Annual Limit on Elective Deferrals. During any taxable
year of a Participant, his Elective Deferrals under the Plan and
any other qualified plan of an Affiliated Employer shall not exceed
the dollar limit contained in section 402(g) of the Code in effect
at the beginning of the taxable year. With respect to any taxable
year, a Participant's Elective Deferrals for purposes of this
Section 5.3 include all Employer contributions made on his behalf
pursuant to an election to defer under any qualified CODA as
described in section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement (SARSEP) as described in
section 402(h)(1)(B) of the Code, any eligible deferred
compensation plan under section 457 of the Code, any plan described
under section 501(c)(18) of the Code, and any Employer
contributions made on behalf of the Participant for the purchase of
an annuity contract under section 403(b) of the Code pursuant to a
salary reduction agreement. The amount of Elective Deferrals of a
Participant who receives a hardship distribution pursuant to
Section 5.14 shall be reduced, for the taxable year next following
the distribution, by the amount of Elective Deferrals made in the
taxable year of the hardship distribution.
69..4 Distribution of Certain Elective Deferrals. "Excess
Elective Deferrals" means those Elective Deferrals described in
Section 5.3 that are includible in a Participant's gross income
under section 402(g) of the Code, to the extent that the
Participant's aggregate elective deferrals for a taxable year
exceed the dollar limitation under that Code section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, whether or not they are distributed under this Section 5.4.
A Participant may designate to the Plan any Excess Elective
Deferrals made during his taxable year by notifying the Employer on
or before the following March 15 of the amount of the Excess
Elective Deferrals to be so designated. A Participant who has
Excess Elective Deferrals for a taxable year, taking into account
only his Elective Deferrals under the Plan and any other plans of
the Affiliated Employers, shall be deemed to have designated the
entire amount of such Excess Elective Deferrals.
Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss allocable
thereto, shall be distributed no later than April 15 to any
Participant to whose Account Excess Elective Deferrals were so
designated or deemed designated for the preceding year. The income
or loss allocable to Excess Elective Deferrals is the income or
loss allocable to the Participant's Elective Deferral Account for
the taxable year multiplied by a fraction, the numerator of which
is the Participant's Excess Elective Deferrals for the year and the
denominator of which is the Participant's Account balance
attributable to Elective Deferrals without regard to any income or
loss occurring during the year.
To the extent that the return to a Participant of his Elective
Deferrals would reduce an Excess Amount (as defined in Section
6.5(f)), such Excess Deferrals shall be distributed to the
Participant in accordance with Article 6.
69..5 Satisfaction of ADP and ACP Tests. In each Plan Year,
the Plan must satisfy the ADP test described in Section 5.6 and the
ACP test described in Section 5.9. The Employer may cause the Plan
to satisfy the ADP or ACP test or both tests for a Plan Year by any
of the following methods or by any combination of them:
(a) By the distribution of Excess Contributions in
accordance with Section 5.7, or the distribution of Excess
Aggregate Contributions in accordance with Section 5.10, or
both; or
(b) If the Employer has so elected in the Plan
Agreement, by making Qualified Nonelective Contributions or
Qualified Matching Contributions or both, in accordance with
the Plan Agreement and this Section 5.5.
69..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 Year, the Participant's Earnings for that
portion of the Plan Year during which he was eligible to
participate in the Plan). Employer contributions on behalf of
any Participant shall include: (i) his Elective Deferrals,
including Excess Elective Deferrals of Highly Compensated
Employees, but excluding (A) Excess Elective Deferrals of Non-
Highly Compensated Employees that arise solely from Elective
Deferrals made under the Plan or another plan maintained by an
Affiliated Employer, and (B) Elective Deferrals that are taken
into account in the Average Contribution Percentage test
described in Section 5.11 (provided the ADP test is satisfied
both with and without exclusion of these Elective Deferrals),
and excluding Elective Deferrals returned to a Participant to
reduce an Excess Amount as defined in Section 6.5(f); and (ii)
if the Employer has elected to make Qualified Nonelective
Contributions, such amount of Qualified Nonelective
Contributions, if any, as shall be necessary to enable the
Plan to satisfy the ADP test; and (iii) if the Employer has
elected to make Qualified Matching Contributions, such amount
of Qualified Matching Contributions, if any, as shall be
necessary to enable the Plan to satisfy the ADP test. For
purposes of computing Actual Deferral Percentages, an Employee
who would be a Participant but for his failure to make
Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
(d) In the event that the Plan satisfies the
requirements of sections 401(k), 401(a)(4), or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with the Plan, then
this Section 5.6 shall be applied by determining the ADP of
Employees as if all such plans were a single plan. For Plan
Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy section 401(k) of the Code only
if they have the same Plan Year.
(e) The ADP for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
these are treated as Elective Deferrals for purposes of the
ADP test) allocated to his Accounts under two or more CODAS
described in section 401(k) of the Code that are maintained by
the Affiliated Employers shall be determined as if such
Elective Deferrals (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single CODA. If a Highly
Compensated Employee participates in two or more CODAs that
have different Plan Years, all CODAs ending with or within the
same calendar year shall be treated as a single CODA, except
that CODAs to which mandatory disaggregation applies in
accordance with regulations issued under section 401(k) of the
Code shall be treated as separate CODAS.
(f) For purposes of determining the ADP of a Participant
who is a 5% owner or one of the 10 most highly-paid Highly
Compensated Employees, the Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both, if these are treated as Elective Deferrals for
purposes of the ADP test) and the Compensation of such a
Participant shall include the Elective Deferrals (and, if
applicable, Qualified Nonelective contributions and Qualified
Matching Contributions, or both) and Compensation for the Plan
Year of his Family Members (as defined in section 414(q)(6) of
the Code). Family Members of such Highly Compensated
Employees shall be disregarded as separate employees in
determining the ADP both for Participants who are Non-Highly
Compensated Employees and for Participants who are Highly
Compensated Employees.
(g) For purposes of the ADP test, Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the 12-month
period immediately following the Plan Year to which those
contributions relate.
(h) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in satisfying the test.
(i) The determination and treatment of the ADP amounts
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
69..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 one and half 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.
69..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
that is returned to a Participant because it represents an Excess
Elective Deferral, an Excess 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,
the Matching Contribution shall be forfeited, notwithstanding any
other provision of the Plan.
(a) Employer Matching Contributions. Employer Matching
Contributions will be allocated among the Employer Matching
Accounts of Participants in proportion to their Elective
Deferrals. Employer Matching Accounts shall become vested
according to the vesting schedule specified in the Plan
Agreement, but regardless of that schedule shall be full
vested upon the Participant's Retirement (or, if earlier, his
fulfillment of the requirements for early retirement, if any,
or attainment of the normal retirement age specified in the
Plan Agreement), his death during employment with an
Affiliated Employer, and in accordance with Section 19.3.
Forfeitures of Employer Matching Contributions, other than
Excess Aggregate Contributions, shall be made in accordance
with Section 8.3. Forfeitures of Employer Matching Accounts
for a Plan Year shall be applied to reduce the total Employer
Matching Contribution for the Plan Year, or allocated among
the Employer Matching Accounts of Participants in addition to
the Employer Matching Contribution for the Plan Year, as
elected by the Employer in the Plan Agreement.
(b) Qualified Matching Contributions. Qualified
Matching Contributions will be allocated among the Qualified
Matching Contribution Accounts of Participants as specified by
the Employer in the Plan Agreement.
69..9 Average Contribution Percentage Test Limit and
Aggregate Limit. The Average Contribution Percentage (hereinafter
"ACP") for Participants who are Highly Compensated Employees for
each Plan Year and the ACP for Participants who are Non-Highly
Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(a) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by two (2), provided that the ACP
for Participants who are Highly Compensated Employees does not
exceed the ACP for Participants who are Non-Highly Compensated
Employees by more than two percentage points.
The following rules shall apply to the computation of the ACP:
(c) Average Contribution Percentage means the average of
the Contribution Percentages of the Eligible Participants in
a group.
(d) Contribution Percentage means the ratio (expressed
as a percentage) of a Participant's Contribution Percentage
Amounts to the Participant's Earnings for the Plan Year (or,
provided that the Employer applies this method to all
Employees for a Plan Year, the Participant's Earnings for that
portion of the Plan Year during which he was eligible to
participate in the Plan).
(e) Contribution Percentage Amounts means the sum of the
Participant Contributions, Employer Matching Contributions,
and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test) made under the Plan
on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall include Forfeitures of
Excess Aggregate Contributions or Employer Matching
Contributions allocated to the Participant's Account, taken
into account in the year in which the allocation is made. If
the Employer has elected in the Plan Agreement to make
Qualified Nonelective Contributions, such amount of Qualified
Nonelective Contributions, if any, as shall be necessary to
enable the Plan to satisfy the ACP test shall be in the
Contribution Percentage Amounts. Elective Deferrals shall
also be included in the Contribution Percentage Amounts to the
extent, if any, needed to enable the Plan to satisfy the ACP
test, so long as the ADP test is met before the Elective
Deferrals are used in the ACP test, and continues to be met
following the exclusion of those Elective Deferrals that are
used to meet the ACP test.
(f) Eligible Participant means any Employee who is
eligible to make an Elective Deferral, if Elective Deferrals
are taken into account in the calculation of the Contribution
Percentage, or to receive an Employer Matching Contribution
(or a Forfeiture thereof) or a Qualified Matching
Contribution.
(g) Aggregate Limit means the sum of (i) 125% of the
greater of the ADP of the Non-Highly Compensated Employees for
the Plan Year, or the ACP of Non-Highly Compensated Employees
under the Plan subject to Code section 401(m) for the Plan
Year beginning with or within the Plan Year of the CODA, and
(ii) the lesser of 200% of, or two plus, the lesser of the ADP
or ACP. "Lesser" is substituted for "greater" in clause (i)
of the preceding sentence, and "greater" is substituted for
"lesser" after the phrase "two plus the" in clause (ii) of the
preceding sentence, if that formulation will result in a
larger Aggregate Limit.
(h) If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test
maintained by an Affiliated Employer, and the sum of the ADP
and ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the ACP
of those Highly Compensated Employees who also participate in
a CODA will be reduced (beginning with the Highly Compensated
Employee whose ACP is the highest) so that the Aggregate Limit
is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amount is reduced shall be
treated as an Excess Aggregate Contribution. In determining
the Aggregate Limit, the ADP and ACP of Highly Compensated
Employees are determined after any corrections required to
meet the ADP and ACP tests. The Aggregate Limit will be
considered satisfied if both the ADP and ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the
ADP and ACP of the Non-Highly Compensated Employees.
(i) For purposes of this section, the Contribution
Percentage for any Participant who is a Highly Compensated
Employee and who is eligible to have Contribution Percentage
Amounts allocated to his account under two or more plans
described in section 401(a) of the Code, or CODAs described in
section 401(k) of the Code, that are maintained by an
Affiliated Employer, shall be determined as if the total of
such Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or more
CODAs that have different plan years, all CODAs ending with or
within the same calendar year shall be treated as a single
CODA, except that CODAs to which mandatory disaggregation
applies in accordance with regulations issued under section
401(k) of the Code shall be treated as separate CODAs.
(j) In the event that the Plan satisfies the
requirements of sections 401(m), 401(a)(4) or 410(b) of the
Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with the Plan, then
this section 5.9 shall be applied by determining the
Contribution Percentage of Employees as if all such plans were
a single plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy section
401(m) of the Code only if they have the same Plan Year.
(k) For purposes of determining the Contribution
Percentage of a Participant who is a 5% owner or one of the 10
most highly-paid Highly Compensated Employers, the
Contribution Percentage Amounts and Compensation of the
Participant shall include the Contribution Percentage Amounts
and Compensation for the Plan Year of Family Members (as
defined in section 414(q)(6) of the Code). Family members of
such highly Compensated Employees shall be disregarded as
separate employees in determining the Contribution Percentage
both for Participants who are Non-Highly Compensated Employees
and for Participants who are Highly Compensated Employees.
(l) For purposes of the ACP test, Matching Contributions
and Qualified Nonelective Contributions will be considered
made for a Plan Year if made no later than the end of the
12-month period beginning on the day after the close of the
Plan Year.
(m) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in the ACP test.
(n) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
69..10 Distribution of Excess Aggregate Contributions.
Notwithstanding any other provision of the Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited if forfeitable, or if not forfeitable,
distributed no later than the last day of each Plan Year to
Participants to whose accounts such Excess Aggregate Contributions
were allocated for the preceding Plan Year. The income or loss
allocable to Excess Aggregate Contributions is the income or loss
allocable to the Participant's Employer Matching 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 and Elective Deferral
Account for the Plan Year, multiplied by a fraction, the numerator
of which is the Participant's Excess Aggregate Contributions for
the year and the denominator of which is the Participant's account
balance(s) attributable to Contribution Percentage Amounts without
regard to any income or loss occurring during the Plan Year.
Excess Aggregate Contributions shall be allocated to a Participant
who is subject to the family member aggregation rules of section
414(q)(6) of the Code in the proportion that the Participant's
Employer Matching Contributions (and other amounts treated as his
Employer Matching Contributions) bear to the combined Employer
Matching Contributions (and other amounts treated as Employer
Matching Contributions) of all of the Participants aggregated to
determine its family members' combined ACP. If excess amounts
attributable to Excess Aggregate Contributions are distributed more
than 2 one and half months after the last day of the Plan Year in which such
excess amounts arose, an excise tax equal to 10% of the excess
amounts will be imposed on the Employer maintaining the Plan.
Excess Aggregate Contributions shall be treated as Annual Additions
under the Plan.
Forfeitures of Excess Aggregate Contributions that are
Employer Matching Contributions shall either be reallocated to the
accounts of Non-Highly Compensated Employees or applied to reduce
Employer Contributions, as elected by the Employer in the Plan
Agreement. Other forfeitures of Excess Aggregate Contributions
shall be applied to reduce Employer contributions.
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.
69..11 Restriction on Distributions. No distribution may be
made from a Participant's Elective Deferral Account, Qualified
Nonelective Account or Qualified Matching Account until the
occurrence of one of the following events:
(a) The Participant's Disability, death or termination
of employment with the Affiliated Employers;
(b) Termination of the Plan without the establishment of
another defined contribution plan other than an employee stock
ownership plan as defined in section 4975(e) or section 409 of
the Code, or a simplified employee pension plan as defined in
section 408(k) of the Code;
(c) The Participant's attainment of age 59 one and half (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) he Employer's interest in a subsidiary (within the
meaning of section 409(d)(3) of the Code), if the Employer
continues to maintain the Plan after the disposition, but only
with respect to Employees who continue employment with such
subsidiary.
In addition, if the Employer has elected in the Plan Agreement
to permit such distributions, a distribution may be made from a
Participant's Elective Deferral Account in the event of his
financial hardship as described in Section 5.12. 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.
69..12 Hardship Distributions. If the Employer has so
elected in the Plan Agreement, upon a Participant's written request
the Employer may permit a distribution from his Elective Deferral
Account and from his Employer Matching Account. The terms and
conditions of Section 12.2 and the special vesting rule contained
in Section 8.4 shall apply to hardship distributions from an
Employer Contribution Account or an Employer Matching Account. The
further terms of this Section 5.12 shall apply to hardship
distributions from an Elective Deferral Account. No hardship
distribution shall be made from a Qualified Nonelective Account or
a Qualified Matching Account.
(a) The maximum amount that may be distributed on
account of hardship from an Elective Deferral Account after
December 31, 1988, shall not exceed the sum of (1) the amount
credited to the Account as of December 31, 1988, and (2) the
aggregate amount of the Elective Deferrals made by the
Participant after December 31, 1988, and before the hardship
distribution.
(b) Hardship distributions shall be permitted only on
account of the following financial needs:
(1) Expenses for medical care described in section
213(d) of the Code for the Participant, his spouse,
children and dependents, or necessary for these persons
to obtain such care;
(2) Purchase of the principal residence of the
Participant (excluding regular mortgage payments);
(3) Payment of tuition and related educational fees
for the upcoming 12 months of post-secondary education
for the Participant, his spouse, children or dependents;
or
(4) Payments necessary to prevent the Participant's
eviction from, or the foreclosure of a mortgage on, his
principal residence.
(c) Hardship distributions shall be subject to the
spousal consent requirements contained in sections 411(a)(11)
and 117 of the Code, to the same extent that those
requirements apply to a Participant pursuant to Section 10.1.
(d) A hardship distribution will be made to a
Participant only upon satisfaction of the following
conditions:
(1) The Participant has obtained all nontaxable
loans and all distributions other than hardship
distributions available to him from all plans maintained
by the Affiliated Employers;
(2) The hardship distribution does not exceed the
amount of the Participant's financial need as described
in paragraph (b) plus any amounts necessary to pay
federal, state and local income taxes and penalties
reasonably anticipated to result from the distribution;
(3) All plans maintained by the Affiliated
Employers provide that the Participant's Elective
Deferrals and voluntary after-tax contributions will be
suspended for a period of 12 months following his receipt
of a hardship distribution; and
(4) All plans maintained by the Affiliated
Employers provide that the amount of Elective Deferrals
that the Participant may make in his taxable year
immediately following the year of a hardship distribution
will not exceed the applicable limit under section 402(g)
of the Code for the taxable year, reduced by the amount
of Elective Deferrals made by the Participant in the
taxable year of the hardship distribution.
69..13 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 5.9 are effective as of the first day of the
first Plan Year beginning after December 31, 1986.<PAGE>
ARTICLE 70. LIMITATIONS ON
ALLOCATIONS
70..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(1)(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 which may be credited
to the Participant's accounts for any Limitation Year will not
exceed the lesser of the Maximum Annual Additions or any other
limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated
to the Participant's Account would cause the Annual Additions
for the Limitation Year to exceed the Maximum Annual
Additions, the amount contributed or allocated will be reduced
so that the Annual Additions for the Limitation Year will
equal the Maximum Annual Additions.
(b) Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant on
the basis of a reasonable estimation of the Participant's
Section 415 Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the
end of the Limitation Year, the Maximum Annual Additions for
the Limitation Year will be determined on the basis of the
Participant's actual Section 415 Compensation for the
Limitation Year.
(d) If pursuant to paragraph (c), or as a result of the
reallocation of Forfeitures, or as a result of a reasonable
error in determining the amount of Elective Deferrals that may
be made by a Participant, the Annual Additions exceed the
Maximum Annual Additions, the Excess Amount will be disposed
of as follows:
(1) Any nondeductible voluntary 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.
70..2 Additional Master or Prototype Plan. If in addition to
this Plan a Participant is covered under another qualified Master
or Prototype defined contribution plan or a welfare benefit fund
(as defined in section 419(e) of the Code), or an individual
medical account (as defined in section 415(1)(2) of the Code) which
provides an Annual Addition as defined in Section 6.5(a),
maintained by an Affiliated Employer during any Limitation Year:
(a) The Annual Additions which may be credited to a
Participant's Accounts under this Plan for any such Limitation
Year will not exceed the Maximum Annual Additions reduced by
the Annual Additions credited to a Participant's accounts
under the other plans and welfare benefit funds for the same
Limitation Year. If the Annual Additions with respect to the
Participant under other defined contribution plans and welfare
benefit funds maintained by an Affiliated Employer are less
than the Maximum Annual Additions, and the Employer
contribution that would otherwise be contributed or allocated
to the Participant's Accounts under this Plan would cause the
Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be
reduced so that the Annual Additions under all such plans and
funds for the Plan Year will equal the Maximum Annual
Additions. If the Annual Additions with respect to the
Participant under such other defined contribution plans and
welfare benefit funds in the aggregate are equal to or greater
than the Maximum Annual Additions, no amount will be
contributed or allocated to the Participant's Accounts under
this Plan for the Limitation Year.
(b) Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant in
the manner described in Section 6.1(b).
(c) As soon as is administratively feasible after the
end of the Plan Year, the Maximum Annual Additions for the
Plan Year will be determined on the basis of the Participant's
actual Section 415 Compensation for the Plan Year.
(d) If, pursuant to Section 6.2(c) or as a result of the
allocation of Forfeitures, or of a reasonable error in
determining the amount of Elective Deferrals that may be made
by him, a Participant's Annual Additions under this Plan and
such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist
of the Annual Additions last allocated under any qualified
Master or Prototype defined contribution plan, except that
Annual Additions to any welfare benefit fund or individual
medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of X and Y, where (X) is the
total Excess Amount allocated as of such date, and (Y) is the
ratio of: (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified Master or Prototype defined
contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in Section 6.1(d).
70..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.
70..4 Additional Defined Benefit Plan. If an Affiliated
Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction will not exceed 1.0 in any Limitation
Year. The Annual Additions which may be credited to the
Participant's Accounts under this Plan for any Limitation Year will
be limited in accordance with the Plan Agreement.
70..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, after-tax Employee 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
person, his earned income; and for any other Participant, his
"Form W-2 earnings" as defined in Section 2.7, if the Employer
has elected in item 4 of the Plan Agreement a definition of
Compensation based on "Form W-2 earnings"; or if the Employer
has not so elected, his wages, salaries, and fees for
professional services and other amounts received for personal
services actually rendered in the course of employment with
the Employer maintaining the Plan (including, but not limited,
to commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements or
other expense allowances under a nonaccountable plan as
described in Income Tax Regulations Section 1.62-2(c)), and
excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not includible in the
Participant's gross income for the taxable year in which
contributed, or Employer contributions under a Simplified
Employee pension plan to the extent such contributions
are deductible by the Employee, or any distributions from
a plan of deferred compensations;
(2) Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or
property) held by the Participant either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified
stock option; and
(4) Other amounts which received special tax
benefits, or contributions made by the Employer (whether
or not under a salary reduction agreement) towards the
purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions are
actually excludable from the gross income of the
Participant).
For purposes of applying the limitations of this Article 6,
Section 415 Compensation for a Limitation Year is the Section
415 Compensation actually paid or made available during such
Limitation Year.
(c) Defined Benefit Fraction means a fraction, the
numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether
or not terminated) maintained by the Affiliated Employers, and
the denominator of which is the lesser of 125% of the dollar
limitation in effect for the Limitation Year under sections
415(b) and (d) of the Code, or 140% of the Participant's
Highest Average Compensation including any adjustments under
section 415(b) of the Code. Notwithstanding the foregoing, if
the Participant was a Participant as of the first day of the
first Limitation Year beginning after December 31, 1986, in
one or more defined benefit plans maintained by an Affiliated
Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125% of the
sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1987, disregarding any change
in the terms and conditions of the Plan after May 5, 1986.
The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of section 415 of the Code for all Limitation
Years beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation means $30,000
or if greater, one-fourth of the defined benefit dollar
limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(e) Defined Contribution Fraction means a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's accounts under all the defined contribution
plans (whether or not terminated) maintained by Affiliated
Employers for the current and all prior Limitation Years
including the Annual Additions attributable to the
Participant's nondeductible Employee contributions to all
definEd benefit plans, whether or not terminated, maintained
by the Affiliated Employers, and the Annual Additions
attributable to all welfare benefit funds, as defined in
section 419(e) of the Code, and individual medical accounts,
as defined in section 415(l)(2) of the Code), and the
denominator of which is the sum of the maximum Annual
Additions for the current and all prior Limitation Years of
service with the Affiliated Employers (regardless of whether
a defined contribution plan was maintained by any Affiliated
Employer). The Maximum Annual Additions in any Plan Year is
the lesser of 125% of the dollar limitation determined under
sections 415(b) and (d) of the Code in effect under section
415(c)(1)(A) of the Code, or 35% of the Participant's Section
415 Compensation for such year. If the Employee was a
Participant as of the end of the first day of the first
Limitation Year beginning after December 31, 1986 in one or
more defined contribution plans maintained by an Affiliated
Employer which were in existence on May 6, 1986, the numerator
of this fraction will be adjusted if the sum of this fraction
and the Defined Benefit Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount
equal to product of the excess of the sum of the factions over
1.0, multiplied by the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes
in the terms and conditions of the Plan after May 5, 1986, but
using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The
Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat 100% of
nondeductible Employee contributions as Annual Additions.
(f) Excess Amount means, with respect to any
Participant, the amount by which Annual Additions exceed the
Maximum Annual Additions.
(g) Highest Average Compensation means the average
compensation for the three consecutive Years of Service with
the Employer that produces the highest average. A Year of
Service with the Employer is the period of 12 consecutive
months specified as the Limitation Year in the Plan Agreement.
(h) Limitation Year means the period of 12 consecutive
months specified in the Plan Agreement. All qualified plans
maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different period of 12
consecutive months, the new Limitation Year must begin on a
date within the Limitation Year in which the amendment is
made.
(i) Master or Prototype plan means a plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
(j) Maximum Annual Additions, which is the maximum
annual addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year,
means an amount not exceeding the lesser of (a) the Defined
Contribution Dollar Limitation or (b) 25% of the Participant's
Section 415 Compensation for the Limitation Year. The
compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of
section 401(h) or section 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition under section
415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different period
of 12 consecutive months, the Maximum Annual Additions will
not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
number of months in the
short Limitation Year
12
(k) Projected Annual Benefit means the annual retirement
benefit (adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than a
straight life annuity or Qualified Joint and Survivor Annuity)
to which the Participant would be entitled under the terms of
the plan assuming:
(1) the Participant will continue employment until
normal retirement age under the Plan (or current age, if
later), and
(2) the Participant's Section 415 Compensation for
the current Limitation Year and all other relevant
factors used to determine benefits under the plan will
remain constant for all future Limitation Years.<PAGE>
ARTICLE 71.
ELIGIBILITY FOR DISTRIBUTION OF BENEFITS
71..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.
71..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.
71..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.<PAGE>
ARTICLE 72. VESTING
72..1 Vested Balance. The vested balance of a Participant's
Accounts will be determined as follows:
(a) General Rule. A Participant's Participant
Contribution Account and Rollover Account shall be fully
vested at all times. The vested portion of his Employer
Contribution Account shall be equal to the percentage that
corresponds, in the vesting schedule specified in the Plan
Agreement, to the number of Years of Service credited to the
Participant as of the end of the Year of Service in which his
employment terminates. The vesting schedule specified in the
Plan Agreement applies to all benefits within the meaning of
section 411(a)(7) of the Code, except those attributable to
Employee contributions.
(b) Special Rules for CODA. In a Plan that includes a
CODA, a Participant's Elective Deferral Account, Qualified
Nonelective Account, and Qualified Matching Account shall be
fully vested at all times. The vested portion of his Employer
Matching Account shall be equal to the percentage that
corresponds, in the vesting schedule specified in the Plan
Agreement, to the number of Years of Service credited to the
Participant as of the end of the Year of Service in which his
employment terminates.
(c) Retirement. All of a Participant's Accounts shall
become fully vested upon his Retirement or his earlier
attainment of early retirement age (if any) or the normal
retirement age elected by the Employer in the Plan Agreement.
For so long as a former Employee does not receive a
distribution (or a deemed distribution) of the vested portion of
his Accounts, the undistributed portion shall be held in a separate
account witch 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 tile same manner as the Accounts of active Participants.
72..2 Vesting of Accounts of Returned Former Employees. The
following rules apply in determining the vested portion of the
Accounts of a Participant who incurs one or more consecutive One-
Year Vesting Breaks and then returns to employment with an
Affiliated Employer:
(a) If the Participant incurred fewer than five
consecutive One-Year Vesting Breaks, then all of his Years of
Service will be taken into account in determining the vested
portion of his Accounts, as soon as he has completed one Year
of Service following his return to employment.
(b) If the Participant incurred five or more consecutive
One-Year Vesting Breaks, then:
(1) No Year of Service completed after his return
to employment will be taken into account in determining
the vested portion of his Accounts as of any time before
he incurred the first One-Year Vesting Break;
(2) Years of Service completed before he incurred
the first One-Year Vesting Break will not be taken into
account in determining the vested portion of his Accounts
as of any time after his return to employment (i) unless
some portion of his Employer Contribution Account or
Employer Matching Account had become vested before he
incurred the first One-Year Vesting Break, and (ii) until
he has completed one Year of Service following his return
to employment; and
(3) Separate sub-accounts will be maintained for
the Participant's prebreak 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.
72..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 4.2 or
Article 5 (whichever applies) no later than the end of the Plan
Year in which it becomes a Forfeiture.
(a) If Distribution Is Made. If any or all of the
vested portion of a Participant's Accounts is distributed in
accordance with Section 9.1 or 9.2 before the Participant
incurs five consecutive One-Year Vesting Breaks, the nonvested
portion of his Accounts shall become a Forfeiture in the Plan
Year in which the distribution occurs. For purposes of this
Section 8.3, if the value of the vested portion of a
Participant's Accounts is zero, he shall be deemed to have
received a distribution of the entire vested balance of his
Accounts on the day his employment terminates. If the
Participant elects to have distributed less than the entire
vested portion of his Employer Contribution Account or
Employer Matching Accounts, the part of the nonvested portion
that will become a Forfeiture is the total nonvested portion
multiplied by a fraction, the numerator of which is the amount
of the distribution and the denominator of which is the total
value of the entire vested portion of such Accounts.
(b) Right of Repayment. If a Participant who receives
a distribution pursuant to paragraph (a) returns to employment
with an Affiliated Employer, the balance of his Employer
Contribution Account and Employer Matching Account will be
restored to the amount of such balance on the date of
distribution, if he repays to the Plan the full amount of the
distribution, before the earlier of (i) the fifth anniversary
of his return to employment or (ii) the date he incurs five
consecutive One-Year Vesting Breaks following the date of
distribution. If an Employee is deemed to receive a
distribution pursuant to this Section 8.3, and he resumes
employment covered under this Plan before the date he incurs
5 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 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 (or
deemed distribution) is made to a Participant before he incurs
five consecutive One-Year Vesting Breaks, the nonvested
portion of his Accounts shall become a Forfeiture at the end
of the Plan Year that constitutes his fifth consecutive One-
Year Vesting Break.
(d) Adjustment of Accounts. Before a Forfeiture is
incurred, a Participant's Accounts shall share in earnings and
losses of the Trust Fund pursuant to Section 13.4 in the same
manner as the Accounts of active Participants.
(e) Accumulated Deductible Contributions. For Plan
Years beginning before January 1, 1989, a Participant's vested
Account balance shall not include accumulated deductible
contributions within the meaning of section 72(o)(5)(B) of the
Code.
72..4 Special Rule in the Event of a Withdrawal. If a
withdrawal pursuant to Section 12.2 or 12.3 is made from a
Participant's Employer Contribution Account or Employer Matching
Account before the Account is fully vested, and the Participant may
increase the vested percentage in the Account, then a separate
account will be established at the time of the withdrawal, and at
any relevant time after the withdrawal the vested portion of the
separate account will be equal to the amount "X" determined by the
following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested
percentage at the relevant time, AB is the account balance at the
relevant time, and D is the amount of the withdrawal.
72..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.<PAGE>
ARTICLE 73. PAYMENT OF BENEFITS
73..1 Distribution of Accounts. A Participant or Beneficiary
who has become eligible for a distribution of benefits pursuant to
Article 7 may elect to receive such benefits at any time, subject
to the terms and conditions of this Article 9, Article 10 and
Article 11. Unless a Participant or Beneficiary elects otherwise,
distribution of benefits will begin no later than the 60th day
after the end of the Plan Year in which the latest of the following
events occurs:
(a) The Participant attains age 65 (or if earlier, the
normal retirement age specified by the Employer in the Plan
Agreement); or
(b) The tenth anniversary of the year in which the
Participant commenced participation in the Plan; or
(c) The Participant's employment with the Affiliated
Employers terminates.
A Beneficiary who is the surviving spouse of a Participant may
elect to have distribution of benefits begin within the 90-day
period following the Participant's death.
For purposes of this Section 9.1, the failure of a Participant
(and his spouse, if spousal consent is required pursuant to Article
10) to consent to a distribution while a benefit is "immediately
distributable" within the meaning of Section 9.2 shall be
considered an election to defer commencement of payment. If the
Employer has so specified in the Plan Agreement, the vested portion
of a Participant's Accounts will be distributed in a lump sum in
cash no later than 60 days after the end of the Plan Year in which
his employment terminates, if at the time the Participant first
became entitled to a distribution the value of such vested portion,
derived from Employer and Employee contributions, does not exceed
$3,500. Commencement of distributions in any case shall be subject
to Section 9.4.
73..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.
(b) Notwithstanding paragraph (a), only the Participant
need consent to the commencement of a distribution in the form
of a Qualified Joint and Survivor Annuity while the account
balance is immediately distributable. Furthermore, if payment
in the form of a Qualified Joint and Survivor Annuity is not
required with respect to the Participant pursuant to Section
10.1(b) of the Plan, only the Participant need consent to the
distribution of an account balance that is immediately
distributable. Neither the consent of the Participant nor the
spouse shall be required to the extent that a distribution is
required to satisfy section 401(a)(9) or section 415 of the
Code. In addition, upon termination of the Plan, if the Plan
does not offer an annuity option (purchased from a commercial
provider, and no Affiliated Employer maintains another defined
contribution plan (other than an employee stock ownership plan
as defined in section 4975(e)(7) of the Code), a Participant's
account balance shall be distributed to the Participant
without his consent. If any Affiliated Employer maintains
another defined contribution plan (other than an employee
stock ownership plan as defined in section 4975(e)(7) of the
Code), a Participant's account balance shall be transferred to
that defined contribution plan without his consent, unless he
consents to an immediate distribution. For purposes of
determining the applicability of the foregoing consent
requirements to distributions made before the first day of the
first Plan Year beginning after December 31, 1988, the
Participant's vested account balance shall not include amounts
attributable to accumulated deductible employee contributions
within the meaning of section 72(o)(5)(B) of the Code.
73..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 sun in cash. Subject to the preceding sentence and to the
rules of Article 10 concerning joint and survivor annuities, a
Participant or Beneficiary may elect to receive benefits in any of
the following optional forms:
(a) A lump sum payment in cash or in kind or in a
combination of both;
(b) A series of installments over a period certain that
meets the requirements of Article 11; or
(c) A nontransferable annuity contract, purchased from
a commercial provider, with terms complying with the
requirements of Article 11; provided, however, that an annuity
for the life of any person shall be available as an optional
form of distribution only if the Employer has so elected in
the Plan Agreement.
(d) In the event that the Plan is adopted as an
amendment to an existing plan, each optional form of
distribution available under the existing plan shall be made
available under the Plan, and may be made available where
necessary through the purchase of an appropriate annuity
contract in accordance with paragraph (c).
73..4 Distribution Procedure. The Trustee shall make or
commence distributions to or for the benefit of Participants only
on receipt of an order from the Employer in writing or by such
other means; as shall be acceptable to the Trustee, certifying that
a distribution of a Participant's benefits is payable pursuant to
the Plan, and specifying the time and manner of payment. The
amount to be distributed shall be determined as of the Valuation
Date coincident with or next following the Employer's order. The
Trustee shall be fully protected in acting upon the directions of
the Employer in making benefit distributions, and shall have no
duty to determine the rights or benefits of any person under the
Plan or to inquire into the right or power of the Employer to
direct any such distribution. The Trustee shall be entitled to
assume conclusively that any determination by the Employer with
respect to a distribution meets the requirements of the Plan. The
Trustee shall not be required to make any payment hereunder in
excess of the net realizable value of the assets of the Account in
question at the time of such payment, nor to make any payment in
cash unless the Employer has furnished instructions as to the
assets to be converted to cash for the purposes of making payment.
73..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.<PAGE>
ARTICLE 74. JOINT AND SURVIVOR ANNUITY
REQUIREMENTS
74..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).
74..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.
74..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.
74..4 Definitions. The following definitions apply:
(a) Election Period means the period beginning on the
first day of the 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 which he reaches age 35, the Election Period with
respect to his account balance as of the date of separation
shall begin on the date of separation. A Participant who will
not attain age 35 as of the end of a Plan Year may make a
special Qualified Election to waive the Qualified
Preretirement Survivor Annuity for the period beginning on the
date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such an
election shall not be valid unless the Participant receives a
written explanation of the Qualified Preretirement Survivor
Annuity in such terms as are comparable to the explanation
required under Section 10.5. Qualified Preretirement Survivor
Annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains
age 35. Any new waiver on or after that date shall be subject
to the full requirements of this article.
(b) Earliest Retirement Age means the earliest date on
which the Participant could elect to receive Retirement
benefits under the Plan.
(c) Qualified Election means a waiver of a Qualified
Joint and Survivor Annuity or a Qualified Preretirement
Survivor Annuity. Any such waiver shall not be effective
unless: (1) the Participant's spouse consents in writing to
the waiver; (2) the waiver designates a specific Beneficiary,
including any class of beneficiaries or any contingent
beneficiaries, which may not be changed without spousal
consent (unless the spouse's consent expressly permits
designations by the Participant without any further spousal
consent); (3) the spouse's consent acknowledges the effect of
the waiver; and (4) the spouse's consent is witnessed by a
plan representative or notary public. Additionally, a
Participant's waiver of the Qualified Joint and Survivor
Annuity shall not be effective unless the waiver designates a
form of benefit payment which may not be changed without
spousal consent (unless the spouse's consent expressly permits
designations by the Participant without any further spousal
consent). If it is established to the satisfaction of a plan
representative that there is no spouse or that the spouse
cannot be located, a waiver will be deemed a Qualified
Election. Any consent by a spouse obtained under these
provisions (and any establishment that the consent of a spouse
may not be obtained) shall be effective only with respect to
the particular spouse involved. A consent that permits
designations by the Participant without any requirement of
further consent by the spouse must acknowledge that the spouse
has the right to limit the consent to a specific Beneficiary
and a specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of
those rights. A revocation of a prior waiver may be made by
a Participant without the consent of the spouse at any time
before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under
this provision shall be valid unless the Participant has
received notice as provided in Section 10.5.
(d) Qualified Joint and Survivor Annuity means an
immediate annuity for the life of a Participant, with a
survivor annuity for the life of the spouse which is not less
than 50% and not more than 100% of the amount of the annuity
which is payable during the joint lives of the Participant and
the spouse, and which is the amount of benefit that can be
purchased with the Participant's Vested Account Balance. The
percentage of the survivor annuity under the Plan shall be
50%.
(e) Annuity Starting Date means the first day of the
first period for which an amount is paid as an annuity (or any
other form).
(f) Vested Account Balance means the aggregate value of
the Participant's vested account balance derived from Employer
and Employee contributions (including rollovers), whether
vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The
provisions of this Article 10 shall apply to a Participant who
is vested in amounts attributable to Employer contributions,
Employee contributions or both at the time of death or
distribution.
74..5 Notice Requirements. In the case of a Qualified Joint
and Survivor Annuity, no less than 30 days and no more than 90 days
before a Participant's Annuity Starting Date the Plan Administrator
shall provide to him a written explanation of (i) the terms and
conditions of a Qualified Joint and Survivor Annuity, (ii) the
Participant's right to make, and the effect of, an election to
waive the Qualified Joint and Survivor Annuity form of benefit,
(iii) the rights of the Participant's spouse, and (iv) the right to
make, and the effect of, a revocation of a previous election to
waive the Qualified Joint and Survivor Annuity.
In the case of a Qualified Preretirement Survivor Annuity,
within the applicable period for a Participant the Plan
Administrator shall provide to him a written explanation of the
Qualified Preretirement Survivor Annuity, in terms and manner
comparable to the requirements applicable to the explanation of a
Qualified Joint and Survivor Annuity as described in the preceding
paragraph. The applicable period for a Participant is whichever of
the following periods ends last: (i) the period beginning with the
first day of the Plan Year in which the Participant attains age 32
and ending with the close of the Plan Year preceding the Plan Year
in which the Participant attains age 35; (ii) a reasonable period
ending after an individual becomes a Participant; (iii) a
reasonable period ending after this Article 10 first applies to the
Participant. Notwithstanding the foregoing, in the case of a
Participant who separates from service before attaining age 35,
notice must be provided within a reasonable period ending after his
separation from service.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (ii) and
(iii) is the end of the two-year period beginning one year before
the date the applicable event occurs, and ending one year after
that date. In the case of a Participant who separates from service
before the Plan Year in which he reaches age 35, notice shall be
provided within the two-year period beginning one year before the
separation and ending one year after the separation. If such a
Participant thereafter returns to employment with the Employer, the
applicable period for the Participant shall be redetermined.
74..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:
(i) begins to receive payments under the Plan
on or after normal retirement age; or
(ii) dies on or after normal retirement age
while still working for the Employer; or
(iii) begins to receive payments on or after
the qualified early retirement age; or
(iv) separates from service on or after
attaining normal retirement age (or the qualified
early retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the Plan and thereafter dies before
beginning to receive such benefits;
then such benefits will be received under the Plan in the
form of a Qualified Joint and Survivor Annuity, unless
the Participant has elected otherwise during the election
period, which must begin at least six months before the
Participant attains qualified early retirement age and
end not more than 90 days before the commencement of
benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
(2) Election of early survivor annuity. A
Participant who is employed after attaining the qualified
early retirement age will be given the opportunity to
elect during the election period to have a survivor
annuity payable on death. If the Participant elects the
survivor annuity, payments under such annuity must not be
less than the payments which would have been made to the
spouse under the Qualified Joint and Survivor Annuity if
the Participant had retired on the day before his death.
Any election under this provision will be in writing and
may be changed by the Participant at any time. The
election period begins on the later of (i) the 90th day
before the Participant attains the qualified early
retirement age, or (ii) the date on which participation
begins, and ends on the date the Participant terminates
employment.
(3) For purposes of this Section 10.6, qualified
early retirement age is the latest of the earliest date
under the Plan on which the Participant may elect to
receive Retirement benefits, the first day of the 120th
month beginning before the Participant reaches normal
retirement age, or the date the Participant begins
participation.<PAGE>
ARTICLE 75. MINIMUM DISTRIBUTION REQUIREMENTS
75..1 General Rules. Subject to Article 10, Joint and
Survivor Annuity Requirements, the requirements of this Article 11
shall apply to any distribution of a Participant's interest and
will take precedence over any inconsistent provisions of the Plan.
Unless otherwise specified, the provisions of this Article 11 apply
to calendar years beginning after December 31, 1984. All
distributions required under this Article 11 shall be determined
and made in accordance with the Income Tax Regulations issued under
section 401(a)(9) of the Code (including proposed regulations,
until the adoption of final regulations), including the minimum
distribution incidental benefit requirement of section 1.401(a)(9)-
2 of the proposed regulations.
75..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 one and half.
(b) Transitional Rules. The required beginning date of
a Participant who attains age 70 one and half 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 one and half 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:
(i) the calendar year in which the Participant
attains age 70 one and half, or
(ii) 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 one and half 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 one and half,
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.
75..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.
75..4 Determination of Amount to be Distributed Each Year.
If the Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply on
or after the required beginning date. Paragraphs (a) through (d)
apply to distributions in forms other than the purchase of an
annuity contract.
(a) If a Participant's Benefit is to be distributed over
(1) a period not extending beyond the Life Expectancy of the
Participant or the Joint Life and Last Survivor Expectancy of
the Participant and his Designated Beneficiary, or (2) a
period not extending beyond the Life Expectancy of the
Designated Beneficiary, the amount required to be distributed
for each calendar year, beginning with distributions for the
first Distribution Calendar Year, must at least equal the
quotient obtained by dividing the Participant's Benefit by the
Applicable Life Expectancy.
(b) For calendar years beginning before January 1, 1989,
if the Participant's spouse is not the Designated Beneficiary,
the method of distribution selected must assure that at least
50% of the present value of the amount available for
distribution is paid within the Life Expectancy of the
Participant.
(c) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year, shall
not be less than the quotient obtained by dividing the
Participant's Benefit by the lesser of (1) the Applicable Life
Expectancy or (2) if the Participant's spouse is not the
Designated Beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations. Distributions after the
death of the Participant shall be distributed using the
Applicable Life Expectancy in paragraph (a) above as the
relevant divisor, without regard to Proposed Regulations
Section 1.401(a)(9)-2.
(d) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on
or before the Participant's required beginning date. The
minimum distribution for other calendar years, including the
minimum distribution for the Distribution Calendar Year in
which the Employee's required beginning date occurs, must be
made on or before December 31 of that Distribution Calendar
Year.
(e) If the Participant's Benefit is distributed in the
form of an annuity contract purchased from an insurance
company, distributions thereunder shall be made in accordance
with the requirements of section 401(a)(9) of the Code and the
regulations issued thereunder (including proposed regulations,
until the adoption of final regulations).
Applicable Life Expectancy means the Life Expectancy (or Joint
and Last Survivor Expectancy) calculated using the attained age of
the Participant (or Designated Beneficiary) as of the Participant's
(or Designated Beneficiary's) birthday in the applicable calendar
year, reduced by one for each calendar year which has elapsed since
the date Life Expectancy was first calculated. if Life Expectancy
is being recalculated, the Applicable Life Expectancy shall be the
Life Expectancy as so recalculated. The applicable calendar year
shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year. If
annuity payments commence in accordance with Section 11.4(e) before
the required beginning date, the applicable calendar year is the
year such payments commence. If distribution is in the form of an
immediate annuity purchased after the Participant's death with the
Participant's remaining interest in the Plan, the applicable
calendar year is the year of purchase.
Participant's Benefit means the account balance as of the last
valuation date in the calendar year immediately preceding the
Distribution Calendar Year (valuation calendar year), increased by
the amount of any contributions or Forfeitures allocated to the
account balance as of dates in the valuation calendar year after
the valuation date and decreased by distributions made in the
valuation calendar year after the valuation date. For purposes of
the preceding sentence, if any portion of the minimum distribution
for the first Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the required beginning
date, the amount of the minimum distribution made in the second
Distribution Calendar Year shall be treated as if it had been made
in the immediately preceding Distribution Calendar Year.
75..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 one and half.
If the Participant has not made an election pursuant to
this Section 11.5 by the time of his death, the Participant's
Designated Beneficiary must elect the method of distribution
no later than the earlier of (i) December 31 of the Calendar
year in which distributions would be required to begin under
this Section 11.5, or (ii) December 31 of the calendar year
which contains the fifth anniversary of the date of death of
the Participant. If the Participant has no Designated
Beneficiary, or if the Designated Beneficiary does not elect
a method of distribution, distribution of the Participant's
entire interest must be completed by December 31 of the
calendar year containing the fifth anniversary of the
Participant's death.
(c) For purposes of paragraph (b), if the surviving
spouse dies after the Participant, but before payments to the
spouse begin, the provisions of paragraph (b), with the
exception of subparagraph (2) therein, shall be applied as if
the surviving spouse were the Participant.
(d) For purposes of this Section 11.5, any amount paid
to a child of the Participant will be treated as if it had
been paid to the surviving spouse of the Participant if the
amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(e) For the purposes of this Section 11.5, distribution
of a Participant's interest is considered to begin on the
Participant's required beginning date (or, if paragraph (c)
above is applicable, the date distribution is required to
begin to the surviving spouse pursuant to paragraph (b)
above). If distribution in the form of an annuity contract
described in Section 11.4(e) irrevocably commences to the
Participant before the required beginning date, the date
distribution is considered to begin is the date distribution
actually commences.
75..6 Transitional Rule. Notwithstanding the other
requirements of this Article 11, and subject to the requirements of
Article 10, Joint and Survivor Annuity Requirements, distribution
on behalf of any Participant, including a 5% owner, may be made in
accordance with all of the following requirements (regardless of
when such distribution commences):
(a) The distribution is one which would not have
disqualified the Trust under section 401(a)(9) of the Internal
Revenue Code of 1954 as in effect before its amendment by the
Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
Trust is being distributed or, if the Employee is deceased, by
a Beneficiary of the Employee.
(c) The designation specified in paragraph (b) was in
writing, was signed by the Employee or the Beneficiary, and
was made before January 1, 1984.
(d) The Employee had accrued a benefit under the plan as
of December 31, 1983.
(e) The method of distribution designated by the
Employee or the Beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the Beneficiaries of
the Employee listed in order of priority.
A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect to
the distributions to be made upon the death of the Employee. For
any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee or the Beneficiary
to whom such distribution is being made will be presumed to have
designated the method of distribution under which the distribution
is being made, if the method of distribution was specified in
writing and the distribution satisfies the requirements in
paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution must
satisfy the requirements of section 401(a)(9) of the Code and the
regulations thereunder. If a designation is revoked after the date
distributions are required to begin, the Trust must distribute by
the end of the calendar year following the calendar year in which
the revocation occurs the total amount not yet distributed which
would have been required to have been distributed to satisfy
section 401(a)(9) of the Code and the regulations thereunder, but
for the designation described in paragraphs (b) through (e). For
calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Any changes in the designation generally will be
considered to be a revocation of the designation, but the mere
substitution or addition of another beneficiary (one not named in
the designation) under the designation will not be considered to be
a revocation of the designation, so long as the substitution or
addition does not alter the period over which distributions are to
be made under the designation, directly or indirectly (for example,
by altering the relevant measuring life). In the case of an amount
transferred or rolled over from one plan to another plan, the rules
in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l of the Proposed
Income Tax Regulations shall apply.<PAGE>
ARTICLE 76. WITHDRAWALS AND LOANS
76..1 Withdrawals from Participant Contribution Accounts.
Subject to the requirements of Article 10, a Participant may upon
written notice to the Employer withdraw any amount from his
Participant Contribution Account. A withdrawn amount may not be
repaid to the Plan. No forfeiture will occur solely as a result of
an Employee's withdrawal of Participant contributions.
76..2 Withdrawals on Account of Hardship. If the Employer
has so elected in the Plan Agreement, upon a Participant's written
request the Plan Administrator may permit a withdrawal of funds
from the vested portion of the Participant's Accounts (excluding
the amount credited to a Rollover Account) on account of the
Participant's financial hardship, which must be demonstrated to the
satisfaction of the Plan Administrator. In considering such
requests, the Plan Administrator shall apply uniform standards that
do not discriminate in favor of Highly Compensated Employees. In
a Plan with a CODA, if hardship withdrawals are permitted from both
the Employer Contribution Account and the Elective Deferral
Account, they shall be made first from a Participant's Employer
Contribution Account and thereafter from a Participant's Elective
Deferral Account, subject to the additional requirements set forth
in Section 5.12. The requirements of Section 5.12(b), (c), (d)(1)
and (d)(2) shall also apply to hardship distributions from a
Participant's Employer Contribution Account and Employer Matching
Account. In a Plan with a CODA, if hardship withdrawals are
permitted from more than one of the Elective Deferral Account,
Employer Matching Account, and Employer Contribution Account, they
shall be made first from a Participant's Employer Contribution
Account, and thereafter from the Employer Matching Account, and
finally from the Elective Deferral Account, subject to the
additional requirements of Section 5.12. A withdrawn amount may
not be repaid to the Plan.
76..3 Withdrawals After Reaching Age 59 one and half. If so specified by
the Employer in the Plan Agreement, a Participant who has reached
age 59 one and half may upon written request to the Employer withdraw during
his employment any amount not exceeding the vested balance of his
Accounts. A withdrawn amount may not be repaid to the Plan.
76..4 Loans. If the Employer has so elected in the Plan
Agreement, the Employer may direct the Trustee to make a loan to a
Participant or Beneficiary from the vested portion of his Accounts,
subject to the following terms and conditions and to such
reasonable additional rules and regulations as the Plan
Administrator may establish for the orderly operation of the
program:
(a) The Plan Administrator shall administer the loan
program subject to the terms and conditions of this Section
12.4.
(b) A Participant's or Beneficiary's request for a loan
shall be submitted to the Plan Administrator by means of a
written application on a form supplied by the Plan
Administrator. 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 50% of the Participant's entire right, title and
interest in and to the Trust Fund, exclusive of any asset as
to which Putnam is not the Trustee.
(e) Loans must bear a reasonable interest rate
comparable to the rate charged by commercial lenders in the
geographical area for similar loans. The Plan Administrator
shall not discriminate among Participants in the matter of
interest rates, but loans may bear different interest rates
if, in the opinion of the Plan Administrator, the difference
in rates is justified by conditions that would customarily be
taken into account by a commercial lender in the Employer's
geographical area.
(f) The Period for repayment for any loan shall not
exceed five years, except in the case of a loan used to
acquire a dwelling unit which within a reasonable time is to
be used as the principal residence of the Participant, in
which case the repayment period shall not exceed ten years.
The terms of a loan shall require that it be repaid in level
payments of principal and interest not less frequently then
quarterly throughout the repayment period, except that
alternative arrangements for repayment may apply in the event
that the borrower is on unpaid leave of absence for a period
not to exceed one year.
(g) To the extent that a Participant would be required
under Article 10 to obtain he consent of his spouse to a
distribution of an immediately distributable benefit other
than a Qualified Joint and Survivor Annuity, the consent of
the Participant's spouse shall be required for the use of his
Account as security for a loan. The spouse's consent must be
obtained no earlier than the beginning of the 90-day period
that ends on the date on which the loan is to be so secured,
and obtained in accordance with the requirements of Section
10.4(c) for a Qualified Election. Any such consent shall
thereafter be binding on the consenting spouse and any
subsequent spouse of the Participant. A new consent shall be
required for use of the Account as security for any extension,
renewal, renegotiation or revision of the original loan.
(h) If valid spousal consent has been obtained in
accordance with Section 12.4(g), then notwithstanding any
other provision of the Plan the portion of the Participant's
account balance used as a security interest held by the Plan
by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of
the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment
of the loan. If less than 100% of the Participant's vested
account balance (determined without regard to the preceding
sentence) is payable to the surviving spouse, then the account
balance shall be adjusted by first reducing the vested account
balance by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the
surviving spouse.
(i) In the event of default on a loan by a Participant
who is an active Employee, foreclosure on the Participant's
Account as security will not occur until the Employer has
reported to the Trustee the occurrence of an event permitting
distribution from the Plan in accordance with Article 9 or
Section 5.11.
(j) No loan shall be made to an Owner-Employee or a
Shareholder-Employee.
(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.
76..5 Procedure; Amount Available. Withdrawals and loans
shall be made subject to the terms and conditions applicable to
distributions pursuant to Section 9.4, except that the amount of
any withdrawal or loan shall be determined by reference to the
vested balance of the Participant's Account as of the most recent
Valuation Date preceding the withdrawal or loan, and shall not
exceed the amount of the vested account balance.<PAGE>
ARTICLE 77. TRUST FUND AND
INVESTMENTS
77..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.
77..2 Management of Trust Fund. Except to the extent of any
investment in Policies pursuant to Article 14, the assets of the
Trust Fund shall be held in trust by the Trustee and accounted for
in accordance with this Article 13, and shall be invested in
accordance with Section 13.3 in the Investment Products specified
by the Employer in the Plan Agreement and from time to time
thereafter in writing. 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.
77..3 Investment Instructions. Except as Article 14 may
apply, all amounts held in the Trust Fund under the Plan shall be
invested in Investment Products. If the Employer has elected in
the Plan Agreement to make investment decisions for the Plan,
investment instructions as to Employer Contribution Accounts,
Employer Matching Accounts, Qualified Matching Accounts and
Qualified Nonelective Contribution Accounts shall be the fiduciary
responsibility of the Employer, and each of such Accounts shall
have a pro rata interest in all assets of the Trust (other than
Policies under Article 14) to which the Employer's instructions
apply. If the Employer has not elected to make investment
decisions for the Plan, then assets of the Trust 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 accented by Putnam at any Valuation Date.
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").
Putnam shall be under no duty to question or review the investment
directions given by the Employer or to make suggestions to the
Employer in connection therewith. Putnam shall not be liable for
any loss, or by reason of any breach, that arises from the
Employer's exercise or non-exercise of rights under this Article
13, or from any direction of the Employer unless it is clear on the
face of the direction that the actions to be taken under the
direction are prohibited by the fiduciary duty rules of Section
404(a) of ERISA. All interest, dividends and other income received
with respect to, and any proceeds received from the sale or other
disposition of, securities or other property held in an investment
fund shall be credited to and reinvested in such investment fund,
and all expenses of the Trust that are properly allocated to a
particular investment fund shall be so allocated and charged. The
Employer may at any time direct Putnam to eliminate any investment
fund or funds, and Putnam shall thereupon dispose of the assets of
such investment fund and reinvest the proceeds thereof in
accordance with the directions of the Employer.
Neither the Employer nor the Trustee nor Putnam shall be
responsible for questioning any instructions of a Participant or
for reviewing the investments selected therein, or for any loss
resulting from instructions of a Participant or from the failure of
a Participant to provide or to change instructions. Neither Putnam
nor the Trustee shall have any duty to question any instructions
received from the Employer or a Participant or to review the
investments selected thereby, nor shall Putnam or the Trustee be
responsible for any loss resulting from instructions received from
the Employer or a Participant or from the failure of the Employer
or a Participant to provide or to change instructions. In the
event that Putnam or the Trustee receives a contribution under the
Plan as to which no instructions are delivered, or such
instructions as are delivered are unclear to Putnam or the Trustee,
such contribution shall be invested until clear instructions are
received in the default investment option set forth in the service
agreement between the Employer and Putnam, or if no such option is
so set forth, in Putnam Daily Dividend Trust. Neither Putnam nor
the Trustee shall have any discretionary authority or
responsibility in the investment of the assets of the Trust Fund.
77..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.
77..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.
77..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 share
holders, with respect to Investment Company Shares held in the
Trust Fund. The Trustee shall act in accordance with directions
received from Participants or the Employer, as the case may be,
with respect to matters to be voted upon by the shareholders of the
Investment Company. Such directions must be in writing on a form
approved by the Trustee, signed by the addressee and delivered to
the Trustee within the time prescribed by it. The Trustee will not
vote Investment Company Shares as to which it receives no written
directions.
77..7 Investment Manager. The Employer, with the consent of
Putnam, may appoint an investment manager, as defined in Section
3(38) of the Employee Retirement Income Security Act of 1974, with
respect to all or a portion of the assets of the Trust Fund. The
Trustee shall have no liability in connection with any action or
nonaction pursuant to directions of such an investment manager.
77..8 Employer Stock. Notwithstanding any other provision of
the Plan, the provisions of this Section 13.8 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 Agremeent 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 the second, third and fourth paragraphs of this
Section 13.8. In either case, the Employer shall be responsible
for determining whether, under the circumstances prevailing at a
given time, its fiduciary duty to Participants nd 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 applies only if the Employer
elects in the plan Agreement that Participants shall direct the
Trustee as to the voting of 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, the number of
shares of Employer Stock deemed credited to a Participant's
accounts shall be determined as of the last preceding Valuation
Date for which an allocation has been completed and Employer Stock
has actually been credited to Participant's accounts. The Employer
shall provide the Trustee with a copy of any materials provided to
Participants and shall certify to the Trustee that the materials
have been mailed or otherwise sent to Participants.
Each Participant shall have the right to direct the Trustee as
to the manner in which to vote that number of shares of Employer
Stock held under the Plan 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 by facsimile or similar means
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. To
the extent that any Participant gives no direction as to the voting
of Employer Stock that he has the right to direct under this
Section 13.8, the Plan Administrator shall retain the status of
Named Fiduciary and shall direct the voting of such Employer Stock.
With respect to all rights in connection with Employer Stock
other than the right to vote, 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.<PAGE>
ARTICLE 78. INSURANCE POLICIES
78..1 Purchase of Insurance Products. At the time of
establishment of the Plan, the Employer shall purchase for each
Participant such Policy or Policies, if any, as a Participant shall
request and annually thereafter such additional Policies as a
Participant shall request, subject to the limitations of Section
14.2. All Policies shall have the same day and month of issue,
insofar as reasonably possible. The premiums on all Policies shall
be paid at the same intervals (for example, annually, semi-
annually, quarterly or monthly), but the interval may be changed
with respect to all Policies from time to time.
78..2 Limitation on Premiums. The premiums paid for Policies
in respect of any Participants shall be limited so that premiums
paid on any ordinary insurance Policies (that is, Policies with
both nonincreasing premiums and nondecreasing death benefits) on
the life of the Participant shall be 49% or less of the Employer's
total contributions for the Participant (and Forfeitures allocated
and amounts reapplied to his Employer Contribution Account), and
premiums paid on term insurance Policies on the life of the
Participant shall be less than 25% of such amount; provided that if
both ordinary life insurance Policies and term Policies are
purchased for any Participant, the total premiums on term Policies
plus one-half the premiums on ordinary life Policies shall be less
than 25% of such amount. If at any time the total premiums to be
paid by the Employer for a Participant shall equal or exceed the
above limitations, then the life insurance coverage of that
Participant shall be reduced so that the total premiums shall not
equal or exceed the limitations. The required reduction shall be
made by changing all or a portion of the life insurance on the
Participant to paid-up life insurance or by cancelling all or a
portion of any term life insurance.
78..3 Policy Options. At the election of the Participant
covered hereunder, a Policy may contain a waiver of premium
disability benefit provision or a provision for additional
indemnity in the event of accidental death, or both, if available
on the type of Policy selected and if permitted by the insurer.
78..4 Insurability. If any Participant who has elected that
a Policy be purchased is found by the insurer not to be insurable
at standard rates, the Employer shall, if permitted by the rules of
the insurer, purchase a similar Policy which provides a lesser
death benefit and which can be purchased for the same premium.
78..5 Dividends on Policies. Dividends and other credits
payable on any Policy shall be applied to the purchase of
additional benefits under the Policy unless the Participant
requests that they be applied in reduction of premiums.
78..6 Trustee of Policy. The Insurance Trustee shall apply
for and be the owner of each Policy purchased under the terms of
the Plan. Each Policy must provide that proceeds will be payable
to the Insurance Trustee; however, the Insurance Trustee shall be
required to pay over all such proceeds to the Participant's
Designated Beneficiary in accordance with the distribution
provisions of the Plan including, without limitation, Section 10.3.
Under no circumstances shall the Trust retain any part of the
proceeds. In the event of any conflict between the terms of the
Plan and the terms of any Policy purchased hereunder, the Plan
provisions shall control.
78..7 Obligations with Respect to Policies. Except as may be
otherwise provided in any conditional or binding receipt issued by
an insurer, there shall be no coverage and no death benefit payable
under any Policy to be purchased from such insurer until such
Policy shall have been delivered and the premium therefor shall
have been paid. The Employer and the Insurance Trustee shall not
have any responsibility as to the effectiveness of any Policy
purchased from an insurer, nor shall either of them have any
liability or obligation to pay any amount to any Participant or his
beneficiary by reason of any failure or refusal by the insurer to
make such payment.
78..8 Distribution of Proceeds on Participant's Death. In
the event of the death of a Participant before the conversion
provided for in Section 14.9, there shall be payable to the
beneficiary named in any Policy on his life the benefits provided
by the terms of such Policy.
78..9 Conversion of Policies. Except as provided in Section
19.3, if any Policies of a Participant (other than retirement
income, endowment or annuity Policies) are held for his benefit at
the time distribution is to commence, the Policies may be converted
by the Insurance Trustee into cash, paid to the Trustee, credited
to the Employer Contribution Account of the Participant, invested
in accordance with the written instructions of the Employer (and if
no such instructions have been given or if such instructions are
not clear, invested in Investment Company Shares in the same
proportion as the most recent contributions to the Participant's
Account) and distributed pursuant to Article 9, subject to the
terms and conditions of Article 10. Retirement income, endowment
or annuity Policies will be distributed directly to the Participant
at the time distribution is to commence.
78..10 Conflict with Policies. In the event of any conflict
between the terms of the Plan and the terms of any Policies
hereunder, the Plan provisions shall control.
78..11 Insurance Loans to Owner-Employees. If an Owner-
Employee or Shareholder-Employee receives, either directly or
indirectly, any amount from an Insurer as a loan under a Policy,
the amount so received shall be considered a distribution under the
Plan. Any assignment or pledge (or agreement to assign or pledge)
by an Owner-Employee or Shareholder-Employee of any interest in the
Plan shall be considered a distribution of such interest.<PAGE>
ARTICLE 79. TOP-HEAVY
PLANS
79..1 Superseding Effect. For any Plan Year beginning after
December 31, 1983, in which Plan is determined to be a Top-Heavy
Plan under Section 15.2(b), the provisions of this Article 15 will
supersede any conflicting provisions in the Plan or the Plan
Agreement.
79..2 Definitions. For purposes of this Article 15, the
terms below shall be defined as follows:
(a) Key Employee means any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the determination period was: (1) an officer of the
Employer having annual compensation greater than 50% of the
amount in effect under section 415(b)(1)(A) of the Code; (2)
an owner (or considered an owner under section 318 of the
Code) of one of the ten largest interests in the Employer
having annual compensation exceeding the dollar limitation
under Section 415(c)(1)(A) of the Code; (3) a 5% owner of the
Employer; or (4) a 1% owner of the Employer having annual
compensation of more than $150,000. Annual compensation means
compensation satisfying the definition elected by the Employer
in item 4 of the Plan Agreement, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludible from the Employee's gross
income under section 125, section 402(a)(8), section 402(h) or
section 403(b) of the Code. The determination period is the
Plan Year containing the Determination Date and the four
preceding Plan Years. The determination of who is a Key
Employee will be made in accordance with Section 416(i)(1) of
the Code and the regulations thereunder.
(b) Top-Heavy: the Plan is Top-Heavy for any Plan Year
beginning after December 31, 1983, if any of the following
conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds
60% and this Plan is not part of any Required Aggregation
Group or Permissive Aggregation Group of plans.
(2) If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the group
of plans exceeds 60%.
(3) If this plan is part of a Required Aggregation
Group and part of a Permissive Aggregation Group of Plans
and the Top-Heavy Ratio for the Permissive Aggregation
group exceeds 60%.
(c) Top-Heavy Ratio means the following:
(1) If the Employer maintains one or more qualified
defined contribution plans (or any simplified employee
pension plan) and the Employer has not maintained any
qualified defined benefit plan which during the 5-year
period ending on the Determination Date(s) has or has had
accrued benefits, the op-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 balances distributed in the 5-year period
ending on the Determination Date(s)), both computed in
accordance with section 416 of the Code and the
regulations thereunder. Both the numerator and
denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the
Determination Date, but which is required to be taken
into account on that date under section 416 of the Code
and the regulations thereunder.
(2) If the Employer maintains one or more qualified
defined contribution plans (or any simplified employee
pension plan) and the Employer maintains or has
maintained one or more qualified defined benefit plans
which during the 5-year period ending on the
Determination Date(s) has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of account
balances under the aggregated qualified defined
contribution plan or plans for all Key Employees,
determined in accordance with (1) above, and the Present
Value of accrued benefits under the aggregated qualified
defined benefit plan or plans for all Key Employees as of
the Determination Date(s), and the denominator of which
is the sum of the account balances under the aggregated
qualified defined contributions plan or plans for all
Participants, determined in accordance with (1) above,
and the Present Value of accrued benefits under the
qualified defined benefit plan or plans for all
Participants as of the Determination Date(s), all
determined in accordance with section 416 of the Code and
the regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the 5-year
period ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value of
account balances and the Present Value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-
month period ending on the Determination Date; except as
provided in section 416 of the Code and the regulations
thereunder for the first and second Plan Years of a
defined benefit plan. The account balances and accrued
benefits of a Participant (A) who is not a Key Employee
but who was a Key Employee in a prior Plan Year, or (B)
who has not been credited with at least one Hour of
Service for the Employer during the 5-year period ending
on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers and transfers are taken
into account will be made in accordance with Section 416
of the Code and the regulations thereunder. Deductible
Employee contributions will not be taken into account for
purposes of computing the Top-Heavy Ratio. When
aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar
year.
The accrued benefit of a Participant other than a
Key Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under
all defined benefit plans maintained by the Employer, or
(b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of section
411(b)(1)(C) of the Code.
(d) Permissive Aggregation Group means the Required
Aggregation Group of plans plus any other qualified plan or
plans (or simplified employee pension plan) of the Employer
which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements
of sections 401(a)(4) and 410 of the Code.
(e) Required Aggregation Group means (i) each qualified
plan of the Employer in which at least one Key Employee
participates or participated at any time during the
determination period (regardless of whether the Plan has
terminated) and (ii) any other qualified plan of the Employer
which enables a plan described in (i) to meet the requirements
of section 401(a)(4) or 410 of the Code.
(f) Determination Date means, for any Plan Year
subsequent to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of the Plan, the
Determination Date is the last day of that Plan Year.
(g) Valuation Date means the last day of the Plan Year.
(h) Present Value means present value based only on the
interest and mortality rates specified by the Employer in the
Plan Agreement.
79..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 first
$200,000 of the Key Employee's Earnings, allocated on behalf
of any Key Employee for that year. The minimum allocation is
determined without regard to any Social Security contribution.
This minimum allocation shall be made even though, under other
Plan provisions, the Participant would not otherwise be
entitled to receive an allocation, or would have received a
lesser allocation of the Employer's contributions and
Forfeitures for the Plan Year because of (1) the Participant's
failure to be credited with at least 1,000 Hours of Service,
or (2) the Participant's failure to make mandatory Employee
contributions to the Plan, or (3) the Participant's receiving
Earnings less than a stated amount. Neither Elective
Deferrals, Employer Matching Contributions nor Qualified
Matching Contributions for non-Key Employees shall be taken
into account for purposes of satisfying the requirement of
this Section 15.3(a).
(b) For purposes of computing the minimum allocation,
Earnings will mean Section 415 Compensation as defined in
Section 6.5(b) of the Plan.
(c) The provision in paragraph (a) above shall not apply
to any Participant who was not employed by the Employer on the
last day of the Plan Year.
(d) The provision in paragraph (a) above shall not apply
to any Participant to the extent he is covered under any other
plan or plans of the Employer, and the Employer has provided
in the Plan Agreement that the minimum allocation requirement
applicable to Top-Heavy Plans will be met in the other plan or
plans.
(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.
79..4 Adjustment of Fractions. For any Plan Year in which
the Plan is Top-Heavy, the Defined Benefit Fraction and the Defined
Contribution Fraction in Article 6 shall each be computed using
100% of the dollar limitations specified in sections 415(b)(1)(A)
and 415(c)(1)(A) instead of 125%. The foregoing requirement shall
not apply if the Top-Heavy Ratio does not exceed 90% and the
Employer has elected in the Plan Agreement to provide increased
minimum allocations or benefits satisfying section 416(h)(2) of the
Code.<PAGE>
ARTICLE 80. ADMINISTRATION OF THE PLAN
80..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 member os 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.
80..2 Claims Procedure. Claims for participation in or
distribution under the Plan shall be made in writing to the Plan
Administrator, or an agent designated by the Plan Administrator
whose name shall have been communicated to all Participants and
other persons as required by law. If any claim so made is denied
in whole or in part, the claimant shall be furnished promptly by
the Plan Administrator with a written notice:
(a) setting forth the reason for the denial,
(b) making reference to pertinent Plan provisions,
(c) describing any additional material or information
from the claimant which is necessary and why, and
(d) explaining the claim review procedure set forth
herein.
Within 60 days after denial of any claim for participation or
distribution under the Plan, the claimant may request in writing a
review of the denial by the Plan Administrator. Any claimant
seeking review hereunder shall be entitled to examine all pertinent
documents and to submit issues and comments in writing. The Plan
Administrator shall render a decision on review hereunder;
provided, that if the Plan Administrator determines that a hearing
would be appropriate, its decision on review shall be rendered
within 120 days after receipt of the request for review. The
decision on review shall be in writing and shall state the reason
for the decision, referring to the Plan provisions upon which it is
based.
80..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.
80..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 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.
80..5 Prototype Plan. Putnam is the sponsor of the Putnam
Basic Plan Document, a prototype plan approved as to form by the
Internal Revenue Service. Provided that an Employer's adoption of
the Plan is made known to and accepted by Putnam in accordance with
the Plan Agreement, Putnam will inform the Employer of amendments
to the prototype plan and provide such other services in connection
with the Plan as may be agreed between Putnam and the Employer.
Putnam may impose for its services as sponsor of the prototype plan
such fees as it may establish from time to time in a fee schedule
addressed to the Employer. Such fees shall, unless paid by the
Employer, be paid from the Trust Fund, and shall in that case be
charged pro rata against the Accounts of all Participants. The
Trustee is expressly authorized to cause Investment Products to be
sold or redeemed for the purpose of paying such fees.<PAGE>
ARTICLE 81. TRUSTEE AND
INSURANCE TRUSTEE
81..1 Powers and Duties of the Trustee. The Trustee shall
have the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
(a) To invest all or a part of the Trust Fund in
Investment Products in accordance with the investment
instructions delivered by the Employer pursuant to Section
13.3, without restriction to investments authorized for
fiduciaries, including without limitation any common,
collective or commingled trust fund maintained by the Trustee
(or any other such fund, acceptable to Putnam and the Trustee,
that qualifies for exemption from federal income tax pursuant
to Revenue Ruling 81-100). Any investment in, and any terms
and conditions of, any such common, collective or commingled
trust fund available only to employee trusts which meet the
requirements of the Code, or corresponding provisions of
subsequent income tax laws of the United States, shall
constitute an integral part of this Agreement;
(b) If Putnam and the Trustee have consented thereto in
writing, to invest without limit in stock of the Employer or
any affiliated company;
(c) To dispose of all or part of the investments,
securities or other property which may from time to time or at
any time constitute the Trust Fund in accordance with the
written directions furnished by the Employer for the
investment of Participants' separate Accounts or the payment
of benefits or expenses of the Plan, and to make, execute and
deliver to the purchasers thereof good and sufficient deeds of
conveyance therefore, and all assignments, transfers and other
legal instruments, either necessary or convenient for passing
the title and ownership thereto, free and discharged of all
trusts and without liability on the part of such purchasers to
see to the application of the purchase money;
(d) To hold cash uninvested to the extent necessary to
pay benefits or expenses of the Plan;
(e) To follow the directions of an investment manager
appointed pursuant to Section 13.7
(f) To cause any investment of the Trust Fund to be
registered in the name of the Trustee or the name of its
nominee or nominees or to retain such investment unregistered
or in a form permitting transfer by delivery; provided that
the books and records of the Trustee shall at all times show
that all such investments are part of the Trust Fund;
(g) Upon written direction of or through the Employer,
to vote in person or by proxy (in accordance with Section 13.6
and, in the case of stock of the Employer, at the direction of
the Employer or Participants) with respect to all securities
that are part of the Trust Fund;
(h) To consult and employ any suitable agent to act on
behalf of the Trustee and to contract for legal, accounting,
clerical and other services deemed necessary by the Trustee to
manage and administer the Trust Fund according to the terms of
the plan'
(i) Upon the written direction of the Employer, to make
loans from the Trust Fund to Participants in amounts and on
terms approved by the Plan Administrator in accordance with
the provisions of the Plan; provided that the Employer shall
have the sole responsibility for computing and collecting all
loan repayments required to be made under the Plan; and
(j) To pay from the Trust Fund all taxes imposed or
levied with respect to the Trust Fund or any part thereof
under existing or future laws, and to contest the validity or
amount of any tax assessment, claim or demand respecting the
Trust Fund or any part thereof.
81..2 Limitation of Responsibilities. Except as may
otherwise be required under applicable law, neither the Trustee nor
the Insurance Trustee nor any of their respective agents shall have
any responsibility for:
(a) Determining the correctness of the amount of any
contribution for the sole collection or payment of
contributions, which shall be the sole responsibility of the
Employer;
(b) Loss or breach caused by any Participant's exercise
of control over his Accounts, which shall be the sole
responsibility of the Participant;
(c) Loss or breach caused by the Employer's exercise of
control over Accounts pursuant to Section 13.3, which shall be
the sole responsibility of the Employer;
(d) Sums paid to an insurer or the validity of any
Policy or the accuracy of information provided by an insurer,
which shall be the sole responsibility of the insurer;
(e) Performance of any other responsibilities not
specifically allocated to them under the Plan.
81..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.
81..4 Reliance on Employer. The Trustee and its agents (and
the Insurance Trustee, if any) shall rely upon any decision of the
Employer, or of any person authorized by the Employer, purporting
to be made pursuant to the terms of the Plan, and upon any
information or statements submitted by the Employer or such person
(including those relating to the entitlement of any Participant to
benefits under the Plan), and shall not inquire as to the basis of
any such decision or information or statements, and shall incur no
obligation or liability for any action taken or omitted in reliance
thereon. The Trustee and its agents shall be entitled to rely on
the latest written instructions received from the Employer as to
the person or persons authorized to act for the Employer hereunder,
and to sign on behalf of the Employer any directions or
instructions, until receipt from the Employer of written notice
that such authority has been revoked.
81..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.
81..6 Advice of Counsel. The Trustee and the Insurance
Trustee may each consult with legal counsel (who may, but need not
be, counsel for the Employer) concerning any questions which may
arise with respect to their respective rights and duties under the
Plan, and the opinion of such counsel shall be full and complete
protection to the extent permitted by applicable law in the respect
of any action taken or omitted by the Trustee or the Insurance
Trustee, as the case may be, hereunder in accordance with the
opinion of such counsel.
81..7 Accounts. The Trustee shall keep full accounts of all
receipts and disbursements which pertain to investments in
Investment Products, and the Trustee and the Insurance Trustee
shall each keep accounts of such other transactions as it is
required to perform hereunder. Within a reasonable time following
the cost of each Plan Year, or upon its removal or resignation or
upon termination of the Trust and at such other times as may be
appropriate, each shall render to the Employer and any other
persons as may be required by law an account of its administration
of the Plan and Trust during the period since the last previous
such accounting, including such information as may be required by
law. The written approval of any account by the Employer and all
other persons to whom an account is rendered shall be final and
binding as to all matters and transactions stated or shown therein,
upon the Employer and Participants and all persons who then are or
thereafter become interested in the Trust. The failure of the
Employer or any other person to whom an account is rendered to
notify the party rendering the account within 60 days after the
receipt of any account of his or its objection to the account shall
be the equivalent of written approval. If the Employer or any
other person to whom an account is rendered files any objections
within such 60-day period with respect to any matters or
transactions stated or shown in the account and the Employer or
such other person and the party rendering the account cannot
amicably settle the questions raised by such objections, the party
rendering the account and the Employer or such person shall have
the right to have such questions settled by judicial proceedings,
although the Employer or such other person to whom an account is
rendered shall have, to the extent permitted by applicable law,
only 60 days from filing of written objection to the account to
commence legal proceedings. Nothing herein contained shall be
construed so as to deprive the Trustee or the Insurance Trustee of
the right to have a judicial settlement of its accounts. In any
proceeding for a judicial settlements of any account or for
instructions, the only necessary parties shall be the Trustee, the
Insurance Trustee, the Employer and persons to whom an account is
required by law to be rendered.
81..8 Access to Records. The Trustee and the Insurance
Trustee shall give access to their respective records with respect
to the Plan at reasonable times and on reasonable notice to any
person required by law to have access to such records.
81..9 Successors. Any corporation into which the Trustee may
merge or with which it may consolidate or any corporation resulting
from any such merger or consolidation shall be the successor of the
Trustee without the execution or filing of any additional
instrument or the performance of any further act.
81..10 Persons Dealing with Trustee or Insurance Trustee. No
person dealing with the Trustee or the Insurance Trustee shall be
bound to see to the application of any money or property paid or
delivered to such party or to inquire into the validity or
propriety of any transactions.
81..11 Resignation and Removal; Procedure. The Trustee or
the Insurance Trustee may resign at any time by giving 60 days'
written notice to the Employer and to Putnam. The Employer may
remove the Trustee or the Insurance Trustee at any time by giving
60 days' written notice to the party removed and to Putnam. In any
case of resignation or removal hereunder, the period of notice may
be reduced to such shorter period as is satisfactory to the
Trustee, the Insurance Trustee and the Employer. Notwithstanding
anything to the contrary herein, any resignation hereunder shall
take effect at the time notice thereof is given if the Employer may
no longer participate in the prototype Plan and is deemed to have
an individually designed plan at the time notice is given.
81..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.
81..13 Action of Insurance Trustee Following Resignation or
Removal. When the Insurance Trustee's resignation or removal
becomes effective, the Insurance Trustee shall perform all acts
necessary to transfer ownership of the Policies to its successor.
If no successor has accepted appointment, the Policies shall be
held and owned by the Employer acting as Insurance Trustee until a
successor is appointed.
81..14 Effect of Resignation or Removal. Resignation or
removal of the Trustee or the Insurance Trustee shall not terminate
the Trust. In the event of any vacancy in the position of Trustee
(or, in a Plan having amounts invested in Policies, the position of
Insurance Trustee), whether the vacancy occurs because of the
resignation or removal of the Trustee (or the Insurance Trustee)
the Employer shall appoint a successor to fill the vacant position.
If the Employer does not appoint such a successor who accepts
appointment by the later of 60 days after notice of resignation or
removal is given or by such later date as the Trustee or the
Insurance Trustee, as the case may be, and Employer may agree in
writing to postpone the effective date of the Trustee or the
Insurance Trustee's resignation or removal, the Trustee or
Insurance Trustee may apply to a court of competent jurisdiction
for such appointment of cause the Trust to be terminated, effective
as of the date specified by the Trustee or Insurance Trustee, as
the case may be, in writing delivered to the Employer. Each
successor Trustee so appointed and accepting a trusteeship
hereunder shall have all of the rights and powers and all of the
duties and obligations of the original Trustee or Insurance
Trustee, as the case may be, under the provisions hereof, but shall
have no responsibility for acts or omissions before he becomes a
Trustee or Insurance Trustee.
81..15 Fiscal Year of Trust. The fiscal year of the Trust
will coincide with the Plan Year.
81..16 Limitation of Liability. Except as may otherwise be
required by law and other provisions of the Plan, no fiduciary of
the Plan, within the meaning of Section 3(21) of ERISA, shall be
liable for any losses incurred with respect to the management of
the Plan, nor shall he or it be liable for any acts or omissions
except those caused by his or its own negligence or bad faith in
failing to carry out his or its duties under the terms contained in
the Plan.
81..17 Indemnification. Subject to the limitations of
applicable law, the Employer agrees to indemnify and hold harmless
(i) all fiduciaries, within the meaning of ERISA Sections 3(21) and
404, and (ii) Putnam, for all liability occasioned by any act of
such party or omission to act, in good faith and without gross
negligence, and for all expenses incurred by any such party in
determining its duty or liability under ERISA with respect to any
question under the Plan.<PAGE>
ARTICLE 82. AMENDMENT
82..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.
82..2 Delegation of Amendment Power. The Employer and all
sponsoring organizations of the Putnam Basic Plan Document delegate
to Putnam Financial Services, Inc., 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
Financial Services, Inc., 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 Financial Services, Inc., 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
Financial Services, Inc., or such successor has a similar power of
amendment. If a sponsoring organization does not adopt any
amendment made by Putnam Financial Services, Inc., such sponsoring
organization shall cease to participate in this prototype Plan and
will be considered to have an individually designed plan.<PAGE>
ARTICLE 83.
TERMINATION OF THE PLAN AND TRUST
83..1 General. The Employer has established the Plan and the
Trust with the bona fide intention and expectation that
contributions will be continued indefinitely, but the Employer
shall have no obligation or liability whatsoever to maintain the
Plan for any given length of time and may discontinue contributions
under the Plan or terminate the Plan at any time by written notice
delivered to the Trustee and the Insurance Trustee, without any
liability whatsoever for any such discontinuance or termination.
83..2 Events of Termination. The Plan will terminate upon
the happening of any of the following events:
(a) Death of the Employer, if a sole proprietor, or
dissolution or termination of the Employer, unless within 60
days thereafter provision is made by the successor to the
business with respect to which the Plan was established for
the continuation of the Plan, and such continuation is
approved by the Trustee;
(b) Merger, consolidation or reorganization of the
Employer into one or more corporations or organizations,
unless the surviving corporations or organizations adopt the
Plan by an instrument in writing delivered to the Trustee
within 60 days after such a merger, consolidation and
reorganization;
(c) Sale of all or substantially all of the assets of
the Employer, unless the purchaser adopts the Plan by an
instrument in writing delivered to the Trustee within 60 days
after the sale;
(d) The institution of bankruptcy proceedings by or
against the Employer, or a general assignment by the Employer
to or for the benefit of its creditors; or
(e) Delivery of notice as provided in Section 19.1.
83..3 Effect of Termination. Notwithstanding any other
provisions of this Plan, other than Section 19.4, upon termination
of the Plan or complete discontinuance of contributions thereunder,
each Participant's Accounts will become fully vested and
nonforfeitable, and upon partial termination of the Plan, the
Accounts of each Participant affected by the partial termination
will become fully vested and nonforfeitable. The Employer shall
notify the Trustee and the Insurance Trustee in writing of such
termination, partial termination or complete discontinuance of
contributions. In the event of the complete termination of the
Plan or discontinuance of contributions, the Trustee will, after
payment of all expenses of the Trust Fund, make distribution of the
Trust asses to the Participants or other persons entitled thereto,
in such form as the Employer may direct pursuant to Article 10 or,
in the absence of such direction, in a single payment in cash or in
kind. Upon completion of such distributions under this Article,
the Trust will terminate, the Trustee and the Insurance Trustee
will be relieved from their obligations under the Trust, and no
Participant or other person will have any further claim thereunder.
83..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.<PAGE>
ARTICLE 84.
TRANSFERS FROM OTHER QUALIFIED PLANS; MERGERS
84..1 General. Notwithstanding any other provision hereof,
subject to the approval of the Trustee there may be transferred to
the Trustee all or any of the assets held (whether by a trustee,
custodian or otherwise) in respect of any other plan which
satisfies the applicable requirements of section 401(a) of the Code
and which is maintained for the benefit of any Employee (provided,
however, that the Employee is not a member of a class of Employees
excluded from eligibility to participate in the Plan) except that
insurance policies held in respect of such other plan shall be
transferred to the Insurance Trustee as trustee if the Employer so
determines. Any such assets so transferred shall be accompanied by
written instructions from the Employer naming the persons for whose
benefit such assets have been transferred and showing separately
the respective contributions made by the Employer and by the
Participants and the current value of the assets attributable
thereto.
84..2 Amounts Transferred. The Employer shall credit any
assets transferred pursuant to Section 20.1 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.
84..3 Merger or Consolidation. The Plan shall not be merged
or consolidated with any other plan, nor shall any assets or
liabilities of the Trust Fund be transferred to any other plan,
unless each Participant would receive a benefit immediately after
the transaction, if the Plan then terminated, which is equal to or
greater than the benefit he would have been entitled to receive
immediately before the transaction if the Plan had then terminated.<PAGE>
ARTICLE 85.
MISCELLANEOUS
85..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.
85..2 No Employment Rights. Neither the establishment of the
Plan and the Trust, nor any amendment thereof, nor the creation of
any fund or account, nor the purchase of Policies, nor the payment
of any benefits shall be construed as giving to any Participant or
any other person any legal or equitable right against the Employer,
the Trustee, or the Insurance Trustee, except as provided herein or
by ERISA; and in no event shall the terms of employment or service
of any Participant be modified or in any way be affected hereby.
85..3 Distributions Exclusively From Plan. Participants and
Beneficiaries shall look solely to the assets held in the Trust and
any Policies purchased pursuant to the Plan for the payment of any
benefits under the Plan.
85..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 within the meaning of section 414(p) of the Code.
The Plan Administrator shall determine whether a domestic relations
order is qualified in accordance with written procedures adopted by
the Plan Administrator.
85..5 Provision of Information. The Employer, Trustee and
Insurance Trustee shall furnish to each other such information
relating to the Plan and Trust as may be required under the Code or
ERISA and any regulations issued or forms adopted by the Treasury
Department or the Labor Department or otherwise thereunder.
85..6 No Prohibited Transactions. The Employer, Trustee, and
Insurance Trustee shall, to the extent of their respective powers
and authority under the Plan, prevent the Plan from engaging in any
transaction known by that person to constitute a transaction
prohibited by section 4975 of the Code and any rules or regulations
with respect thereto.
85..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
85..8 Gender. Whenever used herein, a pronoun in the
masculine gender includes the feminine gender unless the context
clearly indicates otherwise.
DEALER SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this
Dealer Service Agreement, we are authorized to pay you service
fees in connection with the accounts of your customers that hold
shares of certain Putnam Funds listed in SCHEDULE 1 that have
adopted distribution plans pursuant to Rule 12b-1 (the "12b-1
Funds"). Payment of the service fees is subject to your initial
and continuing satisfaction of the following terms and conditions
which may be revised by us from time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Sales Contract with us with respect
to the Putnam Family of Mutual Funds (the "Putnam Funds").
(b) You are the dealer of record for accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in SCHEDULE 2 (DEALER FIRM REQUIREMENTS)
during the period for which a service fee is to be paid. Putnam
Fund accounts are accounts in any open-end Putnam Fund, but
excluding any accounts for your firm's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) on accounts in Putnam Funds having
an aggregate average net asset value of at least the minimum
amount set forth in SCHEDULE 2 (REGISTERED REPRESENTATIVE
REQUIREMENTS) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records.
For each Putnam Fund account registered in the name of
one of your customers, you will advise us, preferably
by electronic means, before the end of the second month
in each calendar quarter, of the registered
representative's name, identification number, branch
number, and telephone number.<PAGE>
2. S ERVICE FEES
(a) If you meet the qualification requirements set forth above
in Paragraph 1, you will be paid a service fee on assets in the
12b-1 Funds for which you are the dealer of record and which are
serviced by a registered representative of your firm meeting the
Registered Representative Requirements, if any, at the annual
rates specified (excluding any accounts for your firm's own
retirement plans).
(b) You understand and agree that:
(i) all service fee payments are subject to the
limitations contained in each 12b-1 Fund's Distribution
Plan, which may be varied or discontinued at any time;
(ii) you shall waive the right to receive service fee
payments to the extent any 12b-1 Fund fails to make
payments to us under its distribution plan with us;
(iii) your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to
time, or otherwise comply with the terms of this
Agreement, will render you ineligible to receive
service fees; and
(iv) failure of an assigned registered representative
to provide services required by this Agreement will
render that representative's accounts ineligible as
accounts on which service fees are paid.
3. P AYMENTS AND COMMUNICATIONS TO REGISTERED REPRESENTATIVES
(a) You will pass through to your registered representatives a
significant share of the service fees paid to you pursuant to
this Agreement.
(b) You will assist us in distributing to your registered
representatives periodic statements which we will have prepared
showing the aggregate average net asset value of shares in Putnam
Funds with which they are credited on our records.<PAGE>
4. REQUIRED SERVICES
(a) You will assign one of your registered representatives to
each Putnam Fund account on your records and reassign the Putnam
Fund account should that representative leave your firm.
(b) You and your registered representatives will assist us and
our affiliates in providing the following services to
shareholders of the Putnam Funds:
(i) Maintain regular contact with shareholders in
assigned accounts and assist in answering inquiries
concerning the Putnam Funds.
(ii) Assist in distributing sales and service
literature provided by us, particularly to the
beneficial owners of accounts registered in your name
(nominee name accounts).
(iii)Assist us and our affiliates in the establishment
and maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will support our marketing efforts by granting
reasonable requests for visits to your offices by our wholesalers
and by including all Putnam Funds on your "approved" list.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.<PAGE>
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for not
more than one year from the date of its execution or adoption and
thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually by the
Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act"). This
Agreement shall automatically terminate in the event of its
assignment (as defined by the 1940 Act). In addition, this
Agreement may be terminated at any time, without the payment of
any penalty, by either party upon written notice delivered or
mailed by registered mail, postage prepaid, to the other party,
or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees
of any 12b-1 Fund or by the vote of the holders of the
outstanding voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. MISCELLANEOUS
(a) All communications mailed to us should be sent to the
address listed below. Any notice to you shall be duly given if
mailed or delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer<PAGE>
We accept and agree to the foregoing Agreement as of the date set
forth below.
Dealer: -------------------------
By: ----------------------------
Authorized Signature, Title
------------------------------
------------------------------
Address
Dated: -------------------------
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203.<PAGE>
SCHEDULE 1:
THE 12B-1 FUNDS
Service fees will be paid on the following Putnam Funds at the
rates set forth in the Prospectus of that Fund:
Putnam Adjustable Rate U.S. Government Fund
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
-Putnam Asset Allocation: Growth Portfolio
-Putnam Asset Allocation: Balanced Portfolio
-Putnam Asset Allocation: Conservative Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Trust
-Putnam California Intermediate Tax Exempt Fund
-Putnam California Tax Exempt Income Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Federal Income Trust
Putnam Florida Tax Exempt Income Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam Income Fund
Putnam Intermediate Tax Exempt Fund
Putnam Intermediate U.S. Government Fund
Putnam Investment Funds
-Putnam International New Opportunities Fund
Putnam Investors Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Natural Resources Fund
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Tax Exempt Income Trust
-Putnam New York Intermediate Tax Exempt Fund
-Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC Emerging Growth Fund
Putnam Overseas Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Trust
Putnam Tax Exempt Income Fund
Putnam Tax-Free Income Trust
-Putnam Tax-Free High Yield Fund
-Putnam Tax-Free Insured Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
SCHEDULE 2: MINIMUM ASSETS
DEALER FIRM REQUIREMENTS. The minimum aggregate average net
asset value of all accounts in Putnam Funds specified by
Paragraph 1(b) is $250,000. We will review this requirement
prior to the start of each year and inform you of any changes.
REGISTERED REPRESENTATIVE REQUIREMENTS. With respect to
Paragraph 1(c), there is no minimum asset qualification
requirement in the Putnam Funds applicable to each of your
representatives. We will review this requirement prior to the
start of each year and inform you of any changes.
NF-57
2/7/97
FINANCIAL INSTITUTION
SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this
FINANCIAL INSTITUTION SERVICE AGREEMENT, we are authorized to pay
you service fees in connection with the accounts of your
customers that hold shares of certain Putnam funds listed in
SCHEDULE 1 that have adopted distribution plans pursuant to Rule
12b-1 (the "12b-1 Funds"). Payment of the service fees is
subject to your initial and continuing satisfaction of the
following terms and conditions which may be revised by us from
time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Financial Institution Sales Contract
with us with respect to the Putnam Family of Mutual Funds (the
"Putnam Funds"), whose shares you have agreed to make available
to your customers on an agency basis.
(b) You are the financial institution of record for accounts in
Putnam Funds having an aggregate average net asset value of at
least the minimum amount set forth in SCHEDULE 2 (FINANCIAL
INSTITUTION REQUIREMENTS) during the period for which a service
fee is to be paid. Putnam Fund accounts are accounts in any
open-end Putnam Fund but excluding any accounts for your
organization's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) in the case of a bank affiliated
dealer, or agent representative(s) in the case of a bank (both
referred to as "representatives"), on accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in SCHEDULE 2 (REPRESENTATIVE
REQUIREMENTS) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records:<PAGE>
For each Putnam Fund account registered in the name of one
of your customers, you will advise us, preferably by
electronic means, before the end of the second month in each
calendar quarter, of the representative's name,
identification number, branch number, and telephone number.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above in
Paragraph 1, you will be paid, at the end of each calendar
quarter, a service fee on assets of your customers in the 12b-1
Funds for which you are the financial institution of record and
which are serviced by a representative of your organization
meeting the Representative Requirements, if any at the annual
rates specified (excluding any accounts for your organization's
own retirement plans), provided that you have evaluated such
service fees and have concluded that it is consistent with
applicable laws, rules, regulations and regulatory
interpretations for you to receive such service fees.
(b) You understand and agree that:
(i) all service fee payments are subject to the limitations
contained in each 12b-1 Fund's Distribution Plan, which may
be varied or discontinued at any time;
(ii) you shall waive the right to receive service fee
payments to the extent any 12b-1 Fund fails to make
payments to us under its distribution plan with us;
(iii)your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to time,
or otherwise comply with the terms of this Agreement, will
render you ineligible to receive service fees; and
(iv) failure of an assigned representative to provide
services required by this Agreement will render that
representative's accounts ineligible as accounts on which
service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REPRESENTATIVES
(a) Where consistent with applicable laws, rules, regulations and
regulatory interpretations, you will pass through to your
representatives a significant share of the service fees paid to
you pursuant to this Agreement, or you will otherwise use the
payments of service fees to advance the objective of providing
and improving service to shareholders of the Putnam Funds in a
manner specifically approved by Putnam Mutual Funds (for example,
via training courses for representatives or shareholder
seminars).
(b) You will assist us in distributing to your representatives
periodic statements which we will have prepared showing the
aggregate average net asset value of shares in Putnam Funds with
which they are credited on our records.
4. REQUIRED SERVICES
(a) You will assign one of your representatives to each Putnam
Fund account on your records and reassign the Putnam Fund account
should that representative leave your organization.
(b) You and your representatives will assist us and our
affiliates in providing the following services to shareholders of
the Putnam Funds:
(i) Maintain regular contact with shareholders in assigned
accounts and assist in answering inquiries concerning the
Putnam Funds.
(ii) Assist in distributing sales and service literature
provided by us, particularly to the beneficial owners of
accounts registered in your name (nominee name accounts).
(iii) Assist us and our affiliates in the establishment and
maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will grant reasonable requests for visits to your offices
by our wholesalers and include all Putnam Funds on your menu or
list of investments made available by you to your customers.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. AMENDM ENT
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.<PAGE>
6. EFFECT IVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for one
year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is
specifically approved at least annually by the Trustees of each
of the 12b-1 Funds in conformity with Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"). This Agreement
shall automatically terminate in the event of its assignment (as
defined by the 1940 Act). In addition, this Agreement may be
terminated at any time, without the payment of any penalty, by
either party upon written notice to the other party, or, as
provided in Rule 12b-1 under the 1940 Act, by the Trustees of any
12b-1 Fund or by the vote of the holders of the outstanding
voting securities of any 12b-1 Fund.
7. WRITTE N REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. COMPLI ANCE WITH LAWS
With respect to the receipt of service fees under the terms of
this Agreement, you will comply with all applicable federal and
state laws and rules, and all applicable regulations and
interpretations of regulatory agencies or authorities, which may
affect your business practices, including any requirement of
written authorization or consent by your customers to your
receipt of service fees, and any requirement to provide
disclosure to your customers of such service fees.
9. MISCEL LANEOUS
(a) All communications mailed to us should be sent to the address
listed below. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.<PAGE>
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: --------------------------
William N. Shiebler,
President and
Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set
forth below.
Financial Institution: --------------------------
By: --------------------------
Authorized Signature, Title
--------------------------
--------------------------
Address
Dated: --------------------------
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203. <PAGE>
SCHEDULE 1:
THE 12B-1 FUNDS
Service fees will be paid on the following Putnam Funds at the
rates set forth in the Prospectus of that Fund:
Putnam Adjustable Rate U.S. Government Fund
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
-Putnam Asset Allocation: Growth Portfolio
-Putnam Asset Allocation: Balanced Portfolio
-Putnam Asset Allocation: Conservative Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Trust
-Putnam California Intermediate Tax Exempt Fund
-Putnam California Tax Exempt Income Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Federal Income Trust
Putnam Florida Tax Exempt Income Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam Income Fund
Putnam Intermediate Tax Exempt Fund
Putnam Intermediate U.S. Government Fund
Putnam Investment Funds
-Putnam International New Opportunities Fund
Putnam Investors Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Natural Resources Fund
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Tax Exempt Income Trust
-Putnam New York Intermediate Tax Exempt Fund
-Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC Emerging Growth Fund
Putnam Overseas Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Trust
Putnam Tax Exempt Income Fund
Putnam Tax-Free Income Trust
-Putnam Tax-Free High Yield Fund
-Putnam Tax-Free Insured Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
SCHEDULE 2: MINIMUM ASSETS
FINANCIAL INSTITUTION REQUIREMENTS. The minimum aggregate
average net asset value of all accounts in Putnam Funds specified
by Paragraph 1(b) is $250,000. We will review this requirement
prior to the start of each year and inform you of any changes.
REPRESENTATIVE REQUIREMENTS. With respect to Paragraph
1(c), there is no minimum asset qualification requirement in the
Putnam Funds applicable to each of your representatives. We will
review this requirement prior to the start of each year and
inform you of any changes. We reserve the right to set a minimum
at any time.
NF-58
2/7/97
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Capital Appreciation Fund -- Class A Shares
Fiscal period ending: 5/31/97
Inception date (if less than 10 years of performance): 8/5/93
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $942 N/A $942
ERV = Ending Redeemable Value $1,158 N/A $2,351
T = Cummulative
Total Return 15.82% N/A 25.07%*
*Life of fund, if less than 10 years
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Capital Appreciation Fund -- Class B Shares
Fiscal period ending: 5/31/96
Inception date (if less than 10 years of performance): 11/2/94
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $1,000 N/A $1,000
ERV = Ending Redeemable Value $1,170 N/A $2,393
T = Cumulative
Total Return 16.95% N/A 25.66%*
*Life of fund, if less than 10 years
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Capital Appreciation Fund -- Class M Shares
Fiscal period ending: 5/31/96
Inception date (if less than 10 years of performance): 1/22/96
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $965 N/A $965
ERV = Ending Redeemable Value $1,180 N/A $2,359
T = Cumulative
Total Return 18.01% N/A 25.20%*
*Life of fund, if less than 10 years
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Capital Appreciation
Fund
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> CLASS A
<S>
<C>
<PERIOD-TYPE>
YEAR
<FISCAL-YEAR-END>
MAY-31-1997
<PERIOD-END>
MAY-31-1997
<INVESTMENTS-AT-COST>
935,625,524
<INVESTMENTS-AT-VALUE>
1,101,102,946
<RECEIVABLES>
19,482,706
<ASSETS-OTHER>
1,157,520
<OTHER-ITEMS-ASSETS>
4,027
<TOTAL-ASSETS>
1,121,747,199
<PAYABLE-FOR-SECURITIES>
14,418,511
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
3,747,440
<TOTAL-LIABILITIES>
18,165,951
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
913,689,920
<SHARES-COMMON-STOCK>
28,030,818
<SHARES-COMMON-PRIOR>
10,610,534
<ACCUMULATED-NII-CURRENT>
1,048,441
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
23,365,465
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
165,477,422
<NET-ASSETS>
1,103,581,248
<DIVIDEND-INCOME>
8,743,546
<INTEREST-INCOME>
2,448,439
<OTHER-INCOME>
0
<EXPENSES-NET>
8,817,177
<NET-INVESTMENT-INCOME>
2,374,808
<REALIZED-GAINS-CURRENT>
33,732,900
<APPREC-INCREASE-CURRENT>
99,347,566
<NET-CHANGE-FROM-OPS>
135,455,274
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
(1,521,434)
<DISTRIBUTIONS-OF-GAINS>
(16,388,552)
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
23,315,457
<NUMBER-OF-SHARES-REDEEMED>
(6,913,708)
<SHARES-REINVESTED>
1,018,535
<NET-CHANGE-IN-ASSETS>
774,330,262
<ACCUMULATED-NII-PRIOR>
881,963
<ACCUMULATED-GAINS-PRIOR>
21,788,438
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
3,625,121
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
9,093,331
<AVERAGE-NET-ASSETS>
290,507,470
<PER-SHARE-NAV-BEGIN>
16.33
<PER-SHARE-NII>
.13
<PER-SHARE-GAIN-APPREC>
3.48
<PER-SHARE-DIVIDEND>
(.10)
<PER-SHARE-DISTRIBUTIONS>
(1.08)
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
18.76
<EXPENSE-RATIO>
1.20
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Capital Appreciation
Fund
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> CLASS B
<S>
<C>
<PERIOD-TYPE>
YEAR
<FISCAL-YEAR-END>
MAY-31-1997
<PERIOD-END>
MAY-31-1997
<INVESTMENTS-AT-COST>
935,625,524
<INVESTMENTS-AT-VALUE>
1,101,102,946
<RECEIVABLES>
19,482,706
<ASSETS-OTHER>
1,157,520
<OTHER-ITEMS-ASSETS>
4,027
<TOTAL-ASSETS>
1,121,747,199
<PAYABLE-FOR-SECURITIES>
14,418,511
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
3,747,440
<TOTAL-LIABILITIES>
18,165,951
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
913,689,920
<SHARES-COMMON-STOCK>
29,213,313
<SHARES-COMMON-PRIOR>
9,477,897
<ACCUMULATED-NII-CURRENT>
1,048,441
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
23,365,465
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
165,477,422
<NET-ASSETS>
1,103,581,248
<DIVIDEND-INCOME>
8,743,546
<INTEREST-INCOME>
2,448,439
<OTHER-INCOME>
0
<EXPENSES-NET>
8,817,177
<NET-INVESTMENT-INCOME>
2,374,808
<REALIZED-GAINS-CURRENT>
33,732,900
<APPREC-INCREASE-CURRENT>
99,347,566
<NET-CHANGE-FROM-OPS>
135,455,274
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
(239,310)
<DISTRIBUTIONS-OF-GAINS>
(15,162,496)
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
24,600,044
<NUMBER-OF-SHARES-REDEEMED>
(5,740,119)
<SHARES-REINVESTED>
875,491
<NET-CHANGE-IN-ASSETS>
774,330,262
<ACCUMULATED-NII-PRIOR>
881,963
<ACCUMULATED-GAINS-PRIOR>
21,788,438
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
3,625,121
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
9,093,331
<AVERAGE-NET-ASSETS>
274,043,170
<PER-SHARE-NAV-BEGIN>
16.24
<PER-SHARE-NII>
0
<PER-SHARE-GAIN-APPREC>
3.45
<PER-SHARE-DIVIDEND>
(.02)
<PER-SHARE-DISTRIBUTIONS>
(1.08)
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
18.59
<EXPENSE-RATIO>
1.95
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Capital Appreciation
Fund
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> CLASS M
<S>
<C>
<PERIOD-TYPE>
YEAR
<FISCAL-YEAR-END>
MAY-31-1997
<PERIOD-END>
MAY-31-1997
<INVESTMENTS-AT-COST>
935,625,524
<INVESTMENTS-AT-VALUE>
1,101,102,946
<RECEIVABLES>
19,482,706
<ASSETS-OTHER>
1,157,520
<OTHER-ITEMS-ASSETS>
4,027
<TOTAL-ASSETS>
1,121,747,199
<PAYABLE-FOR-SECURITIES>
14,418,511
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
3,747,440
<TOTAL-LIABILITIES>
18,165,951
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
913,689,920
<SHARES-COMMON-STOCK>
1,867,102
<SHARES-COMMON-PRIOR>
124,316
<ACCUMULATED-NII-CURRENT>
1,048,441
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
23,365,465
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
165,477,422
<NET-ASSETS>
1,103,581,248
<DIVIDEND-INCOME>
8,743,546
<INTEREST-INCOME>
2,448,439
<OTHER-INCOME>
0
<EXPENSES-NET>
8,817,177
<NET-INVESTMENT-INCOME>
2,374,808
<REALIZED-GAINS-CURRENT>
33,732,900
<APPREC-INCREASE-CURRENT>
99,347,566
<NET-CHANGE-FROM-OPS>
135,455,274
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
(61,582)
<DISTRIBUTIONS-OF-GAINS>
(720,914)
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
2,002,905
<NUMBER-OF-SHARES-REDEEMED>
(304,855)
<SHARES-REINVESTED>
44,736
<NET-CHANGE-IN-ASSETS>
774,330,262
<ACCUMULATED-NII-PRIOR>
881,963
<ACCUMULATED-GAINS-PRIOR>
21,788,438
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
3,625,121
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
9,093,331
<AVERAGE-NET-ASSETS>
13,084,442
<PER-SHARE-NAV-BEGIN>
16.29
<PER-SHARE-NII>
.04
<PER-SHARE-GAIN-APPREC>
3.46
<PER-SHARE-DIVIDEND>
(.09)
<PER-SHARE-DISTRIBUTIONS>
(1.08)
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
18.62
<EXPENSE-RATIO>
1.70
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
